Solomon Islands- Domestic Maritime Project

Solomon Islands- Domestic Maritime Project, ADB

Kyrgyz - Investment Climate

Kyrgyz Republic: Preparing the Investment Climate Improvement Program

SOEs Performance in Indonesia

-Indonesia: State-Owned Enterprise Governance and Privatization Program

History Podcasts

THE GREAT REFORM ACT

“We must get the suffrage, we must get votes, that we may send the men to Parliament who will do our work for us; …and we must have the country divided so that the little kings of the counties can't do as they like, but must be shaken up in one bag with us.”

So declares a working class reformist in George Eliot’s novel Felix Holt: the Radical. It is set in 1832, the year of the so-called “Great Reform Act” which extended the vote and gave industrial cities such as Manchester and Birmingham political representation for the first time. The Act is often described as a landmark moment in British political history.

But to what extent was Britain’s political system transformed by the Great Reform Act? What were the causes of reform in the first place and was the Act designed to encourage democracy in Britain or to head it off?

Historian Shifflett on Thanksgiving Significance of Jamestown

Crandall Shifflett, the project director of ``Virtual Jamestown,'' an Internet site on the first permanent English settlement in America, talks to Bloomberg's Tom Keene about the creation of Thanksgiving as an American holiday by President Lincoln and the historical significance of Jamestown, Virginia compared with Plymouth, Massachusetts.

State of State Finances

Gov. Jon Corzine of New Jersey found $600 million in cuts this June, only to borrow $3.9 billion for school construction projects, with another bond issue of $750 million for transportation projects underway. Gov. Arnold Schwarzenegger made $5 billion in cuts to fill in the state's $15.2 billion gap but wants to make up the rest by levying a sales-tax hike.

Part of what makes budget cutting so painful is that the main cost drivers, such as pensions and school aid, are often budgetary third rails, wrapped up in court orders and government mandates and guarded by unions. That is what makes the plea for federal assistance so appealing--it's a politically cheap way to avoid the hardest reforms.

-Who's Next In Line For A Bailout?

In the fiscal-political calculation, government survival strategies emerge. Cut some programs but create new ones and call them "economic stimulus." Cut to maxi mize public outcry as a justification for future tax increases. With this crisis, governments are facing a hard budget constraint: There's not much room or political support to increase taxation, municipalities' borrowing capacity is reduced and reserve funds are drying up.

-Crisis may finally force fiscal restraint

Economist Biographies

The Life and Times of Raul Prebisch, 1901-1986
by Edgar J. Dosman

Pre-Budget Report

Alistair Darling interview on Pre-Budget Report 2008

Transition and Public Management assorted

Presidential Management Capacity to Respond to 21st Century Challenges

Governing with Foresight: Institutional Changes to Enhance Fact-Based Decision-Making in the Executive Office of the President

Making Big Plans

Book Recommendation

Backstabbing for Beginners: My Crash Course in International Diplomacy
by Michael Soussan

Although Soussan can be described as a whistle-blower, his own role in all of this was not entirely innocent. Quite early on, Soussan receives a query from a Swiss magistrate puzzled by the fact that he is being asked to set up a contract for a “front” company (that is, one deliberately created to disguise the identity of the person behind the company) to handle one of the oil-for-food transactions: the use of such front companies was illegal under the terms agreed by the UN's Security Council. The Russians are the biggest beneficiaries of the scamming, profiting to the extent of $500m, some of which went directly to then President Putin's chief of staff (for subsequent disbursement to favoured politicians). Surprise, surprise, the UN official assigned to such legal issues is Russian. He tells Soussan that the Swiss magistrate's conscientious inquiry should be ignored - advice that our author goes along with, albeit with theatrically expressed misgivings.

After that, the use of front companies escalates out of all control. Some of the biggest personal beneficiaries turn out to be French officials attached to that nation's foreign ministry - which may help in retrospect to explain France's wholehearted sabotaging of Bush and Blair's attempt to gain UN support for the removal of Saddam by military means: not only would a switch from the sanctions policy put an end to the French profits from it, but if Saddam's ministries ever did fall to the Americans there might be some extremely embarrassing documents to be found in them.

Two Models of Government

The Vending Machine Model of Government. . . “Much of the government continues to operate within the vending –machine model. Government still calculates and distributes monthly Social Security payments. It collects taxes and audits returns. It picks up garbage and mows parkland grass. It maintains national historic sites and runs mass transit. The vending-machine model is the great governance legacy of the nineteenth-century Progressives, and it tends to work reasonably well for programs that produce relatively routine services within hierarchies. [Problems like] Katrina , however, represent the new generation of problems. . . . They need instead a leveraged government across complex networks: government leaders who can effectively align public, private, nonprofit, American, and global players across the mess boundaries of action.”

The Collaborative Model of Government. . . . The new tools of governance “embody an approach very different from the traditional vending-machine model, in which government seeks to design a machine by which it produces government services itself. There lies the critical problem: government’s ability to work effectively and to hold its agency accountable depends on its ability to leverage the way these other actors employ tools on its behalf. The right combination of effectiveness and accountability, in turn, requires great subtlety and skill. It also needs an approach to governance that relies on leverage instead of command, on building incentives instead of fine-tuning the vending machine.”

“The system’s enormous difficulty in solving these problems has created the two great governance problems of the day: One is how to manage traditional services in a reliable and efficient way. The other is how to govern the increasingly complex array of Mildred- and Katrina-style policies. The puzzle is how to put the vending-machine and leveraged-governance approaches side by side – to assign the right program to the right approach, to ensure that each works well, and to prevent one from interfering with the other. . . . The government that Mildred and Katrina require is not one that sweeps away the old and replaces it with the new but one that governs through two interconnected systems: one for routine policies managed through hierarchies, the other for non-routine problems governed through networks.”

-The Next Government: Donald Kettl

Quote of the Day

“It’s a lot easier to correct the errors of overreaction than the errors of underreaction,”- Summers

“We don’t intend to stumble into the next administration,” Obama

“In these challenging times, when we are facing both rising deficits and a sinking economy, budget reform is not an option,” Mr. Obama said. “It’s a necessity.”...

“I don’t think that there’s any question that we have a mandate to move the country in a new direction and not continue the same old practices that have gotten us into the fix that we’re in,” Mr. Obama said.

“But I won 53 percent of the vote. That means 46 or 47 percent of the country voted for John McCain,” he added. “It’s important, as I said on election night, that we enter into the new administration with a sense of humility and a recognition that wisdom is not the monopoly of any one party.”...

He did not offer any other specific targets, and by itself, correcting the problem with the farm program would make an undetectable dent in the government’s soaring deficits. After the financial recovery is under way, Mr. Obama said, the chase after wasteful spending will begin in earnest.

“Just because a program, a special interest tax break or corporate subsidy is hidden in this year’s budget does not mean that it will survive the next,” he said. “The old ways of Washington simply can’t meet the challenges of today and tomorrow.”

-Obama Vows to Look for Budget Savings to Help Finance Recovery Plan

Related;

Obama Plans to Name Volcker as Head of New Economic Panel

Obama to name board of economic advisers

Analysts praise choice of Orszag and Nabors

Headline of the Day

Bush Congratulates Krugman

The Free Market and Morality

Tyler Cowen on Big Think

Quote of the Day

But if we’re going to make the investments we need, we must also be willing to shed the spending we don’t. In these challenging times, when we are facing both rising deficits and a sinking economy, budget reform is not an option. It is an imperative. We cannot sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness, or exist solely because of the power of a politician, lobbyist, or interest group. We simply cannot afford it.

This isn’t about big government or small government. It’s about building a smarter government that focuses on what works. That is why I will ask my team to think anew and act anew to meet our new challenges. We will go through our federal budget -- page by page, line by line -- eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way.

-Remarks of President-elect Barack Obama

The Committee to Save the World is back

Like Tim, Larry Summers also brings a singular combination of skill, intellect, and experience to the role he will play in our Administration.

As Under Secretary, Deputy Secretary, and then Secretary of the Treasury, Larry helped guide us through several major international financial crises -- and was a central architect of the policies that led to the longest economic expansion in American history, with record surpluses, rising family incomes and more than 20 million new jobs. He also championed a range of measures -- from tax credits to enhanced lending programs to consumer financial protections -- that greatly benefitted middle income families.

As a thought leader, Larry has urged us to confront the problems of income inequality and the middle class squeeze, consistently arguing that the key to a strong economy is a strong and growing middle class. This idea is the core of my own economic philosophy and will be the foundation for all of my economic policies.

And as one of the great economic minds of our time, Larry has earned a global reputation for being able to cut to the heart of the most complex and novel policy challenges. With respect to both our current financial crisis, and other pressing economic issues of our time, his thinking, writing and speaking have set the terms of the debate. I am glad he will be by my side, playing the critical role of coordinating my Administration's economic policy in the White House -- and I will rely heavily on his advice as we navigate the uncharted waters of this economic crisis.

Assorted

Time for a change at the Fed

Dueling outlooks

My Understanding of TIPS

Competitive Sourcing Continues to Fail


Inflation Should Be Just Around the Corner

But let us be honest. Attempting to increase inflation may not work, particularly if private-sector spending does not respond. The policy response that is in the works is likely to be massive. But what we have already seen over the past 12 months is unprecedented and, to date, not very effective.

So what do markets think? Last week they weren't sure. At the close on Friday, inflation-linked bonds priced in only 0.2 percent average inflation for the next ten years; this sounds like a deflationary spiral. However, the world's oldest inflation hedge, gold, rose sharply, suggesting that some investors think we will soon be successfully inflating. Let's hope the gold market is right.

Balance sheets and income statements: breaking the downward spiral

Addressing the Economic Crisis while Renewing Our Commitment to Fight Climate Change

A good decision

Sanjay Pradhan to head World Bank Institute;

“Today policymakers around the world want to know what has worked elsewhere, and they want to connect with practitioners in other parts of the world. They want just-in-time global knowledge that can be customized for local conditions. The World Bank Institute can serve as a premier global platform that connects practitioners with cutting-edge development knowledge.” Mr. Pradhan said. “By supporting dynamic capacity development that inspires, informs and catalyzes innovative reforms across countries, the World Bank Institute can play a very helpful role in improving development outcomes.”

All the Public Finance you need

Ministry of Silly Walks

Book recommendations

Bubbles in Credit and Currency: How Hot Markets Cool Down
by Brendan Brown

The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy
by George Cooper

India's Financial Markets: An Insider's Guide to How the Markets Work (Elsevier and IIT Stuart Center for Financial Markets Press)
by Ajay Shah , Susan Thomas , Michael Gorham

Podcasts

China and Financial Reform
Howard Davies in conversation with Professor Danny Quah

MOODY and POOR: The Rating Agencies and the Subprime Fiasco

The Food Crisis. Hunger Turns to Anger. A Priority of the United Nations?

The Financial Meltdown and the Future of American Politics
Paul Krugman, 2008 Nobel Economist and Professor of Economics and International Affairs, Woodrow Wilson School of Public and International Affairs at Princeton University


The Global Financial Crisis
Will Hutton and Martin Wolf in conversation with Professor David Held

Bubble economy of Nebaj: Micro-Credit experience in Western Guatemalan Highlands. What it tells us
Recently the Ixil Mayas of Guatemala have experienced two new strategies for climbing out of poverty. The first, conceived by aid consultants, is to lend them money so that they can become entrepreneurs. The second, conceived by the Ixils, is to borrow $5,000 each to smuggle themselves into the United States. For Ixils intent on working in the U.S., microcredits and other lending institutions have been an obvious place to borrow the money. For other Ixils who have borrowed money from institutions, the highest possible rate of return is to turn around and loan the money to Ixil migrants at 10% per month. Since Ixils in the U.S. have few defenses against unscrupulous employers, many are unable to make enough money to pay the debts and Nebaj lending institutions face many defaults.
David Stoll is Associate Professor of Anthropology at Middlebury College. He has been studying religion and politics in Latin America since the 1970s. He is the author of Fishers of Men or Founders of Empire? The Wycliffe Bible Translators in Latin America, Is Latin America Turning Protestant and Rigoberta Mencha and the Story of All Poor Guatemalans.

Hot, Flat and Crowded

Regional and National Financial Crises: Roots, Results and Responses

Wealth creation in the developing world: Is Africa a lost cause?

Origins of the Financial Mess- Alan Blinder

Tajikistan- invaded by consultants?

This assignment is part of the Public Sector Reform Project (PSRP), funded by the International Development Association's (IDA) grant. The aim of the project is to implement key aspects of the 2006 Government's Public Administration Reform Strategy (PARS). The Executive Office of the President of the Republic of Tajikistan (EOP) intends to apply part of the grant proceeds for consulting services to conduct Vertical Functional Reviews of seven Ministries.

The PAR Strategy envisages streamlining through functional reviews functions and structures of the central government, local state authorities and local self-governance. The functional reviews shall develop recommendations for improved allocation of functions and competences for effective policy implementation and effective delivery and accessibility of public services.

- Vertical Functional Reviews of Seven Ministries

Related;
Developing Methods and Procedures for Performance Appraisal of Civil Servants

Development of the Public Financial Management Strategy

The objective of the assignment is to assist the government of Tajikistan, in particular the Ministry of Finance to (1) improve Budget Classification and Chart of Accounts in compliance with the international standards; (2) conduct functional reviews of the public financial system, including the analysis of gaps and issues in the existing systems and proposed changes to business process; and (3) develop a Public Financial Management Strategy and an action plan that will provide a basis for modernization of public financial management in Tajikistan.

Public Sector Reform TA

Conduction of a horizontal functional review of state power bodies of the Republic of Tajikistan

GAO's Performance

U.S. Government Accountability Office: Performance and Accountability Report Fiscal Year 2008

India to create a Debt Management Office

Report of the Internal Working Group on Debt Management

This n That

US global dominance 'set to wane'

Price Fishback: What Do the New Deal and World War II Tell Us About the Prospects for a Stimulus Package?

Lebanon: Letter of Intent and Technical Memorandum of Understanding

Should We Be Worried About Deflation?

Eric Rauchway Translates John Maynard Keynes

Cowen on Great Depression

Thoughts on reading the October CPI

International finance and economic growth

microfoundations of institutional theory

How to be an expert in PFM?

The assignment is for an ex-post evaluation of the Institutional Strengthening of the Ministry of Finance of Sierra Leone. This project was intended to provide capacity support to the Ministry of Finance and Economic Development, given the low capacity at the Ministry at the end of the war. Following the monitoring mission undertaken by the EC, an external mid-term evaluation was carried out at the request of the EC delegation and complying with provisions in the Financing Agreement.

- The Expert should have a relevant master's degree in Financial Management.

- Public Financial Management experience (10 years) in strategic planning, financial programming, institutional and organisational development and evaluations, project performance measurement.

- Minimum of 10 years experience in developing countries.

- The expert must have previous experience in project evaluation in the Economic sector, preferably with regard to EC funded projects. S/he must be familiar with the logframe and with evaluation of institutional strengthening programmes.

Related;
Ministry of Finance/UNDP Launch joint programme support to MTEF

No time for a learning curve

Now, his reported selections for two of the major positions in his cabinet — Senator Hillary Rodham Clinton as secretary of state and Timothy F. Geithner as secretary of the Treasury — suggest that Mr. Obama is planning to govern from the center-right of his party, surrounding himself with pragmatists rather than ideologues.

The choices are as revealing of the new president as they are of his appointees — and suggest that, from its first days, an Obama White House will brim with big personalities and far more spirited debate than occurred among the largely like-minded advisers who populated President Bush’s first term.

But the names racing through the ether in Washington about the choices to follow also suggest that Mr. Obama continues to place a premium on deep experience. He is widely reported to be considering asking Mr. Bush’s defense secretary, Robert M. Gates, to stay on for a year; and he is thinking about Gen. James L. Jones, the former NATO commander and Marine Corps commandant, for national security adviser, and placing Lawrence H. Summers, the former Treasury secretary whom Mr. Obama considered putting back in his old post, inside the White House as a senior economic adviser.

“This is the violin model: Hold power with the left hand, and play the music with your right,” David J. Rothkopf, a former Clinton official who wrote a history of the National Security Council, said on Friday, as news of Mrs. Clinton’s and Mr. Geithner’s appointments leaked. “It’s teaching us something about Obama: while he wants to bring new ideas to the game, he is working from the center space of American foreign policy.”

The reason, several of Mr. Obama’s transition team members say, is that they believe that the new administration will have no time for a learning curve. With the country facing a deep recession or worse, global market turmoil, chaos in Pakistan and a worsening war in Afghanistan, “there’s going to be no time for experimentation,” a member of the Obama foreign policy team said.

That explains Mr. Obama’s first selection: Rahm Emanuel, another centrist Democrat and former member of the Clinton White House, as his chief of staff.

In some ways, the choices made so far are reminiscent of the way the last senator to be elected president, John F. Kennedy, chose a cabinet. As president-elect, Kennedy soon picked three top officials significantly more conservative than he was: Dean Rusk as secretary of state, Robert S. McNamara as secretary of defense and C. Douglas Dillon, a Republican, as secretary of the Treasury. They helped him navigate the Cuban missile crisis, but also got him bogged down in Vietnam.

-Obama Tilts to Center, Inviting a Clash of Ideas

The Dream Team for a President

Brad Delong writes about possible candidates of Obama economic team;

-Peter Orszag: OMB Director-nominee-designate-leekee. The Director of the Office of Management and Budget is the guardian of budgetary rationality: Do the government’s tax and spending plans add up? Do they make sense? Are the right departments being given the money then need—and are they spending it the right way? Are the entitlement programs the right size and targeted the right way? The Bush II administration was marked by a series of extraordinarily weak OMB Directors who essentially did not try to do their jobs—and the country is much the worse for it. The Bush I and Reagan administrations were marked by very strong but devious OMB Directors who did not work and play well with others—and so in the end failed to do their jobs. Peter Orszag is either the best or one of a very small group of people who are the ones best qualified for this job.

-Federal Reserve Chair-nominee-designate-leekee. Ben Bernanke’s term as Fed chair is up in two years. Ben might not want to continue—it’s been a rough ride. And Ben will probably be damaged goods: too many people who think that he gave away too much public money to feckless financiers and too many other people who think that he has not done enough to protect and stabilize the financial system. I think Ben has done a good job—certainly a much better job than I would have done in his shoes. But I think the odds are that a fresh start would be good, and for policy continuity it would be a good idea to designate Ben Bernanke’s probable successor now.

-Treasury Secretary-nominee-designate-leekee. There are two ways to go with Secretary of the Treasury: First, to choose somebody with as much gravitas as possible—a Warren Buffett or a Paul Volcker—and give them as a deputy somebody extremely capable but perhaps not yet of sufficient financial stature to be the ideal choice for the top job. (My favorite candidate for Deputy Secretary if the Obama-Biden administration goes down this road is Laura Tyson.) Second, to sacrifice some gravitas and to instead choose the smartest and most energetic person with sufficient knowledge of finance. (This is my preferred option: and my preferred candidate is Larry Summers.) As far as the Treasury is concerned, the bench is thinner than I had first thought: you need somebody who (a) knows finance, and (b) hasn’t been making a fortune over the past five years by benefiting from the creation of the mess that the government must now clean up.

Related;
Profiles of Geithner
Ministry of all the talents

How much spending is enough on strengthening public expenditure management?

The People's Republic of Bangladesh intends to apply for a grant of around US$ 95 million from a Multi-donor Trust Fund (MDTF) administered by the International Development Association (IDA) and with the participation of five development partners, Department for International Development (DFID), European Commission (EC), Canadian International Development Agency (CIDA), Danish International Development Agency (DANIDA) and the Netherlands, toward the cost of Strengthening Public Expenditure Management Program (SPEMP) and it intends to apply part of the proceeds to payment for goods, works and services to be procured under this program.

- Strengthening Public Expenditure Management Program in Bangladesh

Recently from the Fund

Fundamentals at Odds? The U.S. Current Account Deficit and The Dollar;

Summary: The real effective exchange rate of the dollar is close to its minimum level for the past 4decades (as of September 2008). At the same time, however, the U.S. trade and current account deficits remain large and, absent a significant correction in coming years, wouldcontribute to a further accumulation of U.S. external liabilities. The paper discusses the tension between these two aspects of the dollar assessment, and what factors can help reconcile them. It focuses in particular on the terms of trade, adjustment lags, and measurement issues related to both the real effective exchange rate and the current account balance.

Is it (Still) Mostly Fiscal? Determinants of Sovereign Spreads in Emerging Markets

Summary: Using a panel of 30 emerging market economies from 1997 to 2007, this paper investigates the determinants of country risk premiums as measured by sovereign bond spreads. Unlike previous studies, the results indicate that both fiscal and political factors matter for credit risk in emerging markets. Lower levels of political risk are associated with tighter spreads, while efforts at fiscal consolidation narrow credit spreads, especially in countries that experienced prior defaults. The composition of fiscal policy matters: spending on public investment contributes to lower spreads as long as the fiscal position remains sustainable and the fiscal deficit does not worsen

Budget reform priorities in Italy

-Deepening budget system reform: For next year's medium-term plan, the realism of the baseline projections should be enhanced, especially for wages and investment, and fiscal targets should reflect agreements with subnational governments. Other critical reforms should aim to reduce rigidities, including overhauling the 1978 budget law, streamlining the body of legislation that impinges on spending programs, increasing the flexibility in the management of civil servants, and further enhancing the transparency of budget documentation. These measures would be supported by making the spending review process permanent and extended to all ministries.

-Pursuing prudent fiscal federalism: Maintaining fiscal discipline will require a transparent, formula-based, system of equalization transfers, a robust and independent regime for monitoring fiscal targets, harmonized accounting, and greater civil service mobility. Regional and local governments should be given more revenue autonomy—in this context, it would be useful to undertake a comprehensive review of property taxation, which internationally is an important local government revenue source. The move to benchmark costing needs to be coordinated with budget system reforms. Should the fiscal federalism reform seem set to result in higher spending or tax burden, bolder cost-saving reforms should be considered, including streamlining the structure of subnational governments.

-Better managing public sector assets: The government is appropriately seeking to improve management of public assets, but care should be taken to ensure that the potential proceeds from sales of such assets do not delay consolidation. Faster progress needs to be made on divestment and minimizing the drain on the public purse, with a focus on enhancing competition. These objectives would be helped by ensuring full transparency of any bank-support operations and government guarantees, and producing timely consolidated accounts for the nonfinancial public sector.

-Italy: 2008 Article IV Consultation-Concluding Statement of the Mission

Letter of Intents

Seychelles

Armenia

Togo

Hungary

Quote of the Day

``Make no mistake: this is the greatest economic challenge of our times,'' Obama said.

IMF supports Seychelles

• A fundamental liberalization of the exchange regime, involving the elimination of all exchange restrictions and a float of the rupee was introduced in early November;

• A significant and sustained tightening of fiscal policy backed by a reduction in public employment and the replacement of indirect subsidies by a targeted social safety net;

• A reform of the monetary policy framework to focus on liquidity management based on indirect instruments; and

• A reduction in the role of the state in the economy to boost private sector development, through further privatization, enhanced fiscal governance, and a review of the tax regime.

- IMF Executive Board Approves US$26 Million Stand-By Arrangement for Seychelles

Korea Fact of the Day

Korean household debt has reached 148 percent of disposable income, high by emerging market standards.

The debt of the Korean households reached 82 percent of GDP in 2007

Winning in a World Transformed by Social Technologies

Groundswell: Winning in a World Transformed by Social Technologies

Prioritization of Expenditures in Tanzania

Some of the institutional weaknesses for creating fiscal space;

budget classification: the country’s budget classification, reporting and accounting systems do not allow for the ready identification and monitoring of public infrastructure expenditure—part of which is either conducted outside of the central government or not systematically recorded in the government’s accounts;

project selection: a 2006 audit of procurement practices of 20 public entities found significant weaknesses, with compliance only at 39 percent of procurement regulations. Several recent high profile scandals have also highlighted the weaknesses in this area, in particular regarding the lack of transparency in the bidding process and problems enforcing large government contracts;

budget execution: in 2006-07 only about 50 percent of central and local governments’ development expenditure was executed. While the creation of the Tanzania National Roads Authority has helped to boost budget execution rates for major trunk road projects from around 50 percent in 2002-03 to over 75 percent in 2006-07, execution rates for regional and local road rehabilitation projects remain around 40 percent (Ministry of Infrastructure Development, 2007); and

regulatory frameworks: the AICD estimates that hidden fiscal costs resulting from underpricing and other inefficiencies in the power sector amounted to nearly 2.5 percent of GDP between 2001 and 2006 (Briceño, Smits, and Foster 2008).

If infrastructure investment is a key development priority, governments should look to ensure that it is given adequate emphasis in their expenditure planning and budgeting procedures. Over the past decade or so, a number of governments in both developed and developing countries looking to alter the intersectoral allocation and the impact of public expenditure have made effective use of two public financial management tools:

expenditure reviews: comprehensive program reviews designed to improve the efficiency of public expenditure and to create fiscal space on the expenditure side of the budget have become a regular feature of the budget process in countries such Canada, Chile, France, the Netherlands, South Korea and the United Kingdom. Box 1 discusses the UK experience with using expenditure reviews to put greater emphasis on public investment within their resource allocation process over the past decade;

-medium-term expenditure frameworks (MTEFs) which enable governments to “lock in” savings identified in lower productivity/priority sectors and reallocate them to higher productivity/priority sectors over a period of years. MTEFs are a now a common feature of budgeting systems in Africa and a number of countries have made effective use of them to alter the sectoral allocation of expenditure over a number of years. For example, in Uganda, the government’s most recent National Budget Framework Paper envisages a real reduction in expenditure on security, justice and governance from 39 percent of the national budget in 2008 to 36 percent in 2011 to allow for a scaling up of pro-poor expenditure on rural development, energy, road infrastructure and human development over the next 3 years.

Fiscal Space and Infrastructure

Creating Sustainable Fiscal Space for Infrastructure: The Case of Tanzania

Summary: A common dilemma facing governments around the world is how to meet the sizeable fiscal costs of providing and maintaining infrastructure networks. Over the past decade, developed and developing countries have looked to fiscal rules, budgetary reforms, tax policy and administration measures, public-private partnerships and other innovative financial instruments to raise additional finance for infrastructure investment. This paper looks at the range of options for raising the financing to meet Tanzania's infrastructure needs. It begins with a brief survey of the evidence on the relationship between infrastructure, public investment, and economic growth, and then goes on to consider the case for additional infrastructure investment in Tanzania. The second part of the paper looks at five broad options for mobilizing additional resources to meet Tanzania's infrastructure needs: (i) direct private investment and PPPs, (ii) expenditure reprioritization and efficiency, (iii) domestic revenue mobilization, (iv) external grants and concessional financing, and (v) sovereign borrowing on domestic or international credit markets. The paper concludes with some general recommendations on what combination of the above approaches might be suitable for Tanzania.

The Vetting Process

The questionnaire includes 63 requests for personal and professional records, some covering applicants’ spouses and grown children as well, that are forcing job-seekers to rummage from basements to attics, in shoe boxes, diaries and computer archives to document both their achievements and missteps.

Only the smallest details are excluded; traffic tickets carrying fines of less than $50 need not be reported, the application says. Applicants are asked whether they or anyone in their family owns a gun. They must include any e-mail that might embarrass the president-elect, along with any blog posts and links to their Facebook pages.

The application also asks applicants to “please list all aliases or ‘handles’ you have used to communicate on the Internet.”

The vetting process for executive branch jobs has been onerous for decades, with each incoming administration erecting new barriers in an effort to avoid the mistakes of the past, or the controversies of the present. It is typically updated to reflect technological change (there was no Facebook the last time a new president came to town).

But Mr. Obama has elevated the vetting even beyond what might have been expected, especially when it comes to applicants’ family members, in a reflection of his campaign rhetoric against lobbying and the back-scratching, self-serving ways of Washington.

“President-elect Obama made a commitment to change the way Washington does business, and the vetting process exemplifies that,” said Stephanie Cutter, chief spokeswoman for the Obama transition office.

-For a Washington Job, Be Prepared to Tell All

Here's the questionaire

Europe progresses towards a free market

Starting in July, when the changes come into force, standards for 26 products, ranging from peas to plums, will disappear altogether. European shoppers will then be able to chose their produce whatever its appearance.

For 10 other types of fruit and vegetables, including apples, citrus fruit, peaches, pears, strawberries and tomatoes, shape standards will remain. However, items that do not meet European norms will still be allowed onto the market providing they are marked as being sub-standard or intended for cooking or processing.

“This marks a new dawn for the curvy cucumber and the knobbly carrot,” said Mariann Fischer Boel, European Commissioner for Agriculture, who argued that regulations were better left to market operators.

-Europe Welcomes Abnormal Veggies

Crazy ideas from your law makers

“We have heard reports that there are people trying to scalp inaugural tickets for more than $40,000 each,” Mrs. Feinstein said in a statement. “This is unconscionable and must not be allowed.”
-Senator Seeks Law Against Scalping Inauguration Tickets

A must read for the Transition team

Economists’ Advice for the President-Elect

Photo of the Day

The “fig leaf” pose (hands coupled and held in front) as exhibited here by Joe Biden, Larry Summers, and others; the “toy soldier” pose (hands stiffly at sides) as exhibited by William Donaldson (far left); what looks to be the “hands-in-pocket” pose, by Paul Volcker, to the immediate right of the podium; and, although you can’t see it in this photo (I saw it in another photo of the event that I can no longer locate), the “firing squad” pose (hands behind back) exhibited by Bob Rubin, who in this photo is mostly hidden behind Biden.

But the real outlier here is Rahm Emanuel, hands on hips, eyes scanning the room, looking ready to intervene in any way necessary.

More on the Transition

Where Should the President-elect Begin?

West also moderated a discussion with former White House speech writer Terry Edmonds and Brookings senior fellow emeritus Stephen Hess, a longtime student of presidential transitions and author of the new transition workbook, What Do We Do Now? (Brookings Institution Press, 2008). Two former White House chiefs of staff, Ken Duberstein and Leon Panetta, offered their thoughts on the election results and the policy environment facing the president-elect. Brookings President Strobe Talbott provided introductory remarks.

Memo to the President: Lead With Confidence

Grading the Election Theories

The Real Mandate Is to Bridge the Wealth Gap

What Obama Could Learn From Reagan

Assorted on transition

Guess the author of this book

The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen

Related;

This is confirmed by a brief search on Amazon, which yielded the following books - most published within the last ten years. “The End of Poverty” by Jeff Sachs, “The End of History” by Francis Fukuyama, “The End of Faith” by Sam Harris, “The End of Food” and “The End of Oil”, both by Paul Roberts, “The End of Lawyers” by Richard Susskind, “The End of Fashion” by Teri Agins, “The End of Days” by Zacahria Sitkin, “The End of Human Rights” by Costas Douzinkas, two books called “The End of Globalisation” - one by Harold James and one by Alan Rugman, “The End of Nature” by Bill McKibben, “The End of Work” by Jeremy Rifkin, “The End of Medicine” by Andy Kessler, “The End of Memory” by Miroslav Wolff, “The End of Science” by John Horgan and “The End of the Poem” by Paul Muldoon.

These books share more than just a cliched title. They are also all clearly implausible. Look through that list and ask yourself is it really possible that any of the above will actually come to an end?

Auditing a Dictator, and what you might find

From world's newest edition to democracy- the Maldives- an audit report of its president;

Between 2002 and 2005, at different times a total of Rf 7.2 million ($US 565,000) from the President’s Office budget and fund accounts were handed in cash to two senior officers of the Defence Ministry. Rf 6.3 million ($US 494,000) of this money was given for 'a special government purpose', and the remaining Rf 893,075 ($US 70,000) was given for the establishment and management of a student association in Sri Lanka.

There is no other written record of this money in the President’s Office. There is no way of determining what the required outcome was to be, and if it achieved that outcome. Therefore there is no benefit for the public from Rf 7.2 million given to the two officers of the Defence Ministry.

Quote of the Day

...even if the laws of arithmetic are ignored during campaigns, they provide a real constraint when making actual policy

-Mankiw

Heard about the Kiwi Bureacrats

A correspondent from The Telegraph writes;

The scene of this madness was the Takaka post office which is where ‘rural' households like ours must go to pick up their mail from a bank of rusting old Post Office Boxes.

Recently I concluded some additional business with my landlord who asked me to put a copy of our new rental contract into his PO Box so that he could collect it next time he was passing through town.

So in I pop to the post office to ask the man behind the counter if he would put the envelope into Box No ‘xxx' when they were next being stuffed with the morning mail - the box in question was no more than ten paces from where he was standing -.

He shook his head with the helpless solemnity.

"Sorry, mate. You'll need a stamp."

I pointed at the address on the envelope.

"It's just going in one of the boxes."

"Sorry, mate. You'll need a stamp. That'll be a dollar-fifty."

I looked at him, searching for the hint of a smile. Nothing.

"You've got to be joking, right? That ‘delivery' is ten paces. That's fifteen cents a metre..."

"Sorry, Mate. What kind of business do you think we're running. Dollar-fifty."

I was so shocked, I paid the man his money. Even as I type this, I can't quite understand why.

As if it's any consolation, he explained that my freshly stamped letter will now travel ‘over the hill' to the Nelson sorting office, where it will be sorted and returned to him behind the Takaka post office counter.

Only then, two days and several hundred kilometers later, will the man behind the post office counter shuffle the required ten paces over to the bank of PO Boxes and put my letter in the relevant PO Box.

A useful course for budget professionals

A workshop on productivity and efficiency measurement will be taught at IGIDR, Bombay, from 2 to 4 January, 2009

Data Envelopment Analysis: The Methodological Foundations

Session 1: Measuring Technical Efficiency – Output and Input-oriented Approaches

Session 2: Constant and Variable Returns to Scale: Measuring Scale Efficiency

Session 3: Efficiency Measurement using Market Prices: Cost and Profit Efficiencies

Session 4: Measuring Productivity Change over Time: The Malmquist Productivity Index

Limitations of Growth Diagnostics

Rethinking the Growth Diagnostics Approach: Questions from the Practitioners

Assorted on transition

Official Transition Blog- Change.gov

Presidential Transition Resources Website

GAO transition site

IBM- Presidential Transition site

Council for Excellence in Government transition site

A Survivor's Guide for Presidential Nominees

GSA's Role in Presidential Transition

Lost in Transition

Getting It Done: A Guide for Government Executives

Memo to President Elect -Darrell West, The Brookings Institution

In the weeks ahead, you face several important tasks. You must:

* unify the country
* staff your administration
* identify your priorities
* address immediate and crucial policy challenges, and
* fix our political system.

All these imperatives require leadership, coalition-building, implementation and communications.

Memo to the POTUS-elect from Mankiw

Pay attention to the government’s budget constraint. The nation faces a long-term imbalance between government spending and tax revenue. The fundamental problem is that the federal government has promised the elderly more benefits than the tax system can support. This fiscal imbalance will become acute as more baby boomers retire and start collecting Social Security and Medicare.

Yet during the campaign, you promised that you would cut taxes for 95 percent of Americans, that you would vastly expand health insurance coverage, and that you would never cut Social Security benefits or raise the retirement age. You will almost surely have to renege on some of these promises. As your economic team will often remind you, even if the laws of arithmetic are ignored during campaigns, they provide a real constraint when making actual policy.

WDR 2009

World Development Report 2009

Related;
The Nobel Prize in Economics and Africa

In thinking about their implications for Africa, I was struck by how many of Paul’s ideas were brought to life in this year’s (forthcoming) World Development Report, Reshaping Economic Geography. Although the report will be published in November, earlier drafts show how Africa, especially those parts that consist of many small countries, could gain by concentrating production in certain locations, while ensuring goods and people can move easily among locations.

Gay Marriage and Budget Fact of the Day

In 2004, the Congressional Budget Office, the nonpartisan research arm of the United States Congress, put together a study on the economic effects of legalizing same-sex marriage in all 50 states and on the federal level. It predicted that this legal change would improve the federal budget’s bottom line by $1 billion per year over the next 10 years thanks to additional revenue through the marriage penalty and estate taxes.

- Gay Marriage Economics

Podcasts

Aristotle's Politics

What makes a good society? How should it be governed and who should be allowed to live in it? These are old questions but they don’t go away. Thomas Hobbes, Jean-Jacques Rousseau, Thomas Aquinas and Niccolo Machiavelli, to name but a few, have all asked them and come up with wildly differing answers.

But they do have one thing in common and that is a book by the Greek philosopher Aristotle. It is called Politics – a two and a half thousand year old collection of notes that have cast a very long shadow in political philosophy. In the Politics Aristotle tried to establish why human beings live together and how best they should do it.

The Financial Panic

How Psychology Affects Our Credit Card Payments

Digital Forensics

Nassim Taleb Says Portfolio Theory is `Hogwash'

Frydman Says Rating System Should Be Regulated
Roman Frydman, co-author of ``Imperfect Knowledge Economics: Exchange Rates and Risk,'' talks with Bloomberg's Tom Keene about the financial crisis, the role of rating agencies in asset bubbles and economic modeling

Dean Baker Likes Sheila Bair as Next Treasury Secretary

Levitt Sees Possibility of Volcker, Geithner as Treasury Head

Nomura's Newton Sees Geithner, Summers in Obama Administration

Encima's Malpass Says Tax Changes Possible Under Obama

Metals, money and madness

NATO: a history

Future mind: are computers radically changing the way we think?

The secret life of bacteria - small, smart and thoughtful!

Dementia and antipsychotics: medication or management?

Karl Popper and the logic of the market

Why Asian philosophy?

Bailouts, capitalism and the financial markets

John Milton: Puritan, Polymath and Poet

Improbable Hope
In his Berlin address last July, Barack Obama talked about partnership and hope. He was enthusiastically received. As the US Presidential election arrives, how much do these themes define Obama's beliefs? Wendy Barnaby explores some of Obama's ideas and takes the conversation further to other examples where hope and partnership might be crucial in the lives of communities and individuals.

New English

Robert Silvers, editor of The New York Review of Books

Inside the minds of murderers and sex offenders

New York Schools Chancellor: Joel Klein

War in the Indian Ocean

Health care in the next U.S. administration

The skin and our immune system

Arithmetic for adults

Science and technology in 1859

Richard Epstein on Happiness, Inequality, and Envy

Discuss and Debate

"We don't need more consumption," Joseph Stiglitz, an economics professor at Columbia University and an advisor to the campaign, said recently on financial news channel CNBC. "Infrastructure is where we've starved the economy. This is an opportunity at the national level to say, 'Here are all the things we should have been doing and now have to do to get our economy to grow."

-Downturn, deficit could hinder Obama's economic plan

Transition link of the Day

From GAO- Transition 2009

Fiscal Retrenching in New York

# The work force will be cut by 3,000 employees, about 600 through layoffs and the remainder through attrition.
# The Police Department’s peak headcount will be reduced by 1,000, and the Police Academy class planned for January 2009 will be canceled. A July 2009 Police Academy class, which will graduate 2,000 new officers, is still planned.
# Nighttime shifts will be eliminated at five engine companies in firehouses where ladder companies will remain fully staffed. The firefighting training academy for probationary firefighters will be reduced from 23 weeks to 18 weeks.
# The city’s contribution to the Department of Education budget will be reduced by $181 million this year and $385 million next year. The cuts include the elimination of 475 positions.
# The mayor’s office will be reduced by 10 percent through attrition.
# The city will save $20 million on city vehicles through various administrative means.
# The city’s Administration for Children’s Services will reduce the number of child protective supervisor positions by 127.
# Subsidies to libraries and cultural institutions will be cut by 2.5 percent this year and 5 percent next year — amounting to an $11 million reduction in city funds for cultural institutions and the reduction of average library hours from 6 days to 5.5 days per week.

-Bloomberg Announces Layoffs and Tax Increase

Food Prices

The FAO Food Price Index (FFPI) dropped another 6 percent in September, falling to a nine-month low of 188 points. The sharp decline in the index reflected the rapid decrease in international prices of all major food and feed commodities (composing the FFPI).

Reading for the weekend

Doing Growth Diagnostics in Practice: A 'Mindbook'
Ricardo Hausmann, Bailey Klinger, Rodrigo Wagner

Assorted

A conversation with Paul Krugman 2008 Nobel Prize Winner, Economics

If we only had a financial system...

Kemal Dervis Discusses the Needs of Emerging Markets

A Panel discussion on the Crisis in Financial Markets—Impacts on Emerging Markets and Future Consequences

MOODY and POOR: The Rating Agencies and the Subprime Fiasco

The Global Financial Crisis

Economic Policy in the Next Administration

Saving Seychelles

To put the economy on a strong, sustainable growth path for the medium term, it will be essential to broaden and deepen reform efforts aimed at restoring macroeconomic balance and improving competitiveness. Firm fiscal consolidation, a transparent debt strategy, exchange regime liberalization, and more structural reforms are needed to reduce high public debt to a sustainable level, restrain demand pressure, and support private sector growth. These policies, in combination, will reduce the vulnerability of the economy and contribute to long-run improvements in the living standards of all Seychellois. Success will depend in large part on providing momentum and credibility to the reform efforts and, in this regard, rigorous implementation of the 2008 budget will be essential.

"Seychelles is in the midst of an acute balance of payments and public debt crisis, which jeopardizes its living standards and economic development. The authorities have requested Fund assistance in support of a comprehensive reform strategy.

"The authorities' reform program is wide-ranging and bold, and I welcome the steps announced earlier today by President Michel and the related legislative changes adopted by Parliament. These include fundamental liberalization of the country's exchange regime that will enable a floating of the rupee, significant and sustained fiscal tightening, and reform of monetary policies to promote liquidity management based on indirect instruments. At the same time, important steps were also taken to strengthen a targeted social safety net. These reforms merit the strong support of the international community.

The country's president doesn't sound very confident;

Government has decided to float the rupee as from 1st November. This means that the value of the rupee will be determined by the market in relation to other major currencies and on demand. All commodities and all services will be paid for in rupees. We are confident that there is enough foreign currency entering our economy to be able to undertake this exercise in a sustainable manner. We have also been working with institutions to ensure that we have sufficient reserves in the Central Bank to make a float possible. In addition, we have had discussions with individuals and companies that have large amounts of money in the banking system to urge them not to exchange all their money in one go but to do it gradually.

We are removing all legal controls that still exist on the purchase and sale of foreign currency in our country. It will open a number of new business opportunities, including possibilities for more exchange bureaus.

I believe that all Seychellois have confidence in the capacity of our country to attract foreign exchange. We can all see the evidence of foreign exchange circulating in our economy on a daily basis. The new system once implemented will however allow a more equitable distribution of currency throughout the economy. Through the confidence that we show and through our hard work, it is ourselves, the Seychellois people, that will give our currency its value.

Every discussion I have had on this subject - be it with the IMF or with our own private sector - has reflected this confidence that our rupee will be stable. After the floatation, more currency will be entering the banking system. But that does not mean that we should run to the banks; the rate of exchnage depends on demand. Patience will be rewarded with a more favourable rate.

To implement these reforms the Central Bank needs a new direction. I have decided to appoint a young Seychellois currently holding a key post at the IMF to take up this repsonsibility. He will be in post as of Monday.

WEO Update

• Activity in the advanced economies is now expected to contract by ¼ percent on an annual basis in 2009, down ¾ percentage points from the October 2008 WEO projections

• The U.S. economy will suffer, as households respond to depreciating real and financial assets and tightening financial conditions.

• Growth in the euro area will be hard hit by tightening financial conditions and falling confidence.

• In Japan, the support to growth from net exports is expected to decline.

• Financial conditions continue to present serious downside risks

• There is a clear need for additional macroeconomic policy stimulus relative to what has been announced thus far, to support growth and provide a context to restore health to financial sectors. Room to ease monetary policy should be exploited, especially now that inflation concerns have moderated. However, monetary policy may not be enough because monetary easing may be less effective in the face of difficult financial conditions and deleveraging. Also, is some cases room for further easing is limited as policy rates are already close to the zero bound. These are conditions where broad-based fiscal stimulus is likely to be warranted. Fiscal stimulus can be effective if it is well targeted, supported by accommodative monetary policy, and implemented in countries that have fiscal space.

The World we live in

Quote of the Day;

The People order, spur, nudge, encourage, politicians to go out and play with the market. The Politicians do. They fiddle, tweak, castrate, pick wings off, etc….and eventually things go terribly wrong. A catastrophe ensues. The People get very angry. They shout and tell the Politicians to fix the mess. "It's your job to fix this!". The Politicians in turn, like three-year olds charged to put grandmas set of crystal glasses back into the cupboard, go busily about their business, hauling over-sized delicate objects above their heads, struggling to hang on to several heavy and mis-shaped precious items. This is the world we live in.

Politics of Budgeting in New York State

His tough-talking stance has its political advantages, of course. And that point has not been overlooked by Mr. Paterson’s advisers, who have made the economy the centerpiece of his administration. Voters who ordinarily would be wary of his liberal stance on most social issues could be swayed by his swift and stern handling of the budget, they believe.

But budget experts warned that the strategy could backfire if the cutting resulted in New Yorkers’ noticing a decrease in services, or if he came out looking too combative.

Mr. Paterson has, in somewhat scolding tones, called for lawmakers to get tough on spending. In August, he summoned them back to Albany and persuaded them to agree to $427 billion in cuts. In October, he announced he would call them back again, this time to ask for $2 billion in reductions.

“Right now, the governor is popular because he’s saying we have to be responsible,” said Edmund J. McMahon, director of the Empire Center for New York State Policy, a conservative research group. “But when you do the right thing, the public never appreciates it. When you actually cut stuff and interest groups spend millions of dollars portraying you as someone who wants to leave Grandma on a gurney out on the street, that drives down your poll ratings.”

-As the Governor, a Newfound Thriftiness

Related;
Budget problems in American states

Book you might want to pre-order

The Return of Depression Economics and the Crisis of 2008
by Paul Krugman

Recent events from IMF, World Bank

A Debate on Labor Markets in Developing Countries

The Financial Tsunami: Implcations for South Asia

High Oil Prices: Origins and Prospects?

The Shame of Hunger

The Food Crisis: What Happened and What Should Be Done?

Global Turbulences and Slowdown in G7 Growth

The Financial Crisis in Historical Perspective

Turmoil in Global Financial Markets – Prospects & Policies

Climate Change and Disasters - Risk and Policy
William Nordhaus, Freeman Dyson

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