Performance Budgeting, Motivation, and Incentives

  • Elisabeth Paul
  • Marc Robinson
Chapter
Part of the Procyclicality of Financial Systems in Asia book series (IMF)

Abstract

As noted in Chapter 1, many contemporary forms of performance budgeting are part of the broader “managing-for-results” (MFR) approach to public sector reform. Like MFR in general, the primary focus of these forms of performance budgeting is upon motivating agencies to perform better, and in this sense they differ from, for example, classic forms of performance budgeting the primary focus of which is better central expenditure prioritization. This is true of contemporary performance budgeting models which contain one or more of the following elements:

  • agency-level performance targets which are intended to be linked to the level of resourcing provided

  • funding formulas which implicitly set, through the funding formula, targets for the results expected to be achieved

  • agency-level financial incentives, under which good performance by the agency results in higher levels of funding, and poor performance possibly leads to financial sanctions.

Motivating agencies to perform better is also important if the full benefits of input control relaxation are to be realized.

Keywords

Public Sector Intrinsic Motivation Incentive Scheme Social Motivation Moral Motivation 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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© International Monetary Fund 2007

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  • Elisabeth Paul
  • Marc Robinson

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