Public Sector Governance and Accountability Series: Budgeting and ...

A Primer on Performance Budgeting 171
of Health and Ministry of Education has been observed. The Ministry of
Health has formulated targets for the entire service and has strengthened its
planning. The Ministry of Education has integrated performance targets
into the Poverty Reduction Strategy Paper, and strategies focused on target
achievement are detailed in the annual operating plans of different units
in the ministry.
In view of Bolivia’s experience, performance-oriented reforms are
unlikely to be successfully implemented in an environment of pervasive
political patronage and weak administrative capacity in key financial management
areas. In Bolivia, political parties capture the public administration
and distribute rents and public jobs. Consequently, formal rules are rarely
respected and easily avoided. The government tends to accept reforms to the
public sector’s formal rules because they do not lead to changes in actual
practice or threaten business as usual. The performance-oriented reforms in
Bolivia failed to account for the patronage system and to boost political consensus
for reforms. Aside from the institutional problems embedded in
reform design, the reforms did not take into account Bolivia’s weak administrative
capacity in key financial management areas, especially in budgeting
and personnel management. Budgeting in Bolivia does not really function
because the budget is unreliable and the remaking of budgets and constant
reallocation of funds are evident. Regarding personnel management,
recruitment is informal and based, not on merit, but on political loyalty; job
evaluations and promotions are politicized; and salary scales are informal
and not transparent. Performance-based management and budgeting
reforms require strong political consensus in countries where the government
is managed on the basis of informal relational mechanisms and political
agreement, and they require at least a minimally effective bureaucracy in
some key areas of financial management.
Critical Conditions for Successful Implementation of
Performance Budgeting
What are the critical factors affecting whether performance budgeting penetrates
the routines and procedures of budgeting? The basic conditions
necessary to sustain the momentum of performance budgeting reform are
summarized here.
Motivation to Make a Change
Consensus among participants on the need for reform is critical to successful
implementation. Public officials need to identify their motives for using