The World Bank Presented to: World Bank Staff Core Course on Public Sector Governance PREM Knowledge & Learning Week Washington, DC April 23, 2007 Presented by: Sanjay Pradhan Director Public Sector Governance Poverty Reduction & Economic Management (PREM) Strengthening Strengthening World Bank Group World Bank Group Engagement on Governance Engagement on Governance & Anticorruption & Anticorruption
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The World Bank Presented to: World Bank Staff Core Course on Public Sector Governance PREM Knowledge & Learning Week Washington, DC April 23, 2007 Presented.
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The World Bank
Presented to:World Bank StaffCore Course on Public Sector GovernancePREM Knowledge & Learning WeekWashington, DC April 23, 2007
Presented by:Sanjay Pradhan
DirectorPublic Sector Governance
Poverty Reduction & Economic Management (PREM)
Strengthening Strengthening World Bank Group World Bank Group
Engagement on Governance & Engagement on Governance & AnticorruptionAnticorruption
Governance is the door to anticorruptionGovernance is the door to anticorruption
The manner in which the The manner in which the statestate acquires acquiresand exercises its authority to provide and exercises its authority to provide public goods & servicespublic goods & services
Use of Use of publicpublic office for office for privateprivate gain gain
GovernanceGovernance
CorruptionCorruption
•Corruption is an outcome – a consequence of weak or bad governance
•Governance reform – strengthening capacity & accountability – helps combat corruption by addressing its underlying causes
Participatory Participatory prioritization of prioritization of
policies & public policies & public spendingspending
Investment OperationsBrazil Rural Poverty Reduction Project Rio Grande do Norte; Malawi Third Social Action FundDevelopment Policy LendingArmenia SAC IV; Laos PRSC1; Timor-Leste Consolidation Support Program Policy Grant, Vietnam PRSC (I to IV)
Innovative Examples of Multistakeholder Innovative Examples of Multistakeholder Engagement in WB OperationsEngagement in WB Operations
oversight over the oversight over the use of budgetary use of budgetary
resourcesresourcesInvestment OperationsBangladesh Public Procurement Reform Project
Development Policy LendingHaiti Economic Governance Reform Operation I and II
User participation User participation & oversight in & oversight in
service provisionservice provision
Investment OperationsAndhra Pradesh, India District Poverty Initiatives Project; Morocco Initiative for Human Development Support ProjectDevelopment Policy LendingBrazil PHDSRL I; Georgia PRSC; Peru PSRL IIIEthiopia, Protection of Basic Services
Strengthening Strengthening participatory local participatory local
governancegovernance
Investment OperationsAlbania Community Works 2 Project; Bangladesh Local Governance Support Project; Ethiopia Capacity Building for Decentralized Service Delivery; Indonesia KDPDevelopment Policy LendingSierre Leone ERRC III
Strengthening Strengthening other formal other formal
oversight oversight institutionsinstitutions
Investment OperationsGuatemala Judicial Reform Project; Kenya Institutional Reform and Capacity Building Project; Legal & Judicial OtherWBI Parliamentary Strengthening Program
Other actionsOther actions
Development Policy LendingBangladesh DSC III
OtherWBI Media ProgramCommunity Radio InitiativesPartnership for Transparency Fund
Decentralization is more likely to work when there is adequate capacity and two sets of accountabilities are in place Downward accountability between local governments and
citizens Allocation of responsibilities between central and local
governments• Assignment of service provision responsibilities• Assignment of fiscal resources (including local tax base)• Central fiduciary and performance oversight over local
In practice, the impulse for decentralization is political; high risk of being stuck in institutional ‘limbo’ (Albania; East Asia review – Cambodia, China, Indonesia, Philippines, Thailand and Vietnam)
Making the Private Sector an Advocate of Making the Private Sector an Advocate of Governance ReformGovernance Reform
The two faces of the private sector Competitive, productivity-focused firms thrive on a level-playing field
Corrupt, rent-seeking firms thrive in the shadows
How to support competitive, responsible private sector? Create sound business environments, benchmarked internationally (Doing
Business Indicators)
Showcase examples & evidence that ‘avoiding corruption is good for business’ (Celtel’s Mohammed Ibrahim)
Support initiatives to promote business ethics and voluntary codes of conduct (ICC Code of Conduct, TI’s Business Principles, WEF PACI, UN Global Compact) – and create external verification mechanisms
Build coalitions of businesses and other stakeholders for anticorruption (Indonesia Business Link, Makati Business Club, Global Integrity Alliance)
Monitoring for ResultsMonitoring for Results Use aggregate governance indicators (e.g., CPIA, KKZ, TI
CPI) to indicate of extent and mix of governance problems
Use actionable & outcome indicators (e.g., PEFA, Global Integrity Index) to monitor progress in implementing priority governance and anticorruption reforms
Support participatory mechanisms for monitoring and mutual accountability (private sector, civil society)
*Source for estimates of former Presidents above: Transparency International Global Corruption Report 2004. All sums are estimates of alleged embezzlement in US dollars.
Persuading all jurisdictions to ratify Persuading all jurisdictions to ratify & implement the UN Convention & implement the UN Convention Against Corruption (UNCAC)Against Corruption (UNCAC)
Helping developing countries build Helping developing countries build capacity for requesting mutual legal capacity for requesting mutual legal assistance for asset recoveryassistance for asset recovery
Developing partnerships to share Developing partnerships to share information & experienceinformation & experience
On a voluntary basis, offering On a voluntary basis, offering expertise to monitor the use of expertise to monitor the use of recovered assets in order to ensure recovered assets in order to ensure transparency & development impact transparency & development impact (e.g., Nigeria)(e.g., Nigeria)
Cross-border proceeds from criminal Cross-border proceeds from criminal activity, corruption & tax evasion estimated activity, corruption & tax evasion estimated to be $1-1.6 trillion per year— half from to be $1-1.6 trillion per year— half from developing & transition countriesdeveloping & transition countries
Bribes received by public officials from Bribes received by public officials from developing & transition countries is developing & transition countries is estimated at $20-40 billionestimated at $20-40 billion
TI’s estimates of stolen assets include:TI’s estimates of stolen assets include:
The ProblemThe Problem
StAR is a joint initiative with the StAR is a joint initiative with the Bank & UNODC. Partnerships are Bank & UNODC. Partnerships are being developed with the OECD, being developed with the OECD, Norad, IMF, other MDBs, the G8, Norad, IMF, other MDBs, the G8,
Entrenched Corruption Networks: Entrenched Corruption Networks: The Case on Montesinos in PeruThe Case on Montesinos in Peru
Source: “Robust Web of Corruption: Peru’s Intelligence Chief Vladimiro Montesinos,” Kennedy School of Government Case Program, Case C14-04-1722.0, based on research by Professor Luis Moreno Ocampo; Peru: Resource Dependency Network, 2000
Philippines: Procurement ReformPhilippines: Procurement ReformTransparency and Accountability Transparency and Accountability Network (20+ member groups)Network (20+ member groups)
Walang Ku-Corrupt Movement Walang Ku-Corrupt Movement (Youth)(Youth)
PAGBA &PAGBA &AGAPAGAP(w/in (w/in Gov’t)Gov’t)
CBCP(Church)
Philippine Contractors Association(private sector – main stakeholder)
Local chambers of Commerce (Private sector)
Procurement Watch:Procurement Watch:Drew other civil society groups Drew other civil society groups into the advocacy efforts and into the advocacy efforts and
coordinated the activitiescoordinated the activities
Forging Coalitions for ReformForging Coalitions for Reform
““BIR [Tax Collector] Officials Amass Unexplained Wealth”BIR [Tax Collector] Officials Amass Unexplained Wealth” By By Tess BacallaTess Bacalla, Philippine Center for Investigative Journalism, Philippine Center for Investigative Journalism
CAR MODEL BENEFICIAL OWNER REGISTERED OWNER
Nissan Patrol Edwin Abella BIR Reg'l Director, Quezon City
Sulpicio S. Bulanon Jr. 1817 Jordan Plains Subd., Quezon City (listed address of Abella in his SALs)
Suzuki Grand Vitara
Ditto
Merrick Abella (son of Abella)
24 Xavierville, Loyola Heights, Q uezon City
Nissan Cefiro Ditto Elizabeth S. Buendia 152 Road 8, Quezon City
BMW Lucien E. Sayuno BIR Reg'l Director, Makati City
Limtra Dev. Corp. Zone 4, Dasmariñas, Cavite
BMW Ditto Marie Rachel D. Meneses c/o Metrocor and Holdings, G&F, Makati City
Honda Accord Danilo A. Duncano BIR Reg'l Director, Quezon City
Daniel Anthony P. Duncano 2618 JP Rizal, New Capital Estate, Quezon City
Mitsubishi L200 Corazon P. Pangcog Asst. Reg'l Director, Valenzuela City
Alberto P. Pangcog (husband) B2 L23 Lagro Subd., Quezon City
Honda CR-V Ditto Alberto P. Pangcog 9 Ricardo St., Carmel 1 Subd., Quezon City
Owner: Regional Director in the Bureau of Internal Revenue forced to resign; currently facing corruption charges; other officials suspended, also facing charges
Improving PFM – A Platform ApproachImproving PFM – A Platform Approach
Platform 1A credible budget delivering a reliable and predictable resource to budget managers
Platform 2Improved internal control and public access to key fiscal information to hold managers accountable
Platform 3Improved linkage of priorities and service targets to budget planning and implementation
Platform 4Integration of accountability
and review processes for
both finance and
performance management
• Integration of budget (recurrent & capital budgets)
Strengthen macro and revenue
Forecasting
Streamline spending processes
Broad Activities Re-design
Budgeting
Classification system
Initial design of FMIS for core business processes
Strengthen external audit and define internal audit function
Re-design budget cycle (e.g. MTEF)
Pilot program based budgeting & budget analysis
Further fiscal
Decentralization
Full design of FMIS
Develop IT
Management
Strategy
Initial design of asset register
Enables a basis for accountability
Enables focus on what is done with
money
Enables more accountability for
performance management
Cambodia – Sequence of Platforms
Broad Activities
Broad Activities
Broad Activities
Source: See “Study of measures used to address weaknesses in Public Financial Management systems in the context of policy-based support,” by Peter Brooke, at www.pefa.org
Do community-based approaches support – Do community-based approaches support – or subvert – decentralization?or subvert – decentralization?
Early experience with social funds was problematic• Politicization of FONCODES in Peru (targeted swing localities)
But subsequent learning ...• Harness bottom-up synergies to strengthen local governance• Kecamatan Development Program in Indonesia• Afghanistan, Albania, Kyrgyz, Tanzania, etc.• Even Peru ...
Since 2003, performance-based transition to fiscal transfer to district governments …
1. Work simultaneously on independence and accountability ECA: independent courts, w/o accountability, result: court
corruption
2. Without explicit change management process, efforts to overhaul justice system will fail Latin American failure of efforts to modernize criminal justices
3. Informal, local justice systems govern as much as 95% of the population in some countries If goal is to improve justice for average citizen, look at both formal
and informal systems
…but we still don’t know much about what types of justice reforms are most effective in different
Countries differ in their trajectories & entry pointsCountries differ in their trajectories & entry points
Trajectories are driven by political forces Key issue: How to sequence reforms?
Qu
ality
of
bu
reau
cra
cy
Quality of checks and balance institutions
Ι ΙΙ ΙΙΙ
Source: Global Monitoring Report, 2006
A Country Approach A Country Approach
In some countries, this will mean moving from reforms of In some countries, this will mean moving from reforms of bureaucracy to support checks and balancesbureaucracy to support checks and balances
In 1996, corruption was a taboo “c-word” – since then, the World Bank’s governance and anticorruption work has evolved rapidly
In recent years, stakeholders in recipient & donor countries are demanding better governance & corruption control – scaling up of aid also requires strengthening governance
On March 20, the World Bank’s governance & anticorruption (GAC) strategy was unanimously endorsed by the Board, and approved by the Spring Meetings in April
The strategy represents an unprecedented global consensus – a product of in-depth consultations