KUALA LUMPUR: As political leaders across the world seek to show how public spending contributes to concrete results like better public services, “performance-based budgeting” is an important step to a better future for Malaysia and other countries, says the World Bank.
Although the budget process can be a messy negotiation among competing interests, performance-based budgeting strives to be a more rational approach, that links allocations to agreed targets and outcomes.
After several years of designing and implementing its performance-based budgeting reforms, Malaysia’s experience has proven to be mixed, said World Bank Senior Public Sector Management Specialist Bernard Myers in his article, Lessons from Malaysia: Linking Government Spending to Performance.
“On the one hand, it has helped integrate the previously disconnected national planning and budgeting processes under a unified performance framework. Yet, the tangible impact on service delivery in the country has been difficult to see,“ he said.
For example, Myers said the Ministry of Finance has since 2017 requested line ministries to link budgets to high-level national strategic outcomes found in the 11th Malaysia Plan.
“This approach represents an evolutionary step in Malaysia’s implementation of performance-based budgeting and an example of how a country can successfully link high-level national strategies to specific budget programmes and activities by using an integrated results framework.
“This was instrumental in enabling the government to re-orient budget preparation towards the achievement of clearly defined policy outcomes. However, there has been limited reporting on performance and little evidence that policy decisions were improved as a result,“ he added.
Myers said finding a credible way to assess the quality of spending and to make sure that all public actors were aligned remains important.
“Public officials, therefore, need ways to discover which programmes are working and which are not, and reallocate funds to those that merit their support.
“Moreover, governments need new ways to communicate where money is going, for what purpose and what it is expected to achieve. This becomes even more important when there is a shift in political direction and policy priorities,“ he said.
Myers said although performance-based budgeting in many countries had been overly ambitious, and as a result difficult to administer, that did not necessarily have to be the case.
“There are insightful lessons from global experience that one can draw upon. Rather than throw out their efforts altogether, countries can adopt performance-based budgeting to new circumstances and fresh understanding of their administrative capacity and policy priorities,“ he added.
Myers said the World Bank’s 2018 report on “Budgeting for Performance in Malaysia,“ highlighted a few actions that policymakers could consider utilising to build a better foundation for linking budgets with performance and responding to citizen demands.
Some of these actions include encouraging timely and accurate reporting on performance by ministries when and where it is most relevant, developing the technical capacity to evaluate performance information and presenting it in ways helpful for senior-level decision-making while stimulating demand for performance information possibly by linking it to individuals, and institutional recognition and reward systems.
According to Myers, in Malaysia, some first steps to improve performance-based budgeting have already been taken with the National Budget Office hosting a roundtable discussion with line ministries, think tanks, academic institutions and international experts in August.
“This offered an opportunity for officials from across the public administration to consider some of the lessons and challenges to assessing performance,“ he said.
He said while one meeting was insufficient to agree on a new direction, participants did agree that improving the quality of spending should be a priority and that by working together, it was possible to develop a more performance-oriented culture for national budgeting.
“The new year provides an opportunity to think strategically about the 2020 Budget process so that it contributes to transformation in public services for the benefit of all citizens.
‘For Malaysia and other countries, this is an important first step to a better future,“ Myers added. — Bernama
