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Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
Towards Indicators of Strength of Public Management Systems
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Towards Indicators of Strength of Public Management Systems

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  • For example!!!! Need to have a good set of examples here
  • For example!!!! Need to have a good set of examples here of intervention -> ISPMS -> output
  • For example!!!! Need to have a good set of examples here of intervention -> ISPMS -> output
  • Need good country example here!
  • On Georgia: Gone are the days of multiple import tariffs and complicated customs code that enabled poorly paid customs officials to live in palatial homes. A government with zero tolerance for corruption left nothing to chance when it began to reform Customs. Its comprehensive strategy not only changed customs regulation, it set out to change people’s attitude and behavior. The government worked to develop a virtuous cycle in which strong political will and clear vision, supported by a flexible strategy, pragmatism, and rapid implementation, led to quick results, which extended the windows of opportunity and reinforced the political will for fighting corruption.The government set about strengthening and simplifying the legal framework for customs by developing a new customs code. Until Sept 2006, it had 16 customs band. Now it has a zero tariff rate for 86% of its import and has harmonized its customs treatment to WTO members and non-members. The number of documents needed to clear customs reduced from 14 in 2004 to 4 for imports and 2 for exports by 2010The legislative changes were accompanied by major staffing and incentive changes. 80% of the customs officials were replaced with young, inexperienced staff who were trained to adhere to the government’s zero tolerance policy towards corruption. The newly recruited staff saw their salaries increase from GEL30 to GEL800 per month between 2003 and 2005.Alongside, the government began to institute an environment of collective responsibility to fight corruption, by punishing entire shifts when one customs officer was caught accepting bribes. It has continued to strictly punish any attempts to bribe Georgian customs officials. Those caught were arrested, fined and sentenced to a few days in jails. These actions continued even in the midst of a brief diplomatic uproar.Furthermore, the government streamlined the custom clearance process. It unified the tax and the customs agency to facilitate the use of a common identification system and enable data sharing. It also introduced a risk management system that allowed customs services to target inspections on less than 10 percent of all cargo. In June 2011 only 7 percent of declarations went through the red (enhanced scrutiny) corridor, thereby greatly reducing the time needed to clear custom. Recruiting and training new staff, raising salaries, and heavily investing in new technologies and facilities have been critical in the reform process. However, the sustainability of these reforms have been heavily dependent on the institutional changes that transformed the incentives and the rules of the game and strengthened the accountability framework.
  • The general picture is one of formal features showing more progress than functional features, but also that there is markedly different progress in the three aspects of form versus function:Actor concentration showed much higherperformance improvements than actor deconcentrationUpstream and downstream elements of the budget cycle changed at almost equal rateDe jure elements improved to a moderately higher degree than de facto features
  • Improvement in PEFA (4=A, 1=D) score, fall in central government’s net debtX-axis: PEFA 7(i) measures the extent of unreported government operations (excluding donor funds). A grade (4 in the chart above) means that the level of unreported extra-budgetary expenditure (other than donor funded projects) is insignificant (below 1% of total expenditure).D grade (1 in the chart above) means that level of unreported extra-budgetary expenditure (other than donor funded projects) constitutes more than 10% of total expenditure.The chart shows that countries with less unreported (off-budget) spending (i.e. PEFA 7 scores that are A (4 in the chart) or B (3 in the chart) have accumulated less central government debt. This seems plausible, as enforcing fiscal envelopes to contain debt is easier if all spending is on budget.
  • Improved transparency in taxpayer obligation => tax collection improvePEFA 13 measure the transparency of taxpayer obligations and liabilities (composite score of 3 sub-indicators)Rationale: Effective assessment of tax liability is subject to the overall control environment that exists in the revenue administration system (ref. PI-14) but is also very dependent on the direct involvement and co-operation of the taxpayers from the individual and corporate private sector. Their contribution to ensuring overall compliance with tax policy is encouraged and facilitated by a high degree transparency of tax liabilities, including clarity of legislation and administrative procedures, access to information in this regard, and the ability to contest administrative rulings on tax liability. A good tax collection system encourages compliance and limits individual negotiation of tax liability by ensuring that tax legislation is clear and comprehensive and that it limits discretionary powers (especially in decisions on tax assessments and exemptions) of the government entities involved, such as e.g. the revenue administration (RA), the ministry of finance and investment promotion agencies. The graph shows that countries with more transparent tax liabilities (higher PEFA scores, 4=A) also collect more taxes (possibly because of better compliance)
  • More effective payroll control => wage bill fallsPEFA 18 measures the effectiveness of payroll controls (composite of 4 sub-indicators)The graph shows that countries with more effective payroll controls are better able to contain central government wages as a share of total spending.The wage bill is usually one of the biggest items of government expenditure and susceptible to weak control and corruption. This indicator is concerned with the payroll for public servants only. Wages for casual labor and discretionary allowances that do not form part of the payroll system are included in the assessment of general internal controls (PI-20). However, different segments of the public service may be recorded in different payrolls. All of the more important of such payrolls should be assessed as the basis for scoring this indicator, and mentioned in the narrative.
  • The ISPMS methodology was piloted on the World Bank’s Corporate Scorecard, which the country results achieved with World Bank support. For the 2012 reporting period, the ISPMS approach determined if the indicators in Public Sector Management projects were behavioral and whether they show a marginal improvement relative to the previous reporting period. An indicator is deemed behavioral if it captures changes in the performance of public sector institutions or in the public agents’ actual behavior. The change in performance is a development in something that the government does, rather than a change in the organizational or system design, which may, or may not, lead to a change in output. This pilot exercise defined progress as ‘marginal improvement’. Evidence of marginal benefit achieved by an indicator, renders the project successful. The exercise is still on-going. However, preliminary evidence from this work shows that the World Bank has made significant progress across the its various engagements in PSM, as shown in the table below:
  • De Jure-Concentrated-Upstream (formal – P12i) vs. De Facto-De-Concentrated-Downstream (functional – P7i): Formal shows faster improvement than functionalDe Jure moves faster than de facto because government’s reform claims are further ahead than actual implementationConcentrated moves faster than de-concentrated as the former refers to the number of decisions that need to be made and the latter is the degree to which skilled judgment rather than routine procedures are neededUpstream moves faster than downstream since upstream features tend to involves fewer transactions and less delegation to discretionRed line = top quintileBlack line = number of countries saw no change
  • De Jure-Concentrated-Upstream (formal – P5) vs. De Facto-De-Concentrated-Downstream (functional – P23)
  • Transcript

    • 1. Towards Indicators of the Strength of Public Management Systems OECD DAC meeting, 24 April 2012 Jurgen Blum, Nick Manning, Eshrat Waris World Bank
    • 2. Overview1. What do ISPMS measure?2. Why do we need ISPMS?3. What are the key challenges in developing ISPMS?4. How does the ISPMS approach seek to address these challenges?5. What is a pragmatic way forward?
    • 3. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps This is how the public sector delivers results: Where do we measure success? Broader Governance Environment
    • 4. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps If we were to measure results at the end of the chain… • …we would need to wait for long… • …and attribution would be difficult.
    • 5. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps So we need to measure at some intermediate stage… This is what “Indicators of the Strength of Public Management Systems” are about. • They measure progress made towards improving the performance of core management systems in government • They measure the practice rather than the de jure arrangements
    • 6. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps In sum: ISPMS are replicable and actionable measures, comparable between countries, of the degree to which the behaviors of public sector actors comply with a current understanding of the features of public management that are most likely to lead to better development outcomes
    • 7. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Overview: Two major purposes1. Strengthening government ownership • ISPMS can help governments design and monitor the results of PSM reforms2. Improve project effectiveness, by… • Improving project design • Setting reasonable targets for donor-supported reform projects • Identifying reforms that matter • Strengthening donor accountability
    • 8. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Example: The PEFA Success Story: Broad consensus, broad coverage1. A rapid expansion 50 since 2005: 40 18 7 19 30 13 135 countries, 17 5 14 20 9 325 assessments 13 5 10 10 23 23 in March 2012 3 8 11 15 12 0 2005 2006 2007 2008 2009 2010 Led by EC Led by Other Led by WB2. Growing Nr. of 135 first 52 second 8 third generation repeat assessmentsNote: PEFA assessments are shown by lead agency. The year refers to the main mission when most of the interviews for the PEFA assessment were conducted. The number of assessmentsreported includes both "finalized" and "draft assessments". While every effort was made to take stock of PEFA Assessments comprehensively, some assessments may have been omitted in thedataset.
    • 9. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps The PEFA Success Story: Who uses PEFA for what? Strengthens Government Ownership Improves Donor Project Design Governments use PEFA to design Donors use PEFA to tailor project and repeat assessments to design to the strength of country monitor the results of PFM reforms systems
    • 10. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects The Example of Georgia / Eastern and Central Asia 2: UZB 100 100 How public sector reforms affect the KAZ business environment – what can be done TJK TJK UZB in 5 years? 80 KAZ KGZ 80 Days needed to Export, 2006 Days needed to Import, 2006 KGZ AZE 60 AZE 60 GEO GEO SRB Customs: RUS 40 ARM UKR RUS 40 ARM MDA SRB MDA UKR ROM BLR At which rate have countries reduced the ROM ALB HRV BGR ALB TUR SVK BIH BGR POL BLR BIH SVK SVN average time to export / import? TUR SVN MKDHUN POL CZE 20 HRV CZE 20 HUN MKD LVA LVA LTU LTU EST EST 0 0 -400 -300 -200 -100 0 100 -80 -60 -40 -20 0 20 Percentage Change in T ime Needed to Export between 2006 and 2011 Percentage Change in T ime Needed to Import between 2006 and 2011 Data source: Doing BusinessSource: Doing Business
    • 11. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects The Example of Georgia / Eastern and Central Asia 1: 12 ALB How public sector reforms affect the AZE business environment over 5 years – what Contract Value Paid in Informal Payments or Gifts, 2005 10 can be done in 5 years? MKD BGR KAZ 8 RUS LVA Procurement: LTU UKR HRVKGZ GEO MDA SRB At which rate have countries reduced CZE 6 HUN UZB SVK POL corruption in procurement between 2005 ARM and 2009? BLR TJK EST BIH 4 SVN ROM -100 0 100 200 300 400 Percentage Change in Contract Value Paid to Secure Government Contract between 2005 and 2009 Data source: BEEPSSource: Business Environment and Enterprise Performance Survey (BEEPS)
    • 12. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects Testing theory: Does isomorphism explain the speed of change in PFM reforms? (based on measured differences over a period of 4 years or less) de jure vs. de facto upstream vs. downstream concentrated vs. deconcentrated 50 40 50 40 40 30 30 30 20 20 20 10 10 10 0 0 0 De jure De facto -10 -10 -10 -20 -20 -30 -20 -30 % increase % decrease % increase % decrease % increase % decreaseSource: Based on Ronsholt (2011)
    • 13. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by identifying reforms that matter Public Financial Management Example Do countries with greater transparency in fiscal reporting have less debt?
    • 14. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by identifying reforms that matter Tax Administration Example Do countries with higher transparency of taxpayer obligations collect more taxes [as % of GDP]?
    • 15. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by identifying reforms that matter Civil Service Reform Example Do countries with more effective payroll controls spend less on central government wages?
    • 16. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by strengthening donor accountability Co-operate Scorecard Tier II Indicators : Country Results Supported by the Bank For now based on ISPMS in projects Tier II Corporate Scorecard Institutions and Governance Report No of Countries with 44 Civil Service WB Projects Success Rate 55% No of Countries with Tax 12 WB Projects Administration Success Rate 67% No of Countries with Public Financial WB Projects 26 Management Success Rate 73%
    • 17. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by strengthening donor accountability Change in Tax Revenues in East and Central Asian Countries in % of GDP 2003-2009 (averages) with WB engagment Region Kyrgyzstan Armenia Georgia 0 2 4 6 8 10 12 Can the Bank claim some credit?
    • 18. What are ISPMS? Why ISPMS? Key Challenges? The ISPMS Approach Next Steps A challenging task ahead 1. Making progress without a burning platform 2. Challenges in designing ISPMS 3. Challenges of attribution 4. Factoring in professional judgment and tacit knowledge 5. Research may require additional data
    • 19. What are ISPMS? Why ISPMS? Key Challenges? The ISPMS Approach The ISPMS Approach Next Steps How are ISPMS distinct? PAST ATTEMPTS OUR NEW PRAGMATISM Undermined by… “Indicators of the Strength of Public Management Systems” (ISPMS) • The cost of data collection A “multi-stakeholder patchwork”-approach… Doing Business PEFA• “De jure” bias ISPMS ILO Labor • Over-ambition Open Budget Stats …with quality thresholds for inclusion, 19 measuring PSM performance
    • 20. What are ISPMS? Why ISPMS? Key Challenges? The ISPMS Approach The ISPMS Approach Next Steps What makes an indicator useful for measuring the strength of Public Management Systems? ISPMS should meet 4 “utility” criteria… Criterion Definition 1. Action-worthy We know (or strongly believe) that they contribute to results 2. Actionable They are amenable to government action and project interventions 3. Behavioral Focus on function, not form 4. Replicable Generated transparently and can be reproduced by others …and 2 “feasibility” criteria. Criterion Definition 1. Country coverage ISPMS should be available for a minimum of 20 countries 2. Time series ISPMS should be collected repeatedly
    • 21. What are ISPMS? Why ISPMS? Key Challenges? The ISPMS Approach The ISPMS Approach Next Steps ISPMS are but a subset of governance indicators…1. Do the indicators focus on Examples of“PSM systems”? non-ISPMS (mostly)This includes, inter alia, PFM, revenue Governance Indicatorsadministration, procurement, publicadministration e.g. Bertelsmann, Mo Ibrahim, WGI2. Do the indicators yieldcomparative measures at thenational level? e.g. PETS, QSDS, scorecards3. Do the indicators meet e.g. CPIA, MAPS,ISPMS criteria? IMTAX ISPMSUtility-criteria: Action-worthy, actionable, behavioral, replicableFeasibility-criteria: Countrycoverage, time series
    • 22. What are ISPMS? Why ISPMS? Key Challenges? The ISPMS Approach The ISPMS Approach Next Steps What we have done already: Preliminary Stocktaking results: Major Sources of ISPMS BEEPS Count 8% Public Expenditure and Enterprise Doing Business Financial Accountability Surveys Count Count (PEFA) Count 1% 9% 17% Global Integrity Indicators (GII) Count Open Budget Survey 9% Count 16% IMF Government Finance Statistics and World Economic Outlook (GFS & WEO) Methodology for Count Assessing Procurement 5% Institutional Profiles Systems Count Database Count International Budget 2% 24% Practices and Proceedures Database (OECD) Count 9%
    • 23. What are ISPMS? Why ISPMS? Key Challenges? The ISPMS Approach The ISPMS Approach Next Steps What we have done already: Gap identification Doing 1. Thematic Gaps: ISPMS are scarce except for PFM Business PEFA Budgetary and Financial Management 54 Gaps? System ILO Procurement System 13 Labor Open Budget Stats Revenue Mobilization System 29 Public Administration System 19 Public Information Systems 12 0 10 20 30 40 50 60 2. Country Coverage Gaps: significant 3. Time Series Gaps: significant, sometimes only ad hoc collection
    • 24. What are ISPMS? Why ISPMS? Key Challenges? The ISPMS Approach The ISPMS Approach Next Steps 3 Pragmatic StepsStep 1:• Draft stocktaking - done• Build technical consensus around criteria• Establish multi-donor Steering CommitteeStep 2:• Encourage contributions by providing a “quality seal”• Piggyback on ongoing data collection efforts by governments and NGOs
    • 25. What are ISPMS? Why ISPMS? Key Challenges? The ISPMS Approach The ISPMS Approach Next Steps Next steps? DATE STEP • ISPMS Working Group met to and reviewed approach note, 12 March 2012 including representatives of DfID, UNDP and OECD DAC. • Obtain comments on the proposals for ISPMS at the OECD DAC OECD-DAC meeting, 24 April GOVNET meeting. • Draft inter-agency Working Paper to be circulated July 2012 • High level technical committee including senior academics and researchers, and government representatives to act as commentators and reviewers • Proposals for broad-based Steering Committee, and associated December 2012 technical advisors, tasked with accepting indicators into a pool of ISPMS
    • 26. Thank you!
    • 27. Annex I:Additional data on setting reasonable targets for donor-supported reform projects
    • 28. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects The Example of Eastern and Central Asia 3: BIH How public sector reforms affect the Upper quintile business environment – what can be done .8 in 5 years? Tax Administration is a Major Obstacle, 2006 .6 SVK Tax administration: CZE ARM At which rate have countries reduced the share of firms reporting tax administration POLROM .4 KGZ as a “severe” or “major” obstacle? ALB HRV MDA LVA AZERUS EST SRB TJK UKR HUN MKD LTU .2 SVN UZB KAZ BGR BLR GEO 0 200 400 600 800 Percentage Change in Tax Administration Obstacle 2005 and 2009 Data source: BEEPSSource: Business Environment and Enterprise Performance Survey (BEEPS)
    • 29. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects Isomorphism: PEFA Example 1 PI-12i Preparation of Multi-Year Fiscal Forecasts PI-7i Level of unreported extra-budgetary and Functional Allocations expenditure (i.e. not included in fiscal reports) Upper quintile Upper quintile
    • 30. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects Isomorphism: PEFA Example 2 PI-5 Classification of the budget PI-23 Availability of information on resources received by service delivery units Upper quintile Upper quintile
    • 31. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects Gauging the speed of change Example 1: Upper quintile Making tax declarations faster? – what can be done in 5 years? Percentage change in days for tax declarationsSource: Doing Business.
    • 32. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects Gauging the speed of change Example 2: Upper quintile Upper quintile Cutting the wage bill? – what can be done in 5 years? Percentage change after 5 years in wages [as % of GDP]Source: Staff calculations, based on IMF GFS data.
    • 33. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by setting reasonable targets for donor-supported reform projects Gauging the speed of change Example 3: Upper quintile Reducing public employment? – what can be done in 5 years? Percentage change in public employment after 5 yearsSource: Staff calculations, based on ILO data.
    • 34. Annex II:Additional data on Improving project effectiveness, by identifying reforms that matter
    • 35. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by identifying reforms that matter Public Financial Management Example 2 Do countries that prepare multi-year fiscal forecasts have higher fiscal discipline? Correlation 0.22 / Robust R2=0.0512 / Number of Observations=41 Source: PEFA
    • 36. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by identifying reforms that matter Tax Administration Example 2 Do firms in countries with clearer tax liabilities spend less time on paying taxes? Correlation=0.22 / Robust R2=0.049 / Number of observations= 42 Sources: PEFA / Doing Business
    • 37. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by identifying reforms that matter Tax Administration Example 3 Do countries with stronger controls in the taxpayer registration system do better in curbing tax evasion? Correlation=0.62 / Robust R2=0.38 / Number of Observations 24 Sources: PEFA / Institutional Profiles Database.
    • 38. Annex III:Additional data on Strengthening donor accountability
    • 39. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by strengthening donor accountability Change in Tax Revenues in African Countries in % of GDP 2003-2009 (averages) Average with WB engagement Overall Regional Average Uganda Lesotho Burkina Faso Sierra Leone Liberia Togo Mali Nigeria Ghana Kenya -10 -5 0 5 10 15 20 Can the Bank claim some credit?
    • 40. What are ISPMS? Why ISPMS? Key Challenges The ISPMS Approach Next Steps Improving project effectiveness, by strengthening donor accountability Does World Bank PFM lending make a difference for Open Budget Survey ISPMS ratings?

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