Roles and Expenditure across Levels of Government - PowerPoint PPT Presentation

Loading...

PPT – Roles and Expenditure across Levels of Government PowerPoint presentation | free to download - id: 7527e4-ZjkxY



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Roles and Expenditure across Levels of Government

Description:

across Levels of Government PREM/HD/INF Network Course on PUBLIC EXPENDITURE ANALYSIS AND MANAGEMENT Monday, March 21st, 2005, 1:00-2:30 pm Kai Kaiser – PowerPoint PPT presentation

Number of Views:446
Avg rating:3.0/5.0
Slides: 30
Provided by: TWU5
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Roles and Expenditure across Levels of Government


1
Roles and Expenditure across Levels of Government
PREM/HD/INF Network Course on PUBLIC EXPENDITURE
ANALYSIS AND MANAGEMENT Monday, March 21st, 2005,
100-230 pm Kai KaiserEconomist, PREM Public
Sector Group (PRMPS)kkaiser_at_worldbank.org
2
Overview
  • Intergovernmental Fiscal Systems
  • Levels of Government
  • Sub-National Expenditure Assignments
  • Principles Issues
  • Empirical Evidence
  • Intergovernmental Transfer Systems
  • Vertical Imbalances and Own Source Revenue
    Mobilization
  • Decentralization Challenges
  • Design, Implementation, Diagnosis
  • PEM versus Sectoral Lenses
  • Top-down versus Bottom Up Accountabilities

3
Decentralization A World-Wide Phenomenon
  • Underway in over 85 countries
  • Political and economic rationales
  • Varieties
  • Deconcentration
  • Delegation
  • Devolution
  • Privatization
  • Spans political/legal, fiscal, administrative

4
Four Pillars of Intergovernmental Fiscal System
  • Expenditures
  • Revenues
  • Intergovernmental transfers
  • Subnational borrowing/debt

5
Expenditure Assignments
  • Macroeconomic stability
  • Public Service Delivery
  • Effectiveness/Efficiency
  • Public Management Innovation
  • Poverty Reduction
  • Responsiveness
  • Equalization

6
State Architectures
  • Federal versus Unitary
  • Legal/Constitutional Status of Sub-Nationals?
  • Tiers of Government
  • Levels
  • Scale
  • Devolved versus Deconcentrated Structures
  • Territorial Organization
  • Functional Agencies

7
Expenditure Assignment Issues
  • Design
  • Public goods, externalities, economies of scale,
    public sector competition
  • Ideally, services should be provided at lowest
    level of government where benefits lie
    (subsidiarity)
  • Revenue Expenditure Assignment Design Will
    Differ
  • Practice
  • Ultimately, no single best assignment
  • Provision Technologies May Change Over Time
  • Preferences/Needs May Evolve
  • Clarity in expenditure assignment often lacking
  • dejure versus defacto
  • Significant expenditure responsibility needed for
    autonomy
  • Public provision doesnt imply public production
  • Contracting Out

8
Macroeconomic Stability
  • Key factor is hard budget constraint
  • Hierarchical versus Market Based
  • Creates incentives for subnational fiscal
    discipline
  • Limits risk of central government
  • Can be softened through several channels
    (intergovernmental fiscal system, financial
    system, SOEs, borrowing, etc.)

9
Allocative Efficiency (Subsidiarity)
  • Matching local needs and preferences with local
    public expenditure patterns
  • Assumes
  • Substantial fiscal autonomy/budgeting
  • Political decentralization
  • Are elections held?
  • How are candidates selected?
  • Intra-party hierarchical control mechanisms?
  • What do elections mean?
  • Bottom-up Accountability

10
Decentralized Assignments
Amount Which Level of Government Decides
Amount? Structure Which Level of Government
Defines Structure? Recurrent/Capital? Execution
Which Level of Government Executes the
Expenditure? Supervision Which Level of
Government Supervises and Sets Standards? Country
and Sectoral Contexts Provide for Significant
Diversity in Arrangements
11
Decentralization Trends
Subnational Expenditure Shares Subnational Tax Shares
Developing Countries
1970s 13.0 (48) 10.4 (43)
1980s 13.2 (43) 7.7 (35)
1990s 13.8 (54) 9.3 (28)
Transition Countries
1990s 26.1 (23) 16.6 (14)
OECD Countries
1970s 33.8 (22) 18.7 (22)
1980s 32.3 (23) 18.7 (22)
1990s 32.4 (23) 19.1 (23)
Source International Monetary Fund. Government
Finance Statistics Year Book , various years,
Country Tables
12
Differences Across Regions
Subnational Share of Expenditures
Subnational Share of Revenues
Note Simple average of most recent observations
in available countries. Numbers in parenthesis
indicate number of countries represented. Figure
do not typically include deconcentrated
spending. Source International Monetary Fund.
Government Finance Statistics Year Book 1998,
Country Tables.
13
International Diversity
14
Decentralized Social Sector Expenditures
Source IMF GFS
15
Comparative Assignments
16
Rationales for Intergovernmental Transfers
  • Vertical imbalances
  • Horizontal imbalances
  • Inter-jurisdictional spillovers (externalities)
  • Enhancing national objectives at the subnational
    level
  • Paying for national programs implemented by
    subnational governments

17
Local Revenue Issues
  • Own resources typically inadequate to carry out
    assigned functions
  • Striking variations in size and capacity one
    size doesnt fit all
  • Local revenues often inelastic, and not
    adequately responsive to changing needs
  • Local revenue mobilization strengthens
    accountability
  • Link taxes with benefits derived from local
    government services
  • Simplest and most effective form of tax autonomy
    discretion to set tax rates

18
A Good Transfer System
  • Transfers should be transparent and predictable
    (formula-based)
  • Equalization transfers should include
  • A measure of need
  • A measure of capacity
  • Adequate sub-national revenue autonomy
  • Stable but flexible financing
  • Avoid a proliferation of conditional grants

19
Equity
  • Extent of fiscal equalization
  • Expenditure Needs
  • Fiscal Capacity
  • Ways and means for targeting poor places and poor
    people

20
Decentralization Challenges
  • Balance responsibilities with resources, capacity
    and accountability
  • Subsidiarity
  • Finance follows function
  • Responsibility with capacity (learn by doing)
  • Accountability through political channels, own
    source revenues, participation and transparency
  • Create incentives for implementation to match
    formal arrangements

21
Positive or Negative Outcomes?
  • If designed well, decentralization can
  • Move decision making closer to people
    (subsidiarity principle)
  • Enhance efficiency and responsiveness of service
    delivery
  • Enhance State Legitimacy/Accountability
  • Improve economic growth
  • Potentially alleviate poverty

22
But, good design is complicated
  • Decentralization spans
  • Political/Legal
  • Fiscal
  • Administrative
  • policies and institutions

23
Overarching Considerations
  • Strategies
  • Objectives?
  • Champions
  • Early design has long-run implications
  • Sequencing/Priorities (esp. w/ low starting
    capacity)
  • Monitoring Evaluation / Base-lining
  • Managing Change/Long Run Process
  • New modes of operating
  • Expectations
  • Credibility that LGs can deliver services?
  • Capacity, Accountability, Resources?
  • Post-Conflict Context
  • Phasing

24
Common Dangers
  • Elite capture (by ethnic/racial/social groups)
  • Opaque or arbitrary decision-making
  • Constituents, villagers, communities unable to
    hold representatives accountable due to
    incomplete information
  • Corruption
  • Patronage politics
  • Excessive discretion to reward friends, punish
    rivals
  • Central civil servants over-rule local
    representatives

25
Public Expenditure Management Lens
  • Clarity in expenditure assignment?
  • Adequacy of resources?
  • Formula-based transfer system?
  • Hard budget constraint?
  • Budgeting and reporting systems
  • Uniformity vs. flexibility
  • Carrots vs. sticks
  • Procurement
  • E.g., Contracting Out

26
Service Delivery Lens
  • Decentralization
  • Allocative efficiency effects
  • Intergovernmental fiscal framework
  • Sufficient capacity
  • Technology
  • School autonomy/community participation
  • Purchaser/provider split in health
  • Incentives for service providers
  • Institutional structures
  • Civil service, budgeting and financial management
    processes, performance incentives
  • Resources reach front-line service providers
    (PETs)
  • Accountability

27
Decentralized Accountability Mechanisms
  • Top Down
  • Central Supervision
  • Reporting
  • Minimum Standards
  • Bottom Up Accountabilities
  • Electoral Insufficient
  • Proximity versus Scale/Capacity

28
Leveraging Transparency
  • Sectoral Differences
  • Health versus Education
  • Public LG meetings, citizen fora
  • Participatory Budgeting
  • Publicize voting records
  • Mobilize own source revenues
  • Financial disclosure (improved budgeting)
  • E.g., Annual Review Reports
  • Freedom of Information Acts and/or other public
    disclosure laws (assets, affiliations)
  • Monitoring by vigilance committees, NGOs, CBOs,
    media
  • Media

29
Further Resources
  • Decentralization Thematic Group Website
  • Sign-up for Decentralization TG
  • Decentralization Local Financial Management
    Course
  • March 29-30, 2005
  • AskGov
About PowerShow.com