The severity and global nature of the current financial and economic crisis has increased the role expected of fiscal policy in stimulating national and global demand, protecting vulnerable groups, and investing for future growth (International Monetary Fund, or IMF 2009). For those that can afford it, this means quickly designing and implementing fiscal stimulus packages. These new challenges have arisen while governments across the world have, for some time, been reforming their budget management frameworks to improve public sector performance to better meet complex and ever-rising obligations. While there is a risk that the short-term stimulus diverts attention from longer-term performance reforms, this note suggests that 'performance-informed budgeting' can help countries better address the challenges of the current financial and economic crisis. Specifically, how governments might enhance the impact of their fiscal stimulus through three interrelated performance-informed areas: i) reprioritizing public spending to maximize the impact of the stimulus measures; ii) improving the efficiency and effectiveness of operational expenditures to avoid waste and maximize the available fiscal space; and iii) accelerating investment expenditures, to both stimulate demand and build for future growth.
