Posted by Mario Pessoa
The government of the State of Sao Paulo, Brazil, promoted a seminar on performance budgeting in partnership with the IMF and the Interamerican Development Bank, from December 1 to 3, 2008. Experiences in Latin America and OECD countries, in the Brazilian States of Sao Paulo and Minas Gerais, and in the City of Curitiba, were discussed. The main conclusion is there is no unique approach and it is essential to consider local circumstances. Additionally, to implement a performance budgeting approach it is necessary to count on high-level political support, clear leadership to implement the methodology selected, good information systems, realism in the targets, define few and very clear performance indicators, have a good communication strategy, and have a long-term perspective. To be more effective, it is also important to establish incentives, such as flexibility to remunerate personnel and manage budgetary resources and eliminate disincentives such as a set of formalistic compliance regulations that used to be present in many parts of developing countries. The presentations (some of them available only in Portuguese or Spanish) can be assessed by cliking on this link.
What was discussed in the seminar?
The Governor of the State of Sao Paulo, Jose Serra, emphasized the importance of implementing a performance-oriented approach in the public sector to link the resources to the results. He recognized the difficulties to implement such an approach particularly in relation to the identification of good performance indicators.
Teresa Ter-Minassian (IMF) discussed the state of the art of performance budgeting in OECD countries and Mario Sangines (IADB) described the situation in Latin America. They presented international experiences in each region. The Secretary of Economics and Planning of Sao Paulo, Francisco Luna, presented the strategy adopted in the state of Sao Paulo, in particular, in relation to the implementation of a variable remuneration to the personnel in the education sector that can receive an additional salary according to the performance of the students in a national exam.
Marc Robinson (IMF) discussed the performance budgeting models, main concepts, targets, and measurement. As a conclusion he mentioned that there are good experiences using different models, but none of them are entirely free of shortcomings. Performance budgeting is a learning process and be flexible is essential to correct the strategy and find creative solutions according to specific circumstances of each country. Marc Robinson also discussed how to use performance information in the budget process by identifying where, when, and how performance information can make a difference in the budgeting process.
Mario Pessoa (IMF) presented good practices in program classification and design of reliable performance measures presenting excellent experiences with particular emphasis to good communication, realism in the targets, concerns in relation to the cost of gathering information, and the need for a consistent classification system and accounting process to support the preparation of the reports. Mario Marcel (IADB) discussed what really matters in terms of separating rhetoric from the reality describing what preconditions need to be in place and what reforms have the biggest impact. Establishing a good evaluation framework is considered one of the key elements. Roberto Garcia (IADB) described the main experiences of budgeting for results in Latin America based on a research conducted by the IADB in 26 Latin American countries. In average, LA countries are in the middle of the curve with countries such as Chile and Brazil leading the process. Fatima Cartaxo (IADB) described two projects financed by the IADB in Brazil that promotes some elements of a budget for results approach (PRODEV and PROFISCO).
The Secretary of Administration of the city of Curitiba, Jose Richa Filho, presented the experience with an information technology tool to inform the citizens in relation to the services provided by the municipality and to help the accountability process. The Secretary of Planning of the State of Minas Gerais, Renata Vilhena, presented the experience of the state with the implementation of the performance budgeting approach since 2001. After a first phase in which the emphasis was in the fiscal stability, the second phase is concentrated in the development of management tools, such as variable remuneration, recruitment of public managers by a head hunting company, and better definition of sectoral performance indicators.
Teresa Ter-Minassian conducted the final round-table in which the main conclusion was reach: performance budgeting is a very important instrument to improve results in the public sector but there is no unique approach. Additionally, it is necessary to count on high-level political support, clear leadership to implement the methodology selected, good information systems, and realism in the targets, define few and very clear performance indicators, have a good communication strategy, and have a long-term perspective.
