Financial resources expected from development partners (grant or loan funding) have already been factored in the macro-fiscal framework used for working out spending limits and do not therefore constitute an additional source of funds available for spending.
Fiscal policy is also geared to addressing debt sustainability concerns. Given Burundi’s debt burden, external financing of the budget should be strictly limited to grants and highly concessional loans.
The ratio of the government wage bill to GDP will decline less than anticipated in the medium term owing to higher payroll in the priority sectors, which are key for achieving progress toward the Millennium Development Goals. The ratio should remain below 11 percent of GDP toward the end of the program in 2011.
To contain the wage bill, the government will continue to draw on the findings of the Public Expenditure Management and Financial Accountability Review (PEMFAR) prepared jointly by the World Bank and the government of Burundi. In particular, with the census of civil servants having been completed and payroll management transferred to the Ministry of Finance, the government will proceed with the audit of the payroll to ensure that the calculated wages are indeed on a sound legal basis and that there are no abuses. This audit should precede the exercise to harmonize wages. To increase spending in the priority sectors, the government will implement a rationalization plan for nonpriority spending, in accordance with the PFM strategy.
Burundi will seek only concessional external financing or grants. The government will not contract nonconcessional foreign debt and will ensure that all loans contracted have a grant element of at least 50 percent. To make certain that the concessionality threshold is respected, the government will ensure compliance with the provision that the Ministry of Finance has the exclusive right to negotiate and sign external loans.
National Accounts
Serious deficiencies in real sector data handicap analysis and economic management. National accounts are compiled infrequently. Source data on agriculture, the most important activity, is inadequate. The Statistical Office (ISTEEBU) responsible for producing economic statistics and preparing national accounts has weak capacity. Since 1998 Burundi has reported annual national accounts estimates to the Fund with about a three-month lag, which are derived from a macroeconomic projection model maintained by the Ministry of Planning and Reconstruction. Recently, ISTEEBU has developed, with AFRISTAT’s help, a set of provisional national accounts for 2005, the new base year. This is a major effort because the last national accounts data were from 1998.
Principal Aid-Effectiveness Functions in Government
• National planning (National Socio-Economic Development Plan and Public Investment Program)
• Sector Assistance Program Planning
• Local Government Investment Planning
• National Aid Coordination
• Sector Aid Coordination
• Provincial Aid Coordination
• Aid Policy Reform
• Aid Policy Reform Tracking
• Aid Information and Reporting Systems
• Aid Program Evaluation
• Project and Program Design
• Project and Program Implementation
• Project and Program Monitoring
• Project and Program Evaluation
The World Bank today launched a Governance Partnership Facility to help developing countries strengthen governance programs and further the fight against corruption. This new Facility has the support of the governments of the United Kingdom, The Netherlands and Norway...
The Facility will:
* Support the implementation of governance and anticorruption programs in developing countries – particularly in poor and fragile states, such as Afghanistan, Burundi, Cambodia, the Democratic Republic of Congo, and Haiti.
* Fund cutting-edge work, such as innovative partnerships with civil society, to ensure that public money is used effectively.
* Finance learning and knowledge in the area of governance and anticorruption.
The World Bank carries out reviews of its development policy operations on a regular basis with the last retrospective having been concluded in July 2006. The main objective of the 2009 Development Policy Lending Retrospective is to assess the effectiveness of World Bank development policy operations in supporting the design and implementation of a borrower’s medium-term development policy agenda. The retrospective will also present the main features of World Bank DPOs; discuss emerging issues arising from the experience with policy-based lending; and report on recent trends in the design and processing of World Bank DPOs and on progress with the implementation of the good practice principles on conditionality.
The draft concept note outlining the main areas to be covered in the review and the proposed process and approximate timeframe can be downloaded here.
The IMF Stand-By Arrangement is intended to support the economic policies of the Georgian authorities and to help mitigate the adverse economic and financial consequences of the recent conflict.
Q. To what degree do you believe that natural geography and colonialism play a role in development?
Mitch Vidovich
United States
A. There is a lot of very good work which suggests that long-term factors, such as geography and colonialism, do play a role in development. Jeffrey Sachs has made the point about geography most forcefully (being landlocked, or being malaria-prone, places a huge burden on countries). Daron Acemoglu, Simon Johnson and Jim Robinson on the one hand, and Andrei Shleifer and his co-authors on the other hand, have made the point about the long-term impacts of colonialism, although they have emphasized somewhat different channels.
There is also a recent new wave of work using more localized and microeconomic data that confirms the broad pattern these authors found when comparing countries with different experiences. For example, two recent papers exploit malaria eradication campaigns to estimate the impact of malaria on productivity. Both find long-term effects of having been exposed to malaria in childhood on wage and education in several countries (Hoyt Bleakley and Adrienne Lucas), even though the implied effect on GDP is not nearly as large as what Jeffrey Sachs had estimated previously. On colonialism, articles by Abhijit Banerjee and Lakshmi Iyer, Lakshmi Iyer, and Melissa Dell have shown that even within-country variations in colonial institutions continue to matter for the development of these regions today.
There is a lively debate on what matters more: history, or geography? I think this debate may not be the most important, though. Whether history or geography, these are very long-term factors that we cannot do much about. Sometimes, as Daron Acemoglu’s work has shown, geography actually is a factor in history. The more urgent question is, what can be done in countries that have the misfortune to start with a loaded colonial history or a really poor geography? What policies are effective in these countries to fight poverty and foster development? This is where we need to look at specific policies with a careful lens, and see what comes out of it.
In this sense, the papers on malaria I just cited are very interesting, since they look at the consequences of a concerted effort to fight malaria (mainly by spraying DDT). And they showed that the effort was successful, and that it had positive impacts on education and productivity down the road. Not only have we learnt that malaria is indeed bad, but we have some idea of how to go about solving this problem. We need more work like that.
