Public Expenditure Newsletter

Issue 7, January - June 2003

Heavily Indebted Poor Country (HIPC) Expenditure Tracking Initiative

To assess the capacity to track spending, World Bank Public Sector Group and IMF Fiscal Affairs Department (FAD) staff developed a diagnostic instrument to assess the capacity of countries to track spending. The HIPC expenditure tracking assessment has been applied in 24 HIPCs over 2000-2002. The results showed that these countries generally have low capacity to track spending. As part of each assessment, an action plan was developed to strengthen areas identified as in of upgrading.

The Bank and Fund recently prepared an update on the progress in implementing the action plans for the HIPCs. This update entitled, "Update on Implementation of Action Plans to Strengthen Capacity of HIPCs to Track Poverty-Reducing Public Spending," is based on information for 21 countries and was prepared by Bank/Fund staff in consultation with country authorities using standardized formats. The update indicates that countries are making progress in implementing the action plans. More than three-fourths of measures in the action plans have either been fully implemented or are under implementation. Based on measures that have been fully implemented and assuming no slippage in other areas, staff would expect that, on average, countries have met one additional benchmark compared to the last comprehensive assessment. Countries have been especially active in identifying and tagging poverty-reducing spending. An increasing number of countries are now able to report on poverty-reducing public spending and such spending is rising in relation to GDP and total expenditures. These increases need to be accompanied by increased efficiency and better targeting to improve social outcomes. Measures from the action plans are being incorporated in Poverty Reduction Strategy Papers (PRSPs) as well as in Fund-supported programs and Bank adjustment operations.

To access the three Board papers, please click HERE.