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PEM REFORM IN TURKEY

PEM REFORM IN TURKEY. Ferhat EMİL June 14th , 2003 ANKARA. BACKGROUND. High Fiscal Deficits Ballooning Debt Inefficient Investment Projects (No sequencing) Hidden Deficits Contingent Liabilities Weak Instutional Structure. Intstiutional Set up.

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PEM REFORM IN TURKEY

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  1. PEM REFORM IN TURKEY Ferhat EMİL June 14th , 2003 ANKARA

  2. BACKGROUND • High Fiscal Deficits • Ballooning Debt • Inefficient Investment Projects (No sequencing) • Hidden Deficits • Contingent Liabilities • Weak Instutional Structure

  3. Intstiutional Set up • Ministry Of Finance (Budget Preparationa,Financial Control) • The Treasury Undersecretariat (Cash and Debt Management,Transfer Budget) • State Planning Office –SPO (Macroframework,Investment Budget)

  4. Diagnosis • Fragmented non transparent budget process • Non comprehensive budget with strong incentives for off budget activities • PEM system with emphasis on compliance and control but no focus output 2. Common Understanding with some problems • Problems acknowledged , technical level consensus secured to great extent about the problems • Although ,still alot of distrust (Each Agency thinks the other agency should be reformed,not themselves) • Political Leadership and ownership lacked ( Difficult to understand ,requires patience and talent) • Local and International Homework done in lenght • 8th Year Plan Adhoc Committee Report on Public Financial Management and Fiscal Transparanecy laid the grounds for future work • IMF Fiscal Transparancy Report • PEIR (Joint Porduct of Turkish Team and WB)

  5. Strategy • Three legs of the strategy • Strenghten Aggregate Fiscal Management (Debt Management Law passed, Financial Management Law on the way) • Policy Formulation Improved (Investment Rationalization,Strategic Planning Exercise) • Improve Operational Performance (Pilots , new procurement law and procurement agency)

  6. How did we get there ? • Crises ironically draws the attention to the institutional weaknesses • External Dynamics (IMF,WB,EU) • Internal Dynamics (Civil Society,Technocrats,Bussiness People) • Team work secured (Not an easy process)

  7. TEAM WORK IN PEIR • Central Agencies(TheTreasury,SPO,MOF and Court of Accounts ) worked together after having fought each other • Line agency involvement was critical.(Other side of the table ) • Building trust (among the agencies and between the counterpart teams ) was the essential part to resolve the collective action problem • Counterpart WB team worked hard to undertsand the intricacies of the Turkish Fiscal Accounts. • This also helped both team to know each other and form firm professional relations for a common target. • Information sharing increased (Common problem in every joint work) • Team work is a kind of game theoretical subject. Win-win was essential in PEIR (For example Court of Accounts gave up its exante control function .In return they got the control of wider public sector.) • Broad agreement on strategy was made possible with extensive discussions,workshops,individiual interviews, large symposiums.(PEIR work started in March 2000 and ended October 2001). WB team paid numerous visits . • Technical competence is necessary.’’Know your subject and be prepared to cooperate and share’’ was un disclosed logo among the participants.Again this has not always been an easily understood logo by every one. • I was the team leader not because of my official position ,but because of my personal and academic interest .I knew almost all team members by more than 15 years .This may have helped the process in building trust . • Of course WB Team leader Anand and his team worked with us as part of the overall team not a part of ınternational organization who come and preach on how the things should be done.We received a lot of academic support from Serif and Izak Atiyas of Sabancı University. • Respecting countries’capabilities and institutional culture prevents mutual prejudice. • IMF and WB coordination worked relatively well in this connection.Team leaders should be well prepared to secure this coordination to avoid cross conditionalities and overlapping missions which leads to mission fatique. • Use the media when the work reaches medium level of maturity. • Arrange informal gatherings fo team members. We consumed alot of Raki (or Arak) when designing the strategies.

  8. Risks Discussing the PEM process and setting the strategies was the most enjoyable part of PEIR.Intellectually and professionally ,it was perfect. However implementation is still problematic (Changing governments,changing bureucracy,losing the interest) Those who are very coopeartive during the PEİR process may change their attitude when the question comes how the things shuld be done in real life. Political ownership is essential.If it is not there, even the best strategies can not be implemented. Beware those who use the reform process to advance their hidden agenda under the mask of reforming the system. End result would be the deformation of the system . LAST WORD Reform process of PEM is a long lasting,tiring,stamina requiring , complex process.But the reward is better use of public resources . So , keep on going THANKS and GOOD LUCK

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