Implementing Program Based Budgeting - A Developing Country Context

When program based budgeting is implemented successfully it can provide significant improvements in improving economic governance.  It provides a straightforward mechanism by which a government can, on an informed basis, make decisions about the efficacy of the allocation of its scarce resources and determine whether policy objectives are being met or not. It however represents a substantial increase in budgetary management sophistication with particular challenges to budget implementation especially for developing countries typified by capacity constraints, weak financial networks and highly centralized public administrations with long expenditure management pathways. Clearly successful program based budgeting implementation requires a minimum threshold of public finance management performance and economic governance.  The risks associated with implementing program based budgeting are mitigated by adopting a carefully sequenced approach to reform.  Three main sequencing phases are identified.  The first phase seeks to strengthen basic Public Finance Management (PFM) performance.  The second phase seeks to create an enabling context for the implementation of the core PBB functions. This phase is guided by a process of enhancing performance informed budgeting.  The third phase introduces the core Program Based Budgeting (PBB) functions.  The sequencing of which is guided by PFM functional linkages.

In this course Program Based Budgeting implementation is carefully considered and full guidance provided for the establishment of the PFM performance re-requistes for successful implmentation of PBB.  A sample of countries that have successfully implemented program based budgeting as well as ones currently grappling with undertaking reforms are reviewed, analysed and discussed.   The course provides particpants with insights and approaches for linking sector strategies to budget formulation and in turn linking budget formulation to budget execution along with  financial accounting and reporting under a PBB regime set up within a developing country context.  The Medium Term Expenditure Framework is introduces as the means by which medium term sector strategies are translated into policy based budgetary implmentation.