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Countries and Regions Country Assistance Plans Document
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Country Assistance Plans - Solomon Islands : I. Country Performance Assessment
C. Governance: Sound Development Management13. The past two years have seen a dramatic shift in culture and practice within the public service. In mid-1997, when the newly elected Government assumed office, Government finances were in a shambles, public confidence was at its lowest point, and the donors were reluctant to provide any further assistance to the country. On the fiscal side, years of profligate spending and capricious grants of tariff exemptions and remissions had resulted in a Government without the funds to pay its bills or even to service its debts to official and private creditors. While large arrears piled up (including to the ADB), audits and controls were abandoned on Government expenditures. The public service was demoralized, and hardly any office of Government could be regarded as functioning in a satisfactory manner. The new Government was faced then with the daunting task of rebuilding its resources and reputation from a very low base. 14. In late 1997, the new Government began the painful process of placing its affairs in order. A reform program was planned, and several task forces organized to handle priority issues such as Government finances and public service reform. Advice and funding were sought from donors such as the ADB, the World Bank, NZODA and AusAID. In the initial period, donors were hesitant to come forward with ready assistance, given their fresh memories of economic mismanagement and anti-donor sentiments under the previous government. The ADB, however, began to work closely with the new Government to shape a reform agenda and to design a program loan that would address its immediate financial requirements. The program loan provided the catalytic effect of bringing bilateral donors to the party and enabling the Government to develop a track record of reform that would be sufficient to justify new lending from other multilaterals such as the World Bank and the European Union. 15. The Government remains fully committed to the reform program agreed with the ADB and with other donors. Exemptions and remissions, except those which are legally binding, have been cancelled. The proceeds from the program loan have been used to settle arrears. Fiscal restraints have been maintained and only recurrent income has been applied to pay for recurrent expenditures. Payroll costs have been reduced by trimming the size of the public service, while protecting front-line staff providing essential services in health and education. Proper accounts and audits of public finances are in the process of being established with external assistance. Several state-owned enterprises are being readied for sale or liquidation, as appropriate, and proceeds from such sales are likewise earmarked for clearing remaining arrears or settling high cost liabilities. 16. However, one of the most promising initiatives of the Government has been the shift toward a performance orientation in the public service. As a first step, secretaries of Government departments were placed on performance contracts. All performance agreements were to specify, in measurable or verifiable terms, the “deliverables” of the department concerned. Similar agreements are envisioned for other senior staff in the public service. The Government is in the process of considering other supporting mechanisms – such as a performance bonus scheme which would reward top performers and a mechanism for independent audit of actual performance. These and other related measures, which are being installed with ADB technical assistance, will help to promote accountability and transparency.
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