Program Budgeting As a Tool of Introducing a Higher-Level Performance of the Public Sector of the Economy
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BIOSCIENCES BIOTECHNOLOGY RESEARCH ASIA, August 2015. Vol. 12(2), 1329-1338 Program Budgeting as A Tool of Introducing a Higher-level Performance of the Public Sector of The Economy Arsen Azidovich Tatuev1, Elena Vyacheslavovna Lyapuntsova2, Askerbiy Arsenovich Tatuev3, Violetta Valerievna Rokotyanskaya2 and Zalina Nurmuhamedovna Zhankazieva1 1Kabardino -Balkarian State University named after Kh.M. Berbekov 360004, Kabardino-Balkarian Republic, Nalchik, Chernyshevskogo st., 173 2Moscow State University of Food Production125080, Moscow, Volokolamskoye sh., 11 3North-Caucasian Federal University355035 Stavropol region, Stavropol, Lenin’s st., 133b DOI: http://dx.doi.org/10.13005/bbra/1788 (Received: 02 March 2015; accepted: 04 April 2015) In the article the advantages of program budgeting in comparison with the traditional one are dealt with the analysis of state programs of the Russian Federation from the point of view of basic elements of efficiency is carried out, the main problems arising in the course of their development are revealed and measures for their further improvement are suggested. Key words: budget planning, program budgeting, budgetary policy, efficiency, state programs, budget. Consecutive introduction of program DISCUSSION budgeting in the budgetary process assumes the change of the state policy and can become the Introducing program budgeting is an main means of modernization of public uneasy process, that presumes, among other administration sector. Application of the program things, a reform in the system of government format allows making the formation of the budget management. The transition to program budgeting strategic both financially reasonable and also requires a number of essential changes in the considering various options of realization of financial activity of the government: state programs which need further improvement, a) Revising and reforming the financial regarding the formulation of the purposes, use processes; of indicators of an assessment of social and b) Reorganizing management agencies; economic efficiency. c) Achieving more professionalism in financial activity; METHODS d) New proficiencies of the specialists in the public sphere. In the real work on the basis of From this point of view, program functional and dynamic approach the most budgeting can be seen as a set of operations, aimed important directions of state programs efficiency at improving the efficiency and effectiveness of increase which will allow turning them into the the public sector’s performance. According to effective instrument of realization of social and many researches, the introduction of program economic policy of the state are defined. budgeting allows: 0) Obtaining the maximum result (output) from the use of limited financial resources; * To whom all correspondence should be addressed. b) Evaluating more objectively, on the basis of the results obtained and costs entailed, 1330 TATUEV et al., Biosci., Biotech. Res. Asia, Vol. 12(2), 1329-1338 (2015) the results of the activity of ministries and implemented, be politically sponsored and agencies, performing their functions or strictly controlled. Moreover, the consistent delivering services within the limits of implementation of program budgeting in the their authorities. budgeting process presumes a change in the In this regard, we can say that program governmental policy and might become the basic budgeting is based on directly associating the tool of reforming the sector of public budget expenditures (the use of the financial administration (Shush & Afanasiev, 2014; Shush resources) and the amount and the quality of the & Borodin & Tatuev, 2014; Shush & Borodin, provided governmental services (i.e. the outcomes 2014). of the performance of ministries and agencies) To obtain more effect from the (Anderson & Anderson & Velandia-Rubiano, implementation of program budgeting, it should 2010; Barro, 1989; Checherita & Rother, 2010). be combined with reforms in the sphere of public The idea of introducing program budgeting is administration and public finance management. based on the advantage of increasing the social The program budget differs from the and economical efficiency and effectiveness of traditional one in that point, that all, or nearly all, budget expenditures. costs are allocated to programs, each of them Unlike the traditional form of allocating being directly associated with a concrete result (line-item) budgeting, program budgeting offers (a strategic outcome) of a ministry’s operations, a number of advantages, which allows: and demonstrates a positive change in the sphere a) Focusing budget expenditures on of an agency’s influence. In this respect, a program politically determined and strategically budget is an opposite to a traditional one, as it is important objectives for social and based on the indicators of the result (immediate economical development of the country; and ultimate), not on the input of the resources. b) Achieving a direct relationship between the Applying the program format allows short-term and the long-term forms of making the formation of the budget strategically budget planning and forecast; and financially justified, and also, to consider c) Providing exact agreement between the different variants of realization of the programs. strategic government’s plans and the However, in practice, it is rarely possible to budget; achieve an optimal combination of both the d) Achieving higher-level accountability of strategic planning and the budget reasonability ministries and agencies in the public sector (Cochrane, 2011; Gale & Orszag, 2003; Groneck, for the targeted and effective use of the 2010; Elmendorf & Mankiw, 1999; Hanson, granted funds; 2007). e) Redistributing resources within the The specifics of the federal budget in the framework of implementing particular Russian Federation are the following, since 2011 programs, as well as in favour of more its program part has been represented by a set of productive and/or priority areas state programs, whose development can be viewed (operations); as an attempt to unite all instruments for achieving f) Carrying out objective evaluation of the the goals of the government’s policy. Today, in efficiency and effectiveness of budget the Russian Federation, there are a lot of high- expenditures on the basis of certain; level governmental tasks, that can be solved only g) Simplifying the structure of the budget; if a number of ministries participate. Such tasks h) Achieving higher transparency of the are essentially complex trends in the state’s policy, budget information and make it more namely, being realized as the governmental accessible, for not only the participants of programs of the Russian Federation. the budget process, but also for the At present, 42 programs have been community/society as a whole. adopted in the Russian Federation, which To make these advantages come true, it constitute 5 core building blocks, they are the is vital that the transition to program budgeting following: the new quality of life, the innovative should be thoroughly prepared and steadily development and modernization of the economy, TATUEV et al., Biosci., Biotech. Res. Asia, Vol. 12(2), 1329-1338 (2015) 1331 the provision of the national security, the decrease in the formerly predicted incomes. It is proportional regional development, the effective not incidental, that the idea of cutting the state’s state. Still the quantity of the governmental expenditures became the main idea of the Budget programs being implemented and the amount of Message from the President in the year 2013. their financing are being corrected for each Sequestration has touched upon most areas of the subsequent budget cycle (Table1). budget expenditures. The most unlucky turned out As can be seen from the data in Table 2, to be the housing sector, its expenditures were to since 2013, a reduction has been taking place in be cut in the year 2014 by approximately a quarter the program part of the federal budget (37 billion roubles). The expenditures on expenditures, due to the reduction the number of education were also cut by 13% (which makes the governmental programs. In particular, this 88 billion roubles). affected the programs that are heavily financed In this regard it should be noted, that due including the program on the development of the to the complexity of the macroeconomic pension system. Thus, the share of non-program situation a project was developed for optimizing expenditures has increased dramatically, since the the government’s expenditures, which were budgetary appropriations, allocated for the planned to be reduced by approximately 1.1 development of the pension system, were planned trillion roubles; it would mean, among other in the amount of 9320.1 billion roubles. things, a change in the order of funding the Despite the fact that in the end of April pension system and in reforming the sector of 2013 the State Duma adopted amendments to the public administration. It comes naturally, that all Budget Code of the RF (No. 104-FL dated 7/05/ this, along with pessimistic expectations 13), that are necessary for the transition to a concerning the profitable part of the budget, could normal program budget, and these legislative have had only a negative effect on the amounts of changes should have created an incentive to the financing and on the distribution of the resources formation of the federal budget of Russia in the from the budget that are going into the next budget cycle of the years 2014-2016