Improving public sector performance
The use of Performance Contracts has been acclaimed as an effective and promising means of improving the performance of public enterprises as well as government departments. Essentially, a Performance Contract is an agreement between a government and a public agency which establishes general goals for the a g e n c y, s e ts t a rg e ts for measur i ng performance and provides incentives for achieving these targets. They include a variety of incentive-based mechanisms for controlling public agencies—controlling the outcome rather thanthe process. The success of Performance Contracts in such diverse countries as France, Pakistan, South Korea, Malaysia, India, and Kenya hassparked a great deal of interest in this
policy around the world.A large number of g o v e rnments and i nt e rn a t io n al organizations are currently implementing policies using this method to improve the performance of public enterprises intheir countries. Performance Contracts represent a state-of-the-art tool for improving public s ec t o r pe r fo r ma n ce. They are n ow considered an essential tool for enhancing good governance and accountability for results in the public sector.
International experience with privatiz a t ion sugg e sts tha t t he p r ocess of
implement i ng a well-thoug h t- o ut privatization program is a lengthy one. Therefore, inthe interim, it is imperative that immediate steps be takento increase the efficiency of the public enterprises and reduce further drain on the country's treasury resulting from their losses. A rigorous performance contract exercise reveals the “true” costs and benefits a ssocia t ed wi t h a partic u lar p u blic enterprise. This, in turn, provides a valuable
basis for Privatization. Similarly, the Performance Contracts with government departments are being used extensively in OECD countries to improve the delivery of public services and effectiveness of government machinery.
Many countries have had success in improving the performance of their own public sector by designing Performance
Contracts after carefully examining and adapting to their particular needs the lessons of the vast international experience with regards to Performance Contracts. - bide.com