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Submitted by Gord Evans on

The report introduces some welcome emphasis on pragmatism and expectation management in PSM interventions. These comments, for the most part, relate to implementing the overall approach rather than the report per se.

Dealing with Political Risk

The report rightly emphasizes the high level of risk in PSM interventions and encourages a stronger risk assessment (a diagnostic tool is mentioned). I haven’t seen the diagnostic tool, but my suspicion would be that the most common factor underpinning a high-risk scenario for PSM interventions would be political indifference, gaming, and/or opposition. This raises the delicate issue of how to assess and manage the politics; i.e., when and how to say no, or at least how to downscale the intervention to fit the inherent risk in the political environment. A full assessment could be informed by a diagnostic, but would also need to include an appropriate forum for a frank discussion concerning the political risk. How this would work in practice needs some thought as it obviously touches on sensitive, even diplomatic issues.

A related dimension of this issue is the need for continual, not just ex-ante, risk assessment. Development interventions, once underway, create considerable institutional momentum to make it to the finish line (usually 2-5 years away). High risk may continue to be acknowledged, but there rarely seems to be any clear understanding of what to do when the risk turns out to be real and results are not forthcoming. More adaptive, risk-responsive designs should be considered (this reinforces the “agility in delivery” theme in the paper).

Terminating Dysfunctional Reforms

The Bank’s role as thought leader/knowledge generator could be particularly useful in identifying reforms that rarely if ever work and lobbying for their discontinuation. The impact on PSM results would presumably be beneficial if funding was directed away from these structural, money-wasting losers.

One egregious example (which you know very well) would be conventional functional reviews. It is not just that these expensive development interventions do not fully realize their goals, they rarely achieve any at all. The primary reason seems to be disconnect between the marketing of the reform (streamlining, modernization, savings) and the political implications of the recommendations (which finally dawn on the politicians when the recommendations come forward well into the project). A vigilant risk assessment would require that the incredibly rare winning conditions for functional reviews (e.g., Canada 1994) are in place before proceeding.

I suspect that comprehensive public administration reform programs might also fall into the structural loser category, but that’s another discussion.

Rethinking Best Practices

The report points out that developed countries, especially middle income, are looking to import/adapt developed-country best practices. It also comments on the perception that the Bank is always invested in best practices, and acknowledges the shortcomings of such an approach. A nuance here is the way in which a best practice approach distorts the conception of the reform process; i.e., developing country x proceeds, linearly, towards a best practice benchmark that theoretically exists in developed country y.

Part of the problem is that (outside of OECD perhaps), the professional development community has only anecdotal knowledge of how these so-called best practices actually work in developed countries. If I think of Canada, for instance, the quality of our PSM systems does not just sit at a “best practice” level. Over time, they may improve, deteriorate, become outmoded, and then be adapted and re-energized. The necessary political attention required for a reform push will only be available sporadically.

If we accept that these cycles exist, then reform implementation approaches need to move away from the linear, best-practices approach and build in the capacity to identify and mitigate periods of performance decline and political inattention.

From the Bank’s perspective, perhaps more effort needs to be placed on understanding the dynamics of PSM systems in developed as well as the range of developing countries.

Projects/Interventions as Research Opportunities

I’m sure this has been considered, but given the fiscal constraints against expanded research, could PSM knowledge be generated by incorporating a modest data collection/analytic component into actual TA projects/interventions/Bank involvements, perhaps in collaboration with other donors? This obviously could not be as rigorous as PEFA, but there may be some critical PSM indicators/analysis that could be collected and aggregated by the Bank.

Centre of Government/Upstream Institutions

The report makes the useful distinction between upstream and downstream institutions and rightfully includes the office at the centre of government along with MoF as the main upstream institutions. I also notice that the gap in policy management skills was identified as the highest-ranked major problem affecting project design/implementation of Bank projects (figure 13).

This report isn’t the place for a centre of government discussion, but it might be worth reinforcing a couple of points: the importance of sound policy management practices to realizing policy reliability at the sector level; and, the need to ensure that the government’s policy and financial management systems are mutually reinforcing.

Beyond this report, we should be considering how to make some of this “tacit” practitioner knowledge on centre of government/policy management, and its linkages to public financial management, more explicit.

Informally, I’ve had a couple of exchanges with the PEFA Secretariat about the need for a modest companion to PEFA that covers off the policy side (this was also a topic of the fireplace conversation I moderated on www.pfmboard.com ). In some recent work on an Eastern European country, , a PEFA assessment would have missed the way in which the government decision-making system consistently subverts the fiscal framework (e.g., passing slews of laws without a proper fiscal assessment; walking unvetted items into Cabinet; using emergency ordinances; etc.). The PEFA Secretariat are interested in this issue and agreed that this is a gap that needed to be addressedIn any event, this is one area that could be made a little less tacit. This would also help address the skills gap identified in figure 13.