Outcome-based funding for ministries, agencies

New Straits Times, 29 October 2011

The amount of funding allocated to ministries and government agencies in the 2013 Budget will be measured by their performance next year.

Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said ministries and government agencies found to be involved in irregularities or discrepancies in the next Auditor-General's Report will receive lesser funding allocations.

He said the 2012 Budget announced on Oct 7, would be implemented based on an "outcome concept", which linked the performance of each ministry or government agency to the amount of funds allocated in the next annual budget.

"Instead of looking only at the amount of funds spent, an outcome-based budget will scrutinise the benefits, development or profit gained through each ministry or agency's expenditure.

"Any discrepancy or irregularity is bound to show up in the end performance which will directly affect the funding allocated to the ministry or agency in the next budget," he said after launching a 1Malaysia computer centre at Kampung Jelapang Jaya here yesterday.

Husni said the move was being introduced to increase accountability and curb irregularities as revealed in last year's Auditor General's Report.

He pointed out that ministries or agencies found to be involved in misuse of funds or showing disregard for financial procedures would face strict consequences under the Financial Procedure Act 1957.

He also stated that starting next January, under-performing civil servants would be axed.

"We plan to introduce a new scheme whereby slacking is not tolerated and promotions will be tied to each staff's performance record.

"This is meant to create higher credibility and integrity among staff and hopefully the overall quality of the civil service will improve."

He also revealed that a review of the Auditor-General's report in 2009 and last year would be conducted for a comparison.

"We want to see if the measures introduced so far have been effective."

Meanwhile, Husni also announced that the government had agreed to back up SME Bank's acquisition of bonds worth RM3billion to help fund the country's Small and Medium Enterprises (SME) for a period of three years from now until 2013.

He said the government was confident with the bank's new management which succeeded in reducing the non-performing loan ratio for new loans to a minimum level.