Presentation, Katja Lautar, joint SIGMA ReSPA PIFC regional conference, Skopje, 19 September 2019

AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
© OECD
principallyfinancedbytheEU 5th Regional Conference on Public Internal Financial Control
Ensuring Alignment between Policy Planning and
Financial Planning:
Experience from Slovenia
Katja Lautar
Head of Office for fiscal and economic policy
Ministry of Finance of Slovenia
Skopje
19 September 2019

© OECD
Content:
Strategic
planning
Budget
/ MTBF
RIA
Discussing the Slovenian (gradual) experience in establishing
processes and systems to ensure alignment between strategic
planning, individual policy making and financial/budget planning.

• Area: 20,273 sq. km
• Capital: Ljubljana
• Population of 2 million
• EU member state - May 2004
• Euro area - January 2007
• Schengen Space - December
2007
• OECD member (May 2010)
About Slovenia: Key Statistics and Indicators 2019
Source: UMAR and *SORS, realease
Source: SORS, *ESA methodology
Source: AJPES, SORS
3
Real growth (%) 2016 2017 2018* 2019f 2020f
Gross domestic product 3.1 4.9 4.5 3.4 3.1
Exports 6.4 10.7 7.2 5.1 5.3
Imports 6.6 10.3 7.7 6.0 5.8
Private consumption 3.9 1.9 2.2 2.9 2.4
Gross fixed capital formation -3.7 10.7 10.6 7.7 7.0
Government consumption 2.7 0.5 2.6 2.2 1.9
Annual growth (%) 2016 2017 2018 2019f 2020f
Employment according to the SNA 1,8 2,9 3,0 2,0 1,0
Unemployment rate (ILO in %) 8,0 6,6 5,1 4,3 3,9
Wage per employee (real, gross) 2,0 1,3 1,6 3,3 3,5
Productivity ( GDP per employee) 1,3 1,9 1,5 1,4 2,1
Unit labour costs (nominal)* 1,8 1,3 2,5 3,7 3,4
Inflation (end of year) 0,5 1,7 1,4 2,2 2,2
% of GDP 2016 2017 2018 2019f 2020f
General government balance* -1.9 0.0 0.7 0.9 1.0
General government debt* 78.7 74.1 70.1 65.4 61.3
Dec_2016 Dec_2017 Dec_2018 Jan _2019 May_2019
Total employment
824.485 856.201 887.170 881.245 896.129
Public sector employees (total)
235.841 236.676 240.035 239.365 241.567
% of public sector in total
employment 28,6 27,6 27,1 27,2 27,0

Slovenia's Development Strategy 2030
Vision, 5 strategic orientations, 12 goals
WHAT about development priorities, investment
priorities, institutional setup and structural
changes?
Programme of
Development
Priorities and
Policies
National Reform
Programme
Stability
Programme =
Fiscal strategy
within 4y MTBF
State budget,
Municipal budgets,
Health Insurance fund,
Pension and Disability
fund → GG or S.13
Operational
programmes Development
Report (IMAD)
Macroeconomic
forecast (IMAD)
Country specific
recommendations -
CSR
Stability and
Growth Pact
EU 2020
Slovenian strategic planning in
The EU framework (PF aspect)

principallyfinancedbytheEU Slovenia's development planning model

Main components of the policy-making
and strategic planning systems
(institutions)
The Government shall propose to the NA the adoption of laws,
the national budget, national programmes and other general legal
acts determining the core and long-term political guidelines for each
of the areas within the competence of the state.
Gov. shall direct the state administration
through the ministeries (13 LM +2
without portfolio: one is GODEUCP).
Decree on development
planning and budget
preparation
Alignment of strategic planning
with budget preparation:
GODEUCP & MoF
RULES OF
PROCEDURE
of the
Government of
the Republic of
Slovenia
Gov. Office
for
Legislation
General
Secretariat
6

Slovenia case: Who does what ?
• Government annual plan: laws, regulations, strategies
from LM (monthly report), MPA role (no quality control)
• Ministry of Finance: Budget Directorate + Fiscal unit
Office: fiscal forecast, budget preparation, structural balance
(fiscal rule), proposal of economic policy and structural
measures, drafting legal documents, drafting of strategic
documents (NRP, SP, memorandum for state budget)
• IMAD: macroeconomic forecasts, impact of measures,
potential GDP, ex post assessment of fiscal policy, drafting
macro chapter in PS, NRP and memorandum
• Fiscal Council: Ex ante & ex post assessment of fiscal
policy
• Line ministries: sectorial measures and legal proposals
BUT also strategies, pre-conditionalities for EU funds (+200)
• GODECP no clear role now days for development : SDS +
SDG…

Year 3Year 0 Year 1
Total
expenditure
Debt servicing +
other legal
expenditure
Limitation of
resources
(to be distributed
between the sectors
/ministries/strategies/
programmes)
Financing
the existing
programmes
Total
discretionary
expenditure
Efficiency
savings
Basic
allocation
Additional
funds for
financing new
programmes
Conceptual framework of the medium-
term planning – room for manouver for
(new) programmes, measures?
Summarised from the IMF

Connecting strategies and budgeting
(↓↑ approach)
Measures, structural policies and its impacts,
financial effects
Strategic phase :
SDS, PDPP,
programmes
Decision
phase:
MTBF
State
budget
production
phase (1/2
of GG)
Legislative
phase
(parliament
approval)
Implementation
& execution in
year t
RIA -
function
Evaluation, PBB
Full
aligement

Medium-term programme framework & strategic planning alignment
trough assessment
Macroeconomic estimates
Fiscal estimates/envelope
Expenditure limits on the policy level
PBB & programme classification are useful tool
Sectoral requirements ↑ „wish“ or reality
Technical/finance
aspect - MoF
Policy-related aspect- LM
+ GODEUCP (role?)
Quality estimates
Forecasts vs. targets,
impact of
measures/investments
Income, debt,
expenditure (1), impact
evaluations, multipliers
policy based
Fiscal policy, debt
management, public
expenditure policy over
growth component? Room
for new „costs“, new
impacts TW target from
strategy/programme
Key amendments to
policies – structural
changes – new/better
indicators
Expenditure trend,
spending reviews,
assessment of policies
Assessment and
evaluation of policies and
programmes, investment
planning
Sectoral strategies,
investment policy –
obligatory to asses
„money point of view“ + all
new ideas/prescribed
targets BUT..
A structured, regulated process: a combination from the policy-related aspect and
from the technical aspect

Instructions
for the Implementation of the Rules of
Procedure of the Government of the RS
• Currently, the General Secretariat checks RIAs and
regulatory management tools + necessary only MoF
opinion
11
LAW
ASSESSMENT OF
THE SITUATION AND
REASONS
GOALS,
PRINCIPLES
AND MAIN
SOLUTIONS
ASSESSMENT OF
FINANCIAL
CONSEQUENCES
INDICATION THAT
FUNDS FOR THE
IMPLEMENTATION
DESCRIPTION OF
ARRANGEMENTS IN
OTHER LEGAL
SYSTEMS
ASSESSMENT OF
CONSEQUENCES

principallyfinancedbytheEU Assessment of impacts and
consequences:
environment,
including
spatial and
protection
aspects
for the
economy
administrative:
procedures +
obligations
for
development
and planning
documents
important
circumstances
relating …
public
participation
social
consequences
12

Article 8b:
Elements of a proposal for a law:
Rules of Procedure of the National Assembly, an assessment of
consequences in individual fields:
13
• consequences
for the
environment,
including spatial
and protection
aspects
• consequences for
the economy,
particularly SMEs,
and for the
competitiveness
• administrative
consequences
only, no
supervison
• financial
implications on the
national budget
and other public
funds
Budget
Develop
ment
planning
SecGen/
MoF
approval
Social

First phase budget preparation:
determination of the Overall Budget Ceiling and
Government Programs = SP &MTBF
Second phase budget preparation:
detailed preparation of line ministries subprograms,
projects and activities
MACROECONOMIC
FORECAST
1st Government budget session
CEILINGS
LINE MINISTRIES
Proposals
according to
priorities
FINAL NEGOTIATIONS
Budget sent to Parliament
2nd Government budget session
Budget adopted by the Government
Expenditure NOT
only B.9 (±)
target
Estimation
of revenues
Public expenditure
ceilings (5 classifications)
+ PRIORITIES
Slovenia case: Budget preparation
process
DBP (whole GG) sent the to EC

DECREE
on development planning documents and
procedures for the preparation of the
national budgetRegulates:
1. the method of preparation of development documents,
2. the drafting of policies and setting national
development priorities
3. the procedures and documents for the preparation of the
national budget and its amendments, the amending budget,
and other documents related to these acts.
• Applies also to the preparation of government positions on
development planning documents at the level of the
European Union and international organizations, and other
obligations at international level.
• Relevant regulations have to require that budget
components are consistent with national policies and
priorities set in other strategic planning documents
• Defining hierarchy of documents and clear responsibilities

How can/should we link PF & DevPlan?
• Commitment from institutions, Gov. oversight & ownership
• Mapping all strategic and sectorial objectives and outcomes
(also possible pre-conditionalities for cohesion policy)
• Linking them to fiscal expenditure: setting ceilings on policy
levels
• PBB was focus as link between PF and DevPlan
• Reinforce budgetary framework and set priorities (clear)
Key „on-going processes“: „Easier said than done“
 Programme budgeting and strategic planning (to be
mesured, fulfillment of goals/objectives, SMART enough?)
 Structural measures: labour market, pensions, health …
 Strengthen the capacity for strategy implementation and for
measuring the achievement of results (RIA,
PBB…fiscal/financial aspects)
 Modernizing the budget system to better support budget
decision makers (IT)
Re-think aspects in SI:

How important are RIAs in ensuring
alignment of strategic planning & budget
preparations?
 Governments tend to spend more
than they create/collect taxes
 Poor analysis of impacts (including
fiscal) can risk policy
implementation (unfunded policies)
 RIAs help inform individual decision making about
individual policies and helps budget preparation and
planning. This reduced the risk of unfunded policies.
 They link medium-term planning and development
 It obliges decision-makers in economic policy, less room
for political maneuvering.
 Transparency and "ease" of fiscal planning with clear
priorities and objectives.

principallyfinancedbytheEU Key issues and topics
• Need to have an adequate regulatory and
methodological framework that acknowledges the
need for full alignment of different planning documents
of Government.
• Regulation/law vs polical commitment. Why is not
working?
• Clarity of the status and role/hierarchy of different
planning documents (budget, sectoral strategies, work
plans etc.)
• Clarity in roles and responsibility of various
government players
• A functioning RIA system which should help improve
the quality of individual policies and inform budget
preparation (fiscal impact assessment)
• Programming budgeting and sectoral strategies 18

Thank you for attention!
katja.lautar@mf-rs.si
Change has a considerable psychological impact on the human mind.
To the fearful it is threatening because it means that things may get
worse.
To the hopeful it is encouraging because things may get better.
To the confident it is inspiring because the challenge exists to make
things better.
King Whitney Jr.

Presentation, Katja Lautar, joint SIGMA ReSPA PIFC regional conference, Skopje, 19 September 2019

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Presentation, Katja Lautar, joint SIGMA ReSPA PIFC regional conference, Skopje, 19 September 2019