Sequencing Budgetary Reforms: Lessons from Singapore 26 May 2000.
Transcript of Sequencing Budgetary Reforms: Lessons from Singapore 26 May 2000.
Sequencing Budgetary Sequencing Budgetary Reforms:Reforms:Lessons from SingaporeLessons from Singapore
26 May 2000
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Briefing OutlineBriefing Outline
• Mission
• Budgeting Policy
• Evolution of Budgeting System
• The Future of Budgeting
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MissionMission
To Advance the Well-being and Development of Singapore
through FINANCE
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MissionMission
• We will accomplish this with:– Superior Stewardship and Prudent
Investment of Public Funds– A Financial Environment Conducive to
Business and Enterprise– Policies and Frameworks which Enhance
Excellence in the Public Sector– Practices and Results which distinguish
MOF as a World Class Organisation.
Budgeting PolicyBudgeting Policy
What we want to do and Why...
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Budgeting PolicyBudgeting Policy
• Promote sustained and non-inflationary economic growth
• Foster growth in the private sector
• Live within our means
• Invest in the future
• Safeguard our Reserves
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People at operations
are in the best position to decide
on the most effective andefficient use of resources
to obtain the best value for money
Budgeting PhilosophyBudgeting Philosophy
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• Are they allowed to do it?
• Are they capable of doing it?
• Are they doing it?
Key QuestionsKey Questions
Evolution ofEvolution ofBudgeting SystemsBudgeting Systems
How did we get from There to Here?
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Budgeting SystemsBudgeting Systems
• Past:– Up to 31 Mar 78 Line Item Budgeting– From 1 Apr 78 Programme Budgeting– From 1 Apr 89 Block Vote Budgeting
• Present:– From 1 Apr 96 Budgeting For Results
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Evolutionary TrendsEvolutionary Trends
• General trends:– More flexibility and autonomy– Greater accountability– More focus on outputs, objectives and
outcomes– Greater overall fiscal discipline
Line Item BudgetingLine Item Budgeting
How many paper clips do you need?
Line Item BudgetingLine Item Budgeting
• Budget of each department of a Ministry expressed in terms of the kinds and quantities of goods and services to be purchased
• Ministries had to keep expenditure within the amounts approved for each object
Line Item BudgetingLine Item Budgeting
Strengths:
• Effective in ensuring financial control
• Adequate basis for allocating limited resources at a time when Government activities were limited
Line Item BudgetingLine Item Budgeting
Limitations:
• Rigid, unable to cope with – rapidly changing priorities and
circumstances– creation of new government services
• Budget evaluation mechanism difficult without mechanism to link “things to be bought” with “things to be done”
Line Item BudgetingLine Item Budgeting
Limitations:
• New budgets based on previous budget with increments for price increases– no evaluation of whether objectives are still
met or cost-effective
Programme BudgetingProgramme Budgeting
How much money do you need?
Programme BudgetingProgramme Budgeting
Programme Budgeting from 1 Apr 78:• Emphasizes things to be done• Adopted from the US “Planning,
Programming and Performance Budgeting System” (PPPBS)
• Systematically identify the programmes and activities necessary to achieve the goals and objectives of each Ministry
Programme BudgetingProgramme Budgeting
Programme Budgeting from 1 Apr 78:
• Funding based on resources required to undertake each programme
Programme BudgetingProgramme Budgeting
Strengths:
• Greater awareness of goals to be achieved
• More flexible than Line Item Budgeting– gradually relaxed transfer of budgets
between objects of expenditures and between activities/programmes
Programme BudgetingProgramme Budgeting
Limitations:
• With the expansion of existing programmes and the introduction of new ones, there was no mechanism to ensure that the overall expenditure would not outgrow revenue collection.
Block Vote BudgetingBlock Vote Budgeting
How much money can we give you?
Block Vote BudgetingBlock Vote Budgeting
Block Vote Budgeting• Top-down approach• Cabinet approval of budget priorities and
aggregate allocations• Ministries given flexibility in managing
allocations (transfers between programmes, activities and line-items)
• Control through published workload and performance indicators
Block Vote BudgetingBlock Vote Budgeting
Set Targets for:
• Government Expenditure as percentage of GDP such that– Total expenditure < Operating Revenue– Expenditure to GDP by Sectors and
Ministries
Block Vote BudgetingBlock Vote Budgeting
• Strengths– Better ensure a balanced budget– Contain Government expenditure as a proportion
of GDP– Help Ministries respond speedily to changing
priorities– Improve the effectiveness and efficiency of
Government operations– Make senior civil servants responsible and
accountable for expenditure budget
Block Vote BudgetingBlock Vote Budgeting
Limitations
• Less emphasis on outputs and deliverables– Ministries only required to budget the
amount of inputs needed to fund their operations.
• Inadequate incentives to achieve greater operational efficiency
Budgeting For ResultsBudgeting For Results
What results can you produce?
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Budgeting For ResultsBudgeting For Results
• Key elements:– Pre-specification of outputs and
performance targets– Output-based funding allocations– Granting financial and personnel
management flexibility– Ministries and departments operated as
Autonomous Agencies
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Budgeting For ResultsBudgeting For Results
• Strengths:– Budget based on outputs– Emphasis on performance and results– Greater autonomy and flexibility– Greater accountability– Departments more aware of outputs and cost
of producing outputs– Puts decisions on deployment of resources in
the hands of people at operations
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Budgeting For ResultsBudgeting For Results
• Shortcomings:– No clear link to desired outcomes– Lack of focus on processes– Does not address need for sustained
superior performance and results– With tighter fiscal position, need for greater
emphasis on inter-ministry allocations
The Future of BudgetingThe Future of Budgeting
How do we get from Here to There?
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The Future of BudgetingThe Future of Budgeting
• Moving ahead:– Budgeting 21– Managing For Excellence– Resource Management
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To build an excellent Public Sector through harnessing the creativity
of our people and superior management of our resources
Managing For ExcellenceManaging For Excellence
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Managing For ExcellenceManaging For Excellence
• MFE is about:– Superior leadership and development of
staff– Superior management through results-
oriented processes– Sustained organisational excellence
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Managing For ExcellenceManaging For Excellence
• Scope of MFE:– People-Centred Management– Systems-Oriented Approach– Customer-Focussed Culture– Networked Government
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Resource ManagementResource Management
• Management, deployment and utilisation of resources for maximal results– Resource Accounting & Budgeting
• Based on Accrual Accounting
– Accurate Costing & Pricing– Enhanced Inter-Departmental Charging– Net Economic Value
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Budgeting 21Budgeting 21
• Future envisaged– Proposals outrun resources– Beyond least for output to most from input– Expenditures grow at GDP rate– MOF focuses on outcomes; ministries
manage outputs for those outcomes
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Budgeting 21Budgeting 21
• Key features– Predetermined overall and sectoral budget
ceilings– “Guaranteed” baseline operating budgets for
ministries– Project worthiness distinct from funding– “Productivity dividend” creates fund for inter-
ministry bidding– Funding by prioritisation within ministry and across
ministries
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SummarySummary
• Line Item Programme Block Vote– Focus on greater management autonomy– Addresses “Are they allowed to do it?”
• Budgeting for Results, Managing For Excellence & Resource Management– Focus on outputs and results-oriented processes and best
practices– Addresses “Are they capable of doing it?”
• Budgeting 21– Focus on outcomes and national priorities– Addresses “Are they doing it?”
Thank you!Thank you!