KPI for ministries

Wednesday, 16 August 2017 22:13 -     - {{hitsCtrl.values.hits}}

In a positive turn of events, Sri Lanka is taking strides to make its budget process more transparent and effective. As the days tick down for Budget 2018 the Finance Ministry has announced  it will be prepared on a performance basis, as all the proposals of line ministries, provincial ministries and heads of departments should clearly indicate the details of the output of such projects accompanied with Key Performance Indicators (KPI).

This follows close on the heels of a Cabinet decision to establish a nonpartisan budget office or a Parliament Budget Office (PBO) that will formulate long-term policies to anchor the economy and ensure research-based decisions are made.

Detailing the process of the preparation of next year’s performance budget, the Minister of Finance and Mass Media has said that priority will be given to ongoing and foreign-funded projects where KPI-based measurable outcomes were identified for each projects.

Further, the Minister said that capital expenditure projects that have been earmarked for implementation by the National Planning Department for each ministry will also be given priority provided the plans of such projects carry KPIs.

The medium-term macro-fiscal framework for 2018-2020 approved by the Cabinet of Ministers for the performance-based budget preparation from 2018 includes the rationalisation of recurrent expenditure and prioritisation of capital expenditure while enhancing Government revenue mobilisation and public investment and reducing the budget deficit and outstanding Government debt.

Data is essential for the public to understand how the decisions their representatives make impact them. Sri Lanka’s budget-making is traditionally more a process of rote rather than genuine apolitical, research-based decision-making. In the middle of the year ministries send along their funding needs to the Finance Ministry and business chambers also pitch in with their expectations, sometimes through private influence. A compendium of this is read out in Parliament in October and subsequently passed. No wonder budgets are often criticised for inconsistency and fail to direct the economy competently because they are subject to political agendas and other circumstantial changes. 

Sri Lanka’s budget process has been routinely derided as one of the worst, even by regional standards with no evaluation on whether promised allocations are distributed, especially to key education, healthcare and housing sectors. Budget accountability is so low the public often have no idea if they have been given what was promised. Policies and taxes announced in the Budget often go partially or completely unimplemented. The public are only brought into the process when it is to the political advantage of the Government. During election season, microeconomic needs are ignored in favour of winning votes.        

Hoping to change some of this, Cabinet last week approved the establishment of a Parliament Budget Office (PBO) tasked with independent and non-partisan analysis of budget cycles and financial proposals.

The objective of the PBO would be to provide services and facilities to Parliamentarians, to provide independent and non-partisan analyses of budget cycles, fiscal policy and financial proposals. The Legal Draftsman’s office has been tasked with preparing the Bill to establish the office under the guidelines spelt out in the Prime Minister’s proposal.

Once established, the office will be responsible for preparing policy costing and conduct research and analysis of the budget and fiscal policy settings. If given independence, leadership and resources, the PBO has the potential to fill a huge information chasm and possibly improve State finance operations in the future.

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