Performance-based budgeting strategy is always favoured by the government. This is because policy makers are looking beyond input and expense to make informed choices or decision that will solve long-term outcomes that are based on measurable accomplishment or progress. In short, performance-based budgeting means the allocation of funds with the aim of gaining programmatic objectives and goals. Additionally, effectiveness and efficiency are also considered in this strategy.
Contrarily, there are four features of performance-based budgeting. First, the budget should have a set of goals that are linked with monies. Secondly, the budget system must give data on previous performance that can be used for the future decision-making process. It also helps in determining between actual progress and expected progress. Thirdly, it should have room for adjustment that can be used to close any existing performance gap in the future budget preparation cycle. Lastly, the budget should provide an opportunity for normal ad hoc program evaluation. This is significant because the evaluation gives verifiable or independent data to budget program manager and decision-makers.
Consequently, the example of performance-based budgeting is: the government uses this strategy in their strategic planning. The allocation of resources is done effectively when objective and goals are seriously reviewed. The assessment of objectives and goal is the same as viewing progress, and that is measuring performance. Secondly, the government use performance budgeting system to establish State priorities. This is reviewing which sector of the government is sensitive and needs serious attention. Finally, the government uses performance budgeting during spending plans. This incorporates an extensive plan on how expenditures and revenues allowed in the enacted budget relate to cash disbursement statement or receipts.
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