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Managing Public Expenditures to Make Services Work for Poor People. Discussion with Public Expenditure Thematic Group Shanta Devarajan, Shekhar Shah WDR 2004 October 31, 2002. Objectives. Discuss WDR framework

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Managing public expenditures to make services work for poor people

Managing Public Expenditures to Make Services Work for Poor People

Discussion with Public Expenditure Thematic Group

Shanta Devarajan, Shekhar Shah

WDR 2004

October 31, 2002


Objectives
Objectives

  • Discuss WDR framework

  • Explore questions relating to public expenditure management and service delivery

  • Invite inputs from TG on experiences of PE work & budget formulation, implementation, monitoring that suggest what does & does not work to improve services and outcomes for poor people


Services are failing poor people mdgs global aggregates

Universal Primary Education

Services are failing poor people:MDGs—Global Aggregates

Eradicate Poverty & Hunger


Growth is not enough

Poverty Headcount

% living on less than $1/day

Primary Education

Enrollment

%

Infant Mortality

per 1000

Target

2015

Growth alone

Target

2015 Growth alone

Target

2015 Growth

alone

EAST ASIA

14

3

100

100

14

33

ECA

1

1

100

100

9

22

LAC

8

7

100

100

14

30

MENA

1

1

100

92

20

46

SA

22

18

100

87

29

70

AFRICA

24

40

100

64

33

87

Growth is not enough

Source: Global Economic Prospects 2001, p.42 base case; Devarajan (2002)


Increasing public spending is not enough
Increasing public spending is not enough

Regression line:

Coefficient: -0.055

T-statistic: 0.755

Source: WDR 2004 Team


Similar changes in public spending can be associated with vastly different changes in outcomes
Similar changes in public spending can be associated with vastly different changes in outcomes…

Source: WDR 2004 Team


And vastly different changes in spending can be associated with similar changes in outcomes
…And vastly different changes in spending can be associated with similar changes in outcomes

Source: WDR 2004 Team


Why are services failing for poor people
Why are services failing for poor people?

  • Governments spend on the wrong goods and people



Why are services failing for poor people1
Why are services failing forpoor people?

  • Governments spend on the wrong goods and people

  • Resources fail to reach the service provider (Uganda tracking study)

  • Weak incentives for effective service delivery


Examples of ineffective service delivery
Examples of ineffective service delivery

  • Bangladesh: Absenteeism rates for doctors in primary health care centers: 79%.

  • Zimbabwe: 13% of respondents gave as a reason for not delivering babies in public facilities that “nurses hit mothers during delivery”.

  • Guinea: 70% of government drugs disappeared.

  • Costa Rica: absenteeism rate is 30% in public health facilities.


Why are services failing for poor people2
Why are services failing forpoor people?

  • Governments spend on the wrong goods and people

  • Resources fail to reach the service provider (Uganda tracking study)

  • Weak incentives for effective service delivery

  • Demand-side constraints


Accelerating progress what is the problem
Accelerating progress: Whatis the problem?

  • Economic growth not enough

  • More public spending not enough - Why?

    • Governments often spend on wrong services & people

    • Resources fail to reach service providers due to corruption

    • Weak incentives for delivery, monitoring, accountability

    • Households can’t or don’t utilize services (parents pull children, particularly girls, out of school; problems of access)

  • So, what is needed?


Development outcomes the hope
Development outcomes: the hope

Countries with well-designed policies are supposed to leverage their own & external resources to produce human development outcomes…

Benefits Government

Primary education


Development outcomes the reality
Development outcomes: the reality

…but, there are many weak links in implementation, and much needs to come together to make services work & produce desirable outcomes

Government

Leakage of Funds

Policies

Institutional incentives

LocalGovt

Inappropriate spending (e.g. high teacher salaries; Insufficient supply of textbooks

Providers

Public financing

Implementation capacity

Information & transparency

Institutional incentives

Low-quality instruction

Clients

Capacity & incentives

Curriculum & technology

Monitoring & evaluation

Primary

education

Lack of demand

Benefits

Ability to pay

Intra-household behavior

Community norms




Policymaker provider contracting ngos in cambodia
Policymaker-provider:Contracting NGOs in Cambodia

  • Contracting out (CO): NGO can hire and fire, transfer staff, set wages, procure drugs, etc.

  • Contracting in (CI): NGO manages district, cannot hire and fire (but can transfer staff), $0.25 per capita budget supplement

  • Control/Comparison (CC): Services run by government

    12 districts randomly assigned to CC, CI or CO




Client provider educo program in el salvador
Client-Provider: month EDUCO Program in El Salvador

  • Ministry of Education contracts with parent associations to deliver primary education in rural areas

  • Parents’ associations

    • Hire and fire contract teachers

    • Visit schools on regular basis




Girls education in bangladesh fssap
Girls’ education in Bangladesh: FSSAP month

  • Female Sec. Sch. Assist. Project criteria:

    • Attendance in school

    • Passing grade

    • Unmarried

  • Girls receive scholarship deposited directly into to account in their name

  • School to receive support based on number of girls



Emerging messages
Emerging Messages month

  • Incentives, Choice, Accountability

  • No single solution for every service, every country

    • Public, private, NGO provision of services all possible

    • “Matrix” of characteristics & approaches

    • Most neglected actor: the client

  • Complementarity between improved service delivery & increased financing

  • Need to understand political economy

  • Aid modalities affect service delivery


Public expenditures and service delivery in the wdr
Public Expenditures and month Service Delivery in the WDR

  • Set within WDR approach of unbundling service delivery chain

  • Discussed as primary cross-sectoral issue for improving service delivery

  • Entry point for broader public sector reform

    • Civil service, decentralization, M&E, regulation, anticorruption

    • Scope for integration: priorities within government, across sectors, among donors, and over time


Public spending service delivery
Public Spending & Service Delivery month

  • Well-functioning PE systems vital for health, education, water & sanitation services

  • Budget allocations should reflect determinants of health and education outcomes

  • However, PEM systems fall short of this ideal:

    • Often not backed up by good policymaking

    • Do not allocate adequate resources

    • Lack outcome orientation

    • Suffer from conflicting political & bureaucratic interests

    • Tradeoffs between sectors and over time not made

    • Integration across government missing


Cross cutting pe reforms for better service delivery
Cross-cutting PE Reforms for better service delivery month

  • Raise results-orientation of public expenditure programs: performance budgeting

  • Update, regulate, and harmonize public procurement

  • Update legal & regulatory framework for financial management

  • Improve accounting and audit systems at central and local levels

  • Implement regular expenditure tracking surveys

  • Delineate clear responsibilities for M&E, establish clear service standards


A large agenda pe work and poverty reduction
A Large Agenda: PE work and month Poverty Reduction

Quality

of

Policy

Process

PRSP

PRSC

PE Analysis

Fiscal

Sustainability

Allocative

Efficiency

Incidence

Analysis

Poverty

Reduction

Fiscal risk

Service

Del.survey

Tracking

surveys

PE Management

Budget

Formulation

Budget

Execution

Reporting &

oversight

Procurement

Related items

Civil Service Reform

Decentralization

Source: Rajaram, PREM Learning Week, June 2002


Questions for discussion
Questions for discussion month

  • Ways of cutting into and assisting countries manage this large, growing agenda when capacities are low (e.g. HIPC)

  • Enhancing service orientation of budgets

  • Integrating across PRSPs, sectors, donors

  • Experience with MTEFs

    • Poverty impacts

    • Integration of social sectors

  • Enhancing monitoring and evaluation

  • Role of participatory budget analysis


Objectives today
Objectives Today month

  • Discuss WDR framework

  • Explore questions relating to public expenditure management and service delivery

  • Invite inputs coordinated through TG

    • Country-specific material for boxes

    • Background notes on key questions in PE for making services work for poor people

    • Stories of success and failure


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