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. Last Updated: 07/27/2016

Budgeting for a Better-Run Bureaucracy

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The proposals made by Deputy Prime Minister Alexander Zhukov back in August and the Finance Ministry's current initiatives to change the state budget system show that the strategic goal of reforming government administration and increasing officials' efficiency has not been completely forgotten.

The president approved the Finance Ministry's proposal to move to three-year budget plans starting in 2006. State organizations whose programs are the best designed and whose past operations were the most effective will receive additional funding. The proposals are all part of performance-based regulation, which links funding to results. Many countries apply this method via targeted programs through which the bulk of government money flows. Their parameters are transparent, by the way, as are ways to measure their effectiveness.

Zhukov's proposals last August aimed to promote this very approach. His commission recommended a long list of criteria for judging how well officials are meeting their targets. The 58 criteria were linked to three broad goals: improving Russians' quality of life, encouraging economic growth and creating potential for future development.

The Finance Ministry's budget reforms seem appropriate and necessary. Moving to three-year spending plans will mean more stable funding for targeted programs, most of which last for more than a year. Extending budgets' time horizons will allow officials to compare costs with results -- for instance, when evaluating defense projects. This in turn will put an end to the tired excuse that projects do not yield results because they are underfunded. Money will stop disappearing into thin air.

Finally, the new approach will start in 2006, which will give the government plenty of time to consider the technical side of implementing the new system. Recent welfare reforms have shown that even good ideas can fail if badly executed.

The Finance Ministry's proposals are an absolutely necessary part of moving to new administrative methods, but they are not enough. The problem of increasing the transparency and boosting the effectiveness of targeted programs looms as large as before. The criteria for evaluating officials' performance remain vague and contradictory and need a lot more work. Nonetheless, the new budget system will be an important step and will stimulate further administrative reform.

This comment first appeared as an editorial in Vedomosti.