Vocabulary of Government Performance Management

Many countries aspire to performance based budgeting – implementation is a journey rather than a destination.

James Brumby of the World Bank discussed the significant cultural and institutional change needed for Performance Based Budgeting. Much in Public Financial Management (PFM) has focused on limiting discretion – but discretion is needed to improve performance.

Performance is determined by where you sit, according to Mr. Brumby. Government performance is complex because of the variety of interests.

Mr. Brumby glossary began by defining inputs, outputs, outcomes and indicators. Outputs are controllable by government organizations and easy to measure. Outcomes are harder to control and measure, according to Mr. Brumby. He pointed out these connect together in a performance chain showing where efficiency and effectiveness measurements are used. He described the difference between intermediate outcomes and final outcomes. A list of indicator types like timeliness and location were presented. He recommends that output measurements should be externally focused, controllable, comprehensive measurable and informative.

3 levels of performance based budgeting include:

• Weakest: Performance as an instrument of transparency


• Moderate: Performance informed budgeting


• Strongest: Direct performance budgeting with an unambiguous contractual mechanism. This is only the case in two OECD countries.

It is possible to see all three in any system. The moderate form is the dominant method used around the world. Performance is one of the elements used for developing budgets.

Mr. Brumby described methods of contractual, program, formula-based, purchaser-provider, and the agency model used in performance frameworks in government.

Mr. Brumby described how many countries aspire to performance budgeting – implementation is a journey rather than a destination. He contrasted this with accrual accounting that is a destination. Ideas and objectives change, so there is not destination for performance budgeting.

2.30 3.00pm Understanding Vocab Of Perf Mgmt (Jim Brumby)

View more presentations from icgfmconference.

2.30 3.00pm Understanding Vocab Of Perf Mgmt (Jim Brumby) Spanish

View more presentations from icgfmconference.

2.30 3.00pm Understanding Vocab Of Perf Mgmt (Jim Brumby) French

View more presentations from icgfmconference.

Lessons Learned from Performance Based Budgeting in Latin America

From the Culture of Control to Culture of Performance
Mario Saginés, Senior Advisor, Institutional Capacity and Finance Sector, Inter-American Development Bank described Performance Based Budgeting for government. Mr. Saginés provided insight from experience in Latin America.

PBB does not mean that countries always allocate based exclusively on results. He described four necessary components are: performance information, the use of information in budgetary exercises, incentives for managers to reach goals, and increasing management skills. Management in government can be restricted by rules from making decision. That way, managers can be held accountability.

The benefits of PBB include improved accountability, government services, and efficiencies. PBB brings budgeting in line with government objectives. Mr. Saginés showed graphs that showed how countries with a lower income tend to collect revenues at a lower ratio to GDP. Many Latin American countries spend more than many countries yet achieve poorer results.

Mr. Saginés pointed out that many PBB initiatives are started by bad reasons. For example, PBB should not be used to increase controls because it limits the ability to manage based on performance frameworks. Excessive detailed management is often legally required. This reduces flexibility. He recommends a more macro approach. PBB has become fashionable in the donor community. Mr. Saginés suggests that this should the only reason to implement PBB. He questioned whether accrual budgeting is required to have effective performance based budgeting.

There is a broad menu of PBB framework options. Some countries use more performance measurements to set budgets than others. There is no established model. Mr. Saginés suggested that a practical middle ground is appropriate for most countries. He recommended against using allocation formulas based on performance results.

Many countries use program-based performance budgeting. He cautioned that the concept of “program” is not universally understood. Program budgeting can be complex to manage.

Budget execution for PBB requires culture change. It can be a long and painful process. Mr. Saginés presented details from PBB experiences in Latin America.

Many countries focus on indicators but not on using these to determine resource allocation. A radar graph showing 5 measurements for results-based management was shown. Performance based budgeting and monitoring in Latin America is not as advanced as general financial management.

Monitoring and evaluation is required for effective PBB. Mr. Saginés recommends the use of performance results during budget deliberations. This does not mean that allocations should be directly related to performance. Performance is one of the characteristics that must be used during budget preparation.

1.30 2.30pm Embarking On Perf Mgmt Latin America (Mario Marcel)

View more presentations from icgfmconference.

1.30 2.30pm Embarking On Perf Mgmt Latin America (Mario Sangines) English

View more presentations from icgfmconference.

1.30 2.30pm Embarking On Perf Mgmt Latin America (Mario Sangines) French

View more presentations from icgfmconference.