Performance budgeting contributes to more efficient allocation of funds and a better understanding of government achievements and priorities, as well as greater transparency and accountability throughout the budget process. It helps governments understand if goals have been met and if changes should be made to allocated resources to deliver on promised results.
Performance budgeting
In an environment of budget constraints and high citizen expectations it is necessary to demonstrate that public expenditure is providing value for money and delivering on performance. The availability of good-quality performance information not only assists policymakers in making more informed budgetary decisions but also enables the broader public to hold the government accountable for delivering the outcomes promised to citizens.
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Key messages
For performance budgeting to achieve its potential, governments should focus on developing clear, transparent objectives and incentives for major stakeholders and ensure a practical design of the process. By focusing on tools and methods for developing meaningful performance information, solid accountability mechanisms, supportive IT systems and clearly defined roles and responsibilities, governments can ensure that performance budgeting is not a box-ticking exercise.
For performance budgeting to work well, it is essential to develop meaningful performance information that is relevant for decision-making. This means ensuring performance indicators measure progress towards achieving objectives and presenting performance information in an accessible and understandable way. It is important to present the right level of detail as information overflow is an inherent feature of many national performance budgeting frameworks.
Context
Performance budgeting is a widespread practice across the OECD.
As of 2023, the majority of OECD countries use performance budgeting, although practices differ between countries. Most countries report using performance-informed budgeting, with none implementing direct performance budgeting.
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