Abstract

Table A1.1 presents data on conditionality in IMF programs related to civil service reforms, as well as broader discussion of intended reforms, although these may not be subject to conditionality.

Fund-Supported Programs

Table A1.1 presents data on conditionality in IMF programs related to civil service reforms, as well as broader discussion of intended reforms, although these may not be subject to conditionality.

Table A1.1

Civil Service Conditionality in Fund-Supported Programs, 2000

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Note: Some countries may have civil service reform (CSR) initiatives both as benchmarks and as performance criteria.

The PRGF provides medium-term assistance to countries where poverty reduction is the cornerstone of the growth-oriented economic strategy, based on a comprehensive, nationally owned PRSP prepared by the borrowing country and endorsed in their respective areas of responsibility by the Boards of the Fund and Bank as the basis for the institutions’ concessional loans and for relief under the enhanced HIPC Initiative.

The EFF provides medium-term assistance to members with (a) an economy suffering a serious payments imbalance relating to structural maladjustments in production and trade and where price and cost distortions have been widespread; or (b) an economy characterized by slow growth and an inherently weak balance of payments position that prevents pursuit of an active development policy. The length of an EFF arrangement is typically three years and disbursement is conditional on the borrower meeting specified performance requirements, including structural reforms.

SBAs (stand-by arrangements) are designed to deal with any temporary balance of payments problem. The typical SBA is for 12-18 months, but may be as long as three years where disbursement of financing is usually conditional on the borrower meeting specified performance requirements.

Benchmarks are a point of reference against which Fund program implementation is monitored. Benchmarks are not necessarily quantitative and frequently relate to structural variables and policies.

Performance criteria are macroeconomic indicators (such as monetary and budgetary targets) that must be met for the member to qualify for purchases under SBA, EFF, and PRGF arrangements.

Source: IMF staff.

Some examples of structural benchmarks related to civil service reform in Fund-supported programs have included: (a) implementation of a performance-based compensation system, (b) design of voluntary retirement or buyout packages, or retrenchment or retraining packages for civil servants, (c) computerization of personnel records, (d) decompression of wage scales, and (e) hiring and wage freezes.

Examples of performance criteria related to civil service reform in Fund-supported programs include: (a) lowering or freezing the size of the wage bill, such as ceilings on wage bills, (b) legislation for carrying out civil service reform, and (c) making the civil service pension system actuarially sound.

Bank-Supported Programs

The Bank has two basic types of lending instruments: investment loans and adjustment loans. Investment loans have a long-term focus (5 to 10 years) and finance goods, works, and services in support of economic and social development projects in a broad range of sectors. Adjustment loans have a short-term focus (one to three years), and provide quick-disbursing assistance to countries with external financing needs, in order to support structural reforms in a sector or in the economy as a whole. They support the policy and institutional changes needed to create an environment conducive to sustained and equitable growth.

Loans can be arranged programmatically, so that a series of operations supports a medium-term government program of policy reforms and institution building.

Some Bank operations address civil service reform directly, identifying the core civil service as the explicit object of reform. 21 In fiscal 1999 and 2000 there were 45 operations with explicit civil service reform components, representing around 9 percent of total Bank operations (see Table A1.2). This dramatically understates the level of Bank activity in reforming public employment arrangements, however. The Bank supports many health- and education-sector reforms that affect the employment arrangements for these staffs and the majority of civilian central government staff that are in these sectors. The Bank is also increasingly supporting decentralization and “community-driven” approaches that seek to stimulate better quality services from central government. In fiscal 1999 and fiscal 2000, 60 percent of Bank operations had at least one public sector reform and governance component.

Table A1.2

Civil Service Interventions in Bank Operations

(operations approved in fiscal 1999 and fiscal 2000)

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APLs;

Specific investment loans; sector investment and maintenance loans; learning and innovation loans; and technical assistance loans;

Programmatic structural adjustment loans and PRSC;

Structural and sector adjustment loans; special structural adjustment loans; structural adjustment loans.

Source: Bank staff.

Adjustment operations have an impact on government policy by requiring that significant policy actions are taken either prior to approval of the loan or as a condition of subsequent tranche releases. In core civil service reforms the required policy changes can typically be seen in five areas. Table A1.3 indicates how many of the 12 adjustment operations in fiscal 1999 and fiscal 2000 included a component targeting one of these specific reforms.

In addition, conditionalities under adjustment lending addressed reform coordination mechanisms within government in 4 of the 12 operations.

A detailed examination of the profile of adjustment operations during this two-year period indicates that downsizing is not undertaken without support for accompanying structural reforms, and that there is a broad balance between the three overarching reform objectives (correcting fiscal imbalances, reforming pay and career structures, and improving accountability and service delivery).

Investment operations generally focus on more specific interventions. Table A1.4 summarizes the interventions supported by investment operations, with the figures in parentheses indicating the number of operations that addressed these particular issues out of the 33 investment operations that focused on core civil service reforms in fiscal 1999 and fiscal 2000.

Table A1.3

Policy Reforms in World Bank Adjustment Operations

(operations approved in fiscal 1999 and fiscal 2000)

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Table A1.4

Interventions Supported by World Bank Investment Operations

(operations approved in fiscal 1999 and fiscal 2000)

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The profile of investment operations during fiscal 1999 and fiscal 2000 indicates that the emphasis is on accountability and service delivery—though always in tandem with other structural reforms—and that training and provision of IT and other office equipment are rarely undertaken unless they support a larger structural reform.