Advantages Of Performance Budgeting

The budget (annual financial statement) of a country presents the proposed income and expenditures for the particular fiscal year based on the revenues that the government anticipates to collect from various sources like, taxation, borrowings and donors. This is a custom that is the brainchild of Sir Robert Walpole, Chancellor of the Exchequer, Britain in the 1720’s. The main purpose was to restore the government’s public confidence; a role amongst others; that remains relevant to this day. Over the centuries since it made its mark it has evolved extensively in all the countries of the world. It is based on the country’s government economic, political and technical perspective. At oftentimes it not only allocates scarce resources to the best

It allows the managers to focus on achievement of the results and not only spending the resources. The main objective and purpose is service delivery, the accountability of managers to this affords them the discretion to use the resources as the environment dictates. Unlike the rigid traditional line budgeting the flexibility to use the resources in processing inputs to outcomes in order to produce the agreed upon objectives put the implementation in the hands of the public managers. It facilitates the realization of the strategic goals of government as each department seeks cost-effective and innovation measures for the efficient and effective achievement of their goals. This system requires a basket of measures that gauge public program from a variety of lens (McGill 2001;Wang 1999) McGill 2001; Wang 1999). The different measures that assess different aspects of budgeting practice with the use of indicators demands a monitoring system of good performance and contributes to a rational allocation and decision making process. This has been evident in the Chile performance budgeting system, where according to (Blöndal and Curristine 2004) Performance Based Budgeting (PBB) the performance data contribute to the broader discussion and decision making on future budget allocations. The PBB improves transparency and accountability for the

Further, it should be noted that the economic system allocates limited resources to competing individuals and groups. This necessitates the government’s fiscal and monetary processes to stimulate or restrict the demand for goods and services. Any economic developments can influence public administration. Administrators and managers need to know about economic matters and implications of such decisions on the economy. In 1995, the South African government introduced Growth, Employment and Redistribution (GEAR), a macro-economic strategy. Among other elements, GEAR provides a renewed focus on budget reform to strengthen the redistributive thrust of expenditure and commitment to the implementation of stable and coordinated policies (Growth, Employment and Redistribution,