Executive Director Liu Xiaochuan accepts an interview with CFEN on budget performance management

The Opinions of the State Council on FurtherDeepening the Reform of Budget Management System (hereinafter referred toas the Opinions) issued recentlyclarified the goal of further deepening the reform of the budget managementsystem. In an interview with China Financial and Economic News on the breadth,depth and precision of budget performance management, Liu Xiaochuan, Executive Directorof the Institute, stated that the scientific and effective budget management isdirectly related to the level of budget performance management and it is imperativeto further deepen and strengthen budget performance management. 

The budget reflects a country’s strategy and policies, reflects the scope and direction of government’s activities, and serves as an important support for advancing the modernization of the governance system and governance capabilities of the country. At present and for a future period, the finance is and will be in a state of tight balance, the contradiction between revenue and expenditure is and will become more prominent, and some deep-seated problems in budget management have to be settled urgently. According to Liu Xiaochuan, based on the analysis on the aforesaid background, the requirement set out in the Opinions for deepening the reform of budget management system fully reflects the in-depth integration of the strategic thinking and tactical selection of the central government.

Liu Xiaochuan believes that budget performance management is the core of the reform of budget system, and that more effective use of budget performance management can effectively promote the further deepening of budget management system and contribute to the acceleration of modernization of national governance system and governance capabilities.

The Opinions clearly stated the request for promoting the integration of budget and performance management. Liu Xiaochuan interpreted the connotation thereof from breadth, depth and precision.

- Breadth. The Opinions consist of 7 parts and 26 articles, including income, expenditure, preparation, implementation, risk prevention and control as well as budget management. Literally, the contents of the Opinions specifically related to budget performance management are only reflected in the budget implementation part, but the connotations thereof are reflected in all the other six aspects.

In respect of fiscal revenue, the Opinions required “reflection of fiscal revenues truthfully, improvement of revenue quality and strict prohibition of nominal revenues and false transfers”. With regard to fiscal expenditures, the Opinions require “to ensure that funds are directly made available to the user entities, directly benefit enterprises and people, prevent occupancy, misappropriation, precipitation and idleness, etc., and improve the effectiveness and accuracy of the use of fiscal funds”. In the part related to budget preparation, the Opinions require “to further optimize the transfer payment system, improve the transfer payment fund allocation methods, perfect the regular evaluation and dynamic adjustment & withdrawal mechanism of transfer payment, and improve the standardization, scientific feature and rationality of the management of transfer payment funds. In the part related to enhancing fiscal transparency, the Opinions require to “refine the disclosure contents of government budgets and final accounts, and disclose to the public transfer payment fund management methods, performance management objectives, budget arrangements, etc., in accordance with laws and regulations”. It can be said that the contents of budget performance management can be found everywhere in the Opinions.

- Depth. The Opinions require that budget performance evaluation shall be advanced in depth and the coverage shall be further expanded.

At present, the budget performance management is mainly reflected in the evaluation of projects and their implementation process. The Opinions require to take the implementation of major decisions and deployments of the Party Central Committee and the State Council as the focus of budget performance management, strengthen fiscal policy assessment and evaluation, enhance policy feasibility and fiscal sustainability, strengthen budget performance management in key areas, classify and clarify transfer payment performance management priorities, and strengthen guidance and constraints, implement budget performance management in areas such as government and social capital cooperation, government purchases services, etc. In addition, the Opinions also require the implementation of budget performance management over stock state-owned assets, which will certainly play a positive role in the further improvement of the operation level of state-owned assets and the revitalization of stock resources.

- Accuracy. The Opinions emphasize that budget performance management shall be refined and detailed, the use of evaluation results shall be strengthened, and the information disclosure mechanism shall be established and improved. The Opinions specify that an integrated budget and performance management system shall be established; and scientific evaluation methods, including cost-benefit method, yield curve method, etc. shall be used. These have fully reflected that the accuracy of budget performance management will be continuously improved.

As emphasized by Liu Xiaochuan, budget performance management reform is not the sole responsible of the financial authorities, but all government authorities shall coordinate and cooperate to make concerted efforts. In addition, it is necessary to strengthen institutional guarantees, incentives & constrains and supervision mechanisms, because the quality of budget performance management is not only related to the level of budget, but also in connection with the public interest. In addition to giving play to the role of existing supervision authorities, we shall also strengthen the social supervision. Various measures shall be taken to continuously increase the enthusiasm of the public to participate in social supervision, and their supervision capabilities shall be strengthened by means of strengthening publicity and training, etc.