Public Expenditure Management and Poverty Reduction Strategies. Vera Songwe (EASPR) Poverty Day October 16, 2003Washington DC

Transcription

1 Public Expenditure Management and Poverty Reduction Strategies Vera Songwe (EASPR) Poverty Day October 16, 2003Washington DC 1

2 Outline Ways in which public expenditure management issues can be addressed in the PRSP context How the PRSP was integrated into the Mongolian PEM process and how existing PEM conditions influenced the relationship between the two Operational Issues Lessons - what has worked well, and less well, in practice 2

3 ways in which public expenditure management can be addressed in the PRSP context 3

4 all about budgets Countries with weak public expenditure management systems and processes will under perform on the PRSP agenda. Policy predictability and Funding Predictability generates better outcomes Policy priorities drive funding the PRSP (most) emphasises policy predictability and good PEM is built on funding predictability integration of policy, planning budgeting -(MTEF); execution and monitoring within a medium term perspective 4

5 How the PRSP was integrated into the Mongolian PEM process and how existing PEM conditions influenced the relationship between the two 5

6 Mongolian example Timeline of PRSP preparation from I- PRSP to F-PRSP Influence of Economic and Sector Work on the nature of discussions around the PRSP Ongoing reform programs in country and existing state public expenditure management 6

7 The state of PEM reform in Mongolia at the beginning of the PRSP process (initial conditions) Dialogue with Country on the issues Focus of the PRSP Exploiting existing processes 7

8 PEM reform in Mongolia Public Sector Management and Finance Law Financial Management Performance Management The Hurdle Approach: sequencing the reform agenda at the center and at the agency level Used an approach which has been used with varying degrees of success in different countries. THE PSFML and existing PEM reform in Mongolia how it impacted on the process. Framework existed needed to work with the country on implementation Benefited from support from IMF as well 8

9 Institutional Arrangements Matter Strong leadership of the Ministry of Finance and Economy in the PRSP and PEM reform discussions Pays to build on existing reform momentum The PRSP process has helped to build bottom up sectoral consensus on policy priorities and focus sectoral attention on performance and outcomes. PEM reform has facilitated, and is benefiting from the current emphasis on PRSPs. 9

10 Operational issues what are the operational implications for staff as PRSPs are implemented and we seek to foster greater connection between the strategy and the budget 10

11 Operational issues Need Technical Assistance, Economic and Sector Work as the basis for PRSP diagnostics, Grant funding access and timing, (PHRD, PRSP TF) cycle alignment of Bank processes with country processes CAS-PRSP-PRSC linkages More cross sectoral work every issue is cross cutting.. Staffing PRSP of teams More sector and country director involvement Adequate Administrative Budgets PRSPs are costly 11

12 Lessons and moving forward Alignment: Linking PRSPs, national strategies and budget processes Comprehensiveness of the PRSP: Real tensions exist between the demand for comprehensive PRSPs and the need for realistic MTEFs. Could undermine ongoing gains in adopting MTEF Capacity and sequencing: Learning process and some sectors will be more advanced than others on the PEM/PRSP process Donor Coordination: The PRSPs as an advocacy document or strategic policy document: Policy decisions should reflect what is affordable and implementable over the medium to longer term not as a function of donor funding.. Ownership of the PRSPs by the executive and the legislature 12

13 Lessons and moving forward Accountability: Advanced PEM reform is needed for the PRSP process to deliver on the promise of greater stakeholder involvement-need a more nuanced message Civil society involvement: At issue is timing of civil society involvement in the budget process. Outcome or results orientation of PRSPs: Weak Monitoring capacity in most countries and lack of adequate support within the Bank performance indicators needed Poverty Diagnostics LSMS Managing expectations Decentralization: Enormous challenges to doing 13 PRSPs in a fiscally decentralized environment

14 Conclusion The PRSP (and related sector strategies) provide the roadmap for policy priorities while the MTEF provides the discipline within which explicit policy choices and tradeoffs are made. MTEFs provide the link between ambitious poverty reduction targets and the annual budget priorities of government, linking what is desirable with what is affordable and most likely to deliver results. 14