1 Minding the Gaps Integrating PRSs and Budgets for Domestic Accountability Vera A. Wilhelm The World Bank

2 Key questions of the study Role of PRS and budget for domestic accountability Main challenges in countries when trying to integrate PRS with the budget Main entry points and lessons, with particular focus on reporting mechanisms

3 Accountability: A simple framework Agent considers itself accountable for x Principal demands accountability from agent for x Principal has powers to ensure that agent delivers x It is in the agent’s interest to deliver x ACCOUNTABILITY Capacity The agent has the ability to deliver x OWNERSHIPOWNERSHIP INCENTIVESINCENTIVES

4 PRS and budget: Ownership I Civil Society Electorate Executive Cabinet Parlia- ment Planning Sectors Civil Society Electorate Parlia- ment Finance Ministry Line Ministries & Providers Finance Executive Cabinet Planning Sectors Finance The PRSPThe Budget Strong Ownership ModerateWeak Societal

5 PRS and budget: Incentives In theory: Results orientation Transparency of decision making In practice: Proliferation of products Poor budget execution

6 Budget accountability: Multiple gaps and fractures MTEF Sector Strategies PRSP Policies & Plans Budget Formulation Budget Execution Budget Reporting & Accountability

7 However, there’s hope HIPC evaluation shows that several countries can improve their performance significantly within three years (GH, Mali, MZ) Budgets increasingly include some elements of results orientation Second generation PRS try to make a more explicit link with the budget (Tanzania, Rwanda, Mozambique, Madagascar)

8 Linking PRS and budgets 3 principal approaches in LICS: Pro-poor spending priorities MTEFs Results-oriented budgets Main Lesson: Narrow technical solutions suffer from low ownership and weak incentives for reform

9 Success stories 3 Insights: Centrally led reform initiatives to achieve domestically owned objectives Absence of institutional fragmentation enables integrated reforms Gradual approach starting with strengthening budget basics allowing sufficient time

10 Integrated Reporting: Challenges Assessment Reports Sector MIS Returns CCS Returns Impact Outcomes Outputs/ Activities Inputs/ Funds SectorNational FDS Reports Budget Performance Reports Annual Sector Reports Poverty Status Report PEAP Results Matrix PAF Grant Reports LG Financial Statements MIS Reports, League tables Local Government & MDA Ministerial Policy Statements

11 The Incentive Challenge Incentives to supply information and sources of demand –Donor driven (e.g. APR) Incentives to use information to improve performance –Internally driven (e.g. Uganda)

12 Summary Findings Contested ownership weakens domestic accountability Policy making, planning and budgeting are embedded in fragmented processes and institutions Technical fixes alone won’t do it

13 The way forward: Lessons 1. Focus on strengthening and harmonization of existing processes and adopt a gradual approach to reform 2. Support from within: High level ownership of policies, a challenge function within the executive and clear sector roles. 3. Foster incentives for integration 4. Keep it simple

14 THANK YOU