Fabin David Quirs Alvarez

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• Fabián David Quirós Alvarez
• General Sub-Director of the National Budget
• Ministry of the Treasury
• Costa Rica
• December, 2008

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• Contents
• I. The budgetary process in Costa Rica
• II. Primary innovations and advances in Financial
  Management
• - result-oriented Budget Methodology for
  planning and evaluation.
• National system of Public Investment
• Multi-year Budget and Base-Line Budget
• Follow-up on budget execution
• III. Over-all View The challenges.

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I. The Budgetary Process in Costa Rica
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• The Budgetary Process in Costa Rica

• Levels of Approval
• Central Government Budgetary Law approved by the
  Legislative Assembly
• Decentralized Entities Budgets approved by the
  General Comptrollers Office of the Republic

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STAGES OF THE BUDGETARY PROCESS
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II. Primary Innovations and Advances in Financial
Management
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New Methodology for Budget Planning-Assessment
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Changes in Budgeting Orientation toward Results

• Advances in the strategic analysis of planning
  and in orientation toward results
• Setting institutional priorities
• Strategic objectives
• Indicators of results, and
• Multi-year goals.
• Pilot plans for strengthening the budget process
  toward results synergy and complementarity of
  international technical cooperation (BID-PRODEV
  and Treasury Deparatment of the United States of
  America)

BID/PRODEV TREASURY
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METHODOLOGICAL COMPONENTS
National Development Plan Planning by
Sectors Budgetary Planning with focus on results

• I. Budgetary Planning

System of Management indicators and
results Assessment of Results
II. Monitoring and Assessment
III. Accountability
Report on the Annual Assessment of the Results of
Management
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According to the latest Statement of the General
Comptrollers Office of the Republic

• Improvements in budgetary planning and assessment
  after 2008
• Technical and methodological approaches for
  strategic sectorial and institutional planning
  (May, 2008), establish a gradual process of
  defining indicators of management and results of
  public agencies.

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The General Comptrollers Office of the Republic
in its Technical Report on the Budget for 2009
recognizes that

• Dynamism is seen in the number of indicators from
  the different ministries, suggesting a process of
  improvement.
• There are indicators of efficiency,
  effectiveness, economy, quality, and management.
• A tendency remains favoring indicators of
  effectiveness at the cost of indicators of
  economy (.7), quality (2.4) and efficiency
  (1.2).

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NATIONAL SYSTEM OF PUBLIC INVESTMENT (SNIP)

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NATIONAL SYSTEM OF PUBLIC INVESTMENT (SNIP)
LA GACETA No. 162 of Friday, August 22, 2008 Nº
34694-PLAN-H DECREE Regulation for the
Constitution and Functioning of the National
System of Public Investment Artícle 1On
Location. The National System of Public
Investment is part of the National System for
Planning and its implementation and operation
will be the responsibility of the Ministry of
National Planning and Economic Policy, with the
objective of achieving optimum utilization of
public funds for meeting government objectives,
tied to the principles of economy, efficiency,
effectiveness, gradualness and quality of the
investment. El Sistema .. Artícle 5On
specific objectives.. The SNIP has the following
specific objectives a)  Succeed in assuring
that public monies intended for public investment
yield the greatest economic-social and
environmental benefit to the country. b) 
Implementation of an integral system of analysis,
follow-up, and assessment of public investment,
following the life cycle of projects. c)  Plan
public investment and manage it efficiently. d) 
Provide sufficient quality information for making
decisions about investments. e)  Strengthen the
ability of the entire public sector in the
formulation and planning of public investment, as
well as in the socio-economic, environmental, and
risk management for disasters, and physical and
financial execution of investment projects. f)  
Facilitate annual and multi-year planning of
public investment. g)  Mantain an up-to-date
inventory of all public investment projects.

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MULTI-YEAR BUDGET AND BASE-LINE BUDGET

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Multi-Year Fiscal Scenarios

• In the 2008 budget, for first time, there were
  multi-year fiscal scenarios ? with different
  projections of expenditures and income for the
  central government.

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Multi-Year Fiscal Scenarios

• The Ministry of the Treasury has developed a
  model of macro-economic consistency among the
  different variables associated with the Costa
  Rican economy, in order to be able to have an
  analysis structure at the time of generating
  multi-year scenario indicators.
• COMPONENTS OF THE MODEL
• Mid-term trends of the real sector.
• Monetary and Exchange Aspects.
• Fiscal Performance and Debt Dynamics.
• Consistency of the External Sector.

BID/PRODEV TESORO
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Scenario 1 Multi-annual Budgetary Scenarios,
2009-2012 Millions of colons and percentages
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Multi-Year Fiscal Scenarios

• For 2009 an update is presented of the scenarios
  for projected fiscal income and expenditures,
  first presented in 2008 and include projections.
  This document includes projections up to 2012.
• The Ministry of the Treasury has continued
  working on the study of this topic through
  on-going work in assessment and improvment, and
  has reviewed the experiences and orientations
  that other countries have carried out and within
  the legal structure that governs us.

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Multi-Year Fiscal Scenarios

• Budget estimates are published for the medium
  term by the CentralGovernment, which will be
  developed through the Base-Line Concept
• Base-Line will reflect future income and
  expenditures and the results in terms of
  deficit/surplus by continuing existing government
  policies and programs and applicable law.
• The Base-Line is a technical exercise and a
  neutral measure to determine the fiscal path of
  the government and measure the impact of
  alternate policy proposals.

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Base-Line It is an automatic pilot that sets the
fiscal path
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Follow-up and Oversight of Budget Execution

• New program of oversight for the year 2008, which
  includes aspects of operational audit as well as
  compliance.
• Better coordination and communication between the
  areas of budgetary execution and formulation.
• Greater openness on the part of the ministers and
  oversight entities.

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III. Overall Vision The Challenges
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Countries According to their GpR Development
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PRODEV Pentagon for COSTA RICA
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RESULT-ORIENTED BUDGET

• Assure support from above, participation from
  below o
• Generate demand (A two-way street)
• Determine realistic expectations and understand
  the necessary complementary gradualness and know
  how to wait
• Coordinate and bring the actors into agreement
  improving conversation with other actors in the
  process external control and political control

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RESULT-ORIENTED BUDGET

• Attempt to make the assessment go beyond the
  retelling of achieved physical goals and
  management, and reflect the substantial results
  of institutional management, especially benefits
  to the population.
• Few and simple rules Report in a simple way to
  citizens on the use and application of funds,
  respecting the committed goals and results
  obtained.
• Continue working directly with those responsible
  for programs and formalize commitments with work
  plans.
• Expand assistance to other ministeries and go
  beyond performance indicators.

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NATIONAL SYSTEM OF PUBLIC INVESTMENT (SNIP)

• MIDEPLAN has information on the public investment
  projects of 69 institutions.
• Up to the present date, it has not issued a
  National Plan of Public Investment for 2008-2010.
  
• It is important that the allocation of resources
  in the budget for investment projects be
  available before 2011, but it is also necessary
  to refine SNIP and make it more precise.

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Follow-up and Oversight of Budget Execution

• Strengthen the competence of human resources
  assigned to management and to the agencies.
• Need to have an oversight manual that documents
  its policies and procedures and a program of
  oversight.
• Exchange reports on oversight with auditing units
  and the General Comptrollers Office implement
  oversight software applications.

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Multi-Year Budget and Base-Line

• Advance to a fiscal strategy document that will
  discuss the macro-economic situation and fiscal
  direction for the medium term and will include an
  analysis on the sustainability of the debt.
• The document will include base-line estimates of
  income, expenditures, and the deficit/surplus for
  the budget year (2010) and the following three
  years of planning.
• Periodical publications on multi-year estimates
  for each ministry of the central government in
  accordance with the programmatic classification
  of the budget.
• Guarantee, so far as possible, its simplicity and
  transparency

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Need for a Cost System for Goods and Public
Services

• Accountability of public servants and politicians
• Control (to prevent abuses and fraud)
• Correct use of funds
• Continuous improvement

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Need for a Cost System for Goods and Public
Services

• Information about costs necessary for
• Detailed knowledge to meet goals
• Financial information
• Budget preparation (study of alternatives)
• Surveillance of efficiency
• Transparency
• Control and assessment

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• ADVANCING TO MANAGEMENT FOR RESULTS CONTRIBUTES
  TO GOVERNABILITY AND STRENGTHENS THE LIFE OF
  DEMOCRACY

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• Fabián David Quirós Alvarez
• General Sub-Director of the National Budget
• Ministry of the Treasury
• Costa Rica
• December, 2008