Transcript Public Expenditure Tracking Surveys: Strengthening

Detecting Leakage, Identifying
Inefficiencies, and
Assessing the Outcomes of PFM Reforms:
Public Expenditure Tracking Surveys
(PETS)
Doris Voorbraak, Kai Kaiser
Public Sector Governance Group
Poverty Reduction and Economic Management
The World Bank
IMF- FAD
December 19, 2007
The World Bank
PREM Public Sector Governance
Improving Service Delivery
 Developing countries have increased
spending- with support of donor funding- to
fulfill their commitments to quality health and
education services for all
 Problem remains that evidence shows that
there is a weak association between
spending and outcomes
 Increased pressures to evaluate modalities
by which resource reach the frontline
(including country systems, special programs,
etc.)
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Why are services failing poor
people?
 Increased public resources do not always translate
into better outcomes
 Governments do not spend enough on public
goods or poor people
 The money does not always reach frontline
service providers
 Money does reach frontline service providers but
service delivery can still be inefficient
 There is no demand for better services
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Spending wisely
When services fail poor people, a good
place to start looking for the underlying
problem is the budget:
 Budgets are misallocated
 Budgets are misappropriated
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Public expenditure management
 Strengthening PEM is essential to improve service
delivery
 Formulating, implementing and reporting annual
budgets is a challenging task when capacities are
limited and the broader governance environment
weak
 But what about operational impact of budgets?
 Even the best budget allocations are only as good as
their impact on desired outcomes for poor people
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Judging operational impact of
budgets
 PETS can help you judging operational impact- the
quality and quantity of service delivery, and where
and how, and to what effect allocated funds are spent
 It therefore helps to shed light on budget allocation
and execution issues
 Their common theme: the relationship between public
spending and development outcomes
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What is PETS?
Surveys that track, locate and
quantify the flow of public resources
across various administrative levels
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PETS-Experience to Date
 Pioneer was Uganda PETS (1996)
 Majority of the studies so far cover African countries.
 Most PETS cover health and education. Some are joint studies

Exceptions fiscal sustainability (Honduras), transport,
agriculture, rural development (Sierra Leone) PETS
prepared on justice sector (Burundi)
 PETS team leaders (TTLs) as far as the WB is concerned
represent different professional affiliations-research (DEC),
Public sector governance (PREM) sectors (HD). PETS has
demonstrated to provide a good platform for collaboration
between sector-and governance specialists
 In some countries, follow-up PETS exercises (Uganda,
Tanzania, Sierra Leone) but not necessarily with same research
questions and scope
 Linked with Quantitative Service Delivery Surveys (QSDS)
(Zambia, Nigeria) or other facility-related surveys
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PETS Objectives?
 Identify/Quantify problems in expenditure items

Cash Leakages

In-kind Leakages (textbooks, drugs)

Absenteeism/Ghost Workers
 Investigate specific issues (equity, transparency,
adequacy, timeliness of resources, regional
disparities)
 Increase supply of and demand for information:
information is crucial as stimulus for public action, as
catalyst for change, as input to make reforms work
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Resource Flows to Frontline Facilities Vary
PEM Processes/Execution
Administrative
Layers
- Allocation Disbursement Procurement
Central
E.g.,
Uganda
Education
Capitation
Grant
Provincial
Flow
Junctures
Local
$ per
Student
Facility/
Frontline
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E.g., Wages
In-Kind
Monetary
Cash Grants
In-Kind
Non-Monetary
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PETS-stocktaking
Region/ Country
Year
Sectors
Africa
Cameroon
Chad
DRC
Ghana
Kenya
Madagascar
Mali
Mozambique
Namibia
Nigeria
Rwanda
Senegal
Sierra Leone
Tanzania
Uganda
Zambia
2003
2004
2007
2000
2004
2003, 2005, 2006
2005
2001, 2004
2004
2004
2003, 2004
2002
2000/01, 2003
1999, 2001, 2003,2004
1996, 2001,2003,2004
2001,2002, 2004
Health/Education
Health, Service Delivery
Education
Health/ Education
Health/ Education
Health
Education
Health
Health, Education
Health
Education, Health/ Education
Health
Agric. /health/ educ./water & san.
Health, Educ., Pov. Reduction
Health, Education
Education, Service Delivery
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PETS stocktaking-cont…
Region/ Country
Year
Sectors
2005
1998,2000
2006
2002
Health, Education
Education
Education
Health
2004
2006
Health, Education
Education
2006
2001
2002
Health
Pov. Reduc./Fiscal Sust.
Pov.Reduction, Education
2003
Health
2006
Education
EAP
Cambodia
Indonesia
Mongolia
Papua New Guinea
Europe and Central Asia
Albania
Azerbaijan
Latin America and Caribbean
Brazil
Honduras
Peru
South Asia
Bangladesh
Mid. East & N. Africa
Yemen
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Clinics
Visited
The World Bank
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Schools
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The Scale of PETS Vary
400
214
250
44
45
120
36
218
182
108
20
200
100
20
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PETS reveal a range of leakage estimates
Table 1: Leakage levels (%)
Education
Health
Chad, 2004
-
80
Ghana, 1998
49
80
Kenya, 2004
-
38
Tanzania, 1998
57
41
Uganda, 1991-95
87
-
10 (rule-based)
76 (discretionary)
-
Country
Zambia , 2001
-- Not available
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Headline Leakages



The initial Uganda PETS in the mid-1990s estimated that
87% of non-wage capitation grants in education did not
reach its destination.
Tanzania and Ghana: leakage on non-wage education
expenditures was 41% and 50% respectively
Chad : leakage at the regional level is estimated at 73% and
only 1% of non-wage health expenditures to regional health
administrations was estimated to arrive at the health facility
level.
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Challenges to Quantifying Leakages
 In other surveys, no firm conclusions on leakage could
be made.

For instance: Cameroon, Mozambique, Nigeria, Namibia,
Rwanda, Senegal, Tanzania (2001)
 Factors explaining this situation:
 No rules based allocation “benchmarks” (in contrast to e.g.
Uganda’s capitation grants)
 Poor or non existing official records, or inconsistent
records between levels
 Inadequate design of instruments that did not match
administrative levels or the facilities’ record practice
 Implementation problems
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Staff Related Leakages
Absenteeism
 PETS/QSDS have also allowed to measure provider
absenteeism, which affects service quality.
 For instance: Uganda education: 27%, health 37%,
Mozambique (health) 19%
 Supports findings of other studies (eg. Chaudhury et al,
2006)
Ghost Workers
 In a few countries, allowed to measure number of staff
on official payroll who do not really work in facilities
 In Uganda for instance, it was estimated that “ghost
workers” represented about 20% of the workforce
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Ghost Worker Estimates
Country
Table 2. Ghost workers on payroll (%)
Ghosts workers
Education
Health
Honduras, 2000
5
8.3
Papua New Guinea, 2002
15
_
Uganda, 1993
20
_
Source: World Bank (2001) for Honduras; World Bank (2004) for Papua New Guinea;
and Reinikka (2001) for Uganda.-- Not available.
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PETS highlight problems beyond basic leakage…
 Delays and bottlenecks in the allocation of resources
have also been measured

Salaries, allowances, financing, material, equipment, drugs
and vaccines
 These issues could have important effects on the quality
of services, staff morale and the capacity of providers to
deliver services.

In some countries, such as Nigeria, in one state, 42% of
the health staff respondents reported not receiving salaries
for the 6 months or more.
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Different problems for different flows
 The measurement of delays proved sometimes easier to
estimate than quantitative data on the same flows (which would
have allowed measurement of leakage levels).



For instance in Zambia (as in most countries), staff
compensation flows were not tracked
Instead, information was collected on delays (and arrival time) in
the reception of salaries and four types of allowances at the
school level.
While salary payments were found to be efficient, for not well
defined allowances, more than 75% of recipients of “doubleclass allowances” (additional amount paid for overtime, etc)
experience at least 6 month’s overdue pay.
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Facilities continue to rely on direct user fees
 Tracking surveys have produced findings on the
importance and impact of user fees.




In several countries (e.g. Chad, Mozambique), user fees are
sometimes the only source of revenues for service providers.
On the demand side, however, they often constitute a very
important part of service costs for users and could have
considerable negative effects on accessibility.
For instance in Uganda, although the government was trying
to re-establish free education, the survey found that private
contributions represented more than 60% of education costs
at the school level.
In Chad, for the poorest quintile, the average out-of-pocket
medical expenses accounted for 21% of their monthly
incomes.
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PETS perspectives on equity issues
 In several countries, large variability of health and school
spending across regions and districts, as well as within
districts, was observed




For instance: Mozambique, nine-fold variation of per capita
health spending at the district level
Chad: non-wage per capita public health spending showed
important variations across districts (in a 16 to 1 ratio)
Zambia: the most funded school district received 8 times
more average per-student public resources than the least
funded district.
Uganda: poorer schools faced greater leakages
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Policy Reforms
 PETS/QSDS have led to the identification of areas where
reforms in information gathering and supervision systems
should be introduced.


In Uganda in particular, the policy reform following the PETS
targeted information flows through an information campaign,
in order to give clients potential power over service
providers.
 Results have been spectacular as leakage rate was
reduced very substantially.
In Tanzania also, such an information campaign approach to
reducing corruption has been used.
 No formal impact evaluation, but reports indicate that
the information campaign has reduced leakage
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PETS as one means to an end to strengthen sectoral
public financial managent and outcomes
 PETS are powerful tools to assess efficiency, equity and
corruption issues in public services.
 A sound methodological basis is required for survey
implementation,

In particular with respect to samples, proper preliminary
institutional and data assessment, adequate choice of
tracking flows, use of efficient and relatively common
instruments, etc.
 Tracking surveys are a means to an end.
 The information on incentives and deficiencies in service
delivery organizational structures should be used to help
implement a reform agenda
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PETS for Strengthening
Human Development
Outcomes:
PEM/PFM Perspectives
Presentation for
IMF/FAD 19 December, 2007
Kai Kaiser, Senior Economist,
Public Sector Group, World Bank, Washington, DC
Three Levels of PFM Concerns
 Macroeconomic Management
 Allocative Priorization
 Operational Efficiency
See: Pradhan and Campos (1996)
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Various Instruments
 Public Expenditure Reviews (PERs)
 Increasing Number Conducted by Sectors, including
HD
 Sometimes include PETS
 …also policy note/programmatic approach
 PEIRs, CFAA, Portfolio Reviews
 International Benchmarking
 HIPC Indicators
 PEFA Indicators
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Key Stakeholders in PFM
 Cross-Cutting Ministries
 Ministry of Finance
 Ministry of Planning/Economics
 Ministry of Interior/Local Government
 Sectoral-Cutting Ministries
 Ministry of Education (various levels), Health, Social
Protection
 Sub-National Government
 Devolved and Deconcentrated Structures
 World Bank Networks
 PREM, HD, SDV
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Challenges
 Cross-cutting PFM dialogue to high level
Remains abstract, to focused on supply side strategies
 …enhanced focus on actionable PFM Indicators
 Dialogue with sectors/line agencies will vary
 Sectors may be tempted to vertical lens
 Emphasis on earmarking funds/vertical programs
 Ambivalent about budgeting autonomy for sub-national
governments
 Community Participation Advocates Neglect Supply Side
 May create parallelism to get funds to frontline
 Focuses on narrow volume of expenditures

Fiscal flow mapping and tracking inherent in PETS can serve to center
these discussion
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Fiscal Architectures Vary
 Institutional Architecture


How to funds get prioritized/budgeted,
executed, monitored for frontline service
delivery?
Intermediate/Decentralized Levels

Sub-National Governments
 Does the center and or both allocate?


The World Bank
Facility
Treasury Design
PREM Public Sector Governance
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International Initiatives for
PFM Performance Benchmarking
 HIPC Indicators
 Improved Monitoring of PFM systems as part
of debt reduction
 Public Expenditure & Financial Accountability
(PEFA) Indicators


28 Performance Indicators + 3 for donors
Covers 8 and 23 cover fiscal decentralization
and front-line facility information
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PEFA Indicators
Focused on Facility Financing (PI-23)
Score
A
Minimum requirements (Scoring methodology: M1)
(i) Routine data collection or accounting systems provide reliable information on all types of
resources received in cash and in kind by both primary schools and primary health clinics
across the country. The information is compiled into reports at least annually.
B
(i) Routine data collection or accounting systems provide reliable information on all types of
resources received in cash and in kind by either primary schools or primary health clinics
across most of the country with information compiled into reports at least annually; OR
special surveys undertaken within the last 3 years have demonstrated the level of resources
received in cash and in kind by both primary schools and primary health clinics across
most of the country (including by representative sampling).
C
(i) Special surveys undertaken within the last 3 years have demonstrated the level of resources
received in cash and in kind by either primary schools or primary health clinics covering a
significant part of the country OR by primary service delivery units at local community
level in several other sectors.
D
(i) No comprehensive data collection on resources to service delivery units in any major sector
has been collected and processed within the last 3 years.
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PEFA Indicators
Focused on Sub-National Transfers (PI-8)
PI-8
Transparency of inter-governmental fiscal relations
(i) Transparent and rules based systems in the horizontal allocation among
SN governments of unconditional and conditional transfers from
central government (both budgeted and actual allocations);
(ii) Timeliness of reliable information to SN governments on their
allocations from central government for the coming year;
(iii) Extent to which consolidated fiscal data (at least on revenue and
expeniture) is collected and reported for general government according
to sectoral categories.
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PEFA Fiscal Decentralization Outcomes
Vary
A
Fiscal Decentralization PEFA Score (Sub-Saharan Africa)
B
C
D
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Slide includes finalized and draft reports
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As do information on frontline service
delivery facility financial flows
Frontline Service Delivery PEFA Indicator (PI-23) (Sub-Saharan
Africa)
A
B
C
D
1
2 3
The World Bank
4
5
6 7
8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
PREM Public Sector Governance
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Facility and Local Government Frontline
Financing Indicators
PEFA Indicators on Decentralized Finance (PI-8 and 23)
A
B
C
D
1 2 3 4
The World Bank
5 6 7 8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
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How can PFM diagnostics and information
initiatives have impact?
 PETS Can Promote Evidence Policy Dialogue
 Better understanding of prevailing institutional
arrangements
 Range of contexts (post-conflict to middle income)
 “Hard” numbers on leakages underscore gap between
formal and informal practices
 Supplement or substitute for audit functions?
 Highlight Supply-Demand Side Interactions
 Rules Based Allocations Prerequisite to enable
demand side accountability
 Claims against budgetary entitlements at frontline
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PETS Process Challenges
 Managing Expectations

Ability to quantify leakages in general



How to interpret findings


Specific flows versus general leakages
Catering method to context
Implications for supply side versus demand side
reform/capacity building…
How to disseminate findings
 Mainstreaming in PFM and Sectoral
Dialogues…
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Key Resources
 PETS Database/Website
 PREM Fiscal Leakages Note
 HD PER Guidelines
 Using Information to Enhance Demand Side
Accountability Stocktaking
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