Effectiveness and Efficiency of Implementation of Program-Based Budget and Budget Credibility

Abstract

The full implementation of program-based budgeting offers financial advantages compared to budgeting based on line items. However, in the Ministry of Finance of Timor-Leste, this is not effectively and efficiently implemented, and it fails to maintain the budget's credibility. The main objective of this research is to assess the levels of effectiveness, efficiency, and budget credibility in the Ministry of Finance. To achieve this goal, a quantitative descriptive analysis method is employed. The results indicate that the average budget absorption for the years 2018-2022 has not been effective, with an implementation rate of 78.12%, signifying less effectiveness. The average efficiency level is considered efficient at 78.12%. However, this does not necessarily mean that most programs or activities have been successfully achieved; rather, it is due to some situations at that time that hindered proper implementation. Meanwhile, budget credibility in the context of budget implementation is considered less credible, with an average percentage of 78.12%. Looking at budget credibility from budget changes (additions or reductions), the average ratio is 5.99%, indicating less credibility over the five-year period. It is recommended that the Ministry of Finance of Timor-Leste provides adequate and regular training for its staff, conducts routine supervision, prepares performance reports, and ensures staff commitment in the budget planning process.