Most countries in Central America were hit hardly by the fiscal crisis in 2009, from which some of them have not yet recovered. They are also exposed to commodity prices volatility and natural disasters. These shocks concerned the authorities of these countries due to their economic and social impact, and prompted them to request technical advice from the Bank. In some cases, addressing issues related to the government requests for advice and/or technical notes on these issues require prompt answers, which have proven to be difficult in the past.
These demands could not be delivered by traditional Economic and Sector Work or Technical Assistance, since the processing was relatively burdensome. The challenge consisted in finding flexible approaches and ways to lift this constraint in order to enhance the relevance of the dialogue and to improve the responsiveness of the Bank in helping the governments to solve these issues.
In order to meet these demands, the Bank developed a new approach through a Just-in-time type of product in 2012. This new approach consisted in creating a task aimed at providing technical advice and analytical elements, with a process that avoided the lengthy procedures for an ESW. The task was client driven and prompted by their requests. The process involved systematic consultation and interactions with the clients and other local entities related, including discussion and presentation of the content of the notes.
It has helped produce strategic notes that delivered informed and well-targeted recommendations on a range of issues in a timely manner. The topics covered included: public finance management, impact of food prices, and responses to natural disasters faced by individual countries, among others. Just-in-Time products also facilitated addressing regional issues through a process that entailed little operational and administrative burden.
Just-in Time products have allowed for producing technical policy notes on various issues, including:
- Analysis of Growth in Honduras;
- Analysis of Budget Execution Weaknesses in Honduras;
- Efficiency of Public Expenditures and Procurement in Costa Rica;
- Fiscal Responses to Natural Disasters in Guatemala;
- Understanding Potential Effects of Food Price Issues in Central America.
The notes elaborated with this methodology have generated useful information and key recommendations to solve specific problems, informed policy decision and allowed the client to adopt, in some cases, measures to tackle urgent issues that required prompt actions. That has been the case for the “Analysis of Budget Execution Weaknesses in Honduras”. The note on Budget Execution Control was instrumental in identifying measures to strengthen a budget execution process in Honduras, informed the PER and provided inputs to the Government expenditure management action plan being implemented. In some other cases, implementation of the recommended solutions remains to be seen but the product has been received as a valuable input.
Bank Group Contribution
The task was financed by Bank Budget only. Cumulative expenses of USD235,000 dollars were spent in a period of two years.
The Policy Notes were produced in an environment of close collaboration with each country’s relevant government officials. But the bank team also discussed and consulted with other partners involved in the areas addressed by the Notes as was the case of Honduras for the Expenditure execution note. The task responded to governments’ specific requests, which ensured that the Notes were aligned to country demands and development priorities. Each government also discussed the main results and recommendations of their dialogue with other development partners were included in the Notes. This close collaboration helped obtain accurate information and opened doors for further cooperation.
Most of the Notes were delivered to each country. In some cases, they have fed into other key tasks, such as the Note on Budget Execution Control in Honduras which was an important part of the Honduras PER. In general, the next steps consist in sustaining the dialogue in the areas where more in-depth discussions are needed, and/or advancing to the implementation stage of policy recommendation. The Bank is extending the Just-in-Time Policy task for FY15 given the interests expressed by the governments and the results achieved.
Main beneficiary countries include Honduras, Costa Rica, Guatemala, and more generally Central America as a region. The Notes not only have benefited the authorities but also helped to keep informed other relevant entities. For instance, the Note on Growth in Honduras was done in collaboration with the Government and a think tank which regroups several non-governmental organizations. The Task also had positive impact. Not only the note on the Honduras Budget Execution Control note on Honduras has fed into the Honduras PER, but the recommendations are now part of an action plan of the Government to improve expenditure management.