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From ‘back of the envelope’ - to high-tech policy tool

Learn about the evolution of financial models from manual calculations to high-tech tools, with case studies from Zambia and East Asia. Discover how these models aided in policy decisions and improved government efficiency.

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From ‘back of the envelope’ - to high-tech policy tool

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  1. From ‘back of the envelope’ - to high-tech policy tool The model in use malcolm.green@c3consult.co.uk

  2. Zambia: the first model 1997 - 1998 malcolm.green@c3consult.co.uk

  3. Zambia: classic bureaucratic issues • Expenditure on pay crowded-out other necessary budget items • Low pay • Ad hoc (and inequitable) allowances • High cost of separating staff • External funds available to help fund a ‘solution’ – but what solution? malcolm.green@c3consult.co.uk

  4. The strategy was clear • Reduce employee numbers to release funds for other budget lines • Improve pay after separations have been made • Consolidate allowances into basic pay • But – no robust financial analysis to determine precise solution malcolm.green@c3consult.co.uk

  5. Zambia: the first model • Custom-built in Excel • User un-friendly (nobody in GoZ could use it) • Not transparent to even an experienced Excel user • But it worked • Ministry of Finance worked through a solution, and presented it to a CG malcolm.green@c3consult.co.uk

  6. malcolm.green@c3consult.co.uk

  7. Zambia: model output – financial summary malcolm.green@c3consult.co.uk

  8. East Asia financial models 2000 - 2003 malcolm.green@c3consult.co.uk

  9. Background • Asian financial crisis had exposed institutional weaknesses • Governments needed new policy tools to conduct rigorous analysis • Objective: promote government efficiency with the focus on pay & employment • Two major models developed for Philippines and Thailand; plus a ‘generic’ model malcolm.green@c3consult.co.uk

  10. Design criteria • Comprehensive – address all aspects of pay & employment policy • Transparent design • Easy to use – whilst maintaining rigorous analysis • Counterparts to work on model development • Transfer to clients malcolm.green@c3consult.co.uk

  11. Design elements Three parts to model: • Data entry: grade/ministry matrix (very easy to enter/re-enter) • Calculations (inaccessible to user) • Scenario development (very easy to use) with step-by-step guide malcolm.green@c3consult.co.uk

  12. Philippines model • No longer looks much like an Excel worksheet • Easy to prepare – if you have the data • Easy to construct scenarios • Model workings are inaccessible malcolm.green@c3consult.co.uk

  13. The model in use • Typically we put a laptop on the Minister of Finance’s desk • The Minister then plays with the scenarios he wants to see • Live and interactive • Policy decisions can be made on the spot malcolm.green@c3consult.co.uk

  14. Generic model – available on web Developed a ‘Wizard’ to: • Control data entry • Assist scenario-building Used advanced modelling techniques to: • Reduce model size • Speed up processing malcolm.green@c3consult.co.uk

  15. Individual country models • Still required for detailed planning • Needed to design in precise separation/pension rules • Possibly integrate with pensions malcolm.green@c3consult.co.uk

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