1 prsp and budget links: emerging evidence from case studies find materials at psgo site ...
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PRSP and Budget Links:Emerging Evidence from Case
Studies
Find materials at PSGO site
http://www-wbweb.worldbank.org/prem/premcompass/know_learn/psgo.htm
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PRSP and Budget Links:Emerging Evidence from Case Studies
Jeni KlugmanRosa Alonso
Oct. 12, 2004
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Presentation Summary
Overview and MotivationPRSPs and BudgetsLessons Learned1. Aggregate2. Data 3. Process4. Allocations5. Donors
ConclusionsChallenges Ahead
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Overview:Motivation
PRSP process and associated policy and program commitments have the potential to increase the pro-poor focus and accountability of policy-making and budgeting, through improved availability and use of information, and better incentives and processes.Indeed realizing this potential is central to expectations about PRS effectiveness as an instrument to promote pro-poor policy and programs.
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Overview:The PRSP and Budget: Potential Linkages
IdentifyPriorities
AnnualBudget
MTEF
Evaluation
PRSP Process &
PolicyCommitments
PEM
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Budgets—A Key Disciplining Tool for PRSPs
Budgets are a key implementation tool for PRSPs and provide discipline:
Link to the fiscal envelope and discipline of costingAbsorptive constraintsNeed to prioritize and sequence policiesRigorous application of technical criteria to judge trade-offs
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PRSPs—A Strategic Framework for Budgets
PRSP approach promotes:A focus on poverty reduction A needs-based reference for fiscal policy decisionsGreater transparency of process and more participation of line agencies and CSOsEmphasis on results and indicatorsDonor commitment to align external finance with government priorities
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Key Themes
The case studies aim to assess:The contribution of the PRSP process to more accountable and pro-poor budgetingThe degree of implementation of PRSPs via the budget
Questions on PRSP implementation (JSA):Is the financing plan adequate and credible?Are fiscal choices—on expenditure and revenue side—consistent with strategic priorities and institutional capacity?Is public financial management adequate to ensure effective implementation?
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PRSPs-budgets—tension between needs and resource availabilityNeeds-based PRSP can provide:
Strategic orientation and goalsImpetus to improve tax collectionIncreased ability to leverage external finance to deliver agreed results
Resource availability as determined by realistic macroeconomic projections and overall budget envelope provide the needed discipline for PRSP implementation
Lessons Learned (1)Aggregate Financing--Potential
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Lessons Learned (1)Aggregate--Limitations
Significant gaps in funding in MTEFs (TZ, BF)Failure to tackle the revenue side and slower than expected growth means lower revenue out-turnsDifficulty in prioritizing can put pressure on the aggregate
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Lessons Learned (2)Data Production, Availability and Use
Data production—Greater coverage and disaggregation of data:
Improved coverage of donor financing in TZGender-disaggregated targets in education and health in BF with impact on budgets
Dissemination—improved availability Use—improved poverty analysis. Overall weak feedback loops to policy-making:
In TZ, use of poverty-data for elaboration of local transfers formula
Improved results-orientation and M&E, e.g. of MTEFs, sector strategies and program budgets
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Lessons Learned (2)Improved use of Data,
Results-Orientation of Budgets and M&E
Budget allocations increasingly informed by data, analysis and costing of priority programs
Poverty diagnostics is a key building blockSpending by level of service (primary, tertiary, etc.)Regional composition of spending and poverty mapsBenefit incidence analysis – average and marginal Program evaluations Use of quantitative and survey information
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Lessons Learned (3)More Open Process
Improved accountability—inside and outside governmentEnhanced dialogue within line ministries and b/n line ministries & MoF due to:
WGs and PRS review processesResults-orientation of PRSP process and budget supportBut, much more efficient when finance and planning under one ministry!
PRSP process can support decentralization--Local governments key to improve service delivery
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Lessons Learned (3)Budget Process: Tanzania
PRS working groups:Working groups in priority sectors and budget, macro and energy groupsParticipation from MoF, line ministries, donors and civil societyRole--scrutinize links between PRS, sectoral strategies, MTEF and budgets Government leadership/ownership key!
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Process: TanzaniaInstitutionalizing a Poverty-
Focused Dialogue
Contribution of working groups:Institutionalize participation in PRS implementationSupports dialogue within govt. and b/n government, donors and civil societyIncrease poverty focus of sector dialogues Increase results-orientation of policy dialogueHelp set up and monitor SWAPs
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Lessons Learned (3)Process: Cambodia—Building Linkages
Achievements: Merging of PRSP and planning processExisting sector strategies (e.g. health and education) inform NPRS and sector expenditure frameworksSectoral and structural measures subject to iterative consultationsSome sectors show clear connection to budgetPRSP process is enhancing connections b/n key Parliamentarians and CSOs
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Limitations in Cambodia
Many activities in matrix not costed Line agencies take incremental approach and focus mainly on investment projectsWeak role/ownership of Parliament in development of PRSP and budgeting processes and prioritiesInstitutional disconnect as MEF involved relatively late in NPRS development
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Lessons Learned (4)Allocations: Overall Achievements
Allocations to pro-poor spending have been increasing in countries with PRSPs, as percent of GDP and of total spendingEspecially true in countries that are more advanced in the PRSP process, have better budgeting processes, and more donor support“Poverty-reduction” spending increased by an average of 1.5 points of GDP across 20 countries from 2000 to 2004
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Rising share of current expenditures goes to priority sectors in Cambodia (share for health, education, and agriculture/rural development rose from 25% in 2000 to 36% in 2004)Priority expenditures (relatively) protected from budget cuts in TZ and BFIn some sectors/countries improved intra-sectoral resource allocation (especially primary education)—e.g. BF, Cambodia
Allocations-Findings from Case Studies
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Allocations: Findings
Real Expenditure Increases
-100000
0
100000
200000
300000
400000
500000
600000
FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06
Discretionary Expenditure Priority Sector (broad)
Tanzania: Priority/Discretionary Spending
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Allocations: Findings
7029
3091
612 636
2846
237 0
14724
5130
1742 1864
6205
709 465
0
2000
4000
6000
8000
10000
12000
14000
16000
Educatio
n
Health
Wate
r
Agric. R
&E
Roads
Judic
iary
HIV
/AID
S
T.S
h. (a
t consta
nt F
Y03 p
rices)
FY99
FY03
Priority Real Spending Per Capita
Tanzania: Sectoral Spending
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Allocations: Findings
Burkina-Faso: Real Priority ExpenditureFigure 1. Real expenditure in priority sectors
0
50000
100000
150000
200000
250000
1998 1999 2000 2001 2002
CF
A M
ill
0
2000
4000
6000
8000
10000
12000
14000
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CF
A
Total expenditure Per capita
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Allocations: Findings
Improved geographical resource allocation, impetus to decentralization:
Allocations to municipalities in Bolivia grew from 9 to 13 percent of the budget between 1999 and 2002New pro-poor regional transfer norms in Tanzania and for health sector in Cambodia
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Lessons Learned (4)Allocations: Caveats
Uneven increases across sectors—in education much greater than in health (EFA)And within sectors—(e.g. curative vs. primary health and agriculture vs. rural roads in BF, within agriculture in Cambodia)And across expenditure categories—only small increases in goods and servicesDefinition of “priority” often problematicNumber of priority areas expanded in new PRSPs for both Burkina and Tanzania (now up to 70 percent of non-debt expenditure in TZ)
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Donors and External Assistance--Potential
The move to budget support that has accompanied the PRSP process has greatly increased incentives for:
Sound public expenditure managementCosting and budgeting for sector strategiesSolid accountability mechanisms (internal and external)
Focus on accountability
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Donors and External Assistance—Achievements and Limitations
Increase in budget support:From 1.8 to 3.2 of GDP in TanzaniaFrom 2.9 to 4 percent of GDP in BF
Progress in:Integrating foreign aid into the budgetMedium-term aid commitments (in TZ, BF)Donor coordination around SWAps in priority sectors
BUT No real increase in aid b/n 1999-2002 (TZ, BF)Need to meet international fiduciary requirements (esp. procurement regulations) can significantly slow down budget execution
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Donors and External Assistance--Limitations
0
100
200
Q1 Q2 Q3 Q4 Q1 Q2
FY02 FY03
Tsh
s. b
illio
n
Actual
Committed
Tanzania: Predictability of Budget Support
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Donors and External Assistance--Limitations
Figure 27. Budget Support: Quarterly Disbursements
0%10%20%30%40%50%60%70%80%
1 2 3 4
Quarter
% D
isb
urs
em
en
t
1999 2000 2001 2002 Average 96-02
Burkina-Faso: Variability of Budget Support
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Overall Conclusions
Aggregate—Increased focus on available resources and scope to increase mobilizationData—Improved production, dissemination and use of dataAllocations—Enhanced pro-poor focus of budget allocationsProcess—Greater openness, results-orientation, accountability of budget processDonors—Improved donor coordination and alignment with country priorities
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Challenges Ahead--Dataand Results-Orientation of Budgets
Improve:Comprehensiveness--coverage of budget dataDisaggregation--budget classificationsSkills in the statistics and PFM areasTimeliness, availability and readability of budget informationFeedback loops from poverty analysis to budgetingMonitoring of program budgets and other results-oriented policy-making tools to encourage evidence-based budgeting
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Challenges Ahead--Process
Foster the involvement of line ministries, Parliaments and CSOs in budget processBetter align the PRSP and budget timetables
PRSP monitoring data could usefully inform inter- and intra-sectoral allocations and mid-term adjustmentsPRSP Progress Reports should be timed to inform the budget cycle
Integrate the MTEF, PIP and annual budgetIntegrate MTEF with sector budget and planning cyclesIntegrate responsibility for MTEF with MoF unit preparing annual budget
Improve budget execution so that planning becomes serious process
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Challenges Ahead--Allocations
Protecting prioritization and greater specificity on what being a “priority expenditure” means, e.g. clarify degree of priority in budget allocation process and of protection during revenue shortfallsSticking to good process-PRSP priorities should be respected and reviewed at PRS review time reflecting:
Empirical evidence--results of NPRS M&E, PSIA, other analytical workParticipatory processes for PRS elaboration, including Parliaments!
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Challenges Ahead--Donors
Need for improvedPredictability of commitments—more long-term forecastsReliability of disbursements—smaller gaps b/n commitments and disbursements Variability of aid flows--across and within yearsTimeliness--better synchronization with government budget cycles
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PRPS Budget Links
Comments?
Questions?