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It also highlights the importance of measuring reform implementation at the sectoral level.

The purpose of governance is to protect and promote the well being of citizens.

It is an explicit effort to expand the domain of budgeting to include more emphasis on productivity in relation to planned targets and to strengthen the correspondence between public spending and results. Problems have included lack of basic financial control and performance data systems; inconsistent political will; lack of appropriate incentives; and gaps in alignment and integration within and across government institutions and agencies (Montes and Andrews 2005; Roberts and Andrews 2005; Ronsholt and Andrews 2005).

Implementing agencies have had trouble agreeing on performance indicators, integrating costing systems with performance information and deciding how reforms should be adapted in the context of decentralization (Grizzle and Pettijohn 2002; Kong 2005; Radin 2006).

: The two viewpoints on the MTEF process are ‘Top Down’, i.e.

steps mainly executed from the central level Ministry of Finance, and ‘Bottom Up’, i.e.

The success of public budgeting reforms also has implications for health systems strengthening (World Health Organization 2007).

This article presents evidence from a study in the hospital sector in Lesotho, a small, land-locked country in Southern Africa which has been implementing public finance and budgeting reforms since 2005 in an effort to create more realistic budgets and provide incentives for efficient and effective management of government services (Central Bank of Lesotho 2007).The results show that budget reform in Lesotho has not changed institutions or decision-making practices in the health sector, and reform goals were not achieved.After presenting these findings, the study begins to explore some of the possible reasons for failure.Reforms to make budgeting more transparent and accountable try to relate expenditures to objectives, seeking to make budgeting more rational (Lewis 1952; Wildavsky 1978).Recent public finance reforms, such as the Medium Term Expenditure Framework (MTEF) and performance-based budgeting (PBB) fall within the paradigm of rational budgeting (Radin 1998; Schiavo-Campo and Tommasi 1999), and are currently being implemented in dozens of countries (Schiavo-Campo 2008).

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