Robert P. Beschel JrRobert P. Beschel Jr..

Lead Public Sector Specialist (MNSED)Lead Public Sector Specialist (MNSED)

Riyadh, Saudi ArabiaRiyadh, Saudi Arabia

November 2009November 2009

MENA Experience with MENA Experience with Public Sector Reform:Public Sector Reform:

A Survey of the A Survey of the LandscapeLandscape

Focus on Three AreasFocus on Three Areas

• Public Financial ManagementPublic Financial Management

• Civil Service ReformCivil Service Reform

• AnticorruptionAnticorruption

PFM Objectives are Relatively PFM Objectives are Relatively StraightforwardStraightforward

• Macroeconomic stability and fiscal sustainabilityMacroeconomic stability and fiscal sustainability

• Appropriate allocation between competing prioritiesAppropriate allocation between competing priorities

• Efficient and effective spendingEfficient and effective spending

• Effective control environment ensures fiscal probityEffective control environment ensures fiscal probity

Common PFM Challenges in Common PFM Challenges in MENAMENA

Budget FormulationBudget Formulation• Ensuring credibility of the budget/ Ensuring credibility of the budget/

making hard ceilings stickmaking hard ceilings stick

• Scope and comprehensiveness of the Scope and comprehensiveness of the budgetbudget

• Link between recurrent and investment Link between recurrent and investment budgetingbudgeting

• Multiyear frameworkMultiyear framework

• Strengthening budget classificationStrengthening budget classification

• Introducing performance orientationIntroducing performance orientation

• Greater budget transparency and Greater budget transparency and parliamentary scrutinyparliamentary scrutiny

Budget ImplementationBudget Implementation• Reducing ex-ante controls, while Reducing ex-ante controls, while

improving commitment controlsimproving commitment controls

• Improved virementImproved virement

• Better treasury operations and cash Better treasury operations and cash managementmanagement

• AFMIS systemsAFMIS systems

• Strengthening internal auditStrengthening internal audit

• Strengthening external audit, including Strengthening external audit, including more independent and transparent more independent and transparent reporting relationshipsreporting relationships

Bank Recently Analyzed Bank Recently Analyzed Sample of 10 MENA CountriesSample of 10 MENA Countries

• AlgeriaAlgeria

• EgyptEgypt

• IraqIraq

• JordanJordan

• LebanonLebanon

• MoroccoMorocco

• SyriaSyria

• TunisiaTunisia

• West Bank & GazaWest Bank & Gaza

• YemenYemen

• Comprise 71 percent of Comprise 71 percent of MENA’s population and MENA’s population and nearly half of its GDPnearly half of its GDP

• Different regions and levels Different regions and levels of Developmentof Development

• Represent a range of Represent a range of administrative traditionsadministrative traditions

•MENA & Global PEFA Averages

What Works and What What Works and What Doesn’t with PFM ReformDoesn’t with PFM Reform

Successful PFM Reforms

MixedLess Successful PFM

Reforms

Improving budget Improving budget classificationclassification

Improving budget Improving budget transparencytransparency

Reforms in tax and Reforms in tax and customscustoms

Enhance macro-fiscal capacityEnhance macro-fiscal capacity Budget integrationBudget integration Streamlining ex-ante control Streamlining ex-ante control

processes processes Commitment controlCommitment control Payroll managementPayroll management Treasury operationsTreasury operations Reform of accounting systemsReform of accounting systems Internal and external auditInternal and external audit

Medium term expenditure frameworkMedium term expenditure framework Improving budget scope and coverageImproving budget scope and coverage Introducing performance into the budgetIntroducing performance into the budget Procurement reformsProcurement reforms Large information technology projectsLarge information technology projects

Civil Service ReformCivil Service Reform

• LegislationLegislation

• Pay and EmploymentPay and Employment

• Machinery of Government (structure Machinery of Government (structure and business processes)and business processes)

• Human Resource ManagementHuman Resource Management

• Policy CoordinationPolicy Coordination

Common Problems in MENACommon Problems in MENA

• Governments are largeGovernments are large

• Pay is misaligned, w/ too many Pay is misaligned, w/ too many allowancesallowances

• Wrong sets of skillsWrong sets of skills

• Too many agencies with vague and Too many agencies with vague and overlapping mandatesoverlapping mandates

• Interagency coordination is poorInteragency coordination is poor

• Weak accountabilityWeak accountability

• Meritocracy vs. wastaMeritocracy vs. wasta

General Civilian Government General Civilian Government as % of Total Employmentas % of Total Employment

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Africa Asia ECA LAC MENA OECD

Region

MENA

Government Employment as Government Employment as % of Total Population% of Total Population

0

1

2

3

4

5

6

7

8

9

North Africa Middle East Gulf

Central Government Subnational Education Health Military

Country Comparison Country Comparison

Government Employees % of Population

0

1

2

3

4

5

6

7

Egypt Iran Morocco Syria Turkey India Indonesia Pakistan Mexico

Central Civilian Government Central Civilian Government Wages as % of GDPWages as % of GDP

0

2

4

6

8

10

12

Africa Asia ECA LAC MENA OECD MIC Overall

Central Government Wages and salaries

Wage Bill Country ComparisonWage Bill Country Comparison

Wage Bill as Percentage of GDP (2006)

0

2

4

6

8

10

12

Egypt

Iran

Mor

occo

Syria

Turke

y

India

Indo

nesia

Pakist

an

Mex

ico

Public-Private Wage RatiosPublic-Private Wage Ratios

0%

20%

40%

60%

80%

100%

120%

140%

EastAsia

LAC OECD Africa MENA

Ongoing Bank CSR EffortsOngoing Bank CSR Efforts

LendingLending• Morocco Morocco

• YemenYemen

• WBGWBG

TA and ESWTA and ESW• Regional Pay & Employment Regional Pay & Employment

Exercise Exercise

• MoroccoMorocco

• EgyptEgypt

• LibyaLibya

• WBGWBG

• KuwaitKuwait

For a variety of reasons, this agendaFor a variety of reasons, this agenda

has tended to struggle historicallyhas tended to struggle historically

Country Case Study No. 1:Country Case Study No. 1:MoroccoMorocco

• Size of the wage bill an issueSize of the wage bill an issue

• Not overstaffed, but civil servants are Not overstaffed, but civil servants are overpaid (competitive salary increases overpaid (competitive salary increases among cadres)among cadres)

• Successful VRS in 2004Successful VRS in 2004

• Developing a computerized HR databaseDeveloping a computerized HR database

• Optimal agency staffing levels?Optimal agency staffing levels?

• Geographic distribution a problemGeographic distribution a problem

Country Case Study No. 2:Country Case Study No. 2:EgyptEgypt

• Massive overstaffing, but…Massive overstaffing, but…

• Split between policy (MSAD) and Split between policy (MSAD) and administration (CAOA)administration (CAOA)

• Low salaries, with lots of allowances & Low salaries, with lots of allowances & distortionsdistortions

• Some success with reforming certain Some success with reforming certain agencies (tax, customs, GAFI)agencies (tax, customs, GAFI)

• New legislation focuses on disicpline & New legislation focuses on disicpline & contract employmentcontract employment

Country Case Study No. 3:Country Case Study No. 3:YemenYemen

• Broad, comprehensive reform agendaBroad, comprehensive reform agenda

• Computerized biometric database Computerized biometric database reducing ghost workers, double dippers reducing ghost workers, double dippers & staff serving after retirement& staff serving after retirement

• Reeingineering line departmentsReeingineering line departments

• Fund to reduce overstaffingFund to reduce overstaffing

• Migrate agencies to new salary structure?Migrate agencies to new salary structure?

• Other reforms in recruitment & Other reforms in recruitment & performance evaluationperformance evaluation

General Observations: CSR General Observations: CSR Necessary but ChallengingNecessary but Challenging

What has WorkedWhat has Worked• Agency specific Agency specific

reformsreforms• Hiring freezesHiring freezes• Payroll reformPayroll reform• Creating service Creating service

cultureculture• Incrementalism & Incrementalism &

strategic opportunismstrategic opportunism

What has NotWhat has Not• Comprehensive Comprehensive

strategiesstrategies• Centrally driven efforts Centrally driven efforts

to reform line to reform line departmentsdepartments

• Functional reviewsFunctional reviews• HRM reforms that HRM reforms that

directly confront directly confront wastawasta • Heavy ministerial & Heavy ministerial &

staff turnoverstaff turnover

It DependsIt Depends• RightsizingRightsizing• Voluntary Voluntary

retirement schemesretirement schemes• Computerized HR & Computerized HR &

payroll systemspayroll systems• Civil service Civil service

censusescensuses• Contract Contract

employmentemployment• Training and Training and

capacity buildingcapacity building

Corruption & Transparency…Corruption & Transparency…

MENA and Transparency MENA and Transparency International’s CPIInternational’s CPI

KKM IndicesKKM Indices

Recent Developments in Recent Developments in Combating Corruption in MENACombating Corruption in MENA

Creating Anticorruption Creating Anticorruption AgenciesAgencies

• JordanJordan

• IraqIraq

• YemenYemen

• MoroccoMorocco

Transparency & Public AwarenessTransparency & Public Awareness

The chart to the left shows the The chart to the left shows the MENA region in relation to the MENA region in relation to the rest of the world.rest of the world.

Transparency & Public AwarenessTransparency & Public Awareness

• Freedom of Information legislation Freedom of Information legislation passed in Jordan and under passed in Jordan and under consideration in Egypt & Yemenconsideration in Egypt & Yemen

• E-government and web based E-government and web based dissemination growing in a number dissemination growing in a number of countriesof countries

• Civil society playing a role in Civil society playing a role in several countries (Morocco, several countries (Morocco, Lebanon, Palestine)Lebanon, Palestine)

For the Quality of Administration, For the Quality of Administration, MENA’s ‘Governance Gap’ is SmallMENA’s ‘Governance Gap’ is Small

But for Public Accountability, the But for Public Accountability, the ‘Governance Gap’ is Wider‘Governance Gap’ is Wider

Global Governance Trends…Global Governance Trends…

• Many of the global trends in governance in the 1990s & beyond were felt Many of the global trends in governance in the 1990s & beyond were felt only distantly in MENAonly distantly in MENA

• In comparison with other regions, MENA fares well in terms of political In comparison with other regions, MENA fares well in terms of political stability and e-governance and fair in terms of facilitating private sector stability and e-governance and fair in terms of facilitating private sector development, service delivery and anticorruption, with wide variation development, service delivery and anticorruption, with wide variation between countriesbetween countries

• The region fares worse than global comparators on issues of The region fares worse than global comparators on issues of decentralization and on public voice, accountability and participationdecentralization and on public voice, accountability and participation

• Overall size of the public sector is an issueOverall size of the public sector is an issue

Thank YouThank You

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