Governments introduce budget reforms programs for all kinds of reasons, noble or otherwise. But how can we tell if their declared good intentions are real? How can we identify genuine reform from “fake” reform? A recent paper by the Washington-based Institute for State Effectiveness provides a dozen examples of red flags for identifying “fake” budget reforms. It focused on two closely related areas of budgeting that are commonly found in PFM reform programs:
- Policy-based budgeting, defined as a process where “the fiscal strategy and the budget are prepared with due regard to government’s fiscal policies, strategic plans, and adequate macroeconomic and fiscal projections”.
- Performance-based budgeting, defined as a form of budgeting that “aims to improve the efficiency and effectiveness of public expenditure by linking the funding of public sector organisations to the results they deliver, making systematic use of performance information.”
There are government systems that claim to be using performance and policy-based budgets, but they often exist in name only. These are what are called the ‘fakes’. Fakes are damaging as they prevent the public finance system from working as intended.
So how can we spot a fake? The paper goes into detail on some of the key technical processes that deliver good policy- and performance-based budgets.
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national_budgets, policy-based_budgeting, performance-based_budgeting, accounting_systems,
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