Performance based budgeting (PBB) hasbeen a popular reform among ministries of finance across theworld, accompanied by high expectations for its ability totransform national budget processes. PBB offers the hope ofa more evidence-based rationale for making budget decisionsacross an array of competing policy and program areas. Itoffers a framework for linking medium-term nationalstrategies with the annual budget process, while the programlogic structure gives a more transparent view of theactivities being undertaken than a traditional line itembudget does. Ultimately, PBB holds out the allure ofproviding incentives for improved public service delivery.Despite significant time and effort devoted to PBBimplementation, the experience of many countries is rathermixed. This report explores some of Malaysia’s successes andchallenges in implementing PBB in recent years, therationale for undertaking the reform, and how Malaysia’sexperience with PBB compares with that of other countries.