Challenge
In 2002, the state of Minas Gerais launched a Results-Based Management (RBM) reform program to address the large levels of debt, poor management, and low investment. Through the Management Shock (Choque de Gestão) reform program the state government regained control of the state’s fiscal position. By early 2008, the re-elected government moved into a second phase of the reform process, which entailed introducing rewards and penalties linked to the achievement of goals to all state secretariats. The challenge was to implement and expand the RBM model and further improve public sector management and the delivery of public services.
Solution
The Bank supported the state’s reform efforts through the three-part “Minas Gerais Partnership Series.” The second operation under this partnership series was the “Second Minas Gerais Partnership Project,” which allowed the Bank to respond to the challenges in Minas Gerais in a unique manner, through support for priority expenditure programs, technical support through technical assistance, and on-going guidance of Bank specialists. Because the project was among the first of the Sector-Wide Approach (SWAp) operations, the Bank went beyond its traditional ways of investment lending, and included disbursements linked to the achievements of indicators, technical assistance, and day-to-day advice on a variety of issues.
Results
The project paved the way for significant reforms and a culture change in the public administration of Minas Gerais. It improved the state government’s effectiveness, efficiency, and ability to deliver services. As one of the first successful models of RBM, the project served as a model for the national government, other states, and other countries, which replicated the system. For example, certain education policies developed under the project at the state level have influenced policy-making at the national level. The program supported improvements in the following key outcome areas:
- The project strengthened an organizational structure based on RBM, promoted further institutionalization of strategic management, and built capacity throughout the administrative apparatus, ultimately improving the state’s execution capacity. The percentage of strategic programs in budget expenditures, ensuring that resources are allocated in accordance with state priorities, was more than doubled from 7 percent in 2007 to 16.5 percent in 2013.
- In the education sector, to which the bulk of project expenditures were devoted, the project effectively fostered monitoring and evaluation, efficiency, and innovation. The percentage of eight-year-old students registered in state schools with expected reading level in the third year of elementary school increased from 65 percent in 2007 to over 92 percent in 2013.
- The operation also contributed improvements in the state’s transport sector. Success in increasing efficiency and effectiveness was measured by the average percentage delay of paving works concluded under the road program, Pro-Acesso, which decreased from close to 40 percent in 2007 to around 10 percent in 2012. Furthermore, the percentage of municipalities in Minas Gerais with paved access increased from 83 percent in 2007 to almost 99 percent in 2013.
Bank Group Contribution
The Bank supported the project with a loan of US$ 1.4 billion.
Moving Forward
In 2012, the project was complemented by the third operation under the partnership series, the “Third Minas Gerais Development Partnership DPL.” Although no follow-up projects are planned, the longstanding relationship between the state of Minas Gerais and the Bank is likely to continue after project completion.
Beneficiaries
The improvements in public sector management benefited all citizens through more cost-efficient administration and higher quality public service delivery. The state government’s staff benefited in particular as coordination and communication among the secretariats improved and the information on the impact of government programs allowed them to make more informed decisions. A staff member of the state government stated that the RBM system “helped ensure the completion of pre-established actions and achievement of goals, thus impacting the quality of work and motivating the team.”