Challenge
Poor governance and nearly a decade and a half of conflict left Liberia’s economy, institutions, and human capacity completely devastated. The 2003 Accra Comprehensive Peace Accord, the deployment of United Nations (UN) peacekeepers and the election of a democratic government in 2006 provided much-needed space to lay a solid foundation for recovery. The country is now at an inflection point, moving from the transitional post-conflict recovery phase to laying the foundations for long-term development. The government’s main focus has been on the primary challenges of sustaining economic growth, rebuilding infrastructure, improving the delivery of basic services and consolidating economic governance reforms.
Approach
The Second Re-engagement and Reform Support Program (RRSPII) was designed to support Liberia’s transition from post-conflict recovery to long-term sustained growth through a focus on rebuilding core state functions, strengthening public sector management and improving transparency in order to lay the foundations for a more accountable governance structure that could effectively deliver essential public services. In this regard, the operation supported measures to enhance the government’s accounting system, improve the legislative framework for public finance management, strengthen the audit capability and begin the process of rebuilding an effective civil service. In addition, it focused on facilitating pro-poor growth through measures to enhance the equity and efficiency of tax administration and encourage investment to spur private sector-led growth.
Results
Strong government ownership and commitment led to the achievement of key results including:
- The reduction in the variance between the legislated and actual budget from 19 percent in 2007 to 16 percent in 2009 and the reduction in non-competitive procurement from 80 percent in 2008 to less than 30 percent by December 2009, thanks to Public Financial Management (PFM) reforms including, the provision of supporting regulations and manuals for implementation of the Public Procurement and Concessions Act and the Public Finance Management Act approved in August 2009.
- The completion of 22 audits by the General Auditing Commission (GAC), including for the key ministries of Finance, Education, Health, Public Works and Lands, Mines and Energy as well as the audit for the Fiscal Year (FY)07/08 central government accounts. These audits and their publication are having a positive impact on accountability within the public sector and have reduced opportunities for corruption. IDA is also strengthening the oversight committee of Parliament to ensure follow-up on audit recommendations.
- With the modernization of the Revenue and Investment codes, fiscal incentives are automatic and non-discretionary, thereby reducing the administrative burden and consequently costs.
Bank Contribution
The 2008 Public Expenditure Management and Financial Accountability Review (PEMFAR) (supported by IDA), the first comprehensive assessment of the public expenditure and finance management system in Liberia, provided the analytical underpinning for the Public Finance Management elements of the US$4 million equivalent grant RRSPII operation. The RRSPII was complementary to, and coordinated with, the IDA-financed US$11 million equivalent Economic Governance and Institutional Reform Project (EGIRP) which provides technical assistance on public financial management and civil service reform.
Partners
The International Monetary Fund (IMF) and IDA provided coordinated support for the drafting of the new PFM Act. The IMF completed the diagnostic of tax administration and IDA is providing implementation support, including the installation of an integrated tax administration system. IDA’s work on economic governance and institutional reform was complementary to the Civil Service Capacity Building (CISCAB) program implemented by the U.K. Department for International Development (DFID) and the governance support of other donors.
Moving Forward
The Second Re-engagement and Reform Support Program was followed by a Third Re-engagement and Reform Support Program—a larger operation (US$11 million equivalent) which continued and deepened economic governance reforms and reforms to spur private sector investment for growth. The strong ownership of the reforms by both the government and citizens is leading to the evolution of social accountability mechanisms to ensure the sustainability of the reforms.
Beneficiaries
“NREG has provided the government of Ghana opportunity to confront very difficult public sector management and oversight over sectors important for the Ghanaian economy. The expected results of NREG is good governance but achieving this goal is a challenge because it requires change of attitude in addressing environmental issues and the need to interact with stakeholders like civil society as well as those in the mining, forestry and oil and gas industries” says Jonathan Allotey, Executive Director of the Environment Protection Agency in Ghana.
“With the international community’s confidence in Ghana’s opportunity for development, we are receiving a lot of support, but it is hard to manage the demands and expectations from each development agency. With NREG, we have a one-stop shop for assistance to Ghana on natural resources governance, namely the government system, and this is a very significant achievement in itself. We are gradually strengthening our own systems for programming and monitoring of government agencies’ performance,” says Franklyn Ashiadey, Principal Economist, and NREG Multi-Sector Coordinator, Ministry of Finance and Economic Planning, Ghana.
RSS