Public Sector Reform: What Works and Why?

Report
Public Sector Reform:
What Works and Why?
An IEG Evaluation of World Bank
Support – 1999-2006
September 2008
What did we evaluate?
• Most work of the World Bank supports reforms
of the public sector, broadly defined
• Core Public Sector:
– Managing Public Money thru the budget cycle -- PFM
– Managing the People—civil service and organization
of administration --CSA
– Tax Administration agencies
– Anticorruption and Transparency— government-wide
measures-• AC laws and AC Commission
• access to information laws
• 1999-2006, plus retrospectives
Lending Projects with Significant
PSR Components - 1990-2006
25
Number of Projects
60
20
50
40
15
30
10
20
5
10
0
0
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Fiscal Year
Investment Lending
Total, as percent of World bank projects
Development Policy Lending
Percent of WB Projects
70
How did we evaluate?
– Look at whole country program for PSR
• Lending, Analytic work, non-lending TA
• Six plus PSR loans in 13 countries, including Pakistan, Peru,
Brazil, and Uganda
• Three plus in 55 countires
– Large numbers show tendencies
• Change in ratings of Country Policy and Institutional
Assessments – 1999-2006
– Case studies give insights as to Why
• 19 cases, including 6 with field visits
– Bulgaria, Burkina Faso, Cambodia, India, Russia and
Tanzania
CPIA—Country Policy and
Institutional Assessments
– Total of 16, of which four pertain to public
sector governance
13: Quality of Budgetary and Financial
Management (PFM)
14: Efficiency of Revenue Mobilization
14b: Tax Administration
15: Quality of Public Administration (CSA)
16: Transparency, Accountability and
Corruption in the Public Sector
Main findings – Successes
• PFM and Tax Administration
– Majority of countries with PFM and tax administration
loans improved performance in CPIA
– Good diagnosis and monitoring (PEFA)
– Strong motivation of Min of Finance
• Tax administration a key entry point in Eastern Europe
– Technical cooperation with IMF and donor community
• Transparency – access to information
– Key component of PFM as well as government wide
Finding: UNSuccessful areas
• Civil Service and Adminstrative reform
– Many failures to retrench and to improve pay
• Problem flagged in 1999 IEG evaluation
• Cambodia, Honduras, Yemen
• Labor market conditions facilitated success in Russia
– New initiatives for merit-based recruitment and
promotion – Albania, some Indian states
• Anti Corruption – government-wide initiatives
– AC laws and commissions rarely successful
• Lack of sustained Political commitment
• Lack of Strong judiciary
– Relative success in system-building and transparency
PSR Success rates lower in
low-income countries
• World Bank often used models too
sophisticated for settings with initially weak
institutions—typical in low-income
countries, especially Africa
• Middle-income governments more often
had the fiscal independence to be
selective – choosing what they thought
was appropriate– Russia, South Africa,
Mexico
Rec 1. Recognize complex
political and sequencing issues
• Be realistic about the time needed to get
significant results
• Understand the political context
• Focus first on the basic reforms that a
country needs in its initial situation
• Balance between investment projects and
development-policy lending
– institutional change needs sustained support
Rec 2. Prioritize Anticorruption
efforts
• Identify corruption that is most
harmful to poverty reduction and
growth
– Aim for improved results
• Build country systems to reduce the
opportunities for corruption
• Make information public
– stimulate popular demand for more
efficient and less corrupt service delivery
Rec 3. Strengthen Civil Service and
Administration components
• Better analytic framework for CSA
– Look beyond fiscal cost
– Merit-based incentives
• Actionable indicators for civil service and
administrative performance (like PEFA)
• Link civil service reforms to financial
management
• CSA reforms needed to sustain
improvements in rest of PSR

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