The Evolution of Performance Budgeting in Chile

Abstract

This chapter explains how the main components of Chile's performance budgeting were introduced from the perspective of organizational change, followed by an analysis about the role of performance budgeting in improving allocative and operational efficiency and increasing accountability. The government of Chile has more than two decades of experience with performance budgeting. Chile's political and economic context during the introduction and implementation of performance budgeting reforms is quite unique. The most important components of Chile's performance budgeting system were officially introduced in the years 1996 and 1997. The Program for Management Improvement (PMG), which was first implemented in 1998, was one of the most interesting components of Chile's performance budgeting system. The introduction of evaluations, the PMG, and performance indicators were the result of small steps that were taken since 1990. Chile's performance budgeting system falls within the realm of performance-informed budgeting, i.e. its goal is to make performance information available as an input for decision-making processes.