Public Sector Reform: What Works and Why?

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Public Sector ReformWhat Works and Why?

• An IEG Evaluation of World Bank Support
  1999-2006
• September 2008

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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 Peoplecivil 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

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Lending Projects with Significant PSR Components
- 1990-2006
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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

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CPIACountry 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

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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

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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

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PSR Success rates lower in low-income countries

• World Bank often used models too sophisticated
  for settings with initially weak
  institutionstypical 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

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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

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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

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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