TITLE:
The Effectiveness of Performance-Based Budgeting in the Public Sector: An Empirical Analysis and Policy Implications
AUTHORS:
Ramil Abbasov
KEYWORDS:
Performance-Based Budgeting, Public Sector, Fiscal Management, Accountability, Efficiency, Policy Evaluation
JOURNAL NAME:
iBusiness,
Vol.17 No.1,
March
17,
2025
ABSTRACT: Performance-based budgeting (PBB) is a financial management reform that links resource allocation to measurable outcomes, aiming to enhance fiscal discipline, operational efficiency, and transparency within the public sector. This study presents an empirical analysis of PBB’s effectiveness by examining data from 75 governmental agencies over a ten-year period (2010-2020) across three jurisdictions—the United States, Australia, and the United Kingdom. Using a mixed-methods approach, we combined quantitative analysis of annual financial reports from sources such as the U.S. Government Accountability Office (GAO), the Australian National Audit Office (ANAO), and the UK National Audit Office (NAO) with qualitative insights obtained through semi-structured interviews with 45 senior financial managers and in-depth case studies of 5 agencies. Quantitative findings reveal that agencies implementing PBB achieved a statistically significant reduction in budget variance from an average of 8.3% pre-PBB to 7.0% post-PBB—translating to a relative improvement of approximately 15.7% (p