The effectiveness and efficiency of a country's public sector is vital to the success of development activities, including those the World Bank supports. Sound financial management, an efficient civil service and administrative policy, efficient and fair collection of taxes, and transparent operations that are relatively free of corruption all contribute to good delivery of public services.
The Bank has devoted an increasing share of its lending and advisory support to the reform of central governments, so it is important to understand what is working, what needs improvement, and what is missing. IEG has examined lending and other kinds of Bank support in 1999-2006 for public sector reform in four areas: public financial management, administrative and civil service, revenue administration, and anticorruption and transparency.
The public sector is the largest spender and employer in virtually every developing country, and it sets the policy environment for the rest of the economy. About one-sixth of World Bank projects in recent years have supported public sector reform, because the quality of the public sector— accountability, effectiveness and efficiency in service delivery, transparency and so forth — is thought by many to contribute to development. Improving the efficiency of government counterparts is also essential for the effectiveness of the Bank's support for development.
Lending Projects with Significant PSR Components 1990 - 2006
The main objective of this IEG evaluation is to help the World Bank learn how to contribute more effectively to PSR in its member countries. The intended audience also includes government officials and other stakeholders that want to see what lessons are available for improving project and program design. In other words, the evaluation seeks to provide country directors of finance ministers with knowledge of what sort of PSR program is likely to work in their country.
Although a majority of countries that borrowed to support public sector reform experienced improved performance in some dimensions, there were shortcomings in important areas and in overall coordination.
The frequency of improvement was higher among IBRD borrowers than among IDA borrowers.
Performance usually improved for public financial management, tax administration, and transparency, but did not usually with respect to civil service.
Direct measures to reduce corruption— such as anticorruption laws and commissions— rarely succeeded.
Design PSR projects and allocate Bank resources to them with recognition that PSR has especially complex political and sequencing issues.
In country PSR strategies, set priorities for anticorruption efforts based on assessments of which types of corruption are most harmful to poverty reduction and growth.
Strengthen the civil service and administrative components of PSR, providing them with a better framework and indicator set, and give more attention to the budget execution phases of financial management.