Answer to Question 4
Greetings John, and thanks for raising the issue of what to do in non-IPS systems (which are in no danger of extinction). The spending review, whether one-time or cyclical, represents a powerful tool that can be used to link policy and financial planning. Broadly, such reviews assess whether existing expenditures have produced the desired results in a cost-effective manner and, by extension, whether future planned expenditures will achieve future desired results. Since such discussions invariably raise both policy and financial considerations together, they definitely have potential to bridge, at least partially, the policy-financial universes.
But, as you say, this is a half-way approach.
Commonly, obstacles may arise which limit the effectiveness of these exercises. The first regards the quality of information; i.e., does anyone really know what outputs are being produced with what specific expenditures? The second regards the ongoing government decision-making process which, operating in relative isolation from the financial processes, may inadvertently supersede the spending reviews by foisting new demands on a sector as new policies/regulations/laws are approved without a fiscal impact assessment and without reference to the spending review.
On balance, though, spending reviews do serve to raise these linkages and may even serve to initiate a dialogue on removing the above obstacles. Half an answer is clearly superior to none.
Answer to Question 5
The issue of “MTEF light” revisits the issue of incomprehensible financial documents that are only ever read by budget analysts or IFI officials. Certainly, there is a compelling case to produce these. In a sense, the various “Citizens’ Guides to the Budget” respond to this need.
However, this is different than the type of document that would be produced for a cabinet or cabinet committee meeting. Many countries have strict rules about the way information is presented to decision makers (several countries’ procedures guides are public, but these do not cover how budget-related material, which has special confidentiality provisions, should be presented). In particular, lengthy documents without clear, explicit decision points (such as most MTEF documents) would never be permitted. So how is such information presented?
Unfortunately, these documents are usually confidential so there are not many public examples. Drawing on my own experience though, a series of presentations (averaging 10 pages) would be prepared (often jointly by the Prime Minister’s/Cabinet Office and Ministry of Finance) for the Prime Minister, Minister of Finance and senior Ministers which set out the macro/fiscal framework and a series of options on major new policies and the related new spending; spending cuts; and revenue options. These would be debated and instructions issued to return with different options or more analysis of impacts (policy as well as fiscal impacts would always be included). Over three or four meetings, and sometimes a Cabinet retreat, the fiscal framework would be finalized along a broad agreement on policy priorities, major cuts, revenue decisions, and shifts in expenditure. This then served as the input to the eventual budget speech and document (i.e., MTEF equivalent). The key to a successful process was to present these options concisely and in a way that was meaningful to the decision makers.
Answer to Question 6
Here it is important to distinguish between the term “integrated planning system” and the principles (linking policy and financial planning) that are the basis of IPS systems. In Albania or the US Homeland Security department, “IPS” is a brand name that describes a particular planning system. However, numerous countries (mostly but not exclusively developed countries) have IPS systems; they simply call them something else.
I am unaware of any formal assessment of Albania’s IPS, although SIGMA did produce some related analyses on Albania’s policy-making and public expenditure management systems (generally, the assessment was mixed, concluding that IPS had successfully brought together policy and financial decisions and generated political commitment, but that it remained a complex system and that overall policy management and monitoring systems were still weak).
A partial assessment of Lithuania’s system was conducted through a World Bank Trust Fund; an article on this appeared in a Canadian Journal (I will forward to Mauro for posting). Also, the previously cited World Bank publication (Administrative Capacity in New Member States: The Limits of Innovation) did assess the current state of Lithuania’s reforms alongside several other new member countries.
Other assessments can be found that do not explicitly relate to integrated planning but touch on these issues. The Office of the Auditor General (supreme audit institution) may produce reports on financial management systems that address these issues. Publications such as the OECD Journal of Budgeting do country studies that may deal with such issues. Governments themselves may request evaluations of their Cabinet Offices (e.g. UK capability reviews).
But this question, and the paucity of relevant assessments, does indicate a major gap. Although public expenditure management is thoroughly and systematically reviewed through instruments such as PEFA, there is no equivalent on the policy planning side. PEFA does acknowledge the link, but does not in any way assess how the policy planning and decision-making systems intersect with financial planning systems. A companion tool is definitely required if both houses are to be put in order.
