Managing Public Expenditure Work over Time and across Sectors Charles Humphreys PREM Learning Week 17 June 2002

Why public expenditure work? Entry point to entire agenda of public sector reform (civil service, decentralization, service delivery, PEM, regulatory functions, security…) Entry point for enhanced multisector organization of Bank work

Why integrate? Public expenditure is a government-wide issue Intersectoral competition for allocations Expenditure management systems (nomenclature, releases, systems, reporting, auditing) Role of center in establishing framework for performance (measurement, evaluation, accountabilities) Public expenditures get translated into public service (“performance”) in spending departments Design of sector programs Day-to-day implementation, and financial management

Morocco Public Expenditure Work Problem: excessive centralization and civil service rigidity Approach: Joint Bank/Government working groups to define institutional reforms, delinked from financial support Outcomes: “déconcentration” starting with Health, greater civil service mobility Lessons: Modular approach, sustained over time, need for public sector reform and sector skills, capacity to act as integrators

Disciplining Bank public expenditure work Starts with CAS – definition of multisector, multiyear activities (Strategy for P

Principles of performance budgeting Unified, consolidated budget Management by (strategic) program Use of performance indicators, monitoring and evaluation Multi-year perspective for both budgets and indicators Competitive allocation between sectors Decentralized financial management Ex-post and performance audits

Gödel’s trap: same principle of what we do applies to what we want to be done Public sector reforms that the PER is supporting are themselves based on the idea that the administration works best when it finds ways to leverage ownership and knowledge in the delivery of public services. PS reforms in Morocco: (i)decentralization of decisions to leverage local knowledge and ownership; and (ii) performance-based management to use information on impact as the key to the system

Participatory approaches as method to leverage knowledge Agents K-factors Bank Counterpart Final clients (poor) Knowledge International experience Reform design Country knowledge Procedural,juridical and administrative. Historical Needs priorities Micro conditions Skills General diagnostic Strategic framing Process management Identifying concrete problems Economy of juridical means Local activism: voice, vlonteer work, etc.. Common sense Connectivity Convocation power Brings Discipline incentive Better internet connections