Governance Reform: Bridging Monitoring & Action Framework Patterns Reforms April 28th.2011

The National Governance System Framework Governance and corruption are not the same thing.

Governance Trajectories

Some Governance Indicators Types of Indicators BroadIntermediateSpecific Dimension of Governance Bureaucratic capability State Effectiveness (KK) Quality of budget and financial management (CPIA 13); Quality of public administration (CPIA15) PEFA public financial management performance indicator set State oversight institutions Voice and accountability (KK); Rule of Law (KK); Executive constraints (Polity IV) Property rights and the rule of law (CPIA12) Global Integrity Index Governance and poverty reduction outcomes Control of corruption (KK); Quality of the business environment and service provision (DB&ICS)

Two Approaches to Measuring Governance  Broad and Aggregated: Broad measures to measure governance at more aggregated levels. Help reveal systematic patterns – and basis for monitoring trends over time.  Specific and Disaggregated: Specific measures of quality of key governance subsystems, including using “actionable indicators” to benchmark and track reforms.  Way Forward: Match the governance indicator with the purpose of measurement and monitoring; intensified investment in specific indicators

Governance patterns: East Asia

Patterns: Middle East and North Africa

Governance patterns: Africa

Patterns: East Europe and Central Asia

Patterns: Latin America

REFORMS Strengthening Bureaucratic Quality Strengthening Checks and Balances Initiating Reform from the Front-line

Strategy – Strengthening Governance Institutions I Five Common Themes 1. Understand the politics: why are a country’s governance strengths and weaknesses what they are? (Kenya vs Sierra Leone; Bangladesh) 2. Focus narrowly, embrace momentum 3. Many opportunities for improving transparency – be proactive everywhere 4. Monitor progress, using specific indicators 5. Initiate dialogue on path to long-run sustainability

PFM operations perform satisfactorily regardless of governance starting point, but ACSR operations are successful in stronger settings All projects CPIA (Q16) < 3.0 CPIA (Q16) from 3.0 to 3.5 CPIA (Q16) Greater or equal to 3.5 No. of projects Projects with Satisfactory or better (%) No. of projects Projects with Satisfactory or better (%) No. of projects Projects with Satisfactory or better (%) No. of projects Projects with Satisfactory or better (%) PFM 3985%1587%1883%6 ACSR 2458%1136%978%3100%

Trends in PFM can be monitored Net Change in HIPC Tracking Indicators, Decline in categories Decline in categories No changeImprovement in1-2 categories Improvement inor more categories

Improving PFM – A Platform Approach Cambodia – Sequence of Platforms Enables more accountability for performance management Enables a basis for accountability Enables focus on what is done with money Platform 1 A credible budget delivering a reliable and predictable resource to budget managers Platform 1 A credible budget delivering a reliable and predictable resource to budget managers Platform 2 Improved internal control and public access to key fiscal information to hold managers accountable Platform 2 Improved internal control and public access to key fiscal information to hold managers accountable Platform 3 Improved linkage of priorities and service targets to budget planning and implementation Platform 3 Improved linkage of priorities and service targets to budget planning and implementation Platform 4 Integration of accountability and review processes for both finance and performance management Platform 4 Integration of accountability and review processes for both finance and performance management Broad Activities Integration of budget (recurrent & capital budgets)  Strengthen macro and revenue  Forecasting  Streamline spending processes Broad Activities  Re-design  Budgeting  Classification system  Initial design of FMIS for core business processes  Strengthen external audit and define internal audit function Broad Activities  Re-design budget cycle (e.g. MTEF)  Pilot program based budgeting & budget analysis  Further fiscal  Decentralization Broad Activities  Full design of FMIS  Develop IT  Management  Strategy  Initial design of asset register

Strengthening administrative capability Some initial lessons Ambitious administrative reforms work only in those few countries with strong political commitment and coherence Latvia: EU accession  market competitive pay, meritocracy, comprehensive administrative restructuring Tanzania: pay decompression; performance-based agency reforms Even in these countries, implementation was difficult In most countries, a more modest administrative reform agenda is more likely to get results: example of Albania Pay reform and meritocracy targeted at top 1300 civil servants Underpinned by independent appeals body Beneficiaries successfully resisted political push-back

Building the Demand Side A constellation of checks and balances Broader International Community Civil Society Media Judiciary Legislature Subnational governments and autonomous oversight agencies Executive

Strengthening Justice Three emerging lessons Incentives for effective judicial system: Incentives of citizens and firms to use Incentives of politicians to refrain from intervening Incentives of judges to carry out their roles  Judicial reform requires enabling institutional environment  Reform needs to address political obstacles  Successful implementation remains elusive Independence without accountability results in poor performance ECA: independent courts, w/o accountability, result: court corruption

Decentralization and Local Governance 1.Effective decentralization needs: – Clear allocation of responsibilities between central and local governments Assignment of service provision responsibilities Assignment of fiscal resources (including local tax base) Central fiduciary and performance oversight over local – Capacity of local governments (and central counterparts – Downward accountability between local governments and citizens => High risk of institutional limbo 2. Community  Local government Opportunity for cumulative gains?

Governance --the Many Meanings of ‘Demand-Side’ Reform Extent of Co-operation with State Institutions Required for Effectiveness MarginalSomeSignificant Balance between state and civil society counter- parts Mostly state Capacity building for: Judiciary; Parliament ; Supreme audit institution MixedFoster transparency and participation in policymaking and service provision Support for: Freedom of Information Act; Asset Declaration; Enabling legal framework for civil society organizations; Enabling business environment; Mostly civil society Work with civil society advocacy and watchdog organizations; Foster development of competitive private sector Support media reform Support community- based initiatives

Strengthening checks & balances through transparency Strengthening national-level transparency Supply: Building statistical capacity - Marrakech action plan for statistics Information availability: Freedom of Information Act; support for media Participatory poverty reduction strategies (PRSPs) Strengthening participation and transparency Citizen Scorecards in Bangalore Rajasthan India: leverage FOIA to compare official data with actual experiences of hospital patients and food rationing recipients Philippines: citizen monitoring of textbook distribution Tanzania: local community tracking of health and education spending Transparency & competition in public procurement, e-procurement

Governance and Poverty Reduction: Orchestrated Imbalance A Governance Virtuous Spiral?

Governance from the Front-line I Getting the Priorities Right