PUBLIC EXPENDITURE REVIEW CLINIC FOR BENIN 13 December, 1999

1. PUBLIC EXPENDITURE REVIEW CLINIC FOR BENIN13 December, 1999 OUTLINE OF PRESENTATION BY DAVID SHAND Measuring, Monitoring And Evaluating Government Performance

2. Many Countries Have Reasonable Aggregate Control • a comprehensive budget • satisfactory accounting and reporting systems • But little information on public expenditure outputs or outcomes - little link with “policy”. What are they buying? • But nevertheless in some countries a lot of performance information - but relevance and quality?

3. Problems in prioritization • Lack of clear government priorities - a national plan? • Budget fragmentation - Investment budget versus ordinary budget - Enclaving by Donors • Lack of a firm budget constraint • Lack of a medium term perspective • Therefore difficult To reallocate resources - Resulting in an “add on” mentality - Rather than prioritizing expenditures based on results or performance

4. Commencing Thoughts….. • Performance Measurement - For performance improvement - For accountability (contracting) • Performance Management Through The Budget - Creating An enabling environment - flexibility and predictability - Making people perform

5. Performance Management (Budgeting) • Ex ante specification of required outputs/outcomes • Performance or resource agreements; budget funding is provided in return for agreed output and performance levels • Reporting on actual versus targeted outputs and performance • Consequences of actual performance compared with targets?

6. Performance Management (Budgeting) • Improved information on what is being purchased with the budget allocation. Better basis for budget dialogue. • Informs the budget allocation process, does not control it • Benchmarking - comparisons may improve performance • Performance agreements/contracts in the budget process

7. Different Aspects of Performance Measurement • Social Indicators • (Program) effectiveness (Outcomes) • (Operational) efficiency (Outputs) • Service quality - timeliness, accessibility, accuracy, etc. (a mixture of outcomes and outputs) • Financial performance - cost recovery, rate of return, cost containment • User satisfaction surveys • Process measures (“Best Practices”)

8. Performance Measurement - General Comments • Need to prioritize and understand inter-relationships • Don’t forget probity (and equity?) • The public sector production function inputs processes (“best practices”) outputs outcomes overall social impacts

9. Performance Measurement- General Comments • Full diagnosis of performance requires an understanding of this production function • Allow adequate time and recognize complexity (easy to do badly- inherent limitations) • Ensure comprehensiveness, but don’t over-complicate • Measure the right thing • how to legitimate performance measures (planning processes, consultation with stakeholders) • avoid dysfunctional performance measurement

10. Performance Measurement - General Comments • In principle it applies to all public sector activities - but difficult in some areas (e.g. research, policy advice, foreign affairs) • Setting targets - at what level? - attainable with difficulty? • Reviewing performance - basis of comparison? • previous performance • targets - what is reasonably achievable, with effort • with comparable organizations (benchmarking, including international comparisons)

11. Performance Measurement - General Comments • Input Side is also Important - understanding input/outcome or output relationships - accrual accounting • Positive and negative uses of performance information • Allow for dialogue and interpretation • Accuracy and verification of information • Separate from performance pay issues

12. Program Evaluation - Going Beyond or Behind Performance Measures • An art, not a science-subjectivity and need for demystification • Analysis of past or projected performance • Determining objectives • Evaluating each part of the production function • Quantifying costs and benefits • Understanding cause-effect relationships • Forecasting and uncertainty

13. Program Evaluation - Going Beyond or Behind Performance Measures • A normal part of management life • Whose responsibility? • Self evaluation? • Relationship with audit? An example - Basic Education • Evaluating the impact on educational outcomes of - more teachers - better teachers - better classrooms - better equipment - better textbooks - better curriculum

14. Medium-Term Expenditure Framework (MTEF) • Fiscal targets - what is affordable? • Forward estimates of cost of existing policy • How do forward estimates compare with what is affordable? • Make the necessary changes/adjustments now- medium-term expenditure planning i.e. MTEF becomes the budget process • Provide indicative forward levels of expenditure allocations - aggregate, sectoral, ministry

15. Medium-Term Expenditure Framework (MTEF) • Provides reasonable predictability • But not multi-year expenditure appropriations or an agreed entitlement • Issues • ability to forecast revenues and expenditures • taking the fiscal targets seriously • publish the MTEF for greater fiscal transparency • baseline figures must be controlled by the Budget Office • need for regular review and updating

16. Medium-Term Expenditure Framework (MTEF) • A basis of enforcing prioritization Proposals for funding must compete within the limits set, based on - affordability - relative priority or performance