The Changing Nature of Public Expenditure Work (1) Public Expenditure Analysis and Management Course, May 23, 2002 Anand Rajaram, PRMPS

Transcription

1 The Changing Nature of Public Expenditure Work (1) Public Expenditure Analysis and Management Course, May 23, 2002 Anand Rajaram, PRMPS

2 Story Line Last 2.5 days various components of PE work outlined Our job is to bring it back together How do the components add up in reality? What is the typical framework for such analysis? How are new challenges being incorporated? How can such work contribute to better development impact? And to dovetail into next session on PRSP and specific Bank instruments

3 Logic of the two presentations My presentation will provide an overview on the field and some case illustrations of PERs from an economist s perspective Yasuhiko s presentation will present an institutional/political economy perspective to public expenditure issues

4 My Outline Outline of evolutionary changes in PE scope and content and process A sample classification of recent PE work Challenge of collaboration across PREM, HD, FM Fiduciary assessment Poverty impact of public spending Illustrations from recent PER cases Some guidelines/issues for better PE work

5 Early stages of PE evolution Focus: Level and composition of Public Exp Standard conclusions: High wage bill, inadequate O&M, high interest burden, too many projects PE Analysis Fiscal Sustainability Allocative Efficiency Incidence Analysis Related items Civil Service Reform

6 Focus on PEM Focus: Budget formulation, treasury systems, integrated financial management systems Recommendations: MTEF, IFMS, Treasury single accounts PE Analysis Fiscal Sustainability Allocative Efficiency Incidence Analysis Policy Plans PE Management Budget Formulation Budget Execution Related items Civil Service Reform

7 New Elements Added: Fiscal Risk, Tracking Surveys Policy Process (PRSP?) PE Analysis PE Management Fiscal Sustainability Fiscal risk Budget Formulation Allocative Efficiency Incidence Analysis Tracking surveys Budget Execution Related items Civil Service Reform

8 PRSPs Further Expansion of Expectations PE for Poverty Reduction Pro-poor PE Poverty Reduction Policy Process PE Analysis PE Management Fiscal Sustainability Fiscal risk Budget Formulation Allocative Efficiency Incidence Analysis Tracking surveys Budget Execution Service Del.survey Reporting & oversight Poverty Reduction?? Procurement Related items Civil Service Reform Decentralization

9 Coming Soon to a PER near you: Costing MDGs, Gender, Participatory Budgeting Might we Break the Camel s Back? Pro-poor PE Policy Process (PRSP?) PE Analysis PE Management Fiscal Sustainability Fiscal risk Budget Formulation Allocative Efficiency Incidence Analysis Tracking surveys Budget Execution Service Del.survey Reporting & oversight Poverty Reduction?? Procurement Related items Civil Service Reform Decentralization

10 The family of PE outputs PERs PEIRs Provincial/regional PERs IGRs Fiscal Reviews/Assessments? (OECS) Country cousins the CFAA, CPAR SSEFRs (imminent) A case for birth control? Or at least rational modules?

11 VOLUME OF PE AND FINANCIAL ACCOUNTABILITY WORK, FY97-01 Region CPAR CFAA CPFA PER IGR PE LEND. AFR EAP ECA LAC MNA SAR TOTAL

12 The PE menu: Too Many Cooks/Recipes? Public Expenditure Institutional Reviews (PEIR) Country Financial Accountability Assessments (CFAA) Expenditure Analysis Budget Formulation Budget Execution Monitoring & Reporting HIPC Expenditure Tracking Assessments Fiscal ROSC Country Procurement Assm t Reviews (CPAR) Social Sector Exp.& financel reviews (SSEFRs) Public Expenditure Tracking Surveys PETS Governance Surveys (e.g., IGRs, Anti- Corruption, Public Officials, Household.) PEFA

13 How have PERs adapted to expectations? A typology of recent PERs PIR as a supplement to Customized BM report: Russia The PEM: Mozambique (2001) PE Reform support to MTEF: Albania (2001) Bank supplement to Govt PER: Malawi, Tanzania, Zambia PEIRs: Turkey, Macedonia, Croatia, Bosnia Annual PERs with regional supplement Ethiopia (2001) PE Process annual report: Uganda PERs w/intergovt.fiscal Czech,Thailand, Kazakh,Bosnia Provincial PERs Punjab (Pakistan), Maharashtra (India) Indonesia (ongoing), China

14 The Challenge of Success in East Africa cf: Allister Moon Since 1997 PERs in Tanzania and Uganda have sought to: Open budget process within govt. Open budget to review by external stakeholders Integrate donor financing in budget PERs undertaken annually with govt. counterparts have created strong govt. capacity to manage the budget reform process and created the basis for external domestic review Spillover effects for managing PRSP

15 East Africa success continued Strong and continuous support for this process from staff in resident missions and domestic consultants was key factor PER support in two phases in annual budget cycle: Tech support to budget strategy formulation by executive To play a coordinating role in enabling external review of budget by legislature and NGOs

16 East Africa continued Context and budget achievements: Fiscal stability maintained Improved input (commitment) control Focus on outputs emerging Citizen feedback on budget Challenges: Too many processes: PRSP and budget process Earmarking for PAF: pro-poor Managing expectations Role of legislature Death by participation

17 Does success mean that the PER as a Bank report will wither away? PER is important as an annual process of helping government strengthen its system. In Uganda, the PER report is an annual record of key features of development of the budget process. Under old QAG rules, this would suffer in the evaluation process.

18 Turkey: Solving the Common Property Resource Management Problem Coalition politics, high turnover Traditional budgeting but fragmented institutions and non-comprehensive budget Implicit and explicit contingent liabilities PEIR as process to address collective action problems Bank as honest broker Process was key to successful agreement on reform strategy

19 QAG/OED reviews of PERs and CFAAs In general, both of uneven quality Given fiduciary origin, CFAA s do not provide assessment of risk to Bank funds / limited development impact PERs evaluated on process, content and cost effectiveness both content and process are highly variable Question: Should PERs be standardized? Or is their flexibility an asset for customization? Would more detailed guidelines be a help or a hindrance? De Ferranti Review: Unit of account to be not individual task but full AAA package evaluated in context of country program over one full CAS cycle / more sensitivity to client perspective

20 Problems needing attention: Most PE work not based on multi-year PE strategy in CAS hampers systematic progress de Ferranti report recommend.would help Unit of PE analysis must be general govt.- To provide full coverage of govt activities To highlight intergovt fiscal issues To pave way for provincial/local govt PERs To enable focus on service delivery issues Inadequate coordination of different diagnostic instruments PER, CFAA, CPAR and Fiscal ROSC the whole is less than the sum of parts After diagnostic work, design of PE reform requires appropriate sequencing area of weakness Tendency to recommend package technical fixes MTEF, IFMS, independent procurement boards etc. reflects this weakness Any PEM reform initiated requires close attention and technical support to govt. not always within skill set of staff

21 Improving PE impact on poverty Incidence analysis is not systematically undertaken it is key link to outcomes for the poor Tracking surveys should be used more widely Use of crude proxies for pro-poor PE is widespread but not analytically justified Social sectors have initiated work and can deepen this analysis on incidence and longer run impact Other sectors (water, infrastructure) need to develop this budgetary focus