1. Dodoma, June 2012

2. Plan of the presentation  Finding of the PER Workshop in Washington D.C.  What to change?  Five proposals to improve the process  What to do?  Steps toward a mutually agreed analytical program  Way forward

3. Findings of PER Workshop in Washington 1. Objective: Partnership to improve fiscal policy and management 2. Key ingredient: Commitment and mutual trust from Government and Donors 3. New Process: i. Demand driven process (ownership by Government is vital) ii. Fewer meetings, Higher Results iii. Avoid multiplicity of processes: e.g. Merge PER and PFM iv. Find the balance: Planning vs. flexibility v. Open process (parliamentarians, NGOs, etc.) vi. Introduce Evaluation for Accountability

4. What to change? Today Tomorrow  Process-oriented  Supply-driven  Fatigue  Rigidity  Complex  Performance (Value for money)  Demand driven  Commitment  Flexibility  Streamline

5. Proposal 1: create champion group  Diagnostic: lack of commitment, mutual trust, visibility and ownership  Solution:  Create “Champion Group” under the chairmanship of the Minister of Finance  Composition  Governor of Central Bank  Executive Secretary of Planning commission  PS Prime Minister office  WB Director  GBS Chair  Mandate  Approve annual agenda  Deliver key messages  Evaluation

6. Proposal 2: Dedicated Secretariat  Diagnostic: lack of organization and follow up  Solution:  Re-establish a dedicated secretariat  Headed by Deputy Finance PS  One DFID/Word Bank secondee  One MoF staff  Report to Champion Group  Mandate  Follow up agenda  Organize meetings  Produce Annual Evaluation Report

7. Proposal 3: Define Delivery channels  Diagnostic: rigidity, supply-driven  Solution:  Three alternative windows for delivery  Annual/Multiyear program (e.g., health in 2012, education in 2011)  Rapid response to address just in time requests (rapid budgetary analysis, update on budget)  Capacity Building activities  No more big reports  Short policy notes (e.g., rapid budgetary analysis)  Seminars/workshops  Programs/training/capacity building  Links to networks

8. Proposal 4: Agree on Program and Timetable  Diagnostic: too many meetings, process-oriented, diffused mandate and accountability  Solution:  Define Annual plan aligned on budget cycle  Two general meetings chaired by Champion group  Define annual program for FY  Discuss finding and recommendation to budgetary committee for next FY  Follow up by Secretariat for rapid response and TA  Reduce number of participants to key staffs

9. Proposal 5: Strengthen Accountability  Diagnostic: diffused mandate and accountability among donors and government  Solution:  Identify and monitor results – Annual report by Secretariat  Report to the Champion Group and presented to GBS annual review

10. Summary of Proposals Proposal 1:Create Champion GroupVisibility, ownership, commitment, partnership Proposal 2:Re-establish SecretariatOwnership, follow up Proposal 3:Agree on delivery Mechanisms Flexibility, complementarity Proposal 4:Define Timetable and Annual Program Commitment, planning, allocation of resources Proposal 5:Strengthen accountabilityAccountability, evaluation and monitoring

11. What do to?  Once we have agreed on delivery mechanisms, there is a need to determine analytical areas where development partners can maximize their contribution to fiscal policy and management.  Menu of potential areas for collaboration -- illustrative  Structural Issues  Emerging Issues

12. What do to? Structural issues  Rapid Budgetary Analysis  Domestic Resource Mobilization:  Broadening the tax base,  Improving systems,  Managing Exemptions, etc.  Value for Money in key Social sectors:  Education, (2010 PER); Health (2011 PER),  Water  Nutrition  Social protection  PEPs  Key Transport Infrastructure Sub-sectors :  e.g. Port, Railway, Air Transport, energy  Promotion of Agriculture  Subsidies/Vouchers  Rural investments  Decentralization  Local government own revenues  Transfers mechanisms  Expenditures responsibilities

13. What to do? Emerging Issues  Public investment management  Shift toward more locally funded projects  Weak and diffused local capacity, PPPs (2010 PER)  Wage bill management  Almost 40% of total expenditures  Data management and reliability (e.g., ghost workers)  Performance based systems  Debt management  Capacity building  Contingent debt and management  Fiscal transparency/consolidation  SOEs, public agencies  Gas: fiscal management  Aid efficiency  Efficiency gains  Absorption capacity (2008 PER)

14. Questions  PER/PFM issues?  Governance  Selection and approval mechanisms?  Option 1: Selection by Secretariat and PER focal group with endorsement by Champion group (flexibility)  Option II: General Meeting (chaired by champion) will full range of stakeholders to select (consensus)  Next steps  Selection mechanisms  Agree on annual program  Delivery mechanisms and timetable

15. Concrete implementation  Before end of August  Endorse proposals at next Troika Meeting  Annual work program (topics); and  workplan/timetable for 2012-13  Interim arrangements for next few months until secretariat fully operational  Government Lead - MoF (……….name)  DP Lead - World Bank (………name)  Deliver first results by end September (first quarter FY)  Start studies defined in the annual plan  Discussion of 2011 PER (World Bank)  Concept note for Rapid Budgetary Analysis