INTRODUCING RESULTS-BASED
APPROACHES INTO PUBLIC SECTOR
MANAGEMENT PROCESSES:
The Philippine Experience
A Paper Presented
by
SECRETARY EMILIA T. BONCODIN
Department of Budget and Management
Philippines
2nd International Roundtable on Managing for Development Results
Marrakech, Morocco
05 February 2004
RESULTS-BASED APPROACH:
Major Element of
Philippine Public Sector Management
Reform Program
Republic of the Philippines
Department of Budget and Management
PUBLIC SECTOR MANAGEMENT
REFORM PROGRAM
To address key dysfunctions:

operational leakages

weak corporate and
regulatory environment

weak public institutions
and enforcement

poor incentive structures

slow response capability
to changing situations
and needs

inadequate
resources for
basic services

deteriorating
fiscal position

slow and
unstable
growth
Republic of the Philippines
Department of Budget and Management
poverty
PUBLIC EXPENDITURE MANAGEMENT:
DESIRED RESULTS
To reduce poverty by creating investment and
job opportunities through:
a) Addressing the inadequacy of resources
for basic services
b) Arresting the deteriorating fiscal position
Republic of the Philippines
Department of Budget and Management
PUBLIC EXPENDITURE MANAGEMENT:
FOCUS ON RESULTS
 Use of the budget as instrument for ensuring
desired results
 Strengthening of existing incentive
structures to advocate and implement
reforms
 Active partnership with civil society in
monitoring results
 Clear targets and assessment mechanisms
Republic of the Philippines
Department of Budget and Management
PUBLIC EXPENDITURE MANAGEMENT
FRAMEWORK
 Fiscal Discipline
 Allocative Efficiency
 Operational Efficiency
Republic of the Philippines
Department of Budget and Management
MAJOR REFORM INITIATIVES
OUTCOME
Fiscal Discipline
INSTRUMENT
Medium Term Fiscal Plan
(MTFP)
Assessment of contingent
liabilities; fiscal risks
Allocative Efficiency
Medium Term Public
Investment Program (MTPIP)
Organizational Performance
Indicator Framework (OPIF)
Republic of the Philippines
Department of Budget and Management
Major Reform Initiatives…
OUTCOME
Operational Efficiency
INSTRUMENT
Sectoral Effectiveness and
Efficiency Review (SEER)
Agency Performance Review
(APR)
Procurement reform
Installation of new
government accounting
system and auditing
procedures
Republic of the Philippines
Department of Budget and Management
Major Reform Initiatives…
OUTCOME
INSTRUMENT
Compensation Review
Reengineering the bureaucracy
Strengthening key sector areas:
judicial reform; electoral
campaign reform; peace and
order campaign; regulatory
reform
Investment in IT and IT-based
services
Republic of the Philippines
Department of Budget and Management
MEDIUM-TERM EXPENDITURE
FRAMEWORK
Medium-Term
Philippine Development
Plan
FISCAL
INVESTMENT
Medium-Term
Public Investment
Program
Medium-Term
Fiscal Plan
Organizational
Performance Indicator
Framework
Annual Budget
Sectoral
Effectiveness
and Efficiency
Review
Incentive Structure
Agency
Performance
Review
MEDIUM-TERM FISCAL PLAN:
FEATURES
 Explicit medium term fiscal targets:
deficit reduction strategy; revenue and
disbursement targets; debt management strategy
 Medium term estimates of cost of ongoing and
committed programs (baseline +)
 Proposed revenue enhancing measures over
the medium term
 Clear rules for updating revenue and cost
estimates
 Fiscal Responsibility Bill
Republic of the Philippines
Department of Budget and Management
MEDIUM-TERM FINANCIAL PLAN:
HIGHLIGHTS
Particulars
2003
2004
2005
2006
2007
2008
2009
NG Deficit (% of GDP)
4.6
4.2
3.6
2.9
2.1
1.2
0.2
Public Investment (% of GDP)
(Capital projects)
2.7
2.2
1.8
2.0
1.9
2.1
2.2
69.1
66.9
65.1
63.1
61.5
58.1
55.0
Public Debt to GDP ratio
(NG Outstanding Debt)
Republic of the Philippines
Department of Budget and Management
MEDIUM-TERM
PUBLIC INVESTMENT PROGRAM
 Sectoral investment requirements over
6 years
 Published major sectoral investment
programs
 Alternative financing modes for specific
projects
Republic of the Philippines
Department of Budget and Management
MEDIUM-TERM
PUBLIC INVESTMENT PROGRAM
In Billion Pesos
200
150
100
50
0
2003
2004
2005
Total CO
2006
2007
ODA
2008
2009
Others
Republic of the Philippines
Department of Budget and Management
ORGANIZATIONAL PERFORMANCE
INDICATOR FRAMEWORK: GOALS

Shift to output/outcome performance indicators

Clarify expected performance and accountability of
government agencies

Encourage agencies to focus efforts on the delivery of
outputs relevant to goal

Establish integrated performance management system
where organizational performance targets cascaded
down to lower level units and used as basis of
performance-based compensation

Report to public and Congress in clear terms output of
departments/agencies
Republic of the Philippines
Department of Budget and Management
ORGANIZATIONAL PERFORMANCE
INDICATOR FRAMEWORK:
PROCESS
 Identification of desired outputs and outcomes
a Agency; Oversight
a MAJOR FINAL OUTPUTS (MFOs), in terms
of quantity, quality, timeliness, cost
(QQTC)
 Harmonization: Agency with Oversight (DBM,
NEDA)
 Identification of programs/projects
contributing to the accomplishment of MFOs
Republic of the Philippines
Department of Budget and Management
Organizational Performance Indicator
Framework: Process…
 Establishment of Performance Indicators
 PI to determine whether
program/projects contributed to MFO
 PI must be verifiable in a quick, accurate
and cost-effective manner
Republic of the Philippines
Department of Budget and Management
ORGANIZATIONAL PERFORMANCE
INDICATOR FRAMEWORK:
Example: LTO
Outcome
-
Road safety (less incidence of road
accidents)
MFO
-
Licensing services (Drivers)
Performance indicators:
Quality
-
% of licenses issued in accordance with
operating standards; client satisfaction
Timeliness -
% of licenses issued in accordance with
timeliness standards
Republic of the Philippines
Department of Budget and Management
ORGANIZATIONAL PERFORMANCE
INDICATOR FRAMEWORK:
STATUS
Agencies in advance stage of the OPIF process
 Agriculture sector agencies (Agriculture, Agrarian
Reform, Environment and Natural Resources)
 Social Welfare
 Labor and Employment,
 Education
Agencies in intermediate stage of OPIF
 Health
 Internal Revenue
 Customs
Agencies in the early stage
 Infrastructure agencies
Republic of the Philippines
Department of Budget and Management
SECTOR EFFECTIVESS AND
EFFICIENCY REVIEW:
FEATURES

Periodic review of ongoing programs
and projects in terms of relevance,
performance, cost/benefit

System for establishing and updating
strategic priorities over the medium
term

Allows the redirection of resources to
strategic programs
Republic of the Philippines
Department of Budget and Management
SECTORAL EFFECTIVENESS AND
EFFICIENCY REVIEW:
PROCESS
 Consultations: agencies; stakeholders; funding
agencies
 Presentation of Results and Recommendations
 Approval of Cabinet Committee
 Input to Updated Development Plan, Public
Investment Program, Budget
Republic of the Philippines
Department of Budget and Management
SECTORAL EFFECTIVENESS AND
EFFICIENCY REVIEW:
Results
 Cancel excess financing (6)
 Terminate projects or remaining
components of projects (1)
 Restructure projects, including loans (30)
 Proceed (68)
Republic of the Philippines
Department of Budget and Management
AGENCY PERFORMANCE REVIEW
 Short term review of revenue and
expenditure performance vis-à-vis
budget targets
 Ranking of Agency Budget Performance
and public reporting
Republic of the Philippines
Department of Budget and Management
AGENCY PERFORMANCE REVIEW:
RESULTS
CY 2002
-
All agencies of the National
Government underwent APR
Most got outstanding rating;
review was based on agencydetermined targets
CY 2003
-
Low-budget agencies were
exempted from the APR
Most got satisfactory rating
Republic of the Philippines
Department of Budget and Management
INCENTIVE STRUCTURES
 Greater flexibility in exchange for financial
discipline hurdles
 Use of budget savings from procurement
and streamlining activities
 Creation of one-liner budgets
 Expenditure autonomy for low-budget
agencies
 Performance-based management
 Performance-based compensation
 Collective negotiation agreements (CNA)
Republic of the Philippines
Department of Budget and Management
KEY ACCOMPLISHMENTS TO DATE
A. Planning/Budget Processes
 Linked Budget to Planning starting in 1999
 Changed from input-based to outcome-based
budgeting in 2002 Budget Call
 Formulated budget strategy as precondition
to approval of new foreign loans in 2001
 Conducted first Sectoral Effectiveness and
Efficiency Review (SEER) 2001
 Conducted first Agency Performance
Reviews (APRs) in 2002
 Conducted ODA Portfolio Review in 2003
Republic of the Philippines
Department of Budget and Management
Key Accomplishments to Date…
B. Reengineering the Bureaucracy
 Formulated Reengineering Plan for the
Bureaucracy
 Reengineered key regulatory agencies:
financial markets, energy, ICT
C. Capability Building (1999-2003) Workshops,
Training
 Oversight agencies (18)
 Individual agencies (3 major, 17 minor)
Republic of the Philippines
Department of Budget and Management
Key Accomplishments to Date…
D. Assessments and Documentation
 2001 Budget Preparation, Performance
Orientation,
 Public Expenditure Management Manual
 Documentation of 2002 APR
 Public Expenditure, Procurement and
Financial Management Review with World
Bank (WB) and Asian Development Bank
(ADB)
Republic of the Philippines
Department of Budget and Management
CHALLENGES

Refining multi-year resource constrained
planning

Completing inventory of contingent liabilities

Enhancing the predictability of revenues

Cascading performance management system
down to personnel appraisal

Shifting to a performance based compensation
system

Advocating PEM reforms in Congress
Republic of the Philippines
Department of Budget and Management
MOVING FORWARD
2004
2005
2006
PEM
substantially
operations
limited
budget
autonomy
expanded
budget
autonomy
compensation
review
Alignment of
Initial
agency with
implementation
of compensation individual
performance
reform
reengineering
the bureaucracy
2007
PEM fully
operational
Reengineering
the bureaucracy
Republic of the Philippines
Department of Budget and Management
THANK YOU !!!
Republic of the Philippines