Revitalizing the PER process

Dodoma, June 2012

Plan of the presentation

Finding of the PER Workshop in Washington D.C.

What to change? Five proposals to improve the process

What to do? Steps toward a mutually agreed analytical

program Way forward

Findings of PER Workshop in Washington

1. Objective: Partnership to improve fiscal policy and management

2. Key ingredient: Commitment and mutual trust from Government and

Donors

3. New Process: i. Demand driven process (ownership by Government is

vital)ii. Fewer meetings, Higher Resultsiii. Avoid multiplicity of processes: e.g. Merge PER and PFM iv. Find the balance: Planning vs. flexibilityv. Open process (parliamentarians, NGOs, etc.)vi. Introduce Evaluation for Accountability

What to change?

Today Tomorrow

Process-oriented Supply-driven Fatigue Rigidity Complex

Performance (Value for money)

Demand driven Commitment Flexibility Streamline

Proposal 1: create champion group Diagnostic: lack of commitment, mutual trust,

visibility and ownership Solution:

Create “Champion Group” under the chairmanship of the Minister of Finance Composition

Governor of Central Bank Executive Secretary of Planning commission PS Prime Minister office WB Director GBS Chair

Mandate Approve annual agenda Deliver key messages Evaluation

Proposal 2: Dedicated Secretariat Diagnostic: lack of organization and follow up Solution:

Re-establish a dedicated secretariat Headed by Deputy Finance PS One DFID/Word Bank secondee One MoF staff Report to Champion Group

Mandate Follow up agenda Organize meetings Produce Annual Evaluation Report

Proposal 3: Define Delivery channels Diagnostic: rigidity, supply-driven Solution:

Three alternative windows for delivery Annual/Multiyear program (e.g., health in 2012,

education in 2011) Rapid response to address just in time requests (rapid

budgetary analysis, update on budget) Capacity Building activities

No more big reports Short policy notes (e.g., rapid budgetary analysis) Seminars/workshops Programs/training/capacity building Links to networks

Proposal 4: Agree on Program and Timetable Diagnostic: too many meetings, process-

oriented, diffused mandate and accountability Solution:

Define Annual plan aligned on budget cycle Two general meetings chaired by Champion group

Define annual program for FY Discuss finding and recommendation to budgetary

committee for next FY Follow up by Secretariat for rapid response and TA Reduce number of participants to key staffs

Proposal 5: Strengthen Accountability Diagnostic: diffused mandate and

accountability among donors and government Solution:

Identify and monitor results – Annual report by Secretariat

Report to the Champion Group and presented to GBS annual review

Summary of Proposals

Proposal 1: Create Champion Group

Visibility, ownership, commitment, partnership

Proposal 2: Re-establish Secretariat

Ownership, follow up

Proposal 3: Agree on delivery Mechanisms

Flexibility, complementarity

Proposal 4: Define Timetable and Annual Program

Commitment, planning, allocation of resources

Proposal 5: Strengthen accountability

Accountability, evaluation and monitoring

What do to? Once we have agreed on delivery

mechanisms, there is a need to determine analytical areas where development partners can maximize their contribution to fiscal policy and management.

Menu of potential areas for collaboration -- illustrative Structural Issues Emerging Issues

What do to? Structural issues Rapid Budgetary Analysis Domestic Resource Mobilization:

Broadening the tax base, Improving systems, Managing Exemptions, etc.

Value for Money in key Social sectors: Education, (2010 PER); Health (2011 PER), Water Nutrition Social protection PEPs

Key Transport Infrastructure Sub-sectors : e.g. Port, Railway, Air Transport, energy

Promotion of Agriculture Subsidies/Vouchers Rural investments

Decentralization Local government own revenues Transfers mechanisms Expenditures responsibilities

What to do? Emerging Issues Public investment management

Shift toward more locally funded projects Weak and diffused local capacity, PPPs (2010 PER)

Wage bill management Almost 40% of total expenditures Data management and reliability (e.g., ghost workers) Performance based systems

Debt management Capacity building Contingent debt and management

Fiscal transparency/consolidation SOEs, public agencies

Gas: fiscal management Aid efficiency

Efficiency gains Absorption capacity (2008 PER)

Questions PER/PFM issues?

Governance Selection and approval mechanisms?

Option 1: Selection by Secretariat and PER focal group with endorsement by Champion group (flexibility)

Option II: General Meeting (chaired by champion) will full range of stakeholders to select (consensus)

Next steps Selection mechanisms Agree on annual program Delivery mechanisms and timetable

Concrete implementation Before end of August

Endorse proposals at next Troika Meeting Annual work program (topics); and workplan/timetable for 2012-13

Interim arrangements for next few months until secretariat fully operational Government Lead - MoF (……….name) DP Lead - World Bank (………name)

Deliver first results by end September (first quarter FY) Start studies defined in the annual plan Discussion of 2011 PER (World Bank) Concept note for Rapid Budgetary Analysis