Governments are facing mounting fiscal pressures that threaten the long-term sustainability of public finances in increasing number of OECD countries. Structural factors such as population ageing, rising defence expenditures, and the growing costs associated with climate change are driving up public spending and reducing fiscal space for new policy initiatives. In this context, it is increasingly important that public spending decisions are grounded in evidence and deliver demonstrable results. Many OECD Member countries have responded by introducing performance-oriented budgetary reforms, such as performance and programme budgeting and spending reviews, to better align limited fiscal resources with strategic priorities, while strengthening transparency, accountability, and value for money in the budgeting process.
Programme and performance budgeting in Chile
Over the past decades, many OECD countries have reformed their budget processes to emphasise outcomes of public expenditure. A key reform has been the shift from traditional line-item budgets to programme-based budgeting, which classifies expenditures by policy areas such as education, health, or defense. This approach improves prioritisation and transparency, providing clearer insight into how resources are allocated. Additionally, it strengthens the link between spending and performance data, enabling governments to monitor results and make evidence-based decisions. Programme budgeting often serves as the foundation for developing an effective performance budgeting framework.
Performance budgeting, in turn, systematically integrates performance information into budget decisions. This may involve using performance data directly to allocate resources or as contextual information to guide budget planning (Tryggvadottir and Bambalaite, 2024[1]). The overarching goal of both programme and performance budgeting is to enhance transparency and accountability by clearly linking expenditures to their intended outcomes. This approach requires a fundamental shift in focus - from merely assessing inputs (“How much funding will I receive?”) to prioritising measurable results (“What can be achieved with the funding provided?”).
OECD countries have adopted various approaches to performance budgeting. The main ones are:
Presentational Performance Budgeting is where performance information (objectives, outcomes, and performance indicators) is shown separately from the main budget document. In this approach, the budget may or may not be structured into programmes. It is commonly the first step in introducing performance budgeting.
Performance-Informed Budgeting is where performance information is included within the budget document alongside financial information structured, typically, into programmes. In this approach, performance information is used to inform budgetary decisions. This is the form of performance budgeting that is commonly used by OECD countries.
Managerial Performance Budgeting is a variant of performance-informed budgeting. With this approach, the focus is on managerial impacts and changes in organisational behaviour, achieved through the combined use of budget and related performance information.
Direct Performance Budgeting is where a direct link between results and resources is established, usually implying contractual-type mechanisms that directly link budget allocations to the achievement of results, with budgetary responses to over or under-achievement of performance objectives. No OECD country is using this approach.
There is no one-size-fits-all design to performance budgeting, but several factors can facilitate the successful implementation of performance budgeting. A key element of an effective performance budgeting framework is ensuring that performance objectives and indicators are aligned with government priorities, as these provide clear direction for setting and assessing performance. The OECD Performance Budgeting Framework supports countries in developing a coherent performance budgeting system. The Framework consists of four building blocks (Figure 1):
1. Tools and methods for developing meaningful performance information: the importance of developing good quality and well-structured performance information.
2. Accountability and transparency: fostering accountability and transparency through clear roles and responsibilities and improving scrutiny and public access to performance information.
3. Enabling environment: other elements that are required for a successful performance budgeting framework to exist, such as programme budgeting, centrally issued guidelines and templates, capacity-building efforts, IT systems and incentives.
4. Use of performance information to inform decisions around the budget: ways to ensure effective use of performance information for decision-making purposes.
Source: Tryggvadottir, Á. and I. Bambalaite (2024[1]), “OECD performance budgeting framework”, OECD Journal on Budgeting, Vol. 23/3, https://doi.org/10.1787/247e9dcb-en.
Programme and performance budgeting are widely used in OECD countries. Of the countries that responded to the latest OECD Survey on Performance Budgeting, 72% use programme budgeting and 85% use performance budgeting. While programme structures are often used for presentation, they are less commonly employed as the basis for voting on the budget (Figure 2). In fact, fewer than half of OECD countries use a programme-based structure when approving budgets. Likewise, the application of performance budgeting varies significantly in terms of scope and implementation (Figure 3).
Note: N=33
Source: 2023 OECD Survey on Performance Budgeting
Note: N=33
Source: 2023 OECD Survey on Performance Budgeting
Finally, performance budgeting is used differently across OECD countries with the majority using a performance-informed approach (50%) and a quarter using either a managerial or a presentational approach (25% each).
Note: No countries selected the option “direct performance budgeting”. N=33
Source: 2023 OECD Survey on Performance Budgeting
A robust performance budgeting system relies on high-quality performance information, and a solid structure of the budget. This information should align with government priorities, follow a well-defined structure, and include regular quality checks. Across OECD countries, performance information is typically linked to line ministry plans or strategies (26 out of 33 countries) or government priorities (20 out of 33). France provides a notable example of a structured approach to performance information that is supported by a programme structure of the budget (Box 1).
In France, the budget is structured around organic missions, programmes and actions (or activities). The 2024 budget had 47 missions, 187 programmes each with around 5 to 15 activities. Performance information is set at the programme level, where performance objectives are linked to the budget structure and the implementation of performance objectives is measured by the performance indicators, as shown in Figure 5.
The quality of performance information should be regularly assessed against predefined criteria. In most OECD countries (30 out of 33), centrally defined standards guide the development of performance information, and a designated entity is responsible for ensuring its quality. In many cases, this role falls to the central budget office within the Ministry of Finance. However, in Austria, the Federal Performance Management Office oversees the quality of performance indicators (see Box 2).
During the budget preparation process in Austria, the Federal Performance Management Office (FPMO) ensures the quality of proposed performance objectives and indicators. This includes verifying their alignment with national and sectoral strategies, as well as other established criteria. If the proposed objectives and indicators do not meet the required quality standards, the FPMO provides recommendations to the line ministries, guiding them to revise the material during the budget's preparation stage.
A well-functioning performance budgeting system requires clearly defined roles for key actors and effective reporting mechanisms to enhance accountability and transparency. OECD countries use various approaches to ensure internal accountability, with most organising discussions between line ministries and the Ministry of Finance (66% of respondents) or systematically monitoring and reporting on established targets (61% of respondents). To promote external accountability, most OECD countries publish performance reports (66% of respondents), and over two-thirds make this information publicly available. An emerging practice in 12 countries (36%) is the use of interactive web-based dashboards, allowing external users to visually explore performance data and quickly assess whether targets have been met (Box 3).
Ireland
Ireland has developed a webpage, "Where Your Money Goes," which presents key areas of government spending in a clear and accessible format. While the platform currently does not include performance information, Irish authorities are considering the integration of such data in the future to enhance transparency and public understanding of the link between spending and results.
Estonia
Estonia has developed an innovative tool called the "Tree of Truth," which visually presents the status of government performance targets. The platform uses a simple color-coding system to indicate progress: green signifies that a target has been met, orange indicates progress toward the expected result, and red shows that no significant progress has been made. This approach helps communicate performance information in an accessible and transparent way, supporting accountability and informed public engagement.
Canada
The Government of Canada’s InfoBase provides an interactive platform for visualising both performance and budgetary information. It presents results in a clear visual format, making it easy to identify the proportion of targets that have been met or not met. The dashboard also allows users to generate customised tables with relevant data, which can be downloaded in CSV format for further analysis.
A strong enabling environment is essential for effective performance budgeting. This includes structuring budgets according to programmes, developing guidelines and templates for consistent performance data collection, and implementing supportive IT systems. Among OECD countries practicing performance budgeting, two-thirds issue central guidelines, and more than half provide standardised templates.
However, the mere development and presentation of performance information are not sufficient to ensure its effective use. For performance data to influence budgetary decisions and resource allocation, active engagement with key stakeholders is essential. Among these stakeholders, Parliament plays a pivotal role, not only in scrutinising government spending but also in fostering accountability and encouraging the use of evidence in the budget process.
To strengthen parliamentary engagement, some countries have introduced initiatives that present key results in a structured and transparent manner. For example, the Netherlands holds Accountability Day and France organises Evaluation Springs to facilitate discussions on performance outcomes with Parliament (Box 4).
Accountability Day in the Netherlands
In the Netherlands, Accountability Day - held annually on the third Wednesday of May - serves as a key moment for parliamentary oversight of government performance. On this day, the Minister of Finance submits the Central Government’s annual financial report to the House of Representatives, detailing the government's activities, expenditures, and achievements over the previous year. The Netherlands Court of Audit plays a critical role by independently auditing these reports and presenting its own findings to Parliament. Its evaluation assesses whether policy objectives were achieved, expenditures complied with regulations, and public funds were used effectively. Parliamentary scrutiny continues into mid-June, when both the House of Representatives and the Senate discuss the findings, reviewing the execution, outcomes, and costs of various policy programmes. This process provides timely feedback on the government’s performance and informs the development of the forthcoming National Budget, allowing for course corrections and policy adjustments where necessary.
Evaluation Springs in France
Since spring 2018, the Finance Committee of the French Parliament has implemented an annual evaluation programme. Under this initiative, each special rapporteur selects and investigates an evaluation theme of their choosing. These evaluations typically assess the effectiveness of a given policy, its value for public money, and any unintended consequences. Between May and June, all ministers are called before the Finance Committee to answer questions regarding the performance of the policies under their responsibility. These hearings take place during a dedicated "week of checks" and can influence future budgetary decisions. This process ensures that evaluation findings are embedded in political discourse and aligned with the practical demands of policymaking.