Publication: Czech Republic : Enhancing the Prospects for Growth with Fiscal Stability
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2001-04
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2013-09-05
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This public expenditure review analyzes recent developments in the Czech Republic, and future prospects for growth, with fiscal stability. In analyzing the strategic setting, where a central thrust of this strategy is the accession to the European Union (EU), the report suggests than an appropriate medium-term target for fiscal policy, would be to bring down the overall deficit of the government to one-two percent of GDP, as an intermediate step towards the EU's stability/growth path objectives, emphasizing that much of the adjustment should come from the expenditure side. Given the main purpose of the report - to take this expenditure adjustment challenge as a mean to achieve potential efficiency gains, while limiting attending costs - a reform policy should pursue an ongoing process of review, revision, and re-definition of the role of government intervention. Indeed, to succeed, the process of expenditure reform needs to be firmly grounded in the development of analytic capacities, linked with institutional, and procedural enhancement for fiscal management. The report explores the expenditure reform opportunities, and cost of bank restructuring, focusing on relieving The Konsolidacni Banka (KoB) from its status as a bank, on streamlining recoveries, and asset disposal methods, and on improving the legal framework for debt resolution. It reviews the state pension program, suggesting limited indexation to the consumer price index, elimination of the actuarially unfair aspects of early retirement provisions, to increase statutory retirement, while extending the minimum contribution period for full pension. To strengthen fiscal management, it is proposed that the medium-term outlook be expanded into a full-fledged medium-term fiscal framework, extra-budgetary funds be consolidated, and, activity/service-based articulation of the state budget be initiated.
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“World Bank. 2001. Czech Republic : Enhancing the Prospects for Growth with Fiscal Stability. © World Bank. http://hdl.handle.net/10986/15690 License: CC BY 3.0 IGO.”
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Publication Czech Republic : Enhancing the Prospects for Growth with Fiscal Stability(Washington, DC: World Bank, 2001-09)The Czech government is confronted with a worsening fiscal situation. The structural deficit ballooned in 2000, and it is expected to widen further in 2001. The report suggests that, at this stage of the recovery, fiscal retrenchment instead should be in order, both to make room for private demand to expand, without putting undue pressure on interest rates, and/or on the external current account, and, to set the country on track towards adhering to Stability and Growth Path when in the European Union (EU). The report sees a stronger case, and greater scope for adjustment on the expenditure, than on the revenue side. Expenditures have shot up in the last three years, to a level which exceeds those observed in comparable countries. Worse, most existing expenditure programs, seem locked in upward trajectories, and fresh spending pressures (arising from EU accession, contingent liabilities, or decentralization) are building up. The report illustrates, for selected sectors (bank restructuring, social protection, health, education, transport, and housing), the challenges involved in correcting expenditure trajectories. A key message is that, to succeed, the process of expenditure reform will need to be firmly grounded in the development of analytic capacities, in both core and line agencies, linked with enhancements in the country's institutions, and procedures for fiscal management.Publication Czech Republic : Intergovernmental Fiscal Relations in the Transition(Washington, DC, 2001-05)The study presents an overview of the most relevant, current intergovernmental fiscal issues in the Czech Republic, centered on the options available to prod policy planning. The fragmentation at the lowest tier of government is the most striking feature of the administrative structure, thus suggesting a strategic direction for further administrative reforms to sustain fiscal decentralization, by empowering territorial self-governing units, through meaningful autonomy, through the establishment of a multilevel government coordinating body, for the definition of autonomous functions on expenditures, and revenues, and, by creating financial, and legal incentives, to facilitate an asymmetric assignment of revenue, and expenditure. Specific policy actions to clarify responsibilities of the strategic direction for expenditure assignments should include institutional inter-governmental cooperation, and dialogue, through a broad based commission to recommend regional expenditures, and, the Budget Rules Law should be amended to preempt unfounded mandates to local governments. Revenue autonomy should be boosted by increasing predictability of local budgets, through structural policy parameters, restoring tax-effort incentives, and, reviewing the adopted adjustment coefficient for tax-sharing distribution; while a rationalized transfer system, should focus on decreasing the number of specific subsidies, prioritizing programs to stabilize transfers within a medium-term expenditure framework, including the evaluation of a separate Fiscal Equalization Fund to reduce regional fiscal disparities. Institutional framework, and prudential rules would ensure fiscally responsible borrowing, and encourage a competitive financial market.Publication Czech Republic : Intergovernmental Fiscal Relations in the Transition(Washington, DC: World Bank, 2001-11)The study overviews the most relevant, current intergovernmental fiscal issues in the Czech Republic, centered on the options available to prod policy planning. Fragmentation at the lowest tier of government is the most striking feature of the administrative structure. This suggests a strategic direction for further administrative reforms to sustain fiscal decentralization, which includes empowering territorial self-governing units; establishing a multilevel government coordinating body to define autonomous functions on expenditures, and revenues; and by creating financial and legal incentives to facilitate an asymmetric assignment of revenue and expenditure. Specific policy actions should include institutional inter-governmental cooperation and dialogue through a broad based commission to recommend regional expenditures, and the Budget Rules Law should be amended to preempt unfounded mandates to local governments. Revenue autonomy should be boosted by increasing predictability of local budgets, restoring tax-effort incentives, and reviewing the adopted adjustment coefficient for tax-sharing distribution; while a rationalized transfer system should focus on decreasing the number of specific subsidies, and prioritizing programs to stabilize transfers within a medium-term expenditure framework. Institutional framework and prudential rules would ensure fiscally responsible borrowing, and encourage a competitive financial market.Publication Mozambique : Public Expenditure Management Review(Washington, DC, 2001-12)Improving budget management in Mozambique requires a set of actions in the area of fiscal policy at the macroeconomic level, as well as specific measures to deal with contingent liabilities and to address issues related to intergovernmental fiscal relations. At the same time, a new round of reforms in the way the budget is formulated, executed, controlled, and accounted for is also required to improve efficiency, transparency, and accountability in the use of public resources. This report is organized as follows: The first part of this report offers an analysis of fiscal topics at the aggregate level and discusses cross-cutting issues--recent trends of fiscal policy, medium-run sustainability, contingent liabilities and intergovernmental fiscal relations. Part 2 deals with the budget management system, covering budget formulation, execution, evaluation, and audit. Issues related to public accounting, reporting, cash management, and internal control and auditing are reviewed in this context. It describes the current system, highlights the major issues, describes government's efforts to address them and proposes concrete recommendations for further action.Publication Albania : Public Expenditure and Institutional Review, Volume 1. Executive Summary(Washington, DC, 2001-04-16)This report presents an in-depth evaluation of the budgetary planning process in Albania and the institutional arrangements required for better management of public expenditures. The report does not provide a detailed analysis of expenditures or an assessment of investment projects and their outcomes in each sector. Such a shift in emphasis is appropriate given the currently weak institutional capacities in Albania and the need to enforce accountability in the public sector.The report is arranged as follows: Chapter 1 deals with the macroeconomic frmaework and policies needed to maintain fiscal sustainability and improve fiscal discipline. Chapter 2 discusses revenue and expenditure patterns, presents measures that would enhance revenue performance and analyzes the allocation of expenditures. This chapter is designed to highlight the key expenditure priorities that should be more fully addressed as Albania moves forward with the medium-term expenditure framework process (MTEF). The bulk of the report--Chapters 3, 4, and 5--addresses key challenges facing Albania to improve its institutional environment and its capacities. Chapter 3 assesses the public expenditure management process and its weaknesses and how this process should be reformed. Chapter 4 explains how establishing the MTEF mechanism could provide a better linkage between policy planning and the allocation of resources. Chapter 5 discusses meeting institutional capacity requirements.
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