Abstract
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In 2005, Serbian Government committed to a major budget reform initiative – introduction of programme-based budgeting, as a way of increasing the influence of policy analysis, strategic decision support, and programme information on the budget system. It is often used as a term to describe different practices and approaches aimed at improved usage of non-financial performance information alongside traditional financial data in the budget, and to improve the performance frameworks for state institutions and decision-makers. Performance-based budgeting might be a better term to use, since it is about the allocation of funds to measurable results, based on evaluation and identification of outputs and/or outcomes at the budget beneficiary level.
To understand the challenges posed by this approach, one must divide it into its two main elements. Firstly, it is a system for compiling and presenting information on actual or expected results; secondly, it is a system for “buying” results through the expenditure of public funds. The two elements are interdependent, as government would not be able to allocate funds on the basis of results if it lacked result-based information. Nevertheless, it is useful to distinguish the two elements, for each one creates its own challenges to the successful implementation of programme budgeting.
So far, this reform has taken a form of a step-by-step introduction of the annual operational planning (AOP) approach and an attempt to better coordinate national-level policies and strategies. It started in 2005, with five pilot ministries and has continued with gradual involvement of additional ones. The ministries are supposed to submit their annual operational plans, based on their strategic goals and objectives, for their further integration into policy coordination and mid-term expenditure framework of the country. The 2009 Budget System Law introduced the concept of mid-term financial planning, which sets an obligation upon the ministries to create a three-year programme-based budget projection, important for IPA programming. Thus, the whole effort has been conceptualized as an integrated approach to improved use of available national and international funds.
Five years after the introduction of this public administration initiative known as the Joint Project – Annual Operational Planning, in July-October 2010, the author performed an evaluation of the project’s relevance, success and sustainability, and interviewed 37 participants. This paper presents the key findings of this assessment - who profited the most from this process, what worked and what failed, the role of ministries, decision-makers, the Central Government institutions, etc. As one of the interviewed participants remarked, “...each year, since 2006, the introduction of programme-based budgeting has been announced as a new, revolutionary beginning”.
A lack of top-down approach has been singled out as the main obstacle for integrated implementation of the process. While individual professionals benefited the most from the AOP project, by building skills and practicing analytical and planning tools and techniques, the capacity of institutions and effectiveness of the process is heavily dependant on the support from the top. Evidently, the process can not become efficient and effective without direct support from the highest level of government - joint support by the Prime Minister’s Office, line ministers and state secretaries. This paper is an attempt to propose a set of actions based on more effective combination of bottom-up and top-down approach.
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