Transcript PRSP Process and Pro-Poor Budgeting in Tanzania

PRSP and Budget Links:
Emerging Evidence from Case
Studies
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PRSP and Budget Links:
Emerging Evidence from Case Studies
Jeni Klugman
Rosa Alonso
Oct. 12, 2004
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Presentation Summary
Overview and Motivation
PRSPs and Budgets
Lessons Learned
1. Aggregate
2. Data
3. Process
4. Allocations
5. Donors
Conclusions
Challenges Ahead
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Overview:
Motivation
PRSP process and associated policy and
program commitments have the potential to
increase the pro-poor focus and
accountability of policy-making and
budgeting, through improved availability
and use of information, and better
incentives and processes.
Indeed realizing this potential is central to
expectations about PRS effectiveness as
an instrument to promote pro-poor policy
and programs.
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Overview:
The PRSP and Budget: Potential Linkages
Identify
Priorities
PRSP
Process &
Policy
Commitments
MTEF
Evaluation
PEM
Annual
Budget
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Budgets—A Key Disciplining Tool for PRSPs
Budgets are a key implementation tool for
PRSPs and provide discipline:
Link to the fiscal envelope and discipline of
costing
Absorptive constraints
Need to prioritize and sequence policies
Rigorous application of technical criteria to
judge trade-offs
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PRSPs—A Strategic Framework for Budgets
PRSP approach promotes:
A focus on poverty reduction
A needs-based reference for fiscal policy
decisions
Greater transparency of process and more
participation of line agencies and CSOs
Emphasis on results and indicators
Donor commitment to align external finance
with government priorities
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Key Themes
The case studies aim to assess:
The contribution of the PRSP process to more
accountable and pro-poor budgeting
The degree of implementation of PRSPs via the
budget
Questions on PRSP implementation (JSA):
Is the financing plan adequate and credible?
Are fiscal choices—on expenditure and revenue
side—consistent with strategic priorities and
institutional capacity?
Is public financial management adequate to
ensure effective implementation?
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Lessons Learned (1)
Aggregate Financing--Potential
PRSPs-budgets—tension between needs and
resource availability
Needs-based PRSP can provide:
Strategic orientation and goals
Impetus to improve tax collection
Increased ability to leverage external finance to
deliver agreed results
Resource availability as determined by
realistic macroeconomic projections and
overall budget envelope provide the needed
discipline for PRSP implementation
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Lessons Learned (1)
Aggregate--Limitations
Significant gaps in funding in MTEFs
(TZ, BF)
Failure to tackle the revenue side and
slower than expected growth means lower
revenue out-turns
Difficulty in prioritizing can put pressure
on the aggregate
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Lessons Learned (2)
Data Production, Availability and Use
Data production—Greater coverage and
disaggregation of data:
Improved coverage of donor financing in TZ
Gender-disaggregated targets in education and
health in BF with impact on budgets
Dissemination—improved availability
Use—improved poverty analysis. Overall weak
feedback loops to policy-making:
In TZ, use of poverty-data for elaboration of local
transfers formula
Improved results-orientation and M&E, e.g. of
MTEFs, sector strategies and program budgets
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Lessons Learned (2)
Improved use of Data,
Results-Orientation of Budgets and M&E
Budget allocations increasingly informed by
data, analysis and costing of priority
programs
Poverty diagnostics is a key building block
Spending by level of service (primary, tertiary,
etc.)
Regional composition of spending and poverty
maps
Benefit incidence analysis – average and
marginal
Program evaluations
Use of quantitative and survey information
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Lessons Learned (3)
More Open Process
Improved accountability—inside and
outside government
Enhanced dialogue within line ministries
and b/n line ministries & MoF due to:
WGs and PRS review processes
Results-orientation of PRSP process and budget
support
But, much more efficient when finance and
planning under one ministry!
PRSP process can support
decentralization--Local governments key to
improve service delivery
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Lessons Learned (3)
Budget Process: Tanzania
PRS working groups:
Working groups in priority sectors and
budget, macro and energy groups
Participation from MoF, line ministries,
donors and civil society
Role--scrutinize links between PRS,
sectoral strategies, MTEF and budgets
Government leadership/ownership key!
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Process: Tanzania
Institutionalizing a Poverty-Focused
Dialogue
Contribution of working groups:
Institutionalize participation in PRS
implementation
Supports dialogue within govt. and b/n
government, donors and civil society
Increase poverty focus of sector dialogues
Increase results-orientation of policy dialogue
Help set up and monitor SWAPs
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Lessons Learned (3)
Process: Cambodia—Building Linkages
Achievements:
Merging of PRSP and planning process
Existing sector strategies (e.g. health and
education) inform NPRS and sector expenditure
frameworks
Sectoral and structural measures subject to
iterative consultations
Some sectors show clear connection to budget
PRSP process is enhancing connections b/n key
Parliamentarians and CSOs
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Limitations in Cambodia
Many activities in matrix not costed
Line agencies take incremental approach
and focus mainly on investment projects
Weak role/ownership of Parliament in
development of PRSP and budgeting
processes and priorities
Institutional disconnect as MEF involved
relatively late in NPRS development
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Lessons Learned (4)
Allocations: Overall Achievements
Allocations to pro-poor spending have
been increasing in countries with PRSPs, as
percent of GDP and of total spending
Especially true in countries that are more
advanced in the PRSP process, have better
budgeting processes, and more donor
support
“Poverty-reduction” spending increased by
an average of 1.5 points of GDP across 20
countries from 2000 to 2004
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Allocations-Findings from Case Studies
Rising share of current expenditures goes
to priority sectors in Cambodia (share for
health, education, and agriculture/rural
development rose from 25% in 2000 to
36% in 2004)
Priority expenditures (relatively)
protected from budget cuts in TZ and BF
In some sectors/countries improved
intra-sectoral resource allocation
(especially primary education)—e.g. BF,
Cambodia
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Allocations: Findings
Tanzania: Priority/Discretionary Spending
Real Expenditure Increases
600000
500000
400000
300000
200000
100000
0
-100000
FY99
FY00
FY01
FY02
Discretionary Expenditure
FY03
FY04
FY05
FY06
Priority Sector (broad)
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Allocations: Findings
Tanzania: Sectoral Spending
Priority Real Spending Per Capita
16000
14724
12000
10000
8000
FY99
7029
FY03
6205
5130
4000
3091
2846
1742
612
2000
1864
709
237
636
Judiciary
Roads
Agric. R&E
Water
Health
0
0
465
HIV/AIDS
6000
Education
T.Sh. (at constant FY03 prices)
14000
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Allocations: Findings
Burkina-Faso: Real Priority Expenditure
Figure 1. Real expenditure in priority sectors
250000
18000
16000
14000
12000
150000
10000
8000
100000
CFA
CFA Mill
200000
6000
4000
50000
2000
0
0
1998
1999
2000
Total expenditure
2001
2002
Per capita
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Allocations: Findings
Improved geographical resource
allocation, impetus to decentralization:
Allocations to municipalities in Bolivia grew
from 9 to 13 percent of the budget
between 1999 and 2002
New pro-poor regional transfer norms in
Tanzania and for health sector in Cambodia
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Lessons Learned (4)
Allocations: Caveats
Uneven increases across sectors—in
education much greater than in health (EFA)
And within sectors—(e.g. curative vs. primary
health and agriculture vs. rural roads in BF,
within agriculture in Cambodia)
And across expenditure categories—only
small increases in goods and services
Definition of “priority” often problematic
Number of priority areas expanded in new
PRSPs for both Burkina and Tanzania (now up
to 70 percent of non-debt expenditure in TZ)
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Donors and External Assistance
--Potential
The move to budget support that has
accompanied the PRSP process has greatly
increased incentives for:
Sound public expenditure management
Costing and budgeting for sector strategies
Solid accountability mechanisms (internal and
external)
Focus on accountability
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Donors and External Assistance—
Achievements and Limitations
Increase in budget support:
From 1.8 to 3.2 of GDP in Tanzania
From 2.9 to 4 percent of GDP in BF
Progress in:
Integrating foreign aid into the budget
Medium-term aid commitments (in TZ, BF)
Donor coordination around SWAps in priority
sectors
BUT No real increase in aid b/n 1999-2002 (TZ,
BF)
Need to meet international fiduciary requirements
(esp. procurement regulations) can significantly
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slow down budget execution
Donors and External Assistance-Limitations
Tanzania: Predictability of Budget Support
Tshs. billion
200
Actual
100
Committed
0
Q1
Q2
Q3
FY02
Q4
Q1
Q2
FY03
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Donors and External Assistance--Limitations
Burkina-Faso: Variability of Budget Support
% Disbursement
Figure 27. Budget Support: Quarterly
Disbursements
80%
70%
60%
50%
40%
30%
20%
10%
0%
1
2
3
4
Quarter
1999
2000
2001
2002
Average 96-02
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Overall Conclusions
Aggregate—Increased focus on available
resources and scope to increase mobilization
Data—Improved production, dissemination
and use of data
Allocations—Enhanced pro-poor focus of
budget allocations
Process—Greater openness, resultsorientation, accountability of budget process
Donors—Improved donor coordination and
alignment with country priorities
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Challenges Ahead--Data
and Results-Orientation of Budgets
Improve:
Comprehensiveness--coverage of budget data
Disaggregation--budget classifications
Skills in the statistics and PFM areas
Timeliness, availability and readability of budget
information
Feedback loops from poverty analysis to budgeting
Monitoring of program budgets and other resultsoriented policy-making tools to encourage evidencebased budgeting
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Challenges Ahead--Process
Foster the involvement of line ministries,
Parliaments and CSOs in budget process
Better align the PRSP and budget timetables
PRSP monitoring data could usefully inform inter- and
intra-sectoral allocations and mid-term adjustments
PRSP Progress Reports should be timed to inform the
budget cycle
Integrate the MTEF, PIP and annual budget
Integrate MTEF with sector budget and planning cycles
Integrate responsibility for MTEF with MoF unit
preparing annual budget
Improve budget execution so that planning
becomes serious process
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Challenges Ahead--Allocations
Protecting prioritization and greater
specificity on what being a “priority
expenditure” means, e.g. clarify degree of
priority in budget allocation process and of
protection during revenue shortfalls
Sticking to good process-PRSP priorities
should be respected and reviewed at PRS
review time reflecting:
Empirical evidence--results of NPRS M&E, PSIA,
other analytical work
Participatory processes for PRS elaboration,
including Parliaments!
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Challenges Ahead--Donors
Need for improved
Predictability of commitments—more
long-term forecasts
Reliability of disbursements—smaller gaps
b/n commitments and disbursements
Variability of aid flows--across and within
years
Timeliness--better synchronization with
government budget cycles
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PRPS Budget Links
Comments?
Questions?
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