This paper examines the crucial challenges in strengthening the policy and institutional framework for performance budgeting. Considered as a sound Public Financial Management (PFM) practice, performance budgeting seeks to strengthen the government’s focus on delivering societal results (e.g., number of people lifted out of poverty) that matter most in the spending of limited government funds. These challenges including the gaps in the existing legal framework, the capacity to implement the reform, and performance measurement systems--affect the quality and utilization of performance information in budget preparation, execution, and accountability.
This policy brief highlights the need to clearly define the roles and responsibilities of spending agencies and oversight institutions in ensuring the effective allocation of public funds and in promoting accountability for results. It provides an analysis of the pending legislative measures, and identifies indicative directions for, institutionalizing performance budgeting through legislation.