Performance Budgeting in Poland

Abstract

Poland currently has a traditional budget system that is primarily based on organisational units and control of inputs. But Poland is in the process of introducing a new budget system, the performance-based budgeting system, in order to improve public finance management and strengthen allocative and operational efficiency, multi-year budgeting, and transparency and accountability. Poland faces hard choices on how to harness the advantages of performance management while minimising the costs in terms of organisational capacity and funding. This article assesses the reform process to date, examines cross-cutting institutional, technical, and strategic issues, and provides a series of recommendations for each stage of the budget process: budget preparation, approval and execution, and reporting, accounting and audit.

Toward Next-Generation Performance Budgeting: Lessons from the Experiences of Seven Reforming Countries

“…The performance budget is an annex to the legally binding traditional budget, which is based on organizational units. This may have been intended to be a temporary phase until the traditional budget was replaced by a performance-based budget (Hawkesworth, von Trapp, and Nielsen 2011), but the division remains. The fact that two separate budget classifications coexist has been problematic for implementing performance budgeting in Poland.…”

“…A technical limitation is that the two different budget classifications obscure whether reallocations in the legally binding traditional budget are or are not performance-informed. The Polish system is characterized by relatively more budget flexibility for line ministries than in other OECD countries (Hawkesworth, von Trapp, and Nielsen 2011). Poland is also one of only 10 OECD countries that have fewer than 300 line items in the budget (OECD 2014).…”

“…In terms of the OECD performance budgeting typology, the Polish system should be characterized as presentational performance budgeting rather than performance-informed budgeting or direct formula performance budgeting (Postula 2013). Although the use of performance information for budget allocation is very limited, the performance budgeting system did help the MoF conduct better examinations of public spending, and the traditional budget system was useful for maintaining budget discipline (Hawkesworth, von Trapp, and Nielsen 2011). This suggests that performance budgeting is used to some extent as an analytical tool.…”

“…Unlike most OECD countries, in Poland current regulations do not mandate that the MoF carry out spending reviews. Only new initiatives are subjected to scrutiny, not programs already in existence (Hawkesworth, von Trapp, and Nielsen 2011).…”

The Effect of Internal Audit on Budget Management of Local Government of Rwanda

“…Hawkesworth et al shown that, many local governments have not been examining efficiently the internal audit in budgeting process and execution and this has consequently led to mismanagement; lack of control and less budget execution from their activities or operations [17]. However, there is no evidence of adequate follow up done to verify the accountability reports submitted to Districts by non-budget agencies and to follow up activities reported by non budget agencies.…”