I spent the past 11 years working and living in Afghanistan. I didn’t intend to stay that long in one country office, but I got swept up in the Afghanistan Reconstruction Trust Fund, which under the World Bank, was financing 50% of government expenditures earlier on. Its budget operations grew from $600 million in 2004 to more than $5 billion in 2014.
For anyone working on public financial management, there were a lot of challenges to tackle and no good time to leave. Moreover,
Melissa Thomas, author of Govern like us, speaking at the World Bank recently raised a very interesting question: is our expectation that poor countries with limited resources can deliver high-quality governance unrealistic?
Can these countries provide the public goods and services that citizens demand and need, to be able to forge a strong social contract?
She compares the levels of revenue per capita in rich and poor countries and finds that in the poorest countries, levels of revenue per capita are so low that it would be years, or even decades, until they have enough to provide a decent level of public goods and services.
It is in that context that I thought of Sri Mulyani’s appeal during the Spring Meetings when she spoke of the need to clamp down on tax evasion and avoidance and boost the domestic resource mobilization (DRM) capacities of developing countries as a means of finding resources for financing development going forward.
If you were a football (soccer) player, who would you be? Representatives of Ministries of Finance from 20 African countries were confronted with this question at a CABRI-sponsored conference in Johannesburg last April.
Two decades ago, when I interned at the French Embassy’s economic mission in Moscow, I was asked to look into bankruptcy laws and their implementation. The Embassy wanted to advise French companies on how to get business done in the new Russia—we are talking mid-1990s—when there were no reliable guidebooks on how to navigate the transition to a market economy.
So I was asked to read recently approved, Western-inspired bankruptcy laws, given a phone book and asked to find two dozen companies around Moscow. I was to meet with their CEOs and find out how insolvency and bankruptcy procedures actually worked in practice.
I came away with one key finding: In fact, the distortions brought about by hyperinflation, bartering and the transition from Soviet to Western accounting meant the liquidity and solvency ratios that underpinned the institution of bankruptcy had essentially become meaningless.
Reforms of public financial management (PFM) systems – pursued by many countries and supported by development partners -- have attracted quite a bit of debate and analysis in recent years. Significant variation in progress achieved and lack of broad-based and sustained improvements in metrics of PFM performance, as reflected in CPIA ratings and PEFA scores, suggest to many observers that outcomes have not matched reform efforts and expectations.
This has led to a search for better solutions in two directions. First, grounding reform efforts in stronger problem analysis, and based on this, developing a better fit of reform approaches to specific country circumstances. Second, seeking a better understanding of non-technical aspects and, in particular, the role of political economy drivers in influencing which PFM reforms are pursued where and with what degree of success. ‘Doing things differently’ along these lines sounds promising – but reformers and development partners may well question whether we know enough to pursue such alternative approaches on a wider scale.
The SAFE Trust Fund application (Word document) is now open until 27 February 2015.
What is SAFE?
SAFE means Strengthening Accountability and the Fiduciary Environment. It is a Trust Fund group administered by the World Bank and established by the Swiss State Secretariat for Economic Affairs (SECO) and the European Commission with the aim of improving public financial management in the Europe and Central Asia region. This Trust Fund group provides support for activities to assess public financial management (PFM) performance, identify and implement actions to achieve improvements and share knowledge and good practices across countries in the region.
- public finance management
- public finance
- world bank
- Public Sector and Governance
- Private Sector Development
- Financial Sector
- Europe and Central Asia
- Macedonia, former Yugoslav Republic of
- Kyrgyz Republic
- Bosnia and Herzegovina
In 2010-14, we were facing a challenging task: develop a new approach to increase institutional and leadership capacity in Tajikistan’s public sector, including internal capability to initiate reforms.
in a way that would fit with the country context?
If you are familiar with the Western part of the former Soviet Union and have never been to Tajikistan, you are in for a surprise. The differences with countries such as Ukraine or Georgia are staggering. To put things in the global perspective, The country suffered a civil war that lasted five years (1992-1997), resulted in massive internal displacement and decimated civil service. Despite establishing formal governing institutions after the war, institutional capacity remains weak.
Accountability Institutions – such as Information Commissions, Ombudsman and Supreme Audit Institutions – play a fundamental role in advancing government openness. Initiatives such as the Open Government Partnership should deepen engagement with them.
Transparency and accountability are key priorities of the Open Government movement. They are also areas where accountability institutions can have real impact. Information Commissions play a crucial role in guaranteeing the right to information. Ombudsman institutions handle citizen complaints about public administration and help protect citizen rights. They have a crucial mediation function that fosters reciprocal engagement of the citizen and state. Supreme Audit Institutions (SAIs) are also a critical part of the national accountability architecture, with a mandate to “watch over” government accounts, operations, and performance, through external auditing.
Base Erosion and Profit Shifting (BEPS) is a global problem which requires global solutions. BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is little or no economic activity, resulting in significant savings in corporate taxes. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises (MNEs).
On October 10th 2014, nearly 60 top ministry of finance and tax administration officials from all over the world gathered in Santiago de Compostela, Spain, for a workshop on tax base erosion and profit shifting and Automatic Exchange of Information (AEOI). The workshop was co-organized by CIAT, GIZ, OECD and the World Bank Group.
Whenever aid and development money is involved, one question consistently emerges: How do you make sure it does not fall on the wrong hands, and be victims of fraud and corruption? This is a question that the World Bank country team in Vietnam and elsewhere has been grappling with. How do we ensure that financing for World Bank projects actually goes to its intended purposes and supports the ultimate goals of eliminating extreme poverty and boosting shared prosperity?
World Bank country staff in Vietnam realized that previous responses to fraud and corruption have focused too narrowly on individual projects. What are the factors that cause and perpetuate fraud and corruption in the first place? They needed to sufficiently address the root causes of the problem, and not just the symptoms. Despite greater awareness and more open debate about corruption in Vietnamese society, there's no evidence that allegations of fraud and corruption have decreased in the last several years.
To nip the canker in the bud, the Vietnam country team is developing a Strategic Action Plan to Address Fraud and Corruption Risks. The plan identifies broad areas of fraud and corruption concerns, categorizes them, and proposes measures and activities for mitigation. Teams across different World Bank units called “Global Practices” have come together to mainstream and implement the plan into core operations.