About the Value for Money project
Evaluation of the Public Expenditure Effectiveness (spending review)
This project has been supported by the European Social Fund through the Operational Programme Effective Public Administration.
Information about the Operational Programme Effective Public Administration can be found at http://www.opevs.eu/.
Beneficiary: Ministry of Finance of the Slovak Republic, Štefanovičova 5, 817 82 Bratislava
Project location: Slovak Republic
Amount: € 6 432 604.15
Implementation period: October 2015 – March 2021
Project code: 314011J794
By implementing the national project Evaluation of the Public Expenditure Effectiveness (spending review), the Ministry of Finance of the Slovak Republic introduces a new tool increasing the value for money in public administration. The aim of the project is to measure the value for money in spending programs, investments, operations and state regulation. The second purpose is to strengthen the analytical capacity of the public sector. Stronger analytical capacity of state and public administration is a prerequisite for improved decision-making based on objective analysis stating the most likely outcomes of individual decisions.
Spending review is one of the tools aimed at increasing the value for money. It evaluates current public expenditure in the context of general government budgeting, its impact and effectiveness in particular, be it the quality of healthcare or protection against dangerous products. The effectiveness of achieving pre-stated objectives is assessed by evaluating inputs (costs), outputs and results and where possible, also compared to international standards. The results of the spending review may suggest public finance savings, improved public services (with better results) or expenditure shifting to priority areas (allocation efficiency) with reduced funding elsewhere. It is also possible to combine the recommendations ('do more for less') or to have different objectives in different sectors, such as focusing on better results in education and decreasing spending in other sectors. Besides suggesting modifications of amounts of financial resources, the spending review offers a deeper discussion of recommendations compared to usual budgetary procedure.
The assessment of effectiveness of public expenditure in the proposed form has not been carried out in the Slovak Republic before. Within the European Union (EU), the UK, the Netherlands, Denmark, Sweden and France have experience with spending reviews or its equivalent. In the context of the financial crisis and increased pressure on budget consolidation and public debt reduction, the importance of the process has increased. The method has been implemented by Ireland and later by Slovenia, Poland and other countries.
To ensure the impartiality and transparency of the project's activities, an advisory body was created - the Value for Money Committee.
The main activities and outputs of the project are:
Establishment of the spending review methodology – The spending review methodology defines the flow (proceedings, timetables and outputs) as well as framework of the analysis itself (the way and scope of quantifying the economic benefits of a spending program or project (for instance the form and scope of quantifying the economic benefits of a spending program or project).
Spending review – Assessment of public expenditure in terms of efficiency and effectiveness and identification of measures increasing the value for money of public finance. This will either lead to fiscal savings, improved public services (and results) and/or shifting the funds to other government priorities. This will also allow to better assess and predict the impact of decisions in the decision-making process. This objective will be achieved through a unique analytical process – spending review in the four core areas the state is in charge of - operation, investment, policies and regulation.
Assessment of investment projects – The specific type of spending review is assessment of public investments over EUR 40 mil or EUR 10 mil in the IT areas before the start of the investment related public procurement process and preparation of ad hoc analyses. At least 39 evaluation reports (reviews, assessments, ad hoc analyses) will be produced in total.
Linking the spending review to the budgetary process - In order to link the spending review to the budgetary process thus ensuring the sustainability of the project, the Ministry of Finance of the Slovak Republic will submit a proposal changing the budgetary process by taking into account the principles of the spending review. A government resolution will be adopted together with the submitted conceptual material.
Monitoring the implementation of the proposed measures (by the Implementation Unit of the Office of the Government of the Slovak Republic) - Subsequent implementation and monitoring of implementation of measures or other indicators set out in the evaluation reports is crucial for policy coordination, public reporting of evaluation results and possible adjustments. The monitoring output will be a regular interim and summary annual report on the implementation of the identified spending review measures. A total of 8 reports will be prepared during the project.
The Efficiency of public expenditure – public expenditure reviews’ project has been evaluated for the European Commission as a case study in scope of an assessment of the progress achieved by the European Social Fund support to public administration in EU countries (Progress Assessment of ESF Support to Public Administration’ (PAPA)).