This is not the first time I am writing about performance-based budgeting (PBB). Apparently, no success has been observed in capturing any attention yet. I am taking another shot at it following American educator Thomas Palmer (1782 - 1861) who emphasised, "If at first you don't succeed, try, try again." The saying was popularised by Edward Hickson (1803-70) in his 'Moral Song' and is now applicable to any kind of activity
Budget proposals presented in the parliament, until approved by the lawmakers, is essentially an all-encompassing wish list - bearing in mind that all wishes are not always attainable, given financing and time constraints - let alone bureaucratic inefficiencies and malfeasance at various levels. However, once the budget is approved, all efforts must be geared towards the realisation of all prioritised goals while minimising inefficiency and leakages of appropriated funds into black money. In order to achieve such goals, PBB has evolved as an essential tool for creating transparency and accountability in the oversight of government programmes in many western fiscal operations.
The strategy of PBB is based on the assumption that presenting performance information, alongside budget appropriations, will improve budgetary decision-making by focusing funding choices on programme outcomes. A PBB approach can be tailored to scale with existing operational infrastructure, thus lowering costs and enabling organisations to:
* Direct limited resources to the most critical and important outcomes.
* Set automatic appropriation cycles to provide timely information about financial and programme performance.
* Proactively administer programmes, while tracking and monitoring progress against projected and published objectives.
* Get clear insights and communicate critical issues and priorities relative to budget requests and the use of resources.
* Proactively identify and resolve escalating performance problems before they become critical.
* Focus and start where the needs are of immediate priority, with multiple points of entry, and realise immediate outcome.
The US Congress enacted the Government Performance and Results Act of 1993 to promote a focus on improving programme performance and to provide greater accountability for results within federal government agencies. At the state level, 31 out of 50 states have legislated some form of PBB, and 16 additional states have formalised processes for integrating performance measures and data into the budgetary process.
What constitutes performance varies to some extent from state to state. Only two states, Florida and Texas, provide specific guidelines related to corrective actions for noncompliance. The Texas 1996-1997 General Appropriations guidelines state that "if an agency fails to meet its goals, the Legislative Budget Board and the governor may adopt a budget execution order, which may result in the reduction, elimination, restriction, or withholding of funding or transferability, in addition to possible reorganisation." Florida prescribes a number of budget execution and management restrictions in the event of poor performance.
In the context of Bangladesh, many of the projects under Annual Development Programme (ADP) may be considered for implementation within the framework of PBB. This will guarantee project implementation with substantial savings because of implied transparency and accountability. However, regardless of the budget implementation process, most budget watchers suggest that many aspects of the proposed budget are not implementable. A budget financed in part by taxing black money is not only unethical, it is also inefficient and self-defeating for many different reasons.
Black money whitening (BMW) and the dismissal of corruption charges by successive administrations as being politically motivated to whiten black have become acceptable norms of governance in Bangladesh.
On the question of BMW, why charge only 10 per cent tax, which will certainly encourage creation of more black money in future? Why not impose the same tax rate applicable to all honest tax-payers? Black money possessors may have already transferred a big chunk of their money to their spouses or children's foreign bank accounts and also may have locked up in real estate in Dhaka, Chittagong and other places inside and outside the country. Will they really repatriate that money for investment in Bangladesh?
Why the incumbent government is doing this after so much struggle and sacrifice for democracy and promises of good governance? Why doesn't the leadership understand that this patronisation of BMW will only breed the same and become an uncontainable and irretrievable systemic problem - thus making perpetuating the process.
Not too many people are seen to be lining up defending the WBM process. On a Cine Bangla TV talk-show on June 09, participated by former Bangladesh Bank (BB) Governor Dr Salehuddin Ahmed, President of the Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) AK Azad, and Prime Minister's Economic Adviser, Dr Mashiur Rahman. One particular participant wished for elimination of all black money. He should have stopped there about the contentious black money issue but he did not. Whether by inadvertent gaffe or deliberate diligence he claimed that black money is not sitting idle - they're doing something - being used somewhere doing economic activities such as investment in the capital market. I'm sure the person concerned knows well that investment in capital market and investment in capital goods are two different matters -the former does not guarantee to lead to the later but assures proliferation of black money.
Sadly though, another defender of black money investment is one of the leading functionaries of the Bangladesh Economic Association (BEA). At a press conference on June 14 last, he suggested for mainstreaming the undisclosed money. He said, "We want such a system which will debar the officials of Anti-Corruption Commission and National Board of Revenue from asking questions about the sources of money." Does he really mean it? Should the government then perpetuate the process of generating black money, even if they're invested in infrastructure development?
Yet another minister Obaidul Quader was reported to have told a programme at the National Press Club on June 18 that, "If the polls are not freed from the influence of black money, then democracy will be crippled."
Black money is docile money. Its economic function - if there is any - is a bad one. It breeds more black money - corrupt the economic, political, and social fabric of the society. Tens of billions of takas lie idle in private lockers somewhere and unidentifiable bank accounts making little or no contribution to economic well-being of the people.
Being at the threshold of tiptoeing into a middle income country, availability of every useable tax money to the Treasury - complementing fiscal appropriations to much needed energy production, road and bridge construction - would certainly steer the country's progress faster to achieve the aspirations of the people.
The writer, formerly a Physicist and Nuclear Engineer, is a Senior Fellow at the Policy Research Institute, Dhaka and Professor of Economics at Eastern Michigan University, USA.