Robert P. Beschel Jr. Lead Public Sector Specialist (MNSED) Riyadh, Saudi Arabia November 2009

1. MENA Experience with Public Sector Reform:A Survey of the Landscape Robert P. Beschel Jr. Lead Public Sector Specialist (MNSED) Riyadh, Saudi Arabia November 2009

2. Focus on Three Areas • Public Financial Management • Civil Service Reform • Anticorruption

3. PFM Objectives are Relatively Straightforward • Macroeconomic stability and fiscal sustainability • Appropriate allocation between competing priorities • Efficient and effective spending • Effective control environment ensures fiscal probity

4. Common PFM Challenges in MENA • Budget Formulation • Ensuring credibility of the budget/ making hard ceilings stick • Scope and comprehensiveness of the budget • Link between recurrent and investment budgeting • Multiyear framework • Strengthening budget classification • Introducing performance orientation • Greater budget transparency and parliamentary scrutiny • Budget Implementation • Reducing ex-ante controls, while improving commitment controls • Improved virement • Better treasury operations and cash management • AFMIS systems • Strengthening internal audit • Strengthening external audit, including more independent and transparent reporting relationships

5. Bank Recently Analyzed Sample of 10 MENA Countries • Algeria • Egypt • Iraq • Jordan • Lebanon • Morocco • Syria • Tunisia • West Bank & Gaza • Yemen • Comprise 71 percent of MENA’s population and nearly half of its GDP • Different regions and levels of Development • Represent a range of administrative traditions

6. MENA & Global PEFA Averages

7. What Works and What Doesn’t with PFM Reform

8. Civil Service Reform • Legislation • Pay and Employment • Machinery of Government (structure and business processes) • Human Resource Management • Policy Coordination

9. Common Problems in MENA • Governments are large • Pay is misaligned, w/ too many allowances • Wrong sets of skills • Too many agencies with vague and overlapping mandates • Interagency coordination is poor • Weak accountability • Meritocracy vs. wasta

10. General Civilian Government as % of Total Employment MENA

11. Government Employment as % of Total Population

12. Government Employees % of Population 7 6 5 4 3 2 1 0 Egypt Iran Morocco Syria Turkey India Indonesia Pakistan Mexico Country Comparison

13. Central Civilian Government Wages as % of GDP

14. Wage Bill Country Comparison

15. Public-Private Wage Ratios

16. Ongoing Bank CSR Efforts • Lending • Morocco • Yemen • WBG • TA and ESW • Regional Pay & Employment Exercise • Morocco • Egypt • Libya • WBG • Kuwait For a variety of reasons, this agenda has tended to struggle historically

17. Country Case Study No. 1:Morocco • Size of the wage bill an issue • Not overstaffed, but civil servants are overpaid (competitive salary increases among cadres) • Successful VRS in 2004 • Developing a computerized HR database • Optimal agency staffing levels? • Geographic distribution a problem

18. Country Case Study No. 2:Egypt • Massive overstaffing, but… • Split between policy (MSAD) and administration (CAOA) • Low salaries, with lots of allowances & distortions • Some success with reforming certain agencies (tax, customs, GAFI) • New legislation focuses on disicpline & contract employment

19. Country Case Study No. 3:Yemen • Broad, comprehensive reform agenda • Computerized biometric database reducing ghost workers, double dippers & staff serving after retirement • Reeingineering line departments • Fund to reduce overstaffing • Migrate agencies to new salary structure? • Other reforms in recruitment & performance evaluation

20. General Observations: CSR Necessary but Challenging • What has Worked • Agency specific reforms • Hiring freezes • Payroll reform • Creating service culture • Incrementalism& strategic opportunism • What has Not • Comprehensive strategies • Centrally driven efforts to reform line departments • Functional reviews • HRM reforms that directly confront wasta • Heavy ministerial & staff turnover • It Depends • Rightsizing • Voluntary retirement schemes • Computerized HR & payroll systems • Civil service censuses • Contract employment • Training and capacity building

21. Corruption & Transparency…

22. MENA and Transparency International’s CPI

24. KKM Indices

26. Recent Developments in Combating Corruption in MENA • Creating Anticorruption Agencies • Jordan • Iraq • Yemen • Morocco

27. Transparency & Public Awareness The chart to the left shows the MENA region in relation to the rest of the world.

28. Transparency & Public Awareness • Freedom of Information legislation passed in Jordan and under consideration in Egypt & Yemen • E-government and web based dissemination growing in a number of countries • Civil society playing a role in several countries (Morocco, Lebanon, Palestine)

29. For the Quality of Administration, MENA’s ‘Governance Gap’ is Small

30. But for Public Accountability, the ‘Governance Gap’ is Wider

31. Global Governance Trends… • Many of the global trends in governance in the 1990s & beyond were felt only distantly in MENA • In comparison with other regions, MENA fares well in terms of political stability and e-governance and fair in terms of facilitating private sector development, service delivery and anticorruption, with wide variation between countries • The region fares worse than global comparators on issues of decentralization and on public voice, accountability and participation • Overall size of the public sector is an issue

32. Thank You شكراً متشکرم