1. CAPACITY BUILDING : LITHUANIA’S EXPERIENCES FROM 10 YEARS OF REFORM Vilnius, Lithuania 20-21 March, 2007

2. PRESENTATION OUTLINE PREREQUISITES OF THE REFORM GOALS AND IMPLEMENTATION STAGES REFORM SWOT ANALYSIS

3. SITUATION BEFORE POOR STATE FINANCIAL SITUATION IN 1998-1999 CURRENT ACCOUNT DEFICIT – 12 % FISCAL DEFICIT – 8 % in 1999 GOVERNMENT BORROWING INTEREST RATE - 12–14 % LARGE AMOUNT OF EXTRABUDGETARY FUNDS NO LINKS BETWEEN POLICY FORMATION AND BUDGETING POOR DECISION MAKING PROCESS NO FISCAL RELATIONS ACROSS LEVELS OF GOVERNMENT

4. FACTORS STIMULATED REFORMS STRONG POLITICAL WILL ASPIRATION FOR EUROPEAN-ATLANTIC INTEGRATION ATTITUDE OF SOCIETY TOWARDS PUBLIC ADMINISTRATION POOR FINANCIAL SITUATION

5. GOALS OF THE BUDGET REFORM CONSOLIDATION OF PUBLIC FINANCIAL RESOURCES PRIORITY BASED PLANNING RESULT ORIENTED ACTIVITIES RESPONSIBILITY AND ACCOUNTABILITY TRANSPARENCY

6. IMPLEMENTATION STAGES: 1998 →REFORM INITIATIVE THE SEIMAS RESOLUTION ON THE BUDGET STRUCTURE REFORM CONCEPTION: - THREE-YEAR PLANNING; - PROGRAMME BUDGET; - CONSOLIDATION OF RESOURCES; - TRANSPARENCY

7. IMPLEMENTATION STAGES: 1998→REFORM OF MUNICIPAL BUDGET FORMATION PRINCIPLES – STAGE I THE LAW ON THE METHODOLOGY FOR DETERMINATION OF MUNICIPAL BUDGETARY REVENUE MUNICIPAL BUDGETS FORMATION PRINCIPLE – TO OBSERVE THE REVENUE EQUALISATION PRINCIPLE TO CARRY OUT ALL FUNCTIONS OF MUNICIPALITIES

8. IMPLEMENTATION STAGES: 1999→PROGRAMME BUDGET THE DRAFT OF STATE BUDGET WAS PREPARED BY PROGRAMMES AND SUBMITED TO THE SEIMAS FOR IT’S CONSIDERATION AND APPROVAL PROGRAMMING BUDGETING IS OBLIGATORY TO ALL APPROPRIATION MANAGERS

9. IMPLEMENTATION STAGES: 2000→GOVERNMENT STRATEGIC PLANNING SYSTEM STRATEGIC PLANNING METHODOLOGY IS OBLIGATORY TO ALL STATE BUDGET APPROPRIATION MANAGERS RECOMENDED TO MUNICIPALITIES THE INTEGRATED PLANNING MODEL AND THE LONG-TERM DEVELOPMENT STRATEGY WAS ESTABLISHED THE LAW ON THE GOVERNMENT AND THE LAW ON THE BUDGET STRUCTURE EMBED THE STRATEGIC PLANNING AS A MEASURE FOR ORGANISATION OF ACTIVITIES AND FINANCING PLANNING

10. IMPLEMENTATION STAGES: 2001→ REFORM OF MUNICIPAL BUDGET FORMATION PRINCIPLES – STAGE II THE ESSENCE OF THE REFORM: TO USE THE REVENUE EQUALISATION PRINCIPLE ONLY FOR CARRYING OUT INDEPENDENT FUNCTIONS OF MUNICIPALITIES TO ALLOCATE GRANTS FROM THE STATE BUDGET FOR IMPLEMENTATION OF THE FUNCTIONS DELEGATED BY THE GOVERNMENT

11. IMPLEMENTATION STAGES: 2003→EVALUATION OF BUDGET IMPLEMENTATION THE INTERNAL AUDIT’S FUNCTIONS: TO EVALUATE THE ECONOMY, EFFECTIVENESS AND EFFICIENCY OF THE PROGRAMS, WAS IMPLEMENTED IN PUBLIC INSTITUTIONS THE EXTERNAL AUDIT INTITUTION’S FUNCTIONS: TO EVALUATE WHETHER APPROPRIATIONS ALLOCATED HAVE BEEN USED FOR THE GOALS SET IN THE PROGRAMMES; TO EVALUATE WHETHER APPROPRIATIONS HAVE BEEN USED AT THE HIGHEST POSSIBLE EXTENT OF ECONOMY AND IN THE MOST EFFECTIVE MANNER

12. IMPLEMENTATION STAGES: 2003-2004→DECISION IMPACT ASSESSMENT ADOPTION OF THE DECISION IMPACT ASSESSMENT METHODOLOGY ON: - AN ADEQUATE AREA - ECONOMICS - PUBLIC FINANCES - SOCIAL ENVIRONMENT - CORRUPTION EXTENT - ENVIRONMENT

13. IMPLEMENTATION STAGES: 2005→PERFORMANCE ASSESSMENT CRITERIA SYSTEM OUTCOME / IMPACT CRITERION – AN ASSESSMENT CRITERION FOR ACHIEVEMENT OF THE INSTITUTION’S STRATEGIC GOAL RESULT CRITERION – AN ASSESSMENT CRITERION FOR THE FULFILMENT OF THE PROGRAMME OBJECTIVE OUTPUT CRITERION – AN ACTIVITY IMPLEMENTATION ASSESSMENT CRITERION

14. REFORM SWOT ANALYSIS:STRENGTHS A UNIFORM STRATEGIC PLANNING METHODOLOGY INSTITUTION’S ACTIVITIES BASED ON SYSTEMATICAL PLANNING AND LINKING WITH FINANCING COMPREHENSIVELY REGULATED PLANNING PROCESS A POSSIBILITY TO ANALYSE AND TO ASSESS AN INSTITUTION AS A SYSTEM IN PURSUIT OF THE GOALS SET INSTITUTIONS ARE ENCOURAGED TO ORIENT THEIR ACTIVITIES TOWARDS THE RESULTS MORE RATIONAL DISTRIBUTION OF FINANCIAL, MATERIAL AND HUMAN RESOURCES PUBLICITY OF PROVIDING INFORMATION AND ITS COMPREHENSIVENESS TO THE PUBLIC

15. REFORM SWOT ANALYSIS:WEAKNESSES INADEQUATE INSTITUTIONAL HUMAN RESOURCES AND CAPACITIES FORMULATION OF STRATEGIC GOALS OF AN INSTITUTION RESTS WITH THE INSTITUTION ITSELF STRATEGIC PLANNING IS APPLIED NOT IN ALL ADMINISTRATION LEVELS STRATEGIC PLANNING IS HIGHLY FORMALISED

16. REFORM SWOT ANALYSIS:OPPORTUNITIES DEVELOPMENT OF THE PLANNING SYSTEM IN CONNECTION WITH ACCOUNTABILITY FURTHER CAPACITY BUILDING OF PUBLIC SERVANTS IN THE FIELD OF STRATEGIC PLANNING LESS FORMALISED STRATEGIC PLANS WOULD BE MORE COMPREHENSIBLE AND USEFUL TO THE PUBLIC AND POLITICIANS

17. REFORM SWOT ANALYSIS:THREATS STRATEGIC PLANNING SYSTEM MAY BECOME DECLARATORY AND FORMAL SEGREGATION OF STRATEGIC PLANNING AND BUDGETING PROCESSES NON-PERCEPTION OF THE IMPORTANCE OF STRATEGIC PLANNING MAY POSE THREATS TO ITS REDUNDANCY IN THE FUTURE

18. FINDINGS CAPACITY BUILDING IN ALL LEVELS OF PUBLIC ADMINISTRATION SYSTEM SHALL BE UNIQUE IN DECISION MAKING AND BUDGETING PROCESS “HUMANISATION” OF THE SYSTEM LEARNING “STRATEGIC THINKING”