Transcript Using Bank Instruments to Strengthen Public Expenditure Analysis and Management: Ed Mountfield

Using Bank Instruments to Strengthen Public
Expenditure Analysis and Management:
The Case of Vietnam
Ed Mountfield
East Asia PREM
Current Bank Instruments Supporting Public
Expenditure Reform in Vietnam
Development Policy Lending
(PRSC)
Sector Wide Approaches
(SWAPs)
Economic/
Sector Work
(PER-IFA)
Sector Investment Credits/Grants
(PFMRP and MDTF)
ESW - previous studies
 A series of public expenditure assessments has been conducted:
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UNDP-Bank PER – 1996
IMF-Bank fiscal transparency study – 1998
Joint Government-donor PER – 2000
Bank CFAA – 2001 and Bank CPAR – 2002
 These have had important impacts including:
 Influencing State Budget and Public Investment Program
 Helping shape the Comprehensive Poverty Reduction and Growth
Strategy (CPRGS – Vietnam’s PRSP)
 Influencing the revised State Budget Law of 2002
 Forming the analytical basis for the $71 million Bank/DFID-financed
Public Financial Management Reform Project (PFMRP)…
 … and helping to underpin three Poverty Reduction Support Credits
 Capacity and ownership have developed and Vietnam is ready to
integrate public expenditure analysis into its own budget process
PER-IFA: Objectives
 At the end of 2003, the Prime Minister commissioned a
Public Expenditure Review and Integrated Fiduciary
Assessment (PER-IFA).
 Objectives include to:
 review public expenditure and its management, including
strengths and weaknesses
 align budget planning with the 5 Yr Plan and the CPRGS
 provide analytical inputs to the 2005 State Budget, the 5 year
Plan for 2006–10, and Medium-Term Expenditure Frameworks to
be piloted as part of PFMRP
 strengthen capacity to conduct public expenditure analysis
across Government
 provide an assessment of fiduciary risks for the Government, its
financiers and donors, and its citizens
PER-IFA: Approach
 Status: Prime Ministerial Commission
 1 yr time frame: April 2004 – April 2005
 A participatory process and a joint report (approved both
by the PM/Cabinet and World Bank management)
 Government team: Finance, Planning, Education,
Health, Agriculture, Transport +
 Donor team: Canada, Denmark, Netherlands, Norway,
Sweden, Switzerland, UK +
 Bank team: PREM, HD, RD, INF, Financial
Management, Procurement +
 Also involved: international and Vietnamese
consultants, research institutes and universities
PER-IFA: Scope
 Cross-sectoral studies:
 Fiscal trends and sustainability
 Trends in composition of public expenditure
 Institutions for public expenditure management
 Institutions for financial accountability & transparency (CFAA)
 Decentralization to subnational government
 Delegation to spending units
 Public investment management
 Public procurement management (CPAR)
 Sector-specific studies:
 Education sector expenditure
 Transport sector expenditure
 Health sector expenditure
 Agriculture and rural development sector expenditure
 National Target Program expenditure
 The PER-IFA is pending approval by the Cabinet and Prime Minister
and will be published and launched in May 2005
PFMRP and MDTF
 The PFMRP is one of the Government’s and the Bank’s main
vehicles for taking forward the PER-IFA agenda in Vietnam
 Co-financed by IDA ($54 million) DFID ($10 million) and
Government ($7 million)
 Approved May 2003 and running for 5 years
 Includes:
 implementation of a new Treasury and Budget Management
Information System
 TA to strengthen planning of state budget and public investment
(including MTFF and sector MTEFs)
 TA to strengthen management of public debt and SOE fiscal risk
 A Multi-Donor Trust Fund (MDTF) has also been established to
coordinate donor support for wider reforms in the area of public
financial management
PRSCs and SWAPs
 PRSCs have served to help keep PFM reforms on track,
with each PRSC including PFM as a key focus:
 PRSC 1 – emphasis on publication of disaggregated budget data
and strengthening role of Treasury
 PRSC 2 – emphasis on approval of a new State Budget Law
 PRSC 3 – emphasis on progressive implementation of new
Treasury and Budget MIS and establishment of medium-term
budget planning
 PRSC 4 and 5 – under preparation
 SWAP operations are also planned and under
preparation at sector level – building on PER-IFA sector
analysis, as well as sector-level MTEF work under the
PFMRP:
 Education SWAP will shortly go to the Board
Lessons from the PER-IFA
 Ownership and participation are expensive, messy, time consuming
and slow…
 …but are the best way to build capacity …
 …and the only way to ensure a PER influences plans and budgets
 A participatory PER is a whole-of-Government process and a Bankwide process
 PERs can be integrated with CFAAs and CPARs… and not just
stuck together
 Donors need to be managed carefully and their role kept secondary
to Government
 Government should participate all the way through, and not just as
reviewers of a near-final product
 Ownership and participation are easiest to foster when PERs are
repeated on a regular cycle
Lessons from Complementary Operations
 In low-income contexts, public expenditure ESW can benefit from
active follow-up and a degree of hand-holding
 There is synergy between public expenditure ESW, PRSCs and
SWAPs:
 In low income country context, PRSCs and SWAPs can help
push ESW follow-up along
 PRSCs and SWAPs will become increasingly hard to sell if PFM
reform falters
 MTEFs can help form a basis for SWAPs
 Strengthening public expenditure analysis and management takes
decades not years