Afghanistan Moving towards Program Budgeting Managing for Development

Afghanistan: Moving towards Program Budgeting Managing for Development Results Co. P – Mf. DR 2008 Annual Meeting 11 - 14 November – Colombo, Sri Lanka Wahid“A Community-driven Development Waissi ANDS/PRSP Development Manager Ministry of Finance Programme”

Outline § Why program budgeting? Opportunities and needs for reform § Pilot program budgeting in key ministries § General Considerations

Opportunities § Afghanistan National Development Strategy (ANDS) – June 2008 §Sector Strategies are prepared §Policies and priorities are defined §Results framework is developed §Resources are identified § Donor support still strong

Why Program Budgeting? § Achieving ANDS policy objectives §linking strategic objectives and policy priorities with the annual budget § Separate operating and development budgets § Limited Transparency and Accountability §Budget Format is by Economic Classification §Illustrates “What” the Expense is – but not “Why” § Prioritize the available funds to make ministries accountable for their budget they spend

Beginning… • Started from three ministries; extended to four ministries in second year, now for 16 ministries • Develop Program Budget Implementation Team • Involved key staffs • Guideline and instruction developed • Action plan developed for key steps to be followed • Government cabinet involved • Feedback consulted with pilot and new ministries – Budget Circulars

PB Structure

Conceptual Framework Ministry Strategic Objective General Programs Program Objective Outcome Summary Costs Sub-Programs Operational Objective Outputs Expense Summary Activities Line item expenses Specific

New structure: Pilot § 1 ministry, 4 programs, 14 sub-programs § each sub-program has 5 -10 activities § Finance and Planning departments integrated § Clear functions, one budget, structure approved § Offices and bureaus have separate programs § for clear lines of accountability and discretion § Programs include all funding sources § number of activities per program at no more than about 10 § ICT Administration is a separate program § due to costing difficulty of expenses

Lessons Learned • PB brings reform - takes time and needs capacity to be achieved • Clear guidelines, instructions and training • Program budget is more than a budget – policy and objectives • Organizational and program structure should be aligned responsibility and accountability • Operational and development need to be integrated - plan and monitor full cost of the program • Budget execution and monitoring system required • Strong support by the senior management – buy-in of senior management

Challenges • Parallel systems run – program budget and “normal” budget • Resistance • Parliament keeps appropriating budget in a traditional format – operating budget and development projects • Communication strategy - Cabinet and Parliament • Lack of commitment and political will on the line ministries

Conclusion • Program budgeting presents best practice in most countries with successful PFM system • Program budget is the only way ANDS can be successfully implemented and monitored • In Afghanistan – program budget is the way forward – Pilot ministries are not experiments, but pioneers in the gradu implementation of the reform – Sooner ministries start introducing program budget, better ch they have for earlier success

Thank you