This paper sets out the principal aspects of civil service reform that were discussed at a workshop for World Bank and International Monetary Fund (IMF, or the Fund) staff on September 6, 2001. ² The objective of the workshop was to strengthen collaboration between the Bank and the Fund in order to achieve greater effectiveness in Bank- and Fund-supported programs in this area. About 60 staff, including managers and country teams, participated in the discussions. Both institutions recognize the centrality of a competent, affordable, and accountable public administration. The central question is how to bring this about.

The Bank-Fund workshop was the second thematic discussion held by Bank and Fund staff in the context of recent discussions on strengthening Bank-Fund collaboration on country programs and conditionality. ³ The principles noted in the recently established Joint Guidelines include: clarity on primary responsibilities, full consultations between institutions, and distinct accountability in lending decisions. The Fund’s primary responsibility is to ensure macroeconomic stability, and the Bank’s core mandate is to help countries reduce poverty, particularly by focusing on the institutional, structural, and social dimensions of development. When conditionality in structural areas such as civil service reform is judged critical to success in Fund-supported programs, the Guidelines note that collaboration must ensure that conditionality is consistent with the medium-term reforms covered in the country’s dialogue with the Bank.

Section II presents an overview of the major objectives of civil service reform, highlighting some of the core macrofiscal and structural perspectives. Section III follows, and highlights recent Bank- and Fund-supported programs that address civil service reform. Section IV considers the effectiveness of Bank and Fund interventions, noting the intrinsic tensions between reform objectives and the politically challenging nature of civil service reforms.

Section V considers how the two organizations have worked, both individually and in tandem. The discussion is informed by 11 country case studies. ⁴ Section V also offers conclusions and proposals for improving the effectiveness of Bank-Fund interventions in civil service reform.

Annex 1 briefly summarizes the elements of civil service reforms in Bank- and Fund-supported programs during 1999 and 2000, while Annex 2 provides the case studies and briefly describes the size and structure of the civil service, recent structural and institutional reforms, and the relationship between these reforms and macroeconomic stability and sustainability.

This paper is not a comprehensive primer on best practices in civil service reform. It presents the views of Bank and Fund staff that gathered to discuss this important issue, and is intended to foster further dialogue. The focus of the paper, like that of the joint workshop in September 2001, is on civilian central government, including the central executive and legislative administrations. ⁵ Civil service reform should be assessed in the context of overall public expenditure management, government reform, and improvements in governance, not simply in terms of reform of government employment. That broader context includes a country’s economic, social, and political institutions, in particular the relationship between central and subnational government. These larger contextual points are acknowledged, but are not analyzed in this document.