Connecting performance-based management and annual budgeting

Abstract

Many Latin American countries are these days trying to install performance-based management. The region presents today a mosaic of approaches to performance management, with difference in entry points, levels of administration and Monitoring and Evaluation (M&E) instruments from one country to another. Furthermore, countries are beginning to exchange experience, develop informal networks and otherwise mutually support each other.

Creativity is much more reduced when it comes to linking M&E systems or performance-based management with budget decisions. Though countries often claim to either have reached the stage of budgeting by results -or at least be working in this direction, the truth is that only one or two countries are solidly constructing a results-informed budget. In practice, most governments tend to use weak links between performance measures and resource allocations. Performance is, at best, one of many factors used in formulating budgets.

This paper begins by discussing what is currently the actual role of M&E information at the various stages of the budget process - policy advising and planning; budget decision-making; performance review and reporting- in Chile, Colombia and Mexico. It then explores the factors that account for the disconnect between the M&E work of sector ministries and the use of such information in the budget process, including the disconnect between the budget process and national planning. The paper concludes by presenting the key elements of adopting the system of results-informed budgeting and discussing the means and opportunities to strengthen the role of M&E in the budget.