Transcript Public Expenditure Management Review (PEM/R) in Thailand Bureau of the Budget 15 December 2006

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Public Expenditure Management
Review (PEM/R) in Thailand
Bureau of the Budget
15 December 2006
Last year, Thailand commenced our Public
Expenditure Management Program.
Previous year presentation…
• Thai PEM Framework
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Strategic Performance based Budget System
Decree on Good Governance and Government Administrative Plan
OECD Best Practices for Budget Transparency
IMF Code of Good Practices on Fiscal Transparency
• Thai PEM Main Focus
– Linkage between national priorities and budgeting within the
framework of sustainability
– Legal framework and Institutional arrangements for public spending
• PEM Review Implementation Plan
– Mid term review in early 2006
– Start with Fiscal Sustainability component
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Implementation of the Thai PEM abides by the three fundamental
principles of Best Practiced PEM and covers the whole process of
delivering public services.
• Three Principles
– Maintaining aggregate fiscal discipline
– Allocating public resources in accord with
strategic priorities
– Promoting the efficient delivery of services
• Coverage
–
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Formulation of policies
Planning
Allocation of resources
Implementation
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In the past year, Thailand has made progress in the five main
components of PEM/R.
Critical tools have been identified in order to successfully reach each
of the key PEM objectives.
TOOLS
PEM Objectives
MTEF Top Down/Bottom up
• Fiscal rules
• Budget Ceiling
• Ratio of Capital/ Operating Budget
• Mid-Term Review
•
Maintain Long-term
Aggregate Fiscal Discipline
Strengthen Strategic
Allocation of Resources
Increase Operational
Efficiency
Enhance Managerial
Flexibility
and Accountability
• National Strategic
Target
• Ministerial Strategic Plan & Budget Ceiling
• Integrated agenda based Budget Plan
•Service
Delivery Targets & Public Service Agreement
• Output Profile
• Performance Indicators
•Increasing
roles of front line manager
•PPP & other Public financial innovations
•Performance measurement
Realignment of Program-Activities-Outputs
• GFMIS
Enhance Fiscal Transparency
•Improve
Performance and Financial Report
• Improve the Format of Budget Documents
• Improve Budget Information System
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Tools for each objective are under various stages
of development; some key ones have been
implemented.
Progressive Status
PEM Objectives
TOOLS
1.1 MTEF Top Down / Bottom up
1. Maintain Long-term 1.2 Fiscal Rules
1.3 Budget Ceiling
Aggregate Fiscal
Discipline
1.4 Ratio of Capital /Operating Budget
1.5 Mid – Term Review
Design
Initia
&
tive Develop
ment
Pilot
Testing
Use in
Budget
Process
Refine &
Institutiona
lize
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MEDIUM-TERM BUDGET National Economic and
PLANNING FRAMEWORK Social Development Plan
Government Policy
Tools for long-term
Fiscal Discipline have
been integrated into
the Budget Process.
Government
Administrative Plan
MTEF (Top-Down)
MTEF (Bottom-Up)
Demand of Funds
Macro-economic
Outlook
ANNUAL BUDGET
PLANNING FRAMEWORK
National
Investment Plan
Annual Budgeting Ceiling
Budget Allocation
Strategy
Annual Budget
Preparation
Supply
of Funds
Fiscal Policy
Formulation
Revenue
Forecast
Fiscal
Rules
Public Debt and
Fiscal Risks
All key agencies are involved to some degree in the
utilization of various tools to ensure fiscal sustainability in
the budget planning process.A=Approve L=Lead P= Participate I=Initiate R= Review
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S=Support
CURRENT BUDGET PLANNING PROCESS
MOF
NESDB
BOT
BOB
Prepare baseline economic forecast
P/R
L
P/R
P/R
Prepare baseline revenue estimates
L
P
P
P/R
Project MTEF and future commitments
S
TASK
Cabinet
Line
Ministry
1. Macro Fiscal Framework
Prepare aggregate fiscal targets
A
L
Develop Gov’t Adm Plan and set
policy themes
A
S
Define spending priorities
A
Set public debt, fiscal risk projections,
and identification of capital projects
A
L
S
S
S
2. Budget Allocation Policy
L
L
S
P
I/ S
L
P
P/R
3. Budget Ceilings
Set ministry spending limits
A
L
P
Set departmental spending limits
A
L
P
MOF = Ministry of Finance, NESDB = National Economics and Social Development Board, BOT = Bank
of Thailand, BOB = Bureau of the Budget
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The Thai Government has abided by a set of publicly
announced Fiscal Rules, and the rules are consistent with
the Sufficiency Economy policy principle
1. Ratio of Public Debts to GDP not more than 50%
2. Debt service not exceeding 15%
3. Budget Deficit not more than 2% of GDP
4. Annual borrowing not more than 20% of total
annual budget plus not more than 80% of the
principle repayment budget
5. Capital expenditure no less than 25% of total
budget
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Thai PER will be conducted every two years, at the
beginning and mid-term of the government cycle.
• to ensure the effectiveness of the review
• to maximize the use of information in policy &
implementation adjustment.
GOVERNMENT CYCLE
Previous
Year
Hypothesis
Year 1
PER
Cycle Starts
Year 2
Year 3
PER
Mid-Term
Year 4
PER
Cycle Ends
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Results of the first Mid-term review is useful, but
the process is interrupted by unforeseen
circumstances.
• Macro economics assumptions must be scrutinized to
ensure solid foundations.
• Assumptions of major government policies must be
realistic.
• Report on Public Debts do not cover all existing risks.
• Fiscal decentralization needs to be reviewed urgently.
• Financing for Mega Projects must be well-planned.
• Some key issues will increase fiscal pressure
– Income Contingent Loan for education
– Demographic trend of an aging population
– Capitation Rate for healthcare
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Holistic structure of plans and targets have been installed
from national level down to operational level.
Progressive Status
PEM Objectives
2.Strengthen Strategic
Allocation of Resources
TOOLS
2.1 National Strategic Target
2.2 Ministerial Strategic Plan & Budget ceiling
2.3 Integrated agenda based Budget Plan
Design
Initia
&
tive Develop
ment
Pilot
Testing
Use in
Budget
Process
Refine &
Institutiona
lize
Public policies are run in three dimensions
simultaneously to effectively drive key policies, provide
public services, and enhance area specific competitive
National Economic and
advantages.
Social Development Plan
Government Policy
Government Agenda
Agenda Based
Government
Administrative Plan
Ministry Strategy
Provincial Cluster Strategy
4-year Operational Plan
4-year Operational Plan
Annual Operational Plan
Annual Operational Plan
Line Agency Strategy
Provincial Strategy
4-year Operational Plan
4-year Operational Plan
Annual Operational Plan
Annual Operational Plan
Function Based
Area Based
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Performance indicators become the focus of the
dialogue in budget scrutiny process.
Progressive Status
PEM Objectives
3. Increase Operational
Efficiency
TOOLS
3.1 Service Delivery Target & Public Service Agreement
3.2 Output Profile
3.3 Performance Indicators
Design
Initia
&
tive Develop
ment
Pilot
Testing
Use in
Budget
Process
Refine &
Institutiona
lize
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Public Service Agreements between Ministry and
Agency have been signed, but currently they are
not fully enforced.
Output Profile has been designed to improve the
information structure in the budget process.
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Output Profile
1.
2.
3.
4.
5.
6.
7.
Government Strategic Target
(Government Administrative Plan)
Strategic Target (Government Administrative Plan)
Agenda/Function/Area
Ministry Service Delivery Target (Expected Result)(4-year
Operational Plan)
Agency Service Delivery Target (4-year Operational Plan,
Annual Operational Plan)
Agency Mission (4-year Operational Plan, Annual
Operational Plan)
Outputs & Performance Indicators in each level including
main responsible person and supporting responsible person
- Ultimate Outcome – Key Success Factors
- Intermediate Outcome & KPIs
- Immediate Outcome & KPIs
- Output (Quantity,Quality,Timeliness,Cost)
Output/Service Delivery Process (Operational plan/Budget
Management Plan)
- Output Target (Agenda, Function, Area)
- Primary/Secondary/Support Activities
- Budget
8. Budgeting Management
- Budget Planning
- Budget Allocation Plan
- Budget Execution
9. Output Costing
10. Efficient Resource Management
- Key Success Factor and Constraints
- Organization Management System (Operation Expense)
- Organizational Structure and Human Resource Management
(HR Expense)
- Facilities and Investment Management
- Risk Management
11. Performance Reporting in each level
- Performance and budget used compared to what’s indicated
in the plan
- Monitoring
- Evaluation
- Problems, Obstacles, and Recommendation
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Performance indicators are attached to each agenda,
strategy, tactic, and activities in the budget documents.
• National level: Achieve knowledge-based society for people
with solid ethical values and good morals
• Ministry level: People receive education and lifelong learning
with quality assurance
– Quantity measurement:
• Years of education of the population
• Educational institutions with support for strengthening
– Quality measurement:
• Target students with compulsory and higher education
• External students with ability to apply their knowledge
• Agency level
– Quantity: number of students/researches in each field
– Quality: quality of standardized tests, employment, ability
to continue education
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The trend to increase managerial flexibility and
accountability continues in the past year; PPP is
being tested.
Progressive Status
PEM Objectives
4.Enhance Managerial
Flexibility and
Accountability
TOOLS
4.1 Increasing roles of front line manager
4.2 PPP & other Public Financial Innovations
4.3 Performance Assessment Rating Tool
4.4 Realignment of Program-Activities-Outputs
Design
Initia
&
tive Develop
ment
Pilot
Testing
Use in
Budget
Process
Refine &
Institutiona
lize
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Front line managers have been given more authority on
operation planning and budget matters.
• New Draft Budget Procedures Act
– Strategic performance based budget process
– De-concentration: Empowering ministries and departments
– Comprehensive coverage & Good governance
• New Budget regulations
– Flexibility
• Transfer within Budget Plan
• Spending within budget category
• Spending of left-over budget
– Conditions
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Achievement of objectives
No multi-year commitment
No new government employment
No land acquisitions
Constructions of not more than 10 million baht
Equipment of not more than 1 million baht
– Reporting
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PPP has provided lessons learned, and it is now
encouraged for projects that can generate sufficient cash
flow.
• Key issues must be addressed
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Prioritization and preparation of good projects
True improved value for money
Well thought of risk/benefits assessment & transfer
Actual acceleration of delivery
Transparent off-budget treatment
• Issues under considerations
– Clear legislation
• Legality to enter contract
• Dispute settlement
– Government institutional capability
– Development of Key Processes
• project viability assessment
• private sector pricing
• Realistic government support
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Performance Assessment Rating Tool (PART)
is used to ascertain the capabilities of public
agencies.
• Pre evaluation (before budget spending)
• Interim evaluation (during operations)
• Post evaluation (after implementation)
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Fiscal transparency is enhanced by improved
budget information system on a more integrated
platform.
Progressive Status
PEM Objectives
5. Enhance Fiscal
Transparency
TOOLS
5.1 GFMIS
5.2 Improved Budget Information System
5.3 Improved the Format of Budget Document
5.4 Improved Performance and Financial Reporting
Design
Initia
&
tive Develop
ment
Pilot
Testing
Use in
Budget
Process
Refine &
Institutiona
lize
BOB ICT’s integration with the public sector platform
enhances accessibility for users and increase
transparency overall.
Prime Minister Operation Center
BOB e-Budgeting
www.bb.go.th
EIS
(Executive Information System)
BBOC
(BB Operating Center)
BBOA
(BB Office Automation)
BIS
(Budget Information System)
Planning
Preparation
Evaluation
GFMIS
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The Next Step is to ascertain that PEM become
standard operating procedure in the Thai Budgetary
Process, and Thai PEM must continue to be
improved.
• Increase fiscal inter-relationship among government
agencies in all levels
• Increase roles of government agencies concerning
Public Expenditure Management Review
• Refine design & structure of all PEM Components and
move forward with the operational plan for each PEM
component
• Emphasize the Integration of Fiscal Sustainability
Framework and MTEF in Budget Planning process
• Capacity Building and System Support Program