DfID-World%20Bank%20Agricultural%20Public%20Expenditure%20Review%20Workshop

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DfID-World Bank Agricultural Public Expenditure
Review Workshop

• Christopher Delgado, ARD, World Bank
• On behalf of a multi-person team with special
  thanks to Mona Sur, Limin Wang, Pauline Zwaans,
  Saswati Bora, Robert Townsend, Svetlana Edmeades,
  John Byaruhanga, Stephen Mink, Richard Anson
  country teams in Ethiopia, Honduras, Laos, Nepal,
  Nigeria and Uganda, and welcoming other
  colleagues in the common struggle
• Addis Ababa, May 11, 2009

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A World Bank/DfID Partnership on Analysis of
Agric. Public Exp.

• Overview of issues and trends
• Literature surveys, trends work, input to WDR
  2008 (with IFPRI and Oxford Policy Management)
• (2) Country case studies
• Selected by Project Steering Committee consisting
  of World Bank ARD, World Bank Regions, DfID, FAO,
  NEPAD Secretariat
• Carried out by WB staff, IFPRI and consultants
  funded by DfID in Ethiopia, Honduras, Laos,
  Nepal, Nigeria and Uganda
• (3) Tools development, dissemination and
  capacity-building
• Adaptation of specific tools, a living website
  and a tool kit

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Why Bother?
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To Have a Seat at the Policy Table

• Generally a need stronger capacity in analysis of
  PER for policy analysis, ability to participate
  in PRSP type discussions, and prevail in
  discussion with non-ag constituencies, especially
  for Ag
• Need to strengthen natl systems of data
  collection and monitoring
• Need to be able to analyze the impact of ag
  spending policies
• (a) impact evaluation of ag programs (focusing
  on incomes, poverty measures benefit/cost
  ratios)
• (b) benefit-cost-incidence analysis to provide
  evidence on how well programs/gov spending target
  poor households

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Purposes

• Improve coordination between the Ministry of
  Finance and the sector ministries in budget
  planning and finance
• Strengthen capacity of MOA in PER and policy
  analysis
• Harmonize figures presented by budget execution
  reports, economic and social plans to facilitate
  the evaluation of outcomes
• Accounting for decentralized expenditures and
  revenue
• Improve transparency and accountability of
  expenditures
• Especially off-budget expenditures funded by
  donors and overhead expenditures

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More Advantages

• Combine preparation of recurrent and capital
  expenditures
• Maintain a ratio that that enables sustainable
  use of resources in the sector
• Allocation of resources within Ag Ministry can be
  better related to government policies
• Budget allocations necessary for policy
  implementation should be aligned to stated policy
  goals towards agriculture
• Ongoing evaluation of the effectiveness of public
  expenditure
• Using different tools e.g. benefit incidence
  analysis, PETS

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Issues
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Core Questions

• What is Ag PE? UN COFOG definition of Ag PE
• PE on crops, livestock, fish, forestry, water for
  production, ag land related issues)
• Not perfect ag credit? Ag policy institutions?
  Certain kinds of research?
• Efficiency of PE (counting outputs)
• How much of PE is for public rather than private
  goods?
• how much of what is budgeted is actually spent
  (low outturns)
• Effectiveness of PE (counting outcomes)
• how much reaches those it is intended to reach
  (low leakages)
• Incidence of positive intended outcomes related
  to PE (performance indicators)

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Main Public Goods in the Agricultural Economy

• Agricultural Research
• Agricultural Extension
• Irrigation and Drainage Infrastructure
• Veterinary Services (some)
• Agricultural Statistics and Policy
• Land Administration
• Rural Infrastructure (roads, electricity, ICT..)
• (The last three are very important to impact of
  ag PE but in increasing order descending are not
  well captured in many definitions of agriculture
  and often not fully in Min Ag budgets)

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Definition of Agricultural Expenditure Has
Strategic Implications

• e.g. Uganda, MAAIF 4 of PE, but rural PE
  11 based on all rural (including
  infrastructure)
• Some roads may impact ag sector more than Min Ag
  expenditure, but not all roads
• Returns to some ag PE may depend on other PE
• Involvement of different Ministries or even
  different donors hinders information flows and
  coordination for impact

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WDR 2008 Suggests Public Underinvestment in
African Agriculture in Particular
  Ag value added Ag value added Ag spending Ag spending ODA Ag spending ODA Ag spending
  ( of tot GDP) ( of tot GDP) ( of tot spending) ( of tot spending) ( of tot ODA) ( of tot ODA)
WDR 2008 Country Type 1990 2004 1990 2004 1990 2004
Agriculture based (14) (mostly AFR) 37 33 4.6 4.6 15 5
Transforming (11) 22 17 8.6 4.8 13 3
Urbanized (12) 13 10 4.7 3.2 6 9
Sources (1) IMF data, (2) ODA data from OECD system, (Edmeades, 2007) Sources (1) IMF data, (2) ODA data from OECD system, (Edmeades, 2007) Sources (1) IMF data, (2) ODA data from OECD system, (Edmeades, 2007) Sources (1) IMF data, (2) ODA data from OECD system, (Edmeades, 2007) Sources (1) IMF data, (2) ODA data from OECD system, (Edmeades, 2007) Sources (1) IMF data, (2) ODA data from OECD system, (Edmeades, 2007) Sources (1) IMF data, (2) ODA data from OECD system, (Edmeades, 2007)
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Comparative Distribution of PE () Comparative Distribution of PE () Comparative Distribution of PE () Comparative Distribution of PE () Comparative Distribution of PE () Comparative Distribution of PE () Comparative Distribution of PE ()
   Africa    Africa    Africa    Africa   Asia Asia
1980 1990 2000 2005 2005 1990
 
Agriculture 6 5 4 6.5 6.5 12.3
Education 12 15 15 17.9 17.9 17.4
Health 4 5 8 6.5 5.4 4.3
Trans Comm 6 4 3 3.7 4.5 5.2
Social Security 6 7 6 5.6 8.7 2.4
Defense 15 14 9 8.1 7.9 12.9
Other 51 50 55 53.1 63 45.5
Source IFPRI using IMF data
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And Inefficiency.?

• (1) Allocations not going to sectors with highest
  returns for growth and poverty alleviation
• High variation in benefit/cost ratios across
  sectors
• Sectors with high returns for growth seemingly
  lower priority

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More Inefficiency?

• (2) Large amount of resources devoted to private
  goods (input/output subsidies) and services
• Kenya transfer to parastatals and subsidies from
  Ministry of Ag was about 26 in 2002/03
• Indonesia subsidies accounted for 43 of fiscal
  support for ag in 2006
• Zambia 80 of poverty reduction programs (which
  accounted for 42 of total ag sector budget
  2001-06) devoted to Fertilizer Support Program
  (FSP) and FRA.

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Crowding OutSubsidies are now four times larger
than public investment in Indian agriculture
Subsidies
Public Investment
Source WDR 2008
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Not Enough for Staff to Work With to be Effective

• (3) Wrong composition not enough capital and
  operation and maintenance (OM), too high a share
  of wages
• Evidence shows effectiveness of ag services
  adversely affected if wage share exceeds 60
• Scarcity in OM spending particularly severe in
  irrigation, resulting in poor service delivery
• e.g. Turkey 24 rural spending in irrigation,
  recurrent share is 44, OM only 2 of recurrent
  spending

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Donor Finance Often Extra-Budget

• Donor financing often not captured, off-budget,
  may escape public financial management system
• Ghana 57 of total planned spending in MoAg in
  2007 financed by donor sources
• Uganda donor support 55 capital spending in Ag
  sector in 2005/06
• Hinders analysis on how sources of financing
  correlate with effectiveness, coordination with
  other PE, or congruence with government stated
  priorities

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Assessing Impact of Decentralization Unclear

• Local control and accountability tends to improve
  social expenditure (ed, health, drinking water,
  etc.) but can complicate assessment
• Decentralization affects horizontal as well as
  vertical relations in PE, less good for some
  growth-oriented exp. subject to spillovers
  (research, ext, roads...)
• Revenue collection mechanisms under
  decentralization are keybut can distort
  incentiveseg Tanzania later 1990s are also
  harder to assess

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Approach of the Partnership

• Build on overall PER approaches but go in more
  depth for ag
• 6 ag country case studies discussed tomorrow for
  eventual synthesis of insights
• Explore available tools, including from other
  sectors
• A work in progress

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Tools
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Ongoing ARD/DfID Approach to Ag PER Tools

• Assessment of tools for Ag-PER, such as Public
  Expenditure Tracking Surveys (PETS)
• Options/sources for using IT for PE ME
• Experiences outside agriculture
• Monitoring systems such as Report Cards
• Templates software
• Drawing on what has been done inside and outside
  Ag PER
• Website as an interactive resource base
• The Tool Kit (day 2)

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Website Resource

• See http//ard (internal) or http//www.worldbank.
  org/ard (external)
• Follow sidebar link to APEA page
• Info on partnership
• Info and reference links to MTEFs PER (and PREM
  site generally) PETS Qualitative Service
  Delivery Surveys Incidence Analysis and Gender
  Budgeting
• Links to all WB Ag PER work we could find
• Links to selected work by other organizations
• Info and selected links to work on ag and
  decentralization of PE
• Hopefully a living resource send
  updates/comments/suggestions

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The Practioners Tool Kit

• Core components
• Preparation
• Analysis
• Diagnosis in reporting
• Framework and strategy components
• Dissemination and implementation
• Work in progress
• Details tomorrow