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Assessing the Public Budget A Framework Public Expenditure Clinic - - PowerPoint PPT Presentation
Assessing the Public Budget A Framework Public Expenditure Clinic - - PowerPoint PPT Presentation
Assessing the Public Budget A Framework Public Expenditure Clinic for Benins Finance Committee of the Parliament Vinaya Swaroop World Bank, Washington, DC December 13th, 1999 Public Budget Assessment... should be done on the basis of
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Level (size) of Spending [Aggregate Fiscal Discipline]
Evaluation of public resources allocation (within and across sectors)
Composition of Spending [Strategic Priority Setting]
- 1. Performance-based budgeting
- 2. Performance-based rewards
- 3. Client surveys
- 4. Retention of user fees
Efficient Public Service Delivery
(Reforming Incetives through...)
Public Expenditure Evaluation: A Framework
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- I. Level (Size) of Public Spending &
Deficit Issues
# # Public spending level needs to be
consistent with the country’s long-run financing ability;
$ Persistently large deficits pose threats
to stability & growth of the economy;
% % Experience suggests, deficit reduction
usually requires a cut in public spending.
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- I. Level (Size) of Public Spending &
Deficit Issues (contd.)
A deficit reduction strategy should analyze the following questions... & How is the deficit measured? & What is the composition of deficit financing? & What is the sustainable amount of fiscal deficits?
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- I. Level (Size) of Public Spending &
Deficit Issues (contd.)
More questions... & When and how can the user charges be introduced (or increased) ? & Is it less costly to reduce public spending than raising revenue?
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- II. Resource Allocation Exercise
How to?
A couple of points to remember... & Budgetary allocation process is foremost a political decision; & In practice, there is no optimal allocation of the public budget.
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- II. Resource Allocation Exercise
The technical part should be based on… &What is the rationale for government intervention?
- Market failure (public goods,
externalities)
- Redistribution
&What is the appropriate instrument? &What is the fiscal cost?
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Decision Tree for Evaluating Public Programs
- 1. telecommunications
- 2. fertilizer subsidy
- 3. hospitals ?
- 4. tertiary education ??
No rationale
Government Building Maintenance Community Development Programs
Outsourcing
Clinical Health School Vouchers
Subsidy
Consumer, Workers, Envirnment Securities and Exchange Electricity & Telecommunications
Regulation What are the fiscal costs?
(tradeoffs based on costs) Primary Education Safety Nets Security (internal & external) Basic Health Education
Public provision What is the right instrument ? There is a rationale
(Market Failure and Public Goods)
&
(Distributional Considerations)
What is the rationale for public intervention?
Market failure (externalities, public good) Redistribution
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Example 1: Determinants of infant mortality in Malaysia
An econometric research shows that...
Safe water
- .147*
Immunization
- .113*
Public medical personnel per capita 1.03 Income
- 1.06
Adjusted R
2
.55 *significant at 5%
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Example 2. Public Spending on Education Indonesia -- Who are the Beneficiaries? 1 (poorest) 3 5 7 9 Deciles Subsidy per capita of decile Primary Tertiary
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Example 3. Fiscal Cost Comparison: An Example from Morocco
Farm subsidy, millions of dollars
160%
- f preventive
health
1989 1990 1991 1992 Average
60 120 67 76 90 107
85
20%
- f basic
education
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- III. Efficient Delivery of Public Services
A key requirement is to reform the incentives in the public sector...
- Merit based recruitment and promotion
in public sector;
- Performance-based budgeting and
rewards;
- Assessment of public service delivery
through client surveys;
- Retention of user fees.
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- III. Efficient Delivery of Public Services