scp- performance based budgeting

Country paper-Sri Lanka 1

SCP- PERFORMANCE BASED BUDGETING

Country Case Presentation

SRI LANKA


The Country

Sri Lanka is an Island situated in the Indian Ocean, off the base of the Indian Sub Continent

Total Land Area - 65,610 sq.km 435 km long and 225 km wide Commercial Capital – Colombo Total Population: 20 million; Multi ethnic & multi religious GDP Rs. 3,578 billion


Key Economic Indicators:

Key Economic Indicators 2004 2005 2006 2007

GDP Growth Rate (%) 5.4 6.0 7.7 6.8

Unemployment Rate (%) 8.3 7.7 6.5 6.0

Investment/ GDP (%) 25.0 26.5 28.7 29.5

GDP (nominal) Per Capita $ 1,030 1,197 1,355 1,617

Budget Deficit/ GDP Ratio (%) -8.2 -8.7 -8.0 -7.7

Sect oral Composition

GDP Employment

Agriculture (%) 16.8 32.2

Industries (%) 27.0 26.6

Services (%) 56.2 41.2


Current Budgetary System

The current budgetary system of the country is a mixed system Block Budgeting

Parliament approves the block budget MOF fixed ceilings for sectors, line Ministries

(Recurrent + Capital) Flexibility is given to line Ministries to decide their budget

within the ceiling

Programme Budgeting Cluster based Expenditure Head, Programmes, Projects, object code


Current Budgetary System- ctd

Performance Based Budgeting Medium-term Budgetary Framework Vision, Mission and KPIs for each line Ministry have

identified. However, linkages between these outcome indicators and actual budget figures are still weak.

Line Item Budgeting Expenditure figures are available for administrative and

monitoring purposes


Medium-term Macro Economic Framework (2006-2010)

Indicator 2006 2008 2009 2010

GDP at market price – (Rs bn) 2939 4307 5047 5923

GDP growth (%) 7.7 7.0 7.5 8.2

Total investment 28.0 30.0 31.5 32.5

Current Account (US $ mn) -1478 -1545 -1664 -1881

Current Account Deficit -5.3 -4.0 -3.9 -3.9

Revenue 16.3 17.4 18.0 18.5

Expenditure 24.3 24.4 23.9 23.7

Overall budget deficit -8.0 -6.8 -5.8 -5.2


Legal Framework

Constitution- empowers parliament Finance Act- Appropriation Act- Fiscal Responsibility Act-

Budget deficit shall not exceed 5% of GDP Total liabilities should not exceed 85% of GDP

Financial Regulation


Vision for a new Sri Lanka Agriculture Economic Infrastructure Education Health Environment Public Administration Reforms Livelihood and Social Protection Urban Development and Human

Settlements Tourism Labour Science and Technology Sports and Culture Development of Conflict Affected Areas Macro-economic vision


The document contains overall development policies, strategies, goals, priority areas for next ten year period.

Aimed at raising the GDP growth rate in excess of 8% and sustain this rate for 6 years. (9-10% growth thereafter)

Raise per capita GNP to US$ 3960/- by 2016 elevating SL’s position as a middle income country.

Improve growth prospects with equitable development in the country, with special emphasis on the needs of lagging regions.

Enhanced resource allocation for identified strategic priorities in rural development, education, skills development, health, roads, irrigation & delivery systems.

Raise Investment/ GDP ratio to a level of 32 to 38% during next 10 years.

www.treasury.gov.lk


Medium Term Budgetary Framework

Budget estimates are now presented over 3 year horizon. The present MTBF is from 2008 to 2010

Project/ Programme

2008 2009 2010

1 Estimate Projection Projection

2 etc

10 Year PlanMTEF 1

MTEF 2MTEF 3


Budget Calendar

Preparation of the MTBF and approval of the Hon. Minister of F&P for the Budget Circular- June

Briefing note to Cabinet on budget outline and priorities- July

Issuing the budget circular calling for proposals- July Review of budget requests with line Ministries- August Presenting the Appropriation Bill (Cabinet + Parliament)-

October Budget Speech- November Release of cash flow statement- December


ACHIVEMENTS TOWRDS PBB

1. MTBF - 3 year Budgetary framework

- Cluster Basis approach

- More Resources for Priority Sectors

- Performance Targets

- Expenditure Ceilings (Flexibility )

2. Managing for Development Result (MFDR)

- Whole - of Government Approach

- Led By the Ministry of Plan Implementation

- Aim is to enhance aid effectiveness


WHAT WE DID ? and HOW?

1. Government Level


2. Agency Level

MPI facilitate each ministry to

- Form a committee as change agents - Develop a Agency Result Framework and Result Card with Mission,

Thrust Areas , Goals, and Key performance indicators (KPI)

- Report Progress on KPIs Using Score Cards

# electronic Project Monitoring System

# 3 Color Traffic lights

MPI evaluate achievements Quarterly and report to the Cabinet Completed 3 Phases

# Phase I – 5 Ministries

# Phase II – 12 New Ministries

# Phase III – 18 more Ministries ADB’s Redness Assesment toolkit is use for identify capacity

gaps in the Ministries


Gaps in Public Finance Management and Area for Reforms

Gaps Reforms Recommended

No linkage between 2 process of Budgeting and MFDR systems

Deficiencies in Current Accounting System

Capacity Gaps

Policy Gaps

Inadequate Discretion for the line Ministries

Absence of reward system

Top level Leadership (Political/Official)

Move towards Resource based Accounting System

Awareness and Capacity building

Integrated National policy framework

More Flexibility

Introduce reward system


CHALLENGES

Make a linkage between existing 2 systems of Budgeting and MFDR

Over coming Capacity gaps Changes in Attitudes and Mindsets Improving availability of statistical information Hard Budget Constraints Tribunal environment


Thank you

scp- performance based budgeting

Documents

middle income country

budget requests

budget outline

actual budget figures

budget circular junebriefing

rural development

skills development

budgetary frameworkvision