Tashkent, Uzbekistan (UzDaily.com) -- Budget reform in the Republic of Uzbekistan involves large-scale transformations in the public finance management includingtransition to the treasury execution of the budget, the introduction of capitation financing in healthcare, secondary and higher education, reform of the system of accounting and reporting, and the development of inter-budgetary relations. In this context the approaches to budget formulation and execution should be changed.

Budgeting should be based on clearly defined objectives and priorities of the state policy, while the state budget expenditures should be linked to concrete and measurable results of the activities performed by the authorities. This is the essence of the new approach for budget planning and execution - Performance-based budgeting (PBB).

This methodology has been used in world practice for many years; various models of PBB have been developed. In particular, in world practice, this methodology has been used for many years, and various PBB models have been developed. The novelty and the advantage of this method lies in the fact that the planning and budget allocation is carried out not by type of expenses, but by programs, each of which contains the goals, objectives and measurable quantitative and qualitative indicators.

Budget performance is measured not in terms of its development, but in terms of achieving the goals and results, that is taking into account not only where and what for budget funds will be spent, but also a final result obtained. Accordingly, the focus shifts from controlling “targeted” (in accordance with the approved plan) use of budget funds to the expected and actual results of budget services. Thus, the program based method establishes a relationship between the set objectives, expenses spent for their implementation and the results achieved.

The new method itself does not entail a rapid direct effect in terms of saving budget resources, but it creates conditions for efficient use of public funds and helps to improve expenditure management and ensure their predictability.

For society as a whole, the value of the programmatic method and other PBB models is in the fact, that it allows a better understanding of what goals and priorities the budget funds are directed to, whether they meet the needs of different population groups, how they are spent and to what extent the government can achieve its goals.

In developed countries introducing and applying PBB began in the middle of the last century. In the past decade a number of developing countries made attempts to introduce different models or elements of the PBB either in parallel or ahead of other areas of the budget reform.

In Uzbekistan a joint project of UNDP and the Ministry of Finance “Budget System Reform in Uzbekistan” renders assistance in adapting the new methodology for the planning and execution of the budget. After pilot projects on testing the program method of budgeting as one of the PBB models were carried out on the basis of individual ministries, the Budget Code introduced the elements of program budgeting in planning the state budget in Uzbekistan. Thus, a key document in the planning of the budget is the budget request, which now includes not only financial instruments (budget request),but also non-financial tool like a Development program, an analytical report and the register of expenditure obligations. Non-financial instruments are used to prepare and justify budget requests and as information for financial authorities to make decisions and plan expenditures.

In order to raise awareness about the new methodology, the project supports various training seminars and round tables for specialists of the central and regional levels. In particular, the workshop “Strategic Planning and Performance-based budgeting: the international experience and the possibility of using in Uzbekistan” dedicated to the new methodology for the planning and execution of public expenditures was conducted with the assistance of an international expert. The seminar allowed to acquaint the specialists of the Ministry of Finance, line ministries and experts of regional financial departments with international practical experience in applying PBB (including the programmatic method), in particular with the experience of Asian and European countries, as well as OECD countries. In total, the seminar was attended by about 40 representatives of various ministries and departments.

To involve a broader range of specialists the Project held a similar seminar for specialists of regional financial offices (including the management of the Treasury) and the trainers of the Training Center under the Ministry of Finance.

Familiarization with the new methodology and expanding its application in practice is particularly relevant in the context of developing the government policy priorities when the country’s long-term strategy “Vision 2030” is discussed, regional development strategies are developed and state targeted programs are adopted and implemented.