Regional Roundtable for SADC Parliamentarians Johannesburg – South Africa, 24th November 2006

Theme

Parliament’s Role in Poverty Reduction: Enhancing Macro-Economic Policy Approaches

“MACRO-POLICY FORMULATION PROCESS: CHALLENGES FOR THE LEGISLATURE FOR

ENHANCING PRO-POOR POLICY MAKING AND IMPLEMENTATION”

by

Philip A. COBBINA

Budget & Governance Advisor, Africa Poverty Reduction office of the Canadian Parliamentary

Centre

MACRO-POLICY FORMULATION PROCESS: CHALLENGES FOR THE LEGISLATURE FOR ENHANCING PRO-POOR

POLICY MAKING AND IMPLEMENTATION

• Why the macro policy formulation process

• Macro policies in Africa

• Role of parliaments in macro policy formulation

• Macro policy formulation: key challenges

Why the Macro Policy Formulation Process

• Meeting goals and objectives

• Time-bound outcomes

• Integral part of any successful development process

Macro Policies in Africa• Structural Adjustment Programs (SAPs)

• Highly Indebted Poor Country Debt Relief Initiative (HIPC)

• Poverty Reduction Strategy Papers (PRSPs)

• New Partnership for Africa's Development (NEPAD)

• Millennium Development Goals (MDGs)

Structural Adjustment Programs (SAPs)

• Economic policies designed and implemented by the IMF & the World Bank

Key features:• Export-led growth; • Privatization and liberalization; and • Free market.

Actions taken by developing countries:• Currency devaluation (against major currencies - $ etc);• Lifting of import and export restrictions; • Balanced budgets and not overspend; and• Remove price controls and state subsidies.

Highly Indebted Poor Country Debt Relief Initiative (HIPC)

• Launched in 1996 by the IMF and World Bank, with the aim of ensuring that no poor country faces an unsustainable debt burden;

• Reviewed in 1999, to provide “faster, deeper and broader” debt relief and to strengthen the links between debt relief, poverty reduction

HIPC: Eligibility Criteria• International Development Association – only

(IDA-only) and Poverty Reduction and Growth facility – eligible (PRGF-eligible);

• Facing unsustainable debt burden, beyond traditionally available debt-relief mechanisms;

• Establish a track record of reform and sound policies through IMF and IDA-supported programs; and

• Develop a Poverty Reduction Strategy Paper (PRSP).

Poverty Reduction Strategy Papers (PRSPs)

Structural and social policies and programs that promote broad-based growth and reduce poverty

Core Principles underlying the PRSP Development approach

• Country-driven, national ownership broad-based participation

• Result-oriented focused on outcomes beneficial to the poor;

• Comprehensive in recognizing the multidimensional nature of poverty;

• Partnership-oriented, involving coordinated participation of development partners (government, domestic stakeholders, and external donors); and

• Based on a long-term perspective for poverty reduction

New Partnership for Africa's Development (NEPAD)

• Continental collaboration for development

It is an African Agenda to:

• Promote accelerated growth and sustainable development

• Eradicate widespread and severe poverty

• Halt the marginalization of Africa in the globalization process

Millennium Development Goals (MDGs)

• Eradicate extreme poverty and hunger;

• Achieve Universal Primary Education;

• Promote gender equality and empower women;

• Reduce child mortality;

• Improve maternal health;

• Combat HIV/AIDS, malaria and other diseases;

• Ensure environmental sustainability; and

• Develop a global partnership for development.

Role of Parliaments in Macro Policy Formulation

• Constitutional requirement (major policy initiatives, subjected to legislative debate )

• Consensus building and ensuring participation through the development of effective harmonious linkages

• Useful check on a dominant executive

Macro Policy Formulation: Parliament’s Role in the Budget Process

Budget tabled in thelegislature

Consideration byparliamentarycommittee(s)

Parliament accepts,amends or rejects thebudget

Finance ministry ortreasury issuesguidelines to spendingdepartments or agencies

Spending departmentssubmit draft budgets

Negotiation and finaldecisions by executive

Drafting Legislative Implementation Audit

Funds apportioned tospending departments toimplement activities

Finance ministrymonitors spending

Request for legislativeapproval of adjustmentbudget if necessary

Supreme audit institutionassesses departmentalaccounts andperformance

Audit reports publishedand reviewed byparliament

Before beginning of relevant fiscal year Fiscal year starts and ends Following end of fiscal year

Stages of the annual budget process

Executive and Legislative relationship in the budget process

Planning

Public Accountability

INTERNAL

Budgeting System Accounting Budgeting Independent System Revenue & Audit/Evaluation Cash/Debt Expenditure Management System

Financial CONTROLS Reporting

Managerial Reporting

Internal Audit

Macro Policy Formulation: Key Challenges

• Building consensus and gaining broad participation around a national development agenda

• Monitoring and evaluation

• Access to knowledge and information

• Connect and fully engage with the vulnerable and excluded

• Implementation

THANK YOU