2009年-世界发展银行全球_El_Salvador___Policy_Dialogue_and_Consensus_Building_Non-Lending_Technical_Assistance_7页_504kb

DFID Markets and Governance for Poverty Reduction (MGPR) Fund - El Salvador NLTA Summary

I. Core Content

The Non-Lending Technical Assistance (NLTA) under the DFID Markets and Governance for Poverty Reduction (MGPR) Fund was implemented in El Salvador to support policy dialogue and consensus building during a period of significant political and economic transition. The initiative was a just-in-time response to the Bank's re-engagement in the country, aiming to address the challenges posed by the political shift, the impact of the global economic crisis, and the preparation of the Country Partnership Strategy (CPS).

The project was structured around three main areas:

1. Fiscal Policy Dialogue
2. Governance and State Modernization
3. Political Economy and CPS Preparation

II. Main Objectives

• Facilitate dialogue and consensus among political and social actors to improve policy formulation and implementation.
• Enhance governance through inclusive and constructive engagement between the government, opposition, private sector, and civil society.
• Articulate national priorities to guide urgent policy, project, and program actions.
• Support fiscal policy discussions to mitigate the effects of the global economic crisis.
• Develop issue papers on governance and state modernization.
• Inform the preparation of the CPS by analyzing political context and stakeholder dynamics.

III. Key Activities

a) Fiscal Policy Dialogue

• A Fiscal Dialogue Supporting Group (FDSG) was established to mediate discussions on fiscal policy during the political transition.
• The FDSG coordinated with the Bank, IMF, and IDB to understand the economic situation and the potential impact of the crisis.
• A $950 million borrowing package was secured from the World Bank and IDB, representing a major achievement during a period of political instability and economic vulnerability.
• The FDSG developed a methodology for medium-term fiscal dialogue, which became an input for the ongoing "Fiscal Pact" process.

b) Governance and State Modernization

• A stock-taking exercise was conducted with the Technical Secretariat of the Presidency to identify strategic areas for governance and public sector reform.
• An issue paper on state and public sector modernization was prepared and shared with various stakeholders.
• The paper helped shape the national development plan, which included a focus on improving public sector performance.
• A Fiscal Management and Public Sector Performance TAL was approved in November 2009, incorporating insights from the NLTA.

c) Political Economy and CPS Preparation

• A political economy analysis was conducted to understand the dynamics of Congress and political parties.
• The study provided insights into decision-making processes and formal/informal negotiation channels.
• The analysis was used to inform the CPS, ensuring that political risks were mitigated and stakeholder support was built.
• The Country Office used the findings to design an engagement strategy that facilitated consensus among the new government and other stakeholders.

IV. Main Outcomes

• Establishment of the FDSG, which played a critical role in fostering fiscal dialogue and securing funding.
• Consensus between ruling and opposition parties to approve the $950 million lending package.
• Development of a medium-term fiscal dialogue methodology, supporting the "Fiscal Pact" process.
• Identification of governance priorities through a participatory process, leading to the approval of a public sector modernization program.
• Enhanced understanding of political dynamics by the Bank’s country team, enabling more effective CPS implementation.

V. Lessons Learned

• Flexibility was key to the success of the NLTA, as it allowed for responsive support in a rapidly changing political environment.
• Qualitative outputs such as policy notes and issue papers, while not directly measurable, were instrumental in facilitating dialogue, reducing transaction costs, and mitigating risks.
• Small grants can have a significant impact when used to complement larger programs and initiatives.
• The NLTA approach proved effective in building stakeholder support and enhancing the Bank's engagement in politically sensitive contexts.

VI. Follow-up Questions

a) Additional Activities Under LAMIT Program

• Propose expanded outreach to promote policy dialogue and consensus building in other countries.
• Continue and scale up support for fiscal dialogue initiatives such as the "Pacto Fiscal" in El Salvador.
• Leverage flexible funds to assist in the implementation of complex, politically sensitive programs.

b) Characterization of DFID's Contributions

• DFID-MGPR funds provided critical flexible support to the Bank's work in Latin America and the Caribbean (LAC).
• These funds helped complement substantive activities, such as CPS development and technical assistance loans.
• They enabled the Bank to respond to local needs and leverage its impact in countries with high political and economic vulnerability.

VII. Conclusion

The NLTA in El Salvador successfully supported policy dialogue and consensus building during a critical transition period. It played a vital role in securing financial support, improving governance, and informing the CPS. The project highlighted the importance of flexible and qualitative support in overcoming political and economic challenges, and demonstrated how small grants can contribute significantly to larger development efforts.