Results-Based management as a framework for financial and budgetary governance under Organic Law 18-15 on Finance Laws
Keywords:
Management, Finance, Results, Performance, GovernanceAbstract
Reliance on results-based management has been considered as one of the most significant approaches to addressing the crisis of public financial management. Advanced countries and international financial institutions have contributed to its proposal and promotion, with the objective of enhancing efficiency, improving performance, and achieving the desired outcomes of every public policy. Organic Law 18-15 was introduced to establish a new model of public management centered on results by granting public managers greater autonomy while holding them accountable for presenting reports comparing achieved results with allocated resources. The adoption of this approach is expected to result in a fundamental transformation of the concept of oversight, shifting it towards performance-based control focused on auditing and ensuring that management funds are allocated to programs in accordance with their specified objectives. Based on performance indicators defined for each program and subject to evaluation; The implementation of this transformation will encounter structural and systemic barriers linked to the nature of the political system and its interactions. This makes the adoption of a results-oriented management approach a significant challenge for public financial management in Algeria.
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Ahmed Abubakr Ali Badawi, Public Budget Reform Programs in Arab States, Economic Studies, Arab Monetary Fund, 2011, p. 2
Presidential Decree N0 01-140 of 06-06-2001 ratifying the loan agreement signed on 18-04-2001 between the People’s Democratic Republic of Algeria and the International Bank for Reconstruction and Development to finance the modernization of budgetary systems, Official Journal of the Algerian Republic (O.J.A.) No 31, on 06-06-2001.
Organic Law N018-15of 02-09-2018 on Finance Laws, Official Journal of the Algerian Republic (O.J.A.) No53, on 02-09- 2018.
e.g., France with the adoption of the Organic Law on Finance Laws (LOLF) in 2001, implemented in 2006; Morocco with the adoption of Organic Law N0130-13 in 2013, implemented in 2015; and Tunisia with the enactment of the Fundamental Budget Law in 2019 under Law No15 of 2019 of 13-02-2019. It should be noted that the Tunisian law originated as a legislative initiative by the Ministry of Finance in the Council of Ministers on 13 November 2015, was presented to the Finance Committee on 020-06-2017, reported on 14 -11-2018, discussed in plenary session on18-12-2018, and enacted on 31 -01-2019.
Ministry of Finance of Algeria, Directorate General of Budget, Draft Organic Law on Finance Laws, Explanatory Memorandum, 2018, p. 1.
Law N084-17of 7-07-1984 on Finance Laws, Official Journal of the Algerian Republic (O.J.A.)No 28 of 10 -07- 1984, amended and supplemented.
Article of Organic Law N018-15 on the Medium-Term Budgetary Framework
Andrzej T. Abraszewski et al., Results-Based Budgeting: Experience of United Nations System Organizations, Joint Inspection Unit, JIU/REP/99/3, Geneva, 1999, p. 10.
Article 79 of Organic Law N018-15: “A program constitutes the unit of execution for budgetary appropriations …”
Article 23 of Organic Law N018-15: “… appropriations shall be allocated according to the program, in accordance with Article 75 of this Law, or according to earmarking with respect to non-allocated appropriations. Appropriations are presented by activity and, where appropriate, in the form of titles covering expenditures by economic nature, pursuant to Article 29 of this Law …”
Article 28 of Organic Law 18-15, which specifies that classification by activity and by the economic nature of expenditure constitutes the main budgetary classifications of the state, while classification by major functions of the state and by administrative entities is significant for analysis, statistics, and comparative purposes.
Project for the Modernization of Budgetary Systems (Part I), “B01_1_1 – Overview of the Modernization of Budgetary Systems in Algeria”, Budget Directorate, Ministry of Finance, February 2009, p. 31.
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The management of public funds is subject to oversight under the provisions of the Constitution (Articles 152, 153, 180, 192). Article 85 of Organic Law N018-15stipulates: “The execution of the State budget shall be subject to administrative, judicial, and parliamentary oversight under the conditions set by the Constitution, this law, and other relevant legislative and regulatory provisions”
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Constitutional provisions define oversight mechanisms, including oversight of public funds management, in Articles 155 to 162, and address oversight institutions in Chapter IV of the 2020 constitutional amendment.
Mohamed Tarchi & Fayza Hiersh, Oversight of Government Unit Performance in the Context of Modernizing Public Accounting Systems, Academy for Social and Human Studies, No. 20, June 2018, p. 9; see also Article 87 of Organic Law N018-15.
Fondafip report, for a conceptualization of internal control and internal audit in the financial management of the State. December 9th, 2010, Paris, p. 20.
Through multiple reports from the preparation of the annual draft Finance Law to the reports attached to the Budget Settlement Law.
Public financial governance, inspired by the principles of New Public Management, is introduced as a philosophy aimed at enhancing the role of the State by moving beyond the Weberian legalistic approach to public financial management, and by adopting a managerial approach grounded in the mechanisms of participation, transparency, performance, efficiency, and the rationalization of public action. This is embodied through performance-based management centered on results
Michel Bouvier, La Conduite De La Réforme Budgétaire Dans Les Pays En Développement: Réflexions Métalogiques, Dans : Reforme Des Finances Publiques : La Conduite Du Changement, Actes De La IIIe Université De Printemps De Finances Publiques Du GERFIP, L.G.D.J, p p127-142, 2007
The discourse on results-oriented management dates back to the 1950s, when Peter Drucker presented in his book The Practice of Management the concept and principles of management by objectives. He emphasized the necessity of: “contractual ranking of organizational goals and objectives, setting specific goals for each position within the organization, participatory decision-making, defining a clear timeframe, evaluating performance, and providing feedback on implementation.” See: Abdel-Sami‘ Rouina, Management by Results … An Effective Approach to the Transition from Input-Focused State Budgeting to Results-Focused Budgeting, Journal of Economic and Administrative Research, Algeria, Mohamed Khider University of Biskra, Vol. 12, No 3, 2018, p. 148.
In the mid-1960s, Peter Drucker introduced a new concept, which at first glance seemed similar to management by objectives but in reality was independent of it. He articulated it in his 1964 book Managing for Results. However, these ideas only gained traction in the early 1990s, developing first in the private sector and then being transferred to the public sector due to the shift from focusing on the disbursement and consumption of budgets to focusing on actual achievements. In this context, public management in general and financial management in particular, underwent wide-ranging reforms in response to economic, social, and political pressures.
The management of public funds is subject to oversight under the provisions of the Constitution, Articles 155 to 161 of the 2020 constitutional amendment. Furthermore, Article 85 of Organic Law N018-15 stipulates: “The operations of executing the State budget shall be subject to administrative, judicial, and parliamentary oversight in accordance with the conditions defined by the Constitution, this Law, and the relevant legislative and regulatory provisions.
These are the reports initiated during the preparation phase of the draft Finance Act of the year, continuing until the submission of reports accompanying the Budget Settlement Law
The set of reports that the government is obligated to present to Parliament, according to Articles 72, 75, and 85 of Law 15-18.
It required the existence of a joint report between the minister or head of the concerned public institution and the Minister of Finance only.
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Kenza Meguiche, the Problematic of State Reform in Light of the New Public Management Approach, Idara Journal, Vol. 26, No 2, 2019, p. 27.
Philippe Séguin, Les nouvelles fonctions de la Cour des Comptes en France, in Michel Bouvier (ed.), La Bonne Gouvernance des Finances Publiques dans le Monde, Actes de l’IVe Université de Printemps de Finances Publiques, Paris: L.G.D.J, 2009, p. 211.
The Revenue Watch Index, which evaluates revenue transparency, ranked Algeria 38th out of 41 resource-rich countries in its 2011 report, placing it at the bottom of the ranking in terms of revenue transparency among resource-rich states. See: Khaled Manna, Public Finance Governance and Transparency Challenges, Voice of Law Journal, Khemis Miliana University, Vol. 4, No 2, 2007, p. 22.
In this regard, reference may be made to the observation made by the IMF mission concerning the preliminary draft of the Organic Finance Law of 2015, in Article 74: the documents annexed to the draft Finance Act—which are the same as those addressed in Article 75 of Organic Law N018-15—“are characterized by their excessive number, complexity, and sometimes lack of coherence. Legally, they must be simplified, and a distinction should be made between documents that are mandatory and essential for parliamentary authorization and those that are merely explanatory and informative.” See: IMF Mission Report, Observations and Proposals Regarding the Draft Organic Law on Finance Acts of 2015, p. 34.
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