2003年-世界发展银行全球_Papua_New_Guinea_-_Public_Expenditure_Review_and_Rationalization___Overview_of_Discussion_Papers_34页_309kb

2003 Papua New Guinea Public Expenditure Review and Rationalization (PERR) Overview Summary

Core Content

The Public Expenditure Review and Rationalization (PERR) exercise in Papua New Guinea (PNG) was a collaborative effort between the Government of PNG (GoPNG) and a multi-donor team led by the World Bank. The PERR aimed to address the deteriorating fiscal situation and promote sustainable public finance management. The exercise resulted in the production of six Discussion Papers that outlined specific reforms and strategies for improving public expenditure management and fiscal sustainability.

Main Objectives

• To address the growing fiscal deficit and unsustainable public debt.
• To improve the efficiency and accountability of public spending.
• To create a more sustainable fiscal framework through structural and governance reforms.
• To prepare the 2004 budget with concrete reforms that reflect long-term fiscal sustainability goals.

Key Issues Identified

1. Worsening Fiscal Situation

• PNG's public debt-to-GDP ratio increased from 44% in 1992 to 74% in 2002.
• The fiscal deficit is unsustainable, with public spending growing faster than government revenues.
• High debt servicing costs threaten future development spending and economic growth.
• The country's vulnerability as a small commodity-based open economy to exogenous shocks is a major concern.

2. Civil Service Size and Payroll

• Public sector employment is larger than needed or affordable, with salaries accounting for up to 30% of total public expenditure.
• Payroll growth has been driven by weak governance, waste, leakage, and unproductive spending.
• The payroll system is plagued by "ghosts" (non-existent employees), overpayment of allowances, and high absenteeism.
• The number of unattached officials (those not formally attached to any department) is significant and growing, increasing fiscal costs.

3. Restoring Integrity of Budget Institutions and Systems

• Poor governance is the root cause of fiscal malaise.
• Existing budget systems are sound, but their implementation is flawed.
• Systemic improvements are needed to restore discipline, accountability, and efficiency in public finance management.
• The need to bring budget formulation under the discipline of a Medium Term Expenditure Framework (MTEF) is emphasized.

4. Expenditure Adjustment and Prioritization

• The PERR recommends a Medium Term Development Strategy (MTDS) aligned with fiscal constraints.
• Adjustments should focus on public goods and merit goods, with the private sector handling other functions.
• The goal is to improve the allocative and technical efficiency of public expenditures.

5. Improving Health Spending

• Despite increased resources, health outcomes have deteriorated.
• The PERR highlights the need for restructuring provincial health services and improving the efficiency of health spending.
• A Medium Term Expenditure Framework for Health is recommended to guide future allocations.

6. Improving Education Spending

• Education spending has faced similar issues as health, with inefficiencies and under-spending.
• The PERR recommends a re-evaluation of goals and better management of teacher salaries and school subsidies.
• Emphasis is placed on cost recovery and resource mobilization for better education outcomes.

Key Recommendations

• Fiscal Adjustment: The debt-to-GDP ratio should be reduced to 60% by 2008 and 50% by 2013.
• Payroll Reform:
  • Conduct a second stage of data cleansing to eliminate ghost names and unentitled payments.
  • Implement a ‘sunset’ policy to reduce the unattached pool of officials.
  • Link pay increases to affordability and productivity.
  • Enforce budgetary control over payroll and involve Treasury in pay negotiations.
• Governance Reforms:
  • Strengthen accountability and discipline in public finance management.
  • Improve internal audit and financial controllership.
  • Bring arrears under control and ensure prudent management of trust accounts.
• Budget Institutional Reforms:
  • Introduce a Medium Term Expenditure Framework (MTEF) to improve budget preparation and monitoring.
  • Ensure that realistic budget votes are prepared by the Treasury based on accurate data.
  • Enhance coordination between central and provincial governments.

Conclusion

The PERR team emphasizes that fiscal sustainability requires both austerity and comprehensive governance reforms. While the immediate focus is on expenditure compression and improving the efficiency of public spending, the long-term success of the reforms depends on systemic improvements and strict implementation of existing systems and processes. The PERR also calls for political analysis to build support for these reforms, particularly among stakeholders who may be affected.

Next Steps

• The Government should consider the PERR recommendations and act on them immediately for the 2004 budget.
• Strengthen collaboration between the Government and the donor team for more effective implementation.
• Focus on reducing waste and leakage in the payroll system and improving budget accountability.
• Prepare for the next phase of PERR with an emphasis on political analysis and stakeholder engagement.

Summary of Fiscal Framework (2003-2008)

The PERR is a critical step in addressing PNG's fiscal challenges, with the ultimate goal of achieving sustainable public finance management through targeted reforms and improved governance.