PREM Notes

176 items available

Permanent URI for this collection

http://hdl.handle.net/10986/9424

This note series is intended to summarize good practices and key policy findings on poverty reduction and economic management (PREM) topics.

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Now showing 1 - 10 of 30

The Fiscal Management of Natural Resource Revenues in a Developing Country Setting (or How to Design a Fiscal Rule If You Are Not Norway)

(World Bank, Washington, DC, 2012-04) Eckardt, Sebastian ; Sarsenov, Ilyas ; Thomas, Mark Roland

The exhaustibility and volatility of natural resource revenues pose well-known economic challenges, of which those facing oil producers are the most prominent. If oil revenues represent an important share of export earnings and of government revenues, then they can be part of overheating during booms and costly adjustments during downturns, making fiscal policy exacerbate volatility. At the same time, considerations of intergenerational equity suggest that fiscal policy should also preserve part of current oil revenues for future generations. To address both of these challenges, resource-rich countries commonly establish commodity funds, into which part of their resource-linked revenues are deposited and invested in income-generating assets (usually offshore financial assets). A key question in designing such funds is what share of current revenues should be spent and what share saved. Based on recent advisory services offered to the Ministry of Economy and Trade in Kazakhstan, this note summarizes one possible approach, aiming to provide rule-based anchors for sustainable fiscal policy in an oil-producing country. This approach applies traditional permanent-income and debt sustainability frameworks, but adapts the resulting recommendations to the institutional context of the country. Rule-based fiscal frameworks offer strong benefits to countries that are generating significant government revenue from extractive industries. As commitment devices, these frameworks can reinforce fiscally responsible economic management, contain volatility, and preserve fiscal savings for future generations.
M&E Systems and the Budget

(World Bank, Washington, DC, 2010-10) Krause, Philipp

Monitoring and evaluation (M&E) are means to multiple ends. Measuring government activities, constructing and tracking performance indicators across sectors and over time, evaluating programs, these activities can be carried out and tied together with different objectives in mind. It will certainly be possible to use M&E purely as a way to improve transparency and accountability, by making more information on the workings and results of government programs available to the public. One can also focus M&E on managerial purposes, to reward performance inside ministries and agencies. But surely a crucial element of running an effective public sector will be missing if M&E were not used to inform the spending of public money. This briefing note will introduce the main issues surrounding M&E as a tool for budgeting, a system usually referred to as performance budgeting, to help policy makers make strategic decisions about their M&E systems by outlining different design choices and their respective advantages and pitfalls.
Fiscal Policy for Growth

(World Bank, Washington, DC, 2009-04) Ley, Eduardo

While the term 'fiscal space' is new, the issue is quite old. Fiscal space refers to availability of budgetary resources for a specific purpose, typically growth-enhancing investment uses, without jeopardizing the sustainability of the government's financial position, or the stability of the economy. The recent interest in fiscal space originated as a reaction to International Monetary Fund (IMF), supported fiscal-adjustment programs that by focusing too narrowly on fiscal-deficit targets often ignored the quality of the underlying adjustment. Affected countries meanwhile advocated for fiscal space for investments in physical and human infrastructure crucial for economic growth. The IMF independent evaluation office, in their study on fiscal Adjustment in IMF supported programs acknowledged this problem, observing that 'much of the fiscal adjustment achieved is through measures that do not assure long-term sustainability and flexibility of fiscal systems to future shocks'. In effect, the improvement of the fiscal balance in the context of IMF-supported programs too often relied heavily in cuts in public investment that improve today's government cash flow at the expense of future economic growth.
Linking Fiscal Policy and Growth in PER Reports : An Operational Framework for Low-Income Countries

(World Bank, Washington, DC, 2009-03) Moreira, Emmanuel Pinto

This note describes a framework for linking fiscal policy and growth issues in low-income countries. The framework has been developed in the context of a recently, completed Public Expenditure Management and Financial Accountability Review (PEMFAR) report in the Latin American and Caribbean (LAC) region. The note describes first the framework and then illustrates its application to fiscal reform and growth prospects in the context of Haiti. The note concludes by laying out an agenda for developing this framework further, ideally to facilitate use of this framework in preparing more Public Expenditure Reviews (PERs) and elaborating medium-term budget frameworks.
On the Marriage Between Public Spending and Growth : What Else Do We Know?

(World Bank, Washington, DC, 2009-03) Moreno-Dodson, Blanca

While there are strong theoretical arguments for ways in which public spending influences growth, robust empirical links have been difficult to establish. More recently, many of the methodological problems that plagued the earlier literature have been overcome and interesting policy lessons drawn. The number of studies of developing countries using these new approaches is still limited, due to data scarcity and other comparability issues, but overall findings from the new literature are relevant for developing country policy makers and also open new venues for future research. The objective of this note is to present these new empirical results together with the methodological improvements that support them, and to outline some of the issues that need deeper analysis and empirical study, particularly in developing countries.
Institutionalizing M&E systems in Latin American and Caribbean Countries

(World Bank, Washington, DC, 2005-09) Burdescu, Ruxandra ; del Villar, Azul ; Mackay, Keith ; Rojas, Fernando ; Saavedra, Jaime

Countries are driving the efforts to institutionalize monitoring and evaluation (M&E) systems. Through the promotion of knowledge-sharing, and by taking stock of current M&E systems, fostering South-South collaboration, raising awareness through presentations, and, by launching an informal regional network, the note reviews the cases of Colombia, Chile, Brazil, Mexico and Peru. It became evident from country experiences, that there is no single "destination" for countries. Some stress a system of performance indicators, while others focus on conducting evaluations (program reviews or rigorous impact evaluation (IE). And while some countries have created a whole of government approach driven by finance, or planning ministries, others are more focused on sector M&E systems. One key characteristic of most of the systems that are now at different stages of implementation in Latin America and the Caribbean (LAC) is that they are country-led efforts to institutionalize M&E, rather than donor-driven.
Trends in Recent World Bank Support for Severance Pay

(World Bank, Washington, DC, 2005-03) Mukherjee, Ranjana

This note summarizes the operational perspective and design of severance packages supported by Bank loans and credits. The analysis focuses on severance-funding investment projects approved between fiscal 2000 and 2004, during which time revised expenditure eligibility guidelines were issued (in April 2004; see World Bank 2004). Adjustment projects that supported severance were not analyzed because project documents do not separate severance costs from others. The analysis also did not include investment projects that paid consultants to design organizational restructuring or severance packages but that did not fund actual payments to retrenched workers.
Salary Bonuses in Revenue Departments : Do They Work?

(World Bank, Washington, DC, 2004-01) De Wulf, Luc

Compensation provides a major incentive for workers to perform well. Accordingly, bonus payments are often used to enhance staff effectiveness and efficiency-and have become increasingly common in revenue departments around the world. A recent World Bank study analyzed the bonus systems applied by revenue authorities in seven countries, and was complemented by questionnaires completed by tax and customs administrations in seven others. Though the sample was small, the study generated interesting findings and points to areas requiring further analysis. The countries analyzed indicate that bonus systems are fraught with danger and so must be designed with the utmost care. There is no evidence that bonuses automatically increase the effectiveness of revenue departments. And because staff performance is influenced by factors other than salaries and bonuses, it is not easy to determine the effects of such systems. This note reviews reasons for introducing bonus systems and discusses a number of crucial design features, particularly the importance of effective and transparent performance appraisal systems based on clear performance measures.
Estimating Financing Needs for Local Services in Madagascar

(World Bank, Washington, DC, 2003-11) Fengler, Wolfgang ; Wietzke, Frank Borge

This note presents the methodology and findings of a field study on the financing needs of Madagascar's communes-the country's lowest but most institutionally advanced level of subnational government. Following a first round of municipal elections in 1995, more than 1,500 communes are now formally responsible for maintaining basic administrative services and social and economic infrastructure, including local waste disposal and sanitation. In addition, communes are responsible for identifying and coordinating local investments and for supporting implementation of the national Poverty Reduction Strategy at the local level. To finance these activities, communes receive population-based transfers and small conditional transfers, and can collect revenue from property, market, and consumption taxes as well as user charges. Yet little is known about how much these fiscal assignments satisfy local needs. As part of its policy dialogue with the government of Madagascar, the World Bank is engaged in extensive research that includes geographic mapping of social spending and a review of opportunities and obstacles to fiscal and sectoral decentralization. This research generated the following analysis of local and cross-sectoral service needs and available financing.
Reforming Intergovernmental Fiscal Relations in the Czech Republic

(World Bank, Washington, DC, 2003-10) Oliveira, João do Carmo ; Martinez-Vazquez, Jorge

The Czech Republic has largely overcome the challenges associated with its legacy of socialism, the 1993 breakup of Czechoslovakia, and its transition to a market economy. In addition, the country's evolving approach to intergovernmental fiscal relations has addressed crucial issues, including the prospect of joining the European Union and the need to increase public sector efficiency.