The World Bank PREM Public Sector Governance Page 1 Doris Voorbraak, Kai Kaiser Public Sector Governance Group Poverty Reduction and Economic Management The World Bank PREM learning week May 5, 2009 The World Bank PREM Public Sector Governance

The World Bank PREM Public Sector Governance Page 2 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 resources reach the frontline (including country systems, special programs, etc.)

The World Bank PREM Public Sector Governance Page 3 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

The World Bank PREM Public Sector Governance Page 4 Spending wisely Strengthening Public Expenditure Management is essential to improve service delivery When services fail poor people, a good place to start looking for the underlying problem is the budget: Budgets are misallocated Budgets are misappropriated PETS helps focus on links between effective PFM and actual service delivery

The World Bank PREM Public Sector Governance Page 5 PETS can help you to judge 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 Judging operational impact of budgets

The World Bank PREM Public Sector Governance Page 6 What is PETS? Surveys that track, locate and quantify the flow of public resources across various administrative levels

The World Bank PREM Public Sector Governance Page 7 Resource Flows to Frontline Facilities Vary

The World Bank PREM Public Sector Governance Page 8 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

The World Bank PREM Public Sector Governance Page 9 Region/ CountryYearTypeSectors TTL unit AFR Burundi 2007PETS Health/Education /Justice WB-PREM Cameroon 2004PETSHealth/EducationWB-PREM Chad 2004QSDSHealthWB-DEC DRC 2007PETS Education(teache r payroll expenditure) WB PREM Ghana 2000PETS Health/ Education WB HD Kenya 2004 PETS Preliminary Report Health/ Education DFID Madagascar 2003, 2005, 2006PETS-QSDSHealthWB DEC Mali 2005,2007PETS-QSDS Education, Health WB HD Mozambique 2001, 2004 PETS-QSDS, PETS HealthDFID Namibia 2004PETS-QSDS Health, Education IFPRI Niger 2008PETS Health, Education WB PREM Nigeria 2004PETS, QSDSHealthWB DEC Rwanda 2003, 2004 PETS Education, Health/Education WB PREM

The World Bank PREM Public Sector Governance Page 10 Region/ CountryYearTypeSectors TTL unit Senegal 2002 PETSHealth WB DEC Sierra Leone 2000/01, 2003 PETS 1 and 2, PETS-review Agriculture/Health/ Education/Water and Sanitation DFID Tanzania 1999, 2001, 2003,2004 PETS and PETS review Health, Education, Agriculture and Roads USAID Uganda 1996, 2001,2003,2004 PETS and PETS- QSDSHealth, Education WB DEC Zambia 2001,2002, 2004 PETS-QSDS (3) Education, Service Delivery WB DEC EAP Cambodia 2005PETS (2)Health, EducationWB HD Lao PDR 2008PETSHealth, EducationWB PREM Mongolia 2006PETSEducationWB HD Papua New Guinea 2002PESDHealthWB DEC ECA Albania 2004 PETS (2)Health, Education WB HD WB PREM Azerbaijan 2006 PETS Education WB HD WB PREM

The World Bank PREM Public Sector Governance Page 11 Region/ CountryYearTypeSectors TTL unit Tajikistan 2008 PETS(programmatic PER) HealthWB PREM LCR Honduras 2001PETS +QSDS Poverty Reduction WB PREM Peru 2002PETS +QSDS Poverty Reduction, EducationWB PREM SAR Bangladesh 2003Absenteeism SurveyHealthWB HD MNA Yemen 2006PETSEducation WB PREM

The World Bank PREM Public Sector Governance Page 12 PETS-Experience to Date Pioneer was Uganda PETS; still best known for its strong policy impact (1996) Results and impact other PETS appear more ambiguous. Majority of the studies so far cover African countries and part of PER/broader PFM engagement. Most PETS cover health and education. Some are joint studies. PETS has become a broad brand name for different products. 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

The World Bank PREM Public Sector Governance Page 13 PETS: Experiences to date(2) Cost of survey can range from US$ 75,000-US$200,000 Sufficient time and resources are necessary to plan, design and implement a survey. Key national partners for PETS very context-specific but largely determined by incentives and power dynamics among government counterparts Dissemination activities vary depending on level of engagement by national actors

The World Bank PREM Public Sector Governance Page 14 Challenges in conducting and disseminating PETS Measuring resource leakage ( not necessarily corruption!) has been difficult in many countries due to the complexity of resource flows, and lack of reliable and available data Even when funds reach intended beneficiaries, lack of detailed accounting may lead to erroneous calculations in the book Unannounced visits may result in unintended consequences National counterparts may not like the results Politics ! Institutional incentives in the Bank

The World Bank PREM Public Sector Governance Page 15 Lessons learned: Planning Determine whether or not PETS is the right tool Invest enough time and thought in the planning stage Set appropriate and attainable objectives based on the country-context and available information: Have a fact-finding mission for an institutional assessment, mapping of roles and responsibilities of relevant actors, and review of stakeholders: Promote country ownership from the planning stages. Evaluate the trade-offs for doing a joint PETS: Evaluate the trade-offs of covering single versus multiple types of expenditures or facilities:

The World Bank PREM Public Sector Governance Page 16 Lessons learned: Implementation A well managed process can unleash additional benefits Ultimately the sector ministry needs to be the main actor for the implementation of policy Work with experienced people with deep insight knowledge of the country Recruit the right people at the local level

The World Bank PREM Public Sector Governance Page 17 Lessons learned: Dissemination and follow-up: Strike a practical balance for making findings from a PETS actionable Note that the right timing is critical for releasing survey findings Determine the share of responsibilities among Bank units for dissemination activities Be realistic about the capacity and neutrality of civil society: Establish a PETS monitoring and follow-up mechanism

The World Bank PREM Public Sector Governance Page 18 Weigh options against maximum leverage for real change PETS has established itself as an instrument of reference in the dialogue around PEM and execution for governments, development partners and civil society. PETS can serve as a strategic tool in a broader overall PFM agenda/dialogue. It remains important to carefully weigh the pros and cons of working with PETS as a diagnostic product vis-à-vis the many other existing tools: PERs, CFAAs,PEFA etc. And last but not least: Take your time to plan, design and implement and consider strategic partnering and dissemination and communication strategies aimed at actors who can make change happen!

The World Bank PREM Public Sector Governance Page 19 Resources Public Sector Governance –PETS website Permanent URL for this page:

The World Bank PREM Public Sector Governance Page 20 Presentation for PREM week May 5,2009 Kai Kaiser, Senior Economist, Public Sector Group, World Bank, Washington, DC

The World Bank PREM Public Sector Governance Page 21 Three Levels of PFM Concerns Macroeconomic Management Allocative Priorization Operational Efficiency See: Pradhan and Campos (1996)

The World Bank PREM Public Sector Governance Page 22 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

The World Bank PREM Public Sector Governance Page 23 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

The World Bank PREM Public Sector Governance Page 24 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

The World Bank PREM Public Sector Governance Page 25 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? Facility Treasury Design

The World Bank PREM Public Sector Governance Page 26 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

The World Bank PREM Public Sector Governance Page 27 PEFA Indicators Focused on Facility Financing (PI-23) ScoreMinimum requirements (Scoring methodology: M1) A(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.

The World Bank PREM Public Sector Governance Page 28 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.

The World Bank PREM Public Sector Governance Page 29 PEFA Fiscal Decentralization Outcomes Vary Slide includes finalized and draft reports

The World Bank PREM Public Sector Governance Page 30 As do information on frontline service delivery facility financial flows

The World Bank PREM Public Sector Governance Page 31 Facility and Local Government Frontline Financing Indicators

The World Bank PREM Public Sector Governance Page 32 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

The World Bank PREM Public Sector Governance Page 33 PETS Process Challenges Managing Expectations Ability to quantify leakages in general Specific flows versus general leakages Catering method to context How to interpret findings Implications for supply side versus demand side reform/capacity building… How to disseminate findings Mainstreaming in PFM and Sectoral Dialogues…

The World Bank PREM Public Sector Governance Page 34 Key Resources PETS Database/Website PREM Fiscal Leakages Note HD PER Guidelines Using Information to Enhance Demand Side Accountability Stocktaking