Feasibility Study – Performance-based Budgeting

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The Institute for Democracy “Societas Civilis” – Skopje (IDSCS) and the Center for Economic Analyses (CEA) have prepared a feasibility study called “Peformance-based Budgeting for a Better Budgeting Process in the Increasing of the Transparency and Accountability”. 
Performance-based budgeting is a concept enabling us to provide information/ data on when and whether the budget programs, the agencies and other institutions providing public services, perform their duties and work efficiently and effectively. It has the aim of improving the efficiency and effectivity of the public expenses by connecting the financing of the organizations/institutions from the public sector with the delivered results. 
One of the main reasons for implementation of the performance-based budgeting (against the traditional concept) is the possibility of seeing whether the projects and activities undertaken by the state institutions truly give results and make a difference in people’s lives. 
This feasibility study makes the following recommendations: 
– Having in mind the current situation in the state, the most appropriate measures to implement would be: top-down approach for introducing performance-based budgeting; partial implementation as more appropriate; gradual approach as more appropriate. 
• Establishment of a separate body for designing the appropriate modality and implementation of the concept performance-based budgeting, which would be most convenient for the Republic of Macedonia; 
• Partial implementation means freedom of choice and introduction of performance-based budgeting for pilot budget users;  
• Gradual approach means introduction of performance-based budgeting among the pilot budget users in phases; 
These items stand for all budget users: 
• Introduction of Budget Planning Program for all budget users; 
• Identification of input indicators, output (results) indicators for all budget users. Simple input indicators like number of employees and simple output indicators (for example, the number of users of an appropriate program) can be introduced in the first phase; 
• The strategic plans of all budget users should be available in electronic version and should contain a time frame; 
• The annual financial statements of the budget users should also contain an explanation for the difference between the estimated and the realized expenses;
• The annual financial statements of the budget users should contain the reasons for the differences between the original estimations of the output indicators and the concrete results for that year, as well as the differences between the original estimations for the results indicators and the concrete results for that year; 
• All budget users should publish an evaluation of the achieved outputs from the programs. Those evaluations should contain a separate analysis of the profile changes and the number of public services users, as well as any changes in the needs of the users; 
• The results from the revision of the individual budget expenses after the announcement of the auditor’s report by the State Audit Office – SAO should be available in electronic version; 
Authors of the study are Marjan Nikolov, Borche Trenkovski, Biljana Tashevska. You can read the whole study and the recommendations on the following links: mk al en
The study is prepared within the project “Enhancing the Transparency and Accountability through Performace-based Budgeting” implemented by CEA and IDSCS and financed by the European Union. The aim of the project is promoting budget transparency for accountable spending of public finances. For more information regarding the project visit the following link www.https://idscs.org.mk/wp-content/uploads/2021/11/project-2.png.org.mk.
This publication is made with the help of the European Union. The content of the publication is sole responsibility of the Institute for Democracy “Societas Civilis” – Skopje and the Center for Economic Analyses and can in no way be taken to reflect the views of the European Union.

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