Presentation on theme: "Wismana Adi Suryabrata Director for Allocation of Development Funding,"— Presentation transcript:
1PLANNING AND BUDGETING REFORMS IN INDONESIA: Past Achievements and Future Challenges Wismana Adi SuryabrataDirector for Allocation of Development Funding,BAPPENAS
2OUTLINE OF THE PRESENTATION PLANNING AND BUDGETING FRAMEWORKRULES AND REGULATIONTHE FRAMEWORKAGGREGATE FISCAL DISCIPLINEALLOCATIVE EFFICIENCYOPERATIONAL EFFICIENCYPAST ACHIEVEMENTSMEDIUM-TERM PLAN (RPJMN )ANNUAL WORK PLAN (RKP )FUTURE CHALLENGESSHORT-TERM ( ): PREPARATION OF MEDIUM-TERM PLAN (RPJMN)BEYOND (2010 – ONWARD)
4RULES AND REGULATIONS LAW 25 : NATIONAL DEV’T PLANNING SYSTEM REGULATORY INTERVENTIONBUDGET INTERVENTION (app. 20% of GDP)LAW 32 : DIV. OF RESPONSIBILITIESBETW. CENTRAL & LOCAL GOV’TLAW 17 : BUDGET INTERVENTIONLAW 33 : BALANCED FUND
5Allocation to Priorities PLANNING AND BUDGETING FRAMEWORKAggregate Fiscal DisciplineTax/GDP RatioDeficit/GDP RatioDebt/GDP RatioMTFF: Medium Term Fiscal FrameworkMTEF: Medium Term Expenditure FrameworkAllocative EfficiencyAllocation to PrioritiesProgram outcomeActivity outputForward EstimatesPBB: Performance BasedBudgetingUnified BudgetPerformance Culture (Performance Based Budgeting)Good Governance :BiddingOfficial Travel (at cost)Operational EfficiencyExternal ControlInternal ControlManagement Accountability*) RPJMN (5 YEAR DEV’T PLAN, WITH 3 YEARS ROLLING PLAN THROUGH RKP AND APBN)
6Source : Taken from presentation by Dr Kay Brown, National Treasury, Government of South Africa *) Credible 5 year Baseline (realistic government programs with assured financing availability).**) Reviewed every year through the 3 year rolling Government Work Plan and Budget – APBN – for new initiatives ( drawdown savings and contingency reserve).***) Challenge : credible resource envelope -- the size of contingency reserves
7ALLOCATIVE EFFICIENCY Performance budgeting categories (OECD)TypeLink between performance information and fundingPlanned or actual performanceMain purpose in budget processPresentationalNo linkPerformance targets and/or performance resultsAccountabilityPerformance informed budgetingLoose/indirect linkPlanning and/or accountabilityDirect/formula performance budgetingTight/direct linkPerformance resultsResource allocation and accountabilityOECD definition : A form of budgeting that relates funds to measurable resultsSource : Taken from presentation by Leslie Fischer, National Treasury, Gov’t of South Africa
8LOGIC MODEL THEORYSource: Framework for Managing Programme Performance Information, National Treasury, Republic of South Africa, May 2007
9Performance Information in the MTEF Guidelines INDICATOR TITLEIdentifies the title and whether it is an outcome or output indicator.SHORT DEFINITIONProvides a brief explanation of what the indicator is, with enough detail to give a general understanding of the indicator.PURPOSE/IMPORTANCEExplains what the indicator is intended to show and why it is important.SOURCE/COLLECTION OF DATADescribes where the information comes from and how it is collected.METHOD OF CALCULATIONDescribes clearly how the indicator is calculated.DATA LIMITATIONSIdentifies any limitations about the indicator data, including factors that may be beyond the department’s control.CALCULATION TYPEIdentifies whether the information is cumulative ornoncumulative.REPORTING SCHEDULEIdentifies if an indicator is reported quarterly or annuallyNEW INDICATORIdentifies whether the indicator is new, has significantly changed, or continues without change from the previous year.DESIRED PERFORMANCEIdentifies whether actual performance that is higher or lower than targeted performance is desirable (e.g., a disease rate lower than targeted is desirable).INDICATOR RESPONSIBILITYIdentified the individual/organization responsible for the definition, data analysis, interpretation and reporting in connection with the indicator.INDICATOR DATA ADMINISTRATORIdentifies the individual/organization responsible for ensuring the data for the indicator is collected and assembled according to the schedule defined.INDICATOR ROLL-OUT DATEExpected date for start of data collection for the indicator.INDICATOR STANDARDIdentifies the standard level of performancePerformance standards - express the minimum acceptable level of performance, or the level ofperformance that is generally expected. These should be informed by legislative requirements,departmental policies and service-level agreements. They can also be benchmarked against performancelevels in other institutions, or according to accepted best practices.Cumulative measure – measure for which one quarter’s performance may be added to a previousquarter’s performance to obtain year-to-date performance; otherwise, a measure is noncumulative.Noncumulative measure – a measure that, in order to determine year-to-date performance, must be calculatedfor the entire reporting period and not on the basis of adding together the performance from separatereporting periods.Source : Government of South Africa
10CHALLENGES Difficult to link resource allocations to results Refining outputs (focus on quantitative instead of qualitative results)Difficulty in defining indicatorsConcurrent functions (implemented by central, provinces and districts)Standardised indicators for provinces and districts.
11Continued.. Capacity constraints Monitoring and evaluation feedback into policy making and resource allocationAligning policy planning with organizational accountabilityStreamlining documents for planning, budgeting and monitoring and evaluation.
12OPERATIONAL EFFICIENCY Source : Allen Schick, A Contemporary approach of Public Expenditure Management, IBRD, 1998*) Issues : moving gradually from external control to managerial accountability- Striking the balance between flexibility and accountability- Produce cost estimates of output and running cost
14MEDIUM-TERM DEVELOPMENT PLAN (RPJMN) 2004-2009 AGGREGATE FISCAL DISCIPLINETARGET TO REDUCE DEBT/GDP RATIO TO 31.8%ALLOCATIVE EFFICIENCYSTRATEGIC PRIORITIES AND TARGETSREGULATORY INTERVENTIONBUDGET INTERVENTIONNO RESOURCE CONSTRAINT ON STRATEGIC PRIORITIESOPERATIONAL EFFICIENCYWEAK COSTING OF POLICIESIT HAS BEEN REVIEWED (ADJUSTED AND DEVELOPED) AND IMPLEMENTED THROUGH THE ANNUAL GOVERNMENT WORK PLAN AND BUDGET
15AGGREGATE FISCAL DISCIPLINE ALLOCATION OF “TOP-DOWN” INDICATIVE CEILINGS BY MINISTRY/AGENCY AS CONSTRAINTS TO PROGRAM AND ACTIVITY PREPARATION (SINCE 2005)INTEGRATING NON-ENERGY SUBSIDIES SUCH AS RASKIN, FERTILIZER, SEEDLINGS, CREDIT, ETC. W/ MINISTRY/AGENCY’S BUDGET (SINCE 2008)
16ALLOCATIVE EFFICIENCY SUBSTANCEStandardized Activities (Outputs, Costs)Policy planning : Priorities (e.g. agricultural revitalization, Focus priorities (Coordination among Ministries/Agencies, e.g. food security), Priority Activities (seedling supply – MOA, Irrigation – MOPW, etc).Ministry/Agency Accountability : indicative ceilings for each line Ministry/agency w/ agreed performance output.Integration of Subsidy and Special Purpose Grants (Dana Alokasi Khusus or DAK) policies with line ministries/agencies budget.PROCESSTrilateral Meetings (Performance Contracts)Musrenbangnas (Coordination for Regional Government Work Plans)Cabinet decision : Presidential Decree on the Government Work Plan (RKP).
17OPERATIONAL EFFICIENCY STANDARDS ARE BEING DEVELOPEDUNIT COST (GENERAL STANDARD UNIT COSTS AND SPECIFIC STANDARD UNIT COSTS)OFFICIAL TRAVEL AT COSTPROCUREMENT (BIDDING)USE OF CLASSES OF EXPENDITURE (INTERNAL CONTROL) TO CONTROL SPENDING
18INTERNAL CONTROLCLASSES OF EXPEND.APBN 2006(Realization)APBN 2007Initial Estimation2008RAPBN 2008APBN 2008GOODS AND SERVICES46.071.683.852.469.4ASSETS58.773.184.2101.595.4SOCIAL ASSISTANCE40.749.459.264.463.2*) 2006 – 2007 : spending for goods and services (especially the non-discretionary) increased to the levels of asset spending, and is predicted to continue in 2008.**) In the RAPBN (proposed budget) 2008 spending for goods and services is constrained. In the APBN (budget) 2008 it increases but does not exceed the APBN 2007 levels.
20FUTURE CHALLENGE: SUSTAINING REFORMS SHORT-TERM (TAHUN 2008 – 2009):PREPARING THE RPJMNMTFF : CREDIBLE RESOURCE ENVELOPEMTEF : INDICATIVE BASELINEALLOCATIONS BASED ON RESOURCE CONSTRAINTSALLOCATIONS FOCUS ON ACHIEVEMENT OF RESULTS (OUTPUT, OUTCOME) – PROGRAM RESTRUCTURINGIMPLEMENTATION OF FISCAL DECENTRALIZATION (DIVISION OF AUTHORITY/FUNCTIONS WITH FINANCING CAPABILITY)DEVELOP M & E TO LINK PROGRAM AND ACTIVITY PERFORMANCE TO ALLOCATION OF RESOURCESIMPLEMENTING THE RPJMN : THE FORTHCOMMING RKP3 YEARS ROLLING PLAN, ADDING NEW INITIATIVES
21AGGREGATE FISCAL DISICPLINE BUDGET ITEMSBUDGET 2008PROPOSED 1ST REVISIONREVENUE17.419.6EXPENDITURELINE MINISTRIES/AGENCIESSUBSIDIES, INTEREST, Etco/w energy subsidyTRANSFER TO REGION19.17.05.81.76.3188.8.131.52.6DEFICIT2.0*) LG Budget is substantial, requiring a clear division of functions between central and regional governments.**) Challenge: credibility of resource envelope –> determining contingency reserves (on average in other countries it is at 2% of total spending – in Indonesia it is at approx. 0.4% of GDP, while the fluctuative energy subsidy is at 2.5% of GDP resulting in a cut of line ministries expenditure by 0.9% GDP).
22ALLOCATIVE EFFICIENCY: PROGRAM RESTRUCTURING BASIC PRICIPLESAlignment Principle : Each program is aligned to a government objectiveEach program ‘collects’ spending which contributes to an objective, andRelates spending to performance indicatorsCongruence Principle : Each program is congruent with an organizational unitThis ensures accountability for improving levels of performance indicators and targets
25Food Security Example (MOA) 04. EconomyAgriculture, Forestry, Fishery and MarineFood Security ImprovementDG. Land and Water ManagementWater Management DirectorateMinistry Of AgricultureAgriculture, Forestry and Fishery Revitalization, and Rural DevelopmentFood Production and Improvement of Household Access to FoodFacilitate and Improvement of Food Security to the Level of HouseholdDevelopment and Improvement of Agriculture Infrastructure to Support Food SecuritySecure Level of Rice Availability, a Minimum 90% of Total Domestic NeedProvide Adequate Agriculture InfrastructureAchieve Food Security Trough Production Increase and Consumption DiversityIncrease Food Distribution, Trough Institution Capacity Building and Rural Infrastructure Improvement and DevelopmentIrrigation Scheme for Ha Rice field25
26Food Security Example (MPW) 04. EconomyAgriculture, Forestry, Fishery and MarineIrrigation Scheme, Swamp and Other Irrigation Scheme Management and DevelopmentDG. Water ResourcesDirectorate IrrigationMinistry Of Public WorksAgriculture, Forestry and Fishery Revitalization, and Rural DevelopmentFood Production and Improvement of Household Access to FoodManage Irrigation Scheme, Swamp and Other Irrigation Scheme to Support Food SustainabilityIrrigation Scheme RehabilitationSecure Level of Rice Availability, a Minimum 90% of Total Domestic NeedProvide Adequate Agriculture InfrastructureWater Supply for Household, Housing, Agriculture and Industry increasedIrrigation Scheme for rice fields functioningIrrigation Scheme for Ha Rice field26
27Linking Presentational Performance Information to Spending (Public Works) 27
28Linking Presentational Performance Information to Spending (Agriculture) 28
29Continued … BEYOND (2010 – ONWARD) ALLOCATIVE EFFICIENCY FOCUS EFFORTS ON THE PILOT PROJECTS (6 MINISTRIES/AGENCIES: PUBLIC WORKS, AGRICULTURE, EDUCATION, HEALTH, FINANCE, AND BAPPENAS)GRADUALLY INCLUDE OTHER MINISTRIES/AGENCIESREVIEW M & E FOR LINKING PLANNING TO THE BUDGETING FRAMEWORK, (improve performance-informed budgeting, moving gradually to direct/formula performance budgeting)IMPROVING THE REGULATORY FRAMEWORK AND ANALYSISOPERATIONAL EFFICIENCYIMPROVING COSTINGMOVING GRADUALLY FROM INTERNAL CONTROL TO MANAGERIAL ACCOUNTABILITY
30Next StepsStrengthen and stabilize a compatible legal and regulatory frameworkFocus on aggregate fiscal targets and strategic objectives in medium-term plan (RPJMN)Medium term costs of existing policiesRoll over into Annual Work Plan and BudgetUpdate policy and parameter changesStrengthen internal control systems
31Continued..Develop performance evaluation, but simplify the documents (planning, budgeting, and reporting).Greater application of IT but simplify the systemImprove processes (trilateral meetings, musrenbangnas, cabinet meetings) for contesting and coordinating policies.Keep participants focused on objectivesStrengthen consumer feedback