Development Policy Review

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  • Publication
    Philippines : From Short-Term Growth to Sustained Development
    (Washington, DC, 2005-04) World Bank
    After reviewing the more promising recent developments, this report examines the nature of growth and development in the Philippines from a longer-term perspective and the factors that may have inhibited performance. It concludes that political instability has undermined the beneficial impact of the reforms implemented, and that such instability itself has been rooted in governance failures. Moreover, weaknesses in public institutions and corruption have also directly undermined a range of development objectives. Reconstructing the social contract in the Philippines is a challenge. Key pillars of this strategy discussed in the report include: reducing fiscal vulnerabilities; improving the climate for private investment; and improving public sector performance and governance. The interdependence of these elements as part of a strategy to rebuild the social contract is discussed and the report elaborates on improving the delivery of basic services.
  • Publication
    Vietnam Development Report 2005 : Governance
    (Washington, DC, 2004-11-22) World Bank
    Fundamental changes are taking place in the way the Government of Vietnam operates: the 2001 Constitution empowered the National Assembly to hold votes of no-confidence in the leaders it elects, including ministers. The State Budget Law, effective in January 2004, further expanded those powers, by making the National Assembly responsible for the approval of the budget, including allocations to lower levels of government. In parallel, there is a steady increase in the extent of decentralization. And some successes can be reported in the public administration reform agenda too, in particular, the adoption of the One-Stop Shop (OSS) model at the national level should improve the delivery of administrative services to households and enterprises, and reduce the opportunities for petty corruption. Notwithstanding, it should be recognized that important challenges remain. The goal of this report is to review the progress accomplished so far in building modern governance, and to identify areas where more needs to be done. To attain this goal, the report combines a range of perspectives, and relies on a variety of analytical tools. It carefully reviews patterns in government spending, and revenue at aggregate levels, but also in specific sectors and programs. It evaluates the decision-making processes behind employment and pay policies, investment projects, resettlement programs and budget allocations. It more broadly assesses the justification for government interventions in different aspects of the economy, and the impact of such interventions on key development outcomes, including poverty reduction. Vietnam's continued commitment to inclusive development provides the vision responsive to running an efficient government. Securing rapid economic growth, sustaining continued poverty reduction, and attaining the Vietnam Development Goals, are part of such vision. With this vision in mind, the report flags several areas of concern: planning versus budgeting, and modernizing that planning; better service delivery; redistributing to the poorest; setting budget allocation norms; delegation to spending units; and, management of state assets.
  • Publication
    Indonesia Development Policy Report : Beyond Macroeconomic Stability
    (Washington, DC, 2003-12-04) World Bank
    The year 2004 will mark another crucial step in Indonesia's long-term transition. The country will go to the polls to elect new national and regional Parliaments, and for the first time in the history o f the Republic, to directly elect a President. This milestone in the country's democratization is accompanied by one in economic policy: for the first time since the onset o f the crisis, the Government will not have a program supported by the IMF. The Government's decision to graduate from its IMF program is warranted by the strong improvements in the country's macroeconomic conditions, and has been broadly welcomed by the markets and the international community. The Government's "Economic Policy Package Pre and Post IMF" or White Paper, issued as a presidential instruction on September 15th has helped build confidence in the Government's policies in the election year ahead. The policy package is intended to "bridge the credibility gap." The White Paper is a unique document: it is the first time that the Government commits itself transparently to a time-bound action plan to implement policies. The document shows continuity in macroeconomic policies and financial sector reforms, but also proposes a set of specific policy and institutional measures to address issues that have undermined the country's investment climate. While the timetable for adopting these measures is a short term one - fifteen months - many o f the proposed measures address fundamental longer term problems, and some will take several years to see through fully. The private sector, which has a high " stake in the measures included in the paper, has emerged as an independent monitor of progress. Since the White Paper is so central to Indonesia in the year ahead, much of this brief is devoted to discussing it. Beyond recent developments, the report discusses and analyzes critical policy actions from the White Paper. The report also points at the White Paper measures that may not necessarily be in line with the stated goals of the document. And finally, the report identifies policies that are needed beyond the White Paper to ensure Indonesia builds on the macroeconomic stability achieved to attain more rapid growth and poverty reduction.
  • Publication
    Philippines : Development Policy Update
    (Washington, DC, 2003-10-16) World Bank
    The Philippines has achieved reasonable economic growth of about 4 percent per annum over the past two years, in spite of adverse global developments, sporadic conflict in Mindanao, political uncertainty and investor concerns regarding fiscal sustainability. The economy has been particularly resilient in view of concerns regarding fiscal management and the limited recovery in investment since the 1997 Asian financial crisis. The persistent low levels of investment - below 20 percent of GNP compared with about 23 percent in the early to mid 1990s - raises concerns about future growth. In recent years it has been consumption rather than investment that has underpinned growth, and this cannot continue indefinitely. Sustained geographically dispersed economic growth and relatively stable prices have resulted in a decline in poverty. Both the public and private sector will need to contribute for the Philippines to more fully achieve its development objectives. Three issues are central to improved public sector performance - fiscal management, off-budget losses and contingent liabilities, and governance. Mindful of the Philippines' relatively poor competitiveness and that growth, employment creation and poverty reduction depend critically on private sector performance, this update focuses on three key investment issues - infrastructure, the financial sector, and competition.
  • Publication
    India : Sustaining Reform, Reducing Poverty
    (Washington, DC, 2003-07-14) World Bank
    The report analyzes India's continued good progress in increasing incomes, and improving living standards over the past decade, which after the setback associated with the 1991 balance of payments crisis, economic growth picked up, income poverty continued to decline, and many social indicators, in particular literacy, continued to improve. Likewise, there has been an opening to private activity, trade policy and the exchange rate regime have been further liberalized, and capital markets have been reformed, leading to an improved investment climate. Nonetheless, development progress has been steady, but uneven, while in addition, the recent growth deceleration was accompanied by a slowdown in investment, especially in the private sector. The fiscal position of the general government has now also deteriorated, with a rising budget deficit, the result of a significant increase in government consumption, and continued low revenue mobilization. But at the same time, prudent monetary policy has helped contain inflation, and strengthen the balance of payments. Based on this analysis, fiscal reforms are needed in taxation, financial, social, as well as for fiscal management. The report also reviews the delivery of public services, showing the need to access effective social safety nets, i.e., social services that require increasing the level, but more importantly the quality of public expenditures in these areas. This in turn requires improving the governance and productivity of India's civil service, and the pressing problem of affordability. An effective program of civil service reform should include measures to achieve the following three objectives: improve access to information; strengthen accountability; and, reduce political interference. Of special concern, are the weaknesses in the service delivery of social sectors: education, health and social safety nets, and, it has been argued that decentralization, and local empowerment will ultimately improve the quality of service delivery at the village level. To this end, the report suggests improving the investment climate, with a special look at infrastructure development, while promoting rapid agricultural, and rural growth given its importance in the socioeconomic, and political fabric of India, through productivity-enhancing investments. Continued progress on poverty reduction will require a major push to reinvigorate the reform agenda.
  • Publication
    Belarus : Strengthening Public Resource Management
    (Washington, DC, 2003-06-20) World Bank
    This report, the first Public Expenditure Review of Belarus, will remain focused on broad systemic questions. A number of the problems emphasized in the subsequent chapters fall into four broad categories. These categories are all closely interrelated: The complicated array of extrabudgetary and quasi-fiscal sources of state finance imposes substantial losses on the economy. Budgetary preparation and approval lacks focus, realism, and an appropriate balance of political influence. The implementation of the budget suffers from excessively weak legality, and allows for too much discretion in the allocation and re-allocation of state expenditures. The connection between state objectives and public expenditures is often unclear or weak. There are many recommendations for changes that could help to improve fiscal discipline, strengthen allocative effectiveness and improve the technical efficiency, we present the most critical actions that are needed: Improve realism in budgetary planning and the management of state obligations. Develop institutions to support commitment to budgetary implementation. Expand the coverage of the budget to account for most activities with fiscal impact. Develop a framework for identifying, quantifying and addressing fiscal risks. Develop a sustainable wage and compensation policy. Streamline subsidies to the productive sectors. Focus on development of sector strategies, one or two sectors at a time: identify objectives, determine performance measures and the links between inputs and positive outcomes. Improve the short and medium term revenue and expenditure forecasting capacity. Put in place systematic rules for budget revision. Introduce guidelines for the allocation of resources in the event of unexpected inflation, cash shortages, or surpluses. Develop a concept of accountability beyond the Ministry of Finance and budget.
  • Publication
    Russia : Development Policy Review
    (Washington, DC, 2003-06-09) World Bank
    The objective of this report is to provide an assessment of the development objectives before the Russian Federation. To that end, this report assesses: 1) development outcomes and prospects, and 2) the extent to which the Government has been able to implement its social and structural reform program. The analysis and recommendations herein draw on knowledge acquired through various World Bank activities in Russia as well as on sources external to the World Bank. The report is organized as follows: Chapter 1 discusses development outcomes and prospects, which provides background for the report. Chapter 2 focuses on improving the investment climate by reducing energy subsidies, imposing a payments discipline, and strengthening corporate governance as part of the enterprise restructuring process. Incentives propounded to encourage the growth of small and medium enterprises would include improving the business environment, reforming tax policy, strengthening the financial sector, reforming infrastructure monopolies, promoting competitiveness, improving labor market flexibility, and promoting rural investments. Chapter 3 identifies key macroeconomic challenges and risks. Chapter 4 examines the framework for enhancing human capabilities and protecting vulnerable groups. Finally, Chapter 5 elaborates the steps to be undertaken to reform public sector management, including improving intergovernmental fiscal relations, public financial management, tax and customs administration, civil service, and the justice system.
  • Publication
    Vietnam - Delivering on Its Promise : Development Report 2003
    (Washington, DC, 2002-11-21) World Bank
    The focus of the report, combined with Vietnam's remarkable long-term growth potential, presents a favorable outlook, suggesting the effects of the East Asian crisis are over. The country is committed to socially inclusive development, and, translates a vision of transition towards a market economy, with socialist orientation into concrete public actions, emphasizing the transition should be pro-poor, noting this will require investments in the rural, and lagging regions, and a more gradual reform implementation, than often recommended. However, challenges identified include, first, further progress in economic reform - fast progress in liberalizing foreign trade, and integrating with world economy is increasingly at odds with the slowdown of state-owned enterprise reform. Second, poverty alleviation may be endangered - for in the absence of vigorous action, inequality is likely to increase. And, third, improving the quality of governance faces an economic inefficient mismatch, reflected by its legal framework, budgetary system, and administrative structures, resulting from the inherited centrally-planned economy. The report reviews the increasing inequalities, and the need to redress imbalances, indicating that - although needed - economic reforms, trade liberalization, and the transformation of state-owned enterprises, may create losers, while many of the gains of the last decade remain fragile. The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) identified key decisions that need to be made, supported by strong inter-ministerial coordination for its implementation, namely rolling out to provincial, district, and commune levels in order to better align priorities, and expenditures to the national development goals, supported by external assistance.
  • Publication
    Pakistan Development Policy Review : A New Dawn?
    (Washington, DC, 2002-04-03) World Bank
    This Development Policy Review describes, and evaluates the Government of Pakistan's policies, in six critical areas : governance, investing in people, macroeconomic sustainability, the financial sector, the investment climate for the private sector, and, agriculture and irrigation. Governance reforms are aimed at addressing four major issues: devolution, civil service reform, reduction of corruption and improvement of financial management, and institutionalizing realistic budget processes. On investing in people, the social gap (reinforced by gender discrepancies) show high illiteracy, and ill-health rates, which limits the possibilities for economic growth. To this end, spending commitments prioritize on social sectors, and effective service delivery. As for macroeconomic sustainability, the unsustainable public debt poses a serious problem, exacerbated by defense spending, which diminishes development expenditure. This challenges the move of public debt dynamics towards improving the investment climate, through increased tax revenue, and limiting defense expenditure. The financial sector is dominated by the banking system, where state-owned institutions play a significant role, which despite progress, much needs to be done in strengthening prudential regulations, and capital markets. Concurrently, the unstable investment climate requires a regulatory framework in terms of taxes, and tariffs. Finally, policy priorities are required to accelerate agricultural growth on markets, technology, and irrigation.
  • Publication
    Indonesia Development Policy Review : The Imperative for Reform
    (Washington, DC, 2001-12-10) World Bank
    Indonesia's recovery was already slowing several months before the events of September 11. Political instability had raised social tensions and slowed reforms--fueling capital flight, alarming investors, and delaying official external finance for development. Progress on bank restructuring had slowed and the debt of financially strapped corporations remained largely unresolved. Corruption flourished, unchecked by a justice system that itself was corroded. Regional tensions increased even as the country embarked upon an ambitious decentralization program. And, if real wages are any indication, progress on poverty reduction--encouraging in 1999 and 2000-ground to a halt. Although markets initially welcomed President Megawati Soekarnoputri into office, the new administration has made little progress on structural and governnance reforms in her first one hundred days in office, thus renewing nervousness in markets and worrying external donors and creditors. The events of September 11 have emphatically underscored the urgency of Indonesia's reform priorities. but donors need to be realistic about what is feasible, given strong vested interests, severe institutional weaknesses, the uncertainties arising from decentralization, and a turbulent transition to democracy. Progress is most needed in the key areas of structural reforms, good governance, and empowering and investing in the poor.