INTRODUCTION OF

Armenia

PERFORMANCE BUDGETING (PB)

MECHANISM AT THE COMMUNITY LEVEL TO SUPPORT THE ACHIEVEMENT OF MDGs

United Nations Development Programme

Goal of the Project

Armenia

The long-term goal is to support the decentralization process in the country through improving the LSG capacity , ensuring citizen participation and an accountable and measurable public expenditure management (PEM).

Aim of the Project

Armenia

The aim of the Project is to support the introduction of a Results based/Performance Budgeting (PB) methodology into planning, monitoring and evaluation processes at the community level.

What is Performance/Result Based Budgeting?

Budget Types: Line item budget- is a financial document classified by expenditure types, which defines the amounts that will be or have been spent for each expenditure item. (What was purchased or how much was spent on what?) Expenditures are classified into groups, such as salaries, allocations, and purchased goods and services - Program Budget- under this budget, funds are allocated by activity types and programs; this budget contains details of the expenditure items, prioritizing the goals, rather than the process or means of achieving them.
Armenia

What is Performance/Result Based Budgeting?

Armenia

Performance Budget- is a financial plan providing a statement of the municipality mission, goals, and objectives and a regular assessment of their performance as a part of the budgeting process, which creates linkage between the necessary inputs for the implementation of the municipality strategic development plan and anticipated outcomes.

Phases of Performance Budgeting

Strategic planning process Armenia Mission Statement Development Information Collection and Analysis SWOT Analysis Formulation of strategic issues/problems by sector (social and economic Infrastructure, administration, income generation, etc ) Setting strategic goals, objectives, targets and their costs Prioritization Selection of Prioritization methodology (pair wise assessment, assessment based on criteria, etc) Prioritizing Targets in each sector based on criteria (impact on poverty, number of beneficiaries, sustainability, gender mainstreaming, youth involvement, linkage with national level strategies, financial feasibility, etc ) Developing a list of prioritized targets from all sectors

Phases of Performance Budgeting-continuation

Budgeting

Armenia

Estimation of Municipality revenues for three years Initial estimation/costing of priority Targets/Projects Development of List of long-term Priority Targets/ Projects with costs and cumulative costs for three years -2006-2008 Distribution of targets/projects by years and coding Setting performance indicators for the projects Development of annual 2006 municipality budget Approval of the Municipality 2006 budget by the community council (public hearings)

Phases of Performance Budgeting-continuation

Budget execution, monitoring and control,

Armenia

Execution, internal and external accountability (quarterly status reports for budget implementation) Control, internal (municipality council) and external (NA, Governmant) control-assessment of actual implementation of the budget upon planned budget Provision of recommendations Revision of budget expenditures based on the recommendations

Audit and evaluation

Linkage between Local Development, HR and Gender in Performance Budgeting process

Principals of Human Rights Based Approach

Participation Empowerment of individuals Encouragement of transparency and accountability

Armenia

Principals of Performance Budgeting

Participation-through Civic forums, WGs and IGs Empowerment of individuals-discussions, ongoing consultancies and actual budgeting process, which is a decision making process Encouragement of transparency and accountability-PB by its nature is a transparent system

Gender Mainstreaming
Women and men are equally involved in the decision making process

Performance Budgeting Manual Content

Armenia Budget Types Essence of Performance Budget, Budgeting Principles, Scope, and Cycle Municipality Staff Structure and General Situation

Overview as Baseline for Performance Budgeting Budgeting Process Phases and Participants Performance Budget Planning Budget Execution and Controls

Performance Budgeting Audit and Evaluation

Performance Budgeting Training Program

Factors of success
Armenia

Public participation and engagement: municipality staff and council, WGs and IGs Selection of Pilot Municipalities: size, sector and open minded municipality heads Selection of Partners: Community Finance Officers Association Cooperation with donor organizations and programmes: ASIF, CHF/USAID, US Treasury Department Cooperation with national and local Government partners: Ministry of Territorial Administration and Ministry of Finance and Economy, Pilot LSGs Effective cooperation between the Headquarters, Regional Office and Country Office

Acknowledgments
Many thanks to: Ron McGill UN CDF- New York Dafina Gercheva- UNDP Bratislava Glendal Wright- UNDP Bratislava Semuel Coxsen- USAID/ RTI Gail Ostler US Treasury Department Community Finance Officers Association USAID/CHF Armenian Social Investment Fund Government counterparts
Armenia