This presentation address to finding the one function of Allocative efficiency as part of PEM objectives. In addtion, it has presented several research from Allen shick and collaboration the government expenditure in Indonesia and Malaysia with several exercise have been given to audience to understanding several practice concept.

1. COLLEGE OF LAW, GOVERNMENT AND INTERNATIONAL STUDIES
PUBLIC EXPENDITURE
MANAGEMENT
The process of :
Allocative Efficiency, Forward Estimate,
Public Programs and Prioritization
PREPARED FOR : PUBLIC FINANCIAL MANAGEMENT CLASS | Dr. SALIHU ABDULWAHEED ADELABU
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2. CONTENTS PEM
General Overview of Public
Expenditure Management
The process of allocative
efficiency
PEM : Forwards estimates
Public Programs
Managing prioritization
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3. GENERAL OVERVIEW
OF PUBLIC EXPENDITURE MANAGEMENT
Public expenditure management (PEM) is one
instrument of government policy.
Public expenditure management is a basic means of
government policy distributing utilizing sources
productively, effectively and sensitively
(Allen, Tommasi, 2001, p.19).
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4. Aggregate
Allocative of Fiscal
of Discipline
effective,
efficient
Technical
efficiency
THE OBJECTIVES OF
PUBLIC EXPENDITURE MANAGEMENT
Worldbank:1999
-

5. PUBLIC EXPENDITURE MANAGEMENT (PEM)
OBJECTIVES
Allen, Tommasi, 2001,
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6. 1 ALLOCATIVE
EFFICIENCY STRATEGY
DEFINITION
That is capacity to establish
priorities within the budget, to
distribute resources on the Unified Budget
basis of the government’s
priorities and the program is Consolidation
effectiveness.
Moreover, is to shift resources
Forward
from old priorities to new Estimates
ones, or from less to more Rolling plan budget
productive activities, in
correspondence with the
government’s objectives
Performances
(Allen & Tommasi : 2001)
Based Budgeting
Efficiency & effective
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7. Allocative Efficiency Problems of
Some Developing Countries
Practice Problems
Short-term Government budgets one year at a time, without considering
Budgeting medium-term implications, such as the recurring operating
costs of new projects.
Escapist Planning Planning is politically important but the government promises
in the plan what it cannot pay for in the budget.
Distorted Priorities Scarce resources are spent on showcase projects that
produce meager social return while the budget underspends
on human capital (health, education, etc.).
“Enclave” Efforts (often by international organizations) to protect certain
Budgeting priorities by establishing special funds, separate investment
budgets, social (or physical) investment programs, and
other devices that wall off the "enclaves" from the rest of the
budget.
Source: Allen shick : 1999: 39
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8. FORWARD
2 ESTIMATES
DEFINITION FUNCTION
Structured of budget Application of the forward
estimates in the medium-term
work during periods of
perspective to create certainty of
program expansion as funding for ministries / agencies.
well as during periods
of contraction, and it
The assurance gives
have to survived
opportunities in ministries /
against several agencies in planning expenditure
changes in government / spending in subsequent years in
leadership. accordance with the principles of
efficient allocative efficiency.
Indonesia the National Development Planning Agency
(Allen Schick:1998)
Cont: Public Programs
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9. 3 PUBLIC PROGRAMS
Public programs is implement policy.
“Programs are ongoing service or activities…programs authorized
by policies, are directed toward bring about collectively shared ends.
These ends, or goals, include the provision of social and other public
services and implementation of regulations designed to affect the
behavior of individuals, businesses, or organization.”
Source: Laura Irwin Langbein, Public Progrm Evaluation : A Statistical Guide , Second ,Edition,United States:Library Materials,
pg 4
Government final
consumption expenditure
In What Intended to create future
Programs benefits (investment)
government
expenditure Transfer payment
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10. Government final consumption expenditure
“Government final consumption consists of
expenditure, including imputed expenditure,
incurred by general government on both
individual consumption goods and services and
collective consumption services”
Source: Set: National Account of OECD Countries Volume II, 2010, OECD, pg 904
Water,
Food Clothing Electricity, Health Transpo Commu Education
Gas rtation nication
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11. Intended to create future benefits (investment)
“…Capital expenditure decisions, therefore,
involve a current outlay or a series of outlay
over a period of time in return for future
benefits.”
Source: Banerjee Bhabayosh, (2008)Fundamentals of Financial Management.. New Delhi: PHI
Learning Private Limited. Pg 256.
PERLIS
Airports, Machinery
Roads Transport
Building Railway, For
Equipment
Bridges Technology
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12. Transfer payment
Transfer payment
Example of
Transfer Payments. Payment Transfer payment
made by government to an
individual that are not in
exchange for good or services,
have important implications for
the alleviation of poverty and
distribution of income. Welfare
Payments can be either in
cash or in kind
Social security
There’s two type, Means-
tested transfer and social
insurance programs
Source: John B. Taylor, Akila Weerapana: 2007
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13. 4 PRIORITIZATION IN PEM
What is public expenditure Priorities
The government need to arrange the public
programs expenditure starting from high –
priority category until the low priority
category.
budget allocations would reflect the
government’s considered and reasonable
judgment on priorities
Sources : David Bevan 2007,Promoting and Protecting High-Priority Expenditures, pg2
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14. 2. Look at 3. Now give a
number to all 4. Now you
each programs starting have them
1. Look at programs from high –priority
our budget in priority
and assign category until the low
order
and make it a letter priority category
sure it is as based on the
complete situation in the
country
Sources : Lyman Rose 2012, 4 Step to prioritize expenditures, pg1
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15. LET’S WE DO ONE EXERCISE TO UNDERSTAND
PUBLIC EXPENDITURE PRIORITIES
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16. FURTHER READING
Allen, Richard and Daniel Tommasi (2001), Managing Public Expenditure A Reference Book for Transition
Countries, SIGMA, OECD
Banerjee Bhabayosh, (2008)Fundamentals of Financial Management.. New Delhi: PHI
Learning Private Limited.
David Bevan 2007,Promoting and Protecting High-Priority Expenditures,
Laura Irwin Langbein, Public Program Evaluation:A Statistical Guide , Second ,Edition,United States:Library
Materials,
Lyman Rose 2012, 4 Step to prioritize expenditures, Retrieved November 16, 2012, from
www.imf.org/external/pubs/ft/expend/guide3.htm
Minister of Finance Malaysia(2012),Retrieved November 16, 2012, from
www.treasury.gov.my/.../2012/.../FGDE20122013...
Set: National Account of OECD Countries Volume II, 2010, OECD,
Susan Grant Chris, Chris Vidler, , Andrew Ellams, Heinemann Economics A2 for Edexcel, Uk: Scotprint.
Schick, Allen (1999), A Contemporary Approach to Public Expenditure Management, World Bank
Institute, Governance, Regulation, and Finance Division, Second Printing, (April).
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17. THANKS FOR YOUR
AT T E N T I O N