Macro-Modelling for Poor Countries- case of Mali

Going over Mali's Poverty Reduction Strategy Paper's I came over the following under 'Capacity building in macro-economic modelling and analysis';

-Preparation of micro-simulation model (MEGC) for analysis of impacts of exogenous shocks and policy measures on poverty and income distribution (World Bank financing)

-Macro-sectoral forecasts model, as tool for analysis of growth-oriented sectors.

For Comment: How much economic modelling is required before you can reduce poverty?

Related;

The country's budget planning gets an 'A' according to one rating;

Mali’s MTEF had the top “A” rating in its 2004 HIPC tracking exercise (question 7). However, a more recent assessment finds inadequate integration among the many tools developed to support reforms, including the MTEF, the sector MTEFs, the macroeconomic framework, the new budget nomenclatures, and the multi-year investment program. Timetables of the different exercises aren’t properly synchronized. Sector MTEFs are prepared mainly to satisfy donors, and are separate from the program budget process.

Promises from the latest Letter of Intent;

Mali is vulnerable to external or natural exogenous shocks. Without the fiscal space to respond rapidly to ad hoc demands, there is a risk that macroeconomic stability and the development program will be undermined. The Government considers that in the mediumterm, a zero basic balance is the most appropriate budget target for responding to emergent needs. In 2008 the deficit in the basic balance should be 1.9 percent of GDP, compared with 1.1 percent in 2007, reflecting the budgetary impact of the terms of trade. The aim is to reduce the deficit to 1 percent of GDP in 2009 and achieve balance in 2010. In order to respect the programming of expenditure to reduce poverty, measures have been implemented to correct the downward trend in the tax to GDP ratio observed since 2005....

Improving the quality of public spending remains a top priority. In coordination with our external partners, measures have been included in the Government Action Program for Improving and Modernizing Public Finance (PAGAM-GFP) to respond, among other things, to the conclusions of the Public Expenditure and Financial Accountability (PEFA) exercise. An action plan incorporating PEFA measures has been prepared for 2008. Efforts are under way to pursue implementation of the PAGAM-GFP/PEFA action plan, in particular by completing the connection of authorizing officers (ministries, institutions, regions) to the computerized expenditure system; improving the execution rate of programs by devolving parts of the Procurement Office to the regions; reviewing the Procurement Code; shifting gradually all donors from projects to budget support; and putting in place an economic and financial analysis unit to help strengthen the capacities of the Finance Committee of the National Assembly.

Mali - Public expenditure review

Mali- Creating Fiscal Space
Public Expenditure Management in Francophone Africa: A Cross-Country Analysis

Development of the cities of Mali : Challenges and priorities

Mali budget calendar

• Ministry review of budget-programmes
• Preparation of macro-fiscal framework as part of the Medium Term Budget Framework (MTBF)
• Preparation of Budget Circular (including ceilings and donors disbursement projections)
• Preparation by sector ministries of draft annual budget estimates, including the detailed budget-programmes, on the basis of sector expenditure ceilings in line with the CBMTMEF review of ministries’ budget requests, including the budget-programmes
• Budget negotiations and finalisation of draft Budget d’Etat
• Adoption of draft Budget by Council of Ministers
• Government submits the draft Budget d’Etat to the National Assembly
• Examination and adoption of the Loi de Finances by the National Assembly

Doing business 2008 Mali

Something we often forget

Quote of the Day on government public financial reforms;

Even when developed to the ultimate stage of perfection, governmental accounting cannot become a guaranty of good government. At best, it can never be more than a valuable tool for promotion of sound financial management. It does not offer a panacea for all the ills that beset representative government; nor will it fully overcome the influence of disinterested, uninformed citizens. It cannot be substituted for honesty and moral integrity on the part of public officials; it cannot eliminate the demands of selfish interests, whether in the form of individual citizens, corporations, or the pressure groups which always abound to influence government at al levels-(Mikesell, 1956: 10).

World Bank Support for Public Financial Management: Conceptual Roots and Evidence of Impact by Clay G. Wescott

via IMF PFM blog

Questions about the need for fiscal rules

Over at Stumbling and Mumbling an interesting question;

Which raises the question: why do we need external rules to do this? Why can’t the electorate do it? Younger voters should see that big borrowing is merely deferred taxation, and punish governments for imposing it. And older voters who care about their children and grandchildren should also punish governments.

So why don’t they? One possibility is that our electoral system is just too clumsy to permit them to express their discontent; we are only ever offered a choice of job-lots of policies, not individual ones.

Another possibility is that, for all our drooling and drivelling, we as a nation don’t actually care about our children.

Whichever it is, let’s be clear. If we need fiscal rules, it is only because of moral and/or political failings. But are technocratic constraints really an adequate substitute for adequate political structures or more sophisticated moral sensibilities?

It is good in Down Under

Four year net policy decisions included in each Budget and Growth in government operating expenses


A new architecture for infrastructure


Corporate tax rates in Australia and the OECD 2008

Making provision for future priorities

IMF gives an A+ to Australia's economic management;

10. Fiscal policy focused on medium-term sustainability has delivered a sequence of surpluses that has eliminated commonwealth net debt. This leaves Australia with a strong fiscal position, an enviable situation by international standards. We support the strategy in the latest budget to save the revenue windfall from the commodity driven boom and thereby allow automatic stabilizers to support monetary policy. Saving some of the revenue from the commodity price boom in three new funds will take pressure off monetary policy in the near term and enable increased infrastructure investment over the medium term.

11. The reduction in public spending growth in the latest budget illustrates the government's commitment to help reduce inflation. With the upside risks to the outlook for inflation, more public spending restraint could be required and we encourage the authorities to identify areas where additional spending cuts could be implemented. In addition, positive revenue surprises should be saved to assist monetary policy until it is clear that inflation will decline. Given the uncertainty about how much of the increase in commodity prices will be permanent, saving the additional revenue in the near-term may avoid sharp changes in taxes and spending in the future.

12. The states have increased capital spending and their budget balance has shifted to a small deficit in aggregate, thereby adding stimulus to the economy. This highlights the importance of maintaining restraint at the commonwealth level.

13. To the extent that the improvement in the budget balance is structural, associated with permanently higher commodity prices, this should provide scope to reduce taxes or increase spending over the medium term. The governments' intention to achieve a positive balance over the medium term should increase public net worth, further strengthening the fiscal position. Our analysis suggests that a combination of lower labor and capital income taxes, along with increased public investment, will generate the largest economic gains. The gains from other options such as lower consumption taxes or higher public consumption are not as large. Despite the expected structural improvement in the medium term, significant long-term fiscal challenges remain, particularly in the area of healthcare spending, and early adjustments will be key to preserving fiscal sustainability.

Blogging at the World Bank

Pierre Guillaume Wielezynski, who works on blogs and social media for the World Bank, said: "Dani (Kaufmann) has the profile of a good blogger: open, conversational, opinionated and, most important of all, passionate. He understands that blogging, and social media in general is a powerful new form of expression. With Shanta (Shantayan Devarajan), the CommGap team (Communication for Governance and Accountability Program), and Dani, I am excited to see the Bank embrace social media."

The Governance Blog joins the other recently launched blogs that are helping to break ground on the social media front: CommGap's Public Sphere, East Asia & Pacific on the Rise, and Devarajan's End Poverty in South Asia. "The PublicSphere blog has been going since January," said Sina Odugbemi, program manager in CommGap, who recently joined the Bank from DfID. "We've had thousands of readers so far, most of them from outside the Bank. It's a way for us to engage with a global community on a whole range of issues related to the interactions among public opinion, the public sphere, and governance," Odugbemi said....

Kaufmann, whose trademark, even in his research, is being a straight shooter, says about his newest medium: “I like the language of blogging—the straightforwardness is very salutary. I like it when you don’t have to write in ‘Bank-ese.’”

-We Continue to Innovate: From Surveys to Blogging

Congratulations to Governance Matters Blog and to Mr. Daniel Kaufmann who has been instrumental in creating a Bank blog focussed on governance issues. Still it seems Bank's work are too much in silos and there isn't much talk on cross themes.

The following post was on East Asia blog;
Number 1 essential to fighting corruption: political will

I would have liked to see a reaction from the those at Governance Blog. With all the focus on Africa why isn't there a blog focused on Africa? IMF has taken lead in creating a blog on public financial management.

Who do you think at World Bank should be blogging? Robert Zoellick, Danny Leipziger, Anwar Shah, Charles Kenny, etc.,

A meeting of government accountants

ICGFM Blog

The myth about being 'technical' virigins and oral sex

"There is a widespread belief that teens engage in nonvaginal forms of sex, especially oral sex, as a way to be sexually active while still claiming that, technically, they are virgins," Laura Lindberg of the Guttmacher Institute in New York, who led the study, said in a statement.

"However, our research shows that this supposed substitution of oral sex for vaginal sex is largely a myth. There is no good evidence that teens who have not had intercourse engage in oral sex with a series of partners."...

About one in 10 of the teens said they had engaged in anal sex. These teens were far more likely to have also engaged in vaginal sex.

"Teens of white ethnicity and higher socioeconomic status were more likely than their peers to have ever had oral or anal sex," the researchers wrote.

Lindberg said the new findings illustrate that the Bush administration's emphasis on school programs teaching sexual abstinence until marriage "does not give teens the skills and information they need to be safe."

Statistics released by the Centers for Disease Control and Prevention in March showed that more than one in four U.S. teen girls was infected with at least one sexually transmitted disease. The CDC said in December the birth rate for U.S. teens rose in 2006 for the first time since 1991.

Lindberg said the Guttmacher Institute's findings have health policy implications.

"While oral and anal sex carry no risk of pregnancy, engaging in these behaviors can nevertheless put teens at risk of sexually transmitted infections," she said.

"Counseling and education should take into account total STI risk by addressing the full range of behaviors that teens engage in, including oral and anal sex."

-Teen sex study doubts "technical virginity"

McCain on Earmarks, etc

Live From New York, It’s John McCain

Tax Payer Money at Work

Preliminary Observations on the Use and Oversight of U.S. Coalition Support Funds Provided to Pakistan

According to U.S. embassy officials in Islamabad and unclassified U.S. intelligence documents, since 2002, al Qaeda and the Taliban have used Pakistan's Federally Administered Tribal Areas (FATA) and the border region to attack Pakistani, Afghan, U.S. and coalition troops; plan and train for attacks against U.S. interests; destabilize Pakistan; and spread radical Islamist ideologies that threaten U.S. interests. Since October 2001, the United States has provided Pakistan with over $10 billion for military, economic, and development activities in support of the critical U.S. national security goals of destroying terrorist threats and closing terrorist safe havens. A major component of this effort has been U.S. Coalition Support Funds (CSF) reimbursed to Pakistan. The purpose of CSF is to reimburse coalition countries for logistical and military support provided to United States military operations in the global war on terror. In Pakistan, reimbursements through CSF are intended to enable the government of Pakistan to attack terrorist networks in the FATA and stabilize the border areas. It is structured as a reimbursement mechanism in which the U.S. Department of Defense (Defense) policy is to validate that support was provided, costs were incurred, and these costs were incremental to normal Pakistani military operations. We were asked to assess how CSF reimbursements have been used to meet U.S. goals in Pakistan, and what controls exist to ensure that reimbursements are for legitimate claims.

For the period covering October 2001 through June 2007, the United States reimbursed Pakistan about $5.56 billion in CSF for military operations in FATA and other support in the war on terror. CSF reimbursement funds are paid directly into the Pakistani government treasury and become sovereign funds. Once they become sovereign funds, the U.S. government has no oversight authority over these funds. In response to a Defense Inspector General review conducted in 2003, DOD implemented additional guidance to improve oversight of the CSF reimbursed to Pakistan. Moreover, in 2007, the Office of the Defense Representative to Pakistan (ODRP) began playing a larger role in overseeing CSF reimbursement claims. In performing oversight, ODRP reviews the Pakistani claims and indicates that to the best of their knowledge military support was provided and expenses were actually incurred. U.S. Central Command (CENTCOM) then validates that Pakistani operations listed were essential to support U.S. military operations in the theater. The claims are sent to the Office of the Under Secretary of Defense for Comptroller, who (1) performs a macro-level review comparing the cost to similar operations, and (2) assesses whether the cost categories are reasonable, selected subcategories are reasonable compared to U.S. costs, and costs are consistent with previous claims. In addition, both the Undersecretary of Defense for Policy and the State Department verify that the reimbursement is consistent with the U.S. government's National Security Strategy and that the CSF payment does not adversely impact the balance of power in the region. In recent months, Defense has disallowed or deferred a significantly greater amount of CSF reimbursement claims from Pakistan.

Related;
Sharif's party pulls out of Pakistan government

Econ Talks

Bryan Caplan Says Proposed Gas-Tax Cut Would Be `Placebo'

Bryan Caplan, an associate professor at George Mason University, talks with Bloomberg's Tom Keene from Fairfax, Virginia, about proposals by Senators Hillary Clinton and John McCain to suspend the federal tax on gasoline, the outlook for the presidential election and impact of the dollar's decline on oil prices.

Chris Anderson on Free

Value for Tax Payers Money?

The Bush administration has spent $1.3 billion over the past two years to prop up Siniora's government, with about $400 million dedicated to boosting Lebanon's security forces.

-Fighting in Beirut Threatens a Top Bush Administration Priority

U.S. Airport Privatizations?

Winston of Brookings Seeks U.S. Airport Privatizations

Who wants to be a SubprimeMillionaire

IMF on Pakistan budget reforms

Update on Pakistan: Report on Observance of Standards and Codes - Fiscal Transparency Module;

An MTBF process has been initiated, but crucial elements of budget integration and policy transparency have still to be put in place. The development of an MTBF was initiated in 2003, and an MTBF process involving detailed activity costing and identification of ministry objectives and output indicators applied progressively from FY 2005–06.8 In phase one of the MTBF implementation, emphasis was given to establishing better costing and budget preparation techniques in the line ministries. From December 2006, however, the strategy has been changed to give primary emphasis to top-down budget control—while continuing to build up management capacity in the line ministries. The current and development budgets continue to be prepared and presented in the budget document as separate elements. Three separate call circulars are sent to ministries (for current, development, and MTBF budgets). Costs of policy objectives are shown, but further work is needed to link output indicators and budget allocations. The technical and policy basis of out-year estimates are not yet sufficiently clear in the budget documents and, in practice, out-years are resubmitted rather than being rolled over as the base data for the following year’s budget...

A program classification, based on subdetail functions, covering all ministries should be developed as part of the full MTBF rollout. The MTBF implementation is following an ambitious rollout plan. A unified classification derived from the existing COA will build on the present system and support the top-down allocation process. FAD staff suggest that the present budget classification permits evolution to a more focused program approach which will help to address a number of critical long-term change issues. Operational “programs” so defined would incorporate both development and recurrent budgets relevant to that function element. Starting from an across-the-board classification within the existing chart of accounts would contribute to several important transparency and management objectives. It would help to:

- Unify the development and recurrent budget processes—“new proposal submissions” for programs should be evaluated in a similar way to development projects, but cover both capital and recurrent spending;
- Eliminate crossover problems when the development phase of a project is complete and recurrent costs are transferred to the revenue budget;
- Provide a framework that applies to all ministries, allowing a more phased approach to establishment of effective budget management by line ministries;
- Provide a framework that applies to all levels of government, helping to coordinate cross-government programs, particularly those included in the PRSP24; and
- Set a basis for redefinition and harmonization of the roles of the Planning and Development Division (PDD)25 and the Budget Wing of the MOF.

31. Actual outcomes as well as forward estimates should be included in the MTBF presentation. Given the expected improvement in availability of data, it should be possible in the near future to meet the fiscal transparency code requirement that the budget and MTBF estimates should (in addition to the MTBF out-years) show actual outcomes for two years previous and provisional data for one year previous to the budget year. Allied to this, the budget documents should include summary tables showing original budget versus actual outcomes over several years.
32. The methodology for preparing MTBF out-year estimates should be clearly specified. Clear technical specifications for calculation of out-years will both improve the efficiency of budget preparation and improve transparency and accountability of the budget. Specification of technical parameters (such as price) and policy for the estimates will permit an analysis of factors causing changes in the estimates in the following year— most importantly, separating price changes from introduction of new policies. In turn, this will limit the need for data entry to establish baseline ceilings for following years’ budgets, since the first out-year can be automatically entered as data for the next budget year in the roll-over process.

See also Bill Dorotinsky's comments to my comments.

Rolling the Rock up the hill

Cartoon from New Yorker

Lalu Prasad presents India's Railyway Budget

Lalu Prasad Yadav;

But Mr Yadav is a wily and disarming politician and has confounded his critics by becoming one of the country's most successful railway ministers. And he has not forgotten his cows. “If you don't milk your cow fully it falls sick, and if the cow falls sick the farmer goes sick,” he says to explain his solutions to the problems of the world's second largest railway network. With more than 1.4m employees and 63,000km (40,000 miles) of track, the railways still help bind India together, but they have suffered from deteriorating finances and lack the funds for future investment.

Rather than raise fares as he was urged to do by various reports and pundits, Mr Yadav has opted for volume-boosting and cost-cutting measures that have made diehard officials in the stuffy Railways Board shudder. He increased load limits for the system's 220,000 freight wagons by 11%, legalising something that was already happening. He has boosted the railways' earnings by 72 billion rupees ($1.6 billion) in the current year. Of this, 60 billion rupees came from speeding up turn-round times. These measures have added some 24% to freight revenues—and freight provides 70% of the railways' earnings.

Government Policy Confusion

Yes Minister: Government Policy Policy

Assorted on Government Budgets

Earmarks 101

Iris Lav, tax policy specialist at the Center on Budget and Policy Priorities, talks with Bloomberg's Tom Keene from Washington about state budget deficits in 2009 and the impact of a U.S. slowdown.

World Bank writer on IMF blog

Minding the Gaps: Integrating Poverty Reduction Strategies and Budgets for Domestic Accountability

NY City Budget and how not to do budgets

In her evolution from a campus activist nicknamed Mad Dog to the first female speaker of the City Council and a likely candidate for mayor, Christine C. Quinn has taken care to project an image of reform and an openness about the workings of government.

Since taking office in 2006, Ms. Quinn has devised a more public system for reporting pork-barrel spending and has muscled tough new restrictions on lobbyists through a resistant Council.

But Ms. Quinn, facing her first significant embarrassment as speaker, has spent much of the last 48 hours trying to explain how the Council ran what many government experts have called a strange and even disturbing system for stashing away taxpayer dollars. For years, the Council budgeted millions of dollars for dozens of fictitious community organizations and used the money later for grants to favored neighborhood groups.

The Citizens Budget Commission, an independent watchdog organization, was bluntly critical of the practice on Friday: “There is no excuse for fictional items in a budget,” the commission said in a statement. “All elected officials bear responsibility for the budgets that they adopt, and Speaker Quinn, in particular, should be held accountable for the City Council’s fiscal practices.”

Ms. Quinn, despite her reputation as a focused manager with an understanding of the levers of city government, has said she knew nothing of the unorthodox budgeting practice. She and her staff have gone to great lengths to show that she had tried to put an end to it but was stymied by staffers she forced out.

For the moment, no one has stepped forward to contradict her account, and there is no evidence that anything about the system was illegal or that any money was misspent. Mayor Michael R. Bloomberg has expressed confidence in her, calling her “the most honest person I know.”

But Ms. Quinn’s defense hinges largely on her assertion that when she learned about the practice she immediately ordered it to cease, only to learn that her staff disobeyed her and carried it on for several more months.

“There were meetings, there were oral conversations,” Ms. Quinn, a Manhattan Democrat, said Thursday. “There were many people in the numerous meetings with myself and the finance staff during the budget process, with many people in the room who can confirm that.”

On Friday, however, when Ms. Quinn’s office was asked to produce some of the “many people” who could confirm it, only her chief of staff stepped forward, saying he had remembered her noting in one meeting that they would no longer use the reserve system.

And numerous former and current City Council officials said Ms. Quinn had during her tenure taken an unusually active role in overseeing the budget, leaving them wondering how she could not have known or, if she had truly objected to the practice, authoritatively ended it.

“It’s an off-line extra budget slush fund within the city’s budget, and it’s used at the discretion of the speaker,” said Dick Dadey, executive director of the Citizens Union, who joined Ms. Quinn to overhaul the lobbying rules and is now calling for all future Council appropriations to be monitored by an outside agency. “Given the speaker’s drive to create more transparency about the Council’s own budget and member items, it would have been appropriate to go public with this bad practice even if it did shine a bad light on the Council.”

Indeed, the revelations have been particularly troubling for Ms. Quinn, consultants said, in part because she has made open government a mantra of her tenure as speaker.

“She’s no Eliot Spitzer,” said Kellyanne Conway, a Republican political consultant, “but we have a very recent example in the governor’s precipitous fall from grace that the more you crusade as someone having a transparent budget, open to the public, governing according to ethics, then the higher those accountability standards will be.”

-Backer of City Hall Openness Trips on a Budget Maneuver

On New York State Budget