Lessons for Low- and Middle-Income Countries: Right-Sizing the Reform

This chapter analyzes how governance factors and implementation strategies of performance budgeting (PB) reform are related to PB reform results among low- and mid-income countries. In some situations, PB is used to change how spending decisions are made and to improve the cost-effectiveness of public programs. Foreign assistance and advice is certainly helpful to low- and middle-income countries that are interested in PB system-building. Many low- and middle-income countries have begun to follow the example of developed economies and pursue performance budgeting reform, hoping that limited budgetary resources can be put to the best use and public spending can achieve the desired outcomes for policymakers and the general public. Despite the social desirability of the reform, performance budgeting has remained a difficult task to implement effectively, especially in low- and middle-income countries. The contrast between Afghanistan and other countries shows that having the basic level of political stability is a necessary institutional condition for PB reform.