RESULTS ORIENTED BUDGETING REFORMS MALAYSIA SINGAPORE WORLD

“RESULTS ORIENTED BUDGETING REFORMS: MALAYSIA & SINGAPORE” WORLD BANK Washington, DC 15 JULY, 1999 ARUNASELAM RASAPPAN, Ph. D. EXECUTIVE DIRECTOR ARTD (Malaysia) Management, Evaluation, & Research Associates Kuala Lumpur (c) 1999 Arunaselam Rasappan

THE SOCIO-ECONOMIC ENVIRONMENT in MALAYSIA/ SINGAPORE (c) 1999 Arunaselam Rasappan

BUDGET REFORMS & NATIONAL STRATEGIES / AGENDA _____________________ * DYNAMIC SOCIO-ECONOMIC ENVIRONMENT * SOCIO-ECONOMIC DEVELOPMENT * NATION-BUILDING * GLOBALIZATION * COMPETITIVENESS * ENABLING MECHANISMS (c) 1999 Arunaselam Rasappan

BUDGET REFORMS & OTHER CAUSAL FACTORS _____________________ * RISING EXPECTATIONS * TREND TOWARDS RIGHTSIZING * SCARCE RESOURCES * NEW PUBLIC MANAGEMENT INITIATIVES * INCREASING DEMAND FOR GREATER ACCOUNTABILITY (c) 1999 Arunaselam Rasappan

THE ACCOUNTABILITY AGENDA _____________________ “PROGRAM RESULTS” “SERVICE QUALITY” “MORE WITH LESS” “VALUE FOR MONEY”

BUDGET REFORMS (c) 1999 Arunaselam Rasappan

BUDGET REFORMS * LINE-ITEM BUDGETING (Pre 60 s) * * CENTRALIZED DETAILED CONTROL INCREMENTAL REACTIVE BUDGETS * PROGRAM PERFORMANCE BUDGETING SYSTEM (PPBS) (1960 s TO 1990 s) * * PROGRAM/ACTIVITY BASED PERFORMANCE FOCUS DETAILED CONTROL CENTRALIZED (c) 1999 Arunaselam Rasappan

BUDGET REFORMS PERFORMANCE-ORIENTED BUDGETING (1990 s) * MODIFICATION TO PPBS * PROGRAM / ACTIVITY BASED * AGGREGATE CONTROL * GREATER FLEXIBILITY * PERFORMANCE BASED * RESULTS FOCUS * PERFORMANCE TOOLS (c) 1999 Arunaselam Rasappan

BUDGET REFORM SEQUENCING ISSUES * STAGE OF SOCIO-ECON DEV’T * RESOURCE AVAILABILITY * RESOURCE CAPACITIES * CULTURAL & VALUE SYSTEMS * FOCUSSED & STRUCTURED * PRACTICAL EXAMPLES * TECHNICAL ASSISTANCE * LEADERSHIP & VISION (c) 1999 Arunaselam Rasappan

ASSOCIATED PUBLIC SECTOR REFORMS (c) 1999 Arunaselam Rasappan

DRIVERS OF OTHER PUBLIC SECTOR REFORMS & FOCUS p CRITICAL DEVELOPMENT MECHANISMS * CHANGE AGENTS * DEV’T FACILITATORS p GLOBAL COMPETITIVENESS * MALAYSIA INC. * CHANGE AGENTS * GROWTH FACILITATORS p CAPACITY & CAPABILITY BUILDING p PUBLIC SERVICE FOCUS (c) 1999 Arunaselam Rasappan

ASSOCIATED PUBLIC SECTOR REFORM INITIATIVES ò PRODUCTIVITY IMPROVEMENTS ò TQM ò ISO 9000 ò QUALITY IMPROVEMENTS ò CONTINUOUS IMPROVEMENTS ò PERFORMANCE REPORTING ò INNOVATIONS IN GOVERNMENT (c) 1999 Arunaselam Rasappan

ASSOCIATED PUBLIC SECTOR REFORM INITIATIVES í ASSET MANAGEMENT í COSTING OUTPUTS/ACTIVITIES í CLIENT CHARTERS í SERVICE RECOVERY í COUNTER SERVICE í COMPLAINTS HANDLING í PERFORMANCE BUDGETING (c) 1999 Arunaselam Rasappan

LINKAGE BETWEEN BUDGET REFORMS & MANAGEMENT REFORMS Z CRITICAL ROLE OF MANAGEMENT REFORMS Z LINK WITH NATIONAL DEV’T Z LINK WITH ECON. GROWTH Z LINK WITH SERVICE QUALITY Z MISSING LINKS WITH BUDGET REFORMS Z INTEGRATED PERFORMANCE MANAGEMENT FRAMEWORK (c) 1999 Arunaselam Rasappan

DIFFICULTIES IN ADOPTING AN INTEGRATED PERFORMANCE MANAGEMENT FRAMEWORK Z LACK OF PROVEN AND WORKABLE MODELS Z INTRICACIES & DIFFICULTIES Z INABILITY OF POLICY-MAKERS AND PROGRAM MANAGERS Z LACK OF RESOURCES Z LACK OF EXPOSURE AND GUIDANCE (c) 1999 Arunaselam Rasappan

The Results-Oriented Budgeting System (MBS/PBS) (c) 1999 Arunaselam Rasappan

THE RBB SYSTEM l IMPLEMENTED IN 1990 (1996) l BASED ON THE PPBS (1969) l l l NOW INTEGRATED WITH KEY ELEMENTS OF THE PPBS, ZBB, AND MBO BASED ON THREE MAJOR ACCOUNTABILITY TYPES “LET MANAGERS MANAGE & MAKE MANAGERS MANAGE” (c) 1999 Arunaselam Rasappan

THE RBB SYSTEM l TRUST & EMPOWERMENT l ACCOUNTABILITY FOR FLEXIBILITY l PERFORMANCE AGREEMENTS BETWEEN CEO & MINISTRY OF FINANCE l EXPENDITURE TARGETS BASED ON THREE YEAR BUDGET TRENDS & BUDGET FORMULA (c) 1999 Arunaselam Rasappan

THE RBB SYSTEM l TREATMENT OF CURRENT POLICIES, NEW POLICIES, & ONE-OFFS l PERFORMANCE AGREEMENT & ANNUAL REPORTING l VARIANCE ANALYSIS & EXCEPTIONS REPORTING l EFFICIENCY DIVIDEND l “THRESHOLD” OR EXCESS CLAUSE (c) 1999 Arunaselam Rasappan

THE PERFORMANCE MANAGEMENT FRAMEWORK (c) 1999 Arunaselam Rasappan

THE MISSION & Pi. L STRATEGIC PLAN GOALS & OBJECTIVES PERFORMANCE PLAN PERFORMANCE

Program Logic & Linkages Model (Pro. LL Model) CLIENTS NEEDS / PROBLEMS Needs Fulfillment / Problem alleviation (rate / level) POLICIES PROGRAM/ ACTIVITY Mission Goals OBJECTIVE INPUT (RESOURCES) Objective Achievement (rate / level ) PROCESS OUTPUT OUTCOME (c) 1999 Arunaselam Rasappan (1992)

BUDGET REFORM IMPLEMENTATON STRATEGIES * STRATEGIC PLANNING * PREPARATORY WORK * INTER-AGENCY COORDINATION * ENABLING MECHANISMS * PILOT TESTING * STAGGERED IMPLEMENTATION * STAGGERED INTENSITY (c) 1999 Arunaselam Rasappan

BUDGET REFORM IMPLEMENTATON - MISSING LINKS * OWNERSHIP & COMMITMENT FROM ALL LEVELS * PERFORMANCE MEASUREMENT SYSTEM * PERFORMANCE INFORMATION SYSTEM * INTEGRATION WITH OTHER MANAGEMENT REFORMS * INTER-AGENCY COORDINATION (c) 1999 Arunaselam Rasappan

BUDGET REFORM & POLICYMAKING * MAJOR MISSING LINK * INTRICACIES OF POLITICAL CONSIDERATIONS * POLITICAL V/S ADMINISTRATIVE DRIVEN * POLICY CONSIDERATIONS AS KEY COMPONENT OF BUDGETING * NEED FOR INTEGRATION BETWEEN PERF. MNGT, PERF. EVALUATION & POLICY-MAKING (c) 1999 Arunaselam Rasappan

BUDGETING, FISCAL DISCIPLINE, ALLOCATIVE EFFICIENCY & OPERATIONAL EFFICIENCY (c) 1999 Arunaselam Rasappan

BUDGETING, FISCAL DISCIPLINE, ALLOCATIVE EFFICIENCY & OPERATIONAL EFFICIENCY * IMPROVED FISCAL DISCIPLINE * Budget Discipline * Resource Predictability * Improved Planning * Reduced Supplementaries * IMPROVED OPERATIONAL DISCIPLINE * Improved financial mng’t * Less budget overruns * Focused Expenditures * Better value-for-money * Reduced Wastage (c) 1999 Arunaselam Rasappan

BUDGETING, FISCAL DISCIPLINE, ALLOCATIVE EFFICIENCY & OPERATIONAL EFFICIENCY * LIMITED ALLOCATIVE EFFICIENCY * Reasonable success at agency levels * Limited success at politiical levels * Room for improvement (c) 1999 Arunaselam Rasappan

BUDGETING EFFORTS TOWARDS IMPROVING EFFICIENCY GOVERNMENT COMMITED TOWARDS IMPROVING EFFICIENCY: * ENHANCED STRATEGIC PLANNING * PERFORMANCE PLANNING * MINIMIZING AD-HOC BUDGETS * LINKING RESOURCES & POLICY * MINIMIZE ONE-OFFS * EXPENDITURE CAPS * BALANCED BUDGET APPROACH * REDUCED ENTITLEMENTS & CHARGED EXPENDITURES * EXCEPTIONS REPORTING * COST CONSCIOUSNESS * FLEXIBILITY FOR ACCOUNTABILITY (c) 1999 Arunaselam Rasappan

ACCOUNTING REFORMS (c) 1999 Arunaselam Rasappan

ACCOUNTING REFORMS ò MINIMAL LINKS WITH BUDGET REFORMS ò ACCOUNTING REFORMS FROM 1960 s ò MAJOR REFORMS LINKED BUT OTHERS WERE PIECEMEAL ò MAJOR ACCOUNTING REFORMS LINKED TO BUDGETS: ò ò MODIFIED CASH ACCOUNTING COST INFORMATION DECENTRALIZED ACCOUNTING INTEGRATED INFORMATION (c) 1999 Arunaselam Rasappan

ACCOUNTING REFORMS ò CASH ACCOUNTING ò MODIFIED CASH ACCOUNTING ò SELF-ACCOUNTING AGENCIES ò DECENTRALIZATION TO STATES AND AGENCIES ò INTEGRATED REPORTING ò MICRO-ACCOUNTING ò ELECTRONIC GOVERNMENT (c) 1999 Arunaselam Rasappan

BUDGETING, FISCAL RISKS & CONTINGENT LIABILITIES ò SPECIAL CIRCUMSTANCES OF DEVELOPING COUNTRIES ò TRANSPARENCY ISSUES IN BUDGETING ò COMPLIANCE WITH ACCOUNTING PRINCIPLES ò LINKAGE WITH BUDGETING PRACTICES (c) 1999 Arunaselam Rasappan

TIME FRAMEWORK FOR BUDGETING (c) 1999 Arunaselam Rasappan

TIME FRAMEWORK FOR BUDGETING ò ANNUAL BUDGETING ò PERFORMANCE BUDGETS & MULTI-YEAR FOCUS ò ELEMENTS OF MULTI-YEAR PLANNING & CEILINGS ò MODIFIED MULTI-YEAR BUDGETING WITH ESTIMATED RESOURCE CERTAINTY ò FORWARD ESTIMATES - DEVT V/S OPERATING BUDGETS (c) 1999 Arunaselam Rasappan

IMPACT OF BUDGET REFORMS MAJOR REFORM FEATURES & IMPACT â ACCOUNTABILITY FOR FLEXIBILITY â ANNUAL BUDGET CEILINGS â PROGRAM AGREEMENTS & PERFORMANCE FRAMEWORKS â FUNDS TRANSFER FLEXIBILITY â EFFICIENCY DIVIDENDS â PERFORMANCE MEASUREMENT â PROGRAM EVALUATION & POLICY-MAKING PROCESSES (c) 1999 Arunaselam Rasappan

“RESULTS ORIENTED BUDGETING REFORMS: MALAYSIA & SINGAPORE” WORLD BANK Washington, DC 15 JULY, 1999 ARUNASELAM RASAPPAN, Ph. D. EXECUTIVE DIRECTOR ARTD (Malaysia) Management, Evaluation, & Research Associates Kuala Lumpur (c) 1999 Arunaselam Rasappan