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Managing Public Expenditure for Development Results and Poverty Reduction

Author: J Roberts
Date: 2003
Size: 80 pages (305KB)

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Summary

There is an increasing international desire to see tangible and sustained improvements in development indicators. The international community has signalled its commitment through the setting of the Millennium Development Goals for poverty alleviation. The key focus is on explicitly measuring outcomes in relation to expenditure. The practice of public-expenditure management is becoming more widespread within the developing world.

This working paper from the Overseas Development Institute (ODI) evaluates low-income countries’ experiences of performance budgeting and assesses the contribution of results-oriented processes to poverty reduction. An examination is made with a geographically-widespread sample of low-income countries.

The paper assesses definitions of performance budgeting and performance management and applies these paradigms to data drawn from the case-study countries. Do performance-oriented approaches have genuine utility in low-income countries? What role can donors play in supporting the development of effective performance management systems?

Low-income countries are making some achievements in the realms of performance budgeting and management. There is evidence that practitioners are being reflexive and seeking ways to improve their performance. Such initiatives are likely to play a vital role in the successful implementation of poverty reduction strategies.

• Conditions favouring the introduction of a results culture include effective political leadership and a unified institutional approach to performance management. Ministers of finance are best placed to provide leadership and direction in such matters.
• Results-oriented processes are often initiated via sector-wide approaches, especially in health and education. Poverty Reduction Strategy Papers have not been a point of entry for the nations in the case study, although this route has potential for other nations.
• Sample countries showed better aptitude for setting targets and performance indicators than for monitoring and evaluating results and using conclusions to strengthen and redirect their programmes.
• Weak domestic pressure for accountability from service users, parliaments and civil society makes the success of results-oriented cost management dependent on the drive of senior government figures.
• Results-orientation is clearly facilitating the planning and management of service delivery in some countries. Programme planning and resource allocation have to be justified. Line managers and service providers tend to be more motivated and underperformance is identified and tackled more rapidly.
• Significant pro-poor policy change can be implemented with the aid of informational, analytical and resource-management tools provided by results-oriented practitioners.

There is an important role for donors to play in facilitating the development of good budgetary and expenditure management practice. However, their optimum role is to stimulate such practices, not direct them. Donors need to expand their horizons by including financial management and accountability within their aid strategies.

• Donors need to recognise the contribution of performance management in the content of poverty reduction strategies. Without accountability for expenditure and results, public programmes tend to waste resources while producing limited beneficial outcomes.
• Recognition must be given to homegrown efforts to find methods of managing expenditure for results. Donors should not impose their own pre-packaged answers. The donor countries should endeavor to facilitate learning by diffusing knowledge and experience.
• Targets measuring expenditure programmes often relate to the processes and outputs for which managers have direct responsibility. It is important to ensure that a programme’s outputs are achieved efficiently and also that they contribute to long-term broader policy objectives. Donors can help this by building technical capacity to analyse results and making adjustments to programme design.
• Donors can play an important role in strengthening the voice of parliamentary and civil society institutions. This can increase the demand for results accountability.

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Source: Roberts, J., 2003, 'Managing Public Expenditure for Development Results and Poverty Reduction', Overseas Development Institute (ODI) Working Paper, London
Author: Overseas Development Institute (ODI), http://www.odi.org.uk/