Catalog

The common economic target of the island states is a sustained rate of real income growth significantly in excess of the rate of population increase, so as to make possible a raising of incomes and welfare throughout the community.

Sustainability of growth requires conservation and replenishment of capital, both natural and financial; maintenance of produced and purchased assets; competent strategic planning, and managerial adaptability. It also requires equitable distribution of the costs and benefits of growth, in proportions generally regarded as fair in the community.¹²

63. Political commitment to and ownership of the reform program are essential. However, reform is a destabilizing process and no government undertakes such a process without some risk of becoming so unpopular that it loses its mandate to rule. Thus, much courage, patience, and commitment on the part of government are needed. The importance of political stability and firm commitment to reform from top political leaders have been underlined by events in Vanuatu and the Solomon Islands in 1999 and 2000.

64. It is critical for reformist governments to involve key stakeholders in the design of reform programs, and to maintain their commitment by keeping them continually informed of the process and envisaged impacts. This serves the dual purpose of involving the public, and by doing so, more deeply committing the incumbent government to the path of reform. Presenting convincing arguments and evidence on the merits of reform remains a challenge in the PDMCs, especially because of the relative importance of the public sector as an employer and uncertainties in some cases about the opportunities for private sector development.

65. Reform programs must take careful account of the local culture. Some cultural factors may be used to advance the reform process; others may need to be managed so that they do not hinder the process; and some may display features that both help and hinder the reform process. One example of a social institution that may constrain the reform process is the Melanesian wantok system, which can make demands of politicians and public officials that conflict with the requirements of their formal, national roles. On the other hand, that same system may be a source of useful social support for those retrenched under a reform program. Another example is the varied customary land tenure systems, which are often seen as a constraint to optimal land use and a deterrent to foreign investment, but which are valued in their own right by Pacific islanders. Reformers need to recognize and understand such cultural factors, address them overtly in a participatory manner, and manage them sensitively. Participatory approaches to the introduction of reform measures, particularly those that are culturally sensitive, are essential to ensure sustainable solutions.

66. It is essential to maintain a continuous focus on outcomes and impacts. A reform program often, and necessarily, includes various levels of reform actions, influencing and building on each other. However, in the final analysis, the governments must be able to demonstrate to their citizens that the impacts of these actions (some of which may initially be painful) are actually beneficial through better service provision, or lower prices, or improved employment and other income-earning opportunities. Thus, the government must establish and manage an information system that tracks reform implementation, and permits the analysis and publication of the resulting impacts as and when they occur. Analysis of impacts needs to extend to an assessment of who benefits and who loses, so that government may address any inequities. This area has received inadequate attention. Information is one of most critical inputs in the reform process, and the one most commonly inadequate in the Pacific.

67. Simple scope ensures that the reform program content is clear, realistic, and within local capacity. Some programs have been too complex and too ambitious in terms of time targets. Reform program design must pay careful attention to pace and sequencing of policy actions, and to resolving conflicting objectives. For example, in terms of realistic sequencing, it is of little value to attempt introducing performance-based budgeting if basic costing and accounting systems do not provide timely feedback, or for that matter, if basic accounting skills are not available to the government. In regard to trade-offs between objectives, public service downsizing has been undertaken urgently in response to fiscal pressures, without adequate attention to allocation priorities (particularly education and health) or technical efficiency. The result is the loss of valuable staff skills in areas of economic priority and the elimination of useful, constructive activities, both of which may be difficult to reestablish in the future.

68. Some key design principles learned through experience over the last few years are (i) keep it simple, (ii) tackle a few though significant and relevant reforms at a time, (iii) think through the sequencing with the implementers, and (iv) allow for testing and adjustments. It is important to lay out a sequence of reform actions that leads to tangible and specified outcomes and impacts, taking account of cause-effect linkages, and then to focus on achieving success within the initial phase. Follow-on stages should come only when the initial phase has proven successful. Care is needed to distinguish between input targets, process milestones, outputs, and impacts.

69. The use of consultants and external advisers must be more carefully designed. First, given the constrained human resource capacity in the Pacific, the need for consultants is often inevitable. However, there are options for how they can be used: as long-term advisers in line positions; or as providing short-term, periodic inputs. These options must be carefully evaluated, keeping in mind that the reform program must remain locally owned and managed. A key indicator of consultant effectiveness should be the extent of local ownership he or she is able to engender. Second, it is important to clarify whether the consultant is fulfilling a line function or whether the mandate is to build capacity. If it is the latter, technical expertise is not a sufficient qualification for the job. Proven success in transferring skills and supporting participative capacity building are essential requirements. Third, ADB must assure the government that the consultants it offers have the right breadth of experience and demonstrated exposure to a variety of reform approaches. Otherwise, there is the substantial risk that reform approaches adopted by the country are dictated not by disciplined analysis of needs and assessment of options, but by the narrow experience of the long-term adviser. The larger issue is the need for ADB to strengthen its policies and systems for the engagement and management of consultants. Consulting contracts should be drafted not only in terms of expected inputs and tasks, but also in terms of precise and tangible outputs and expected outcomes. Consultants’ performance must be more closely monitored by government and ADB staff, on the basis of the outputs delivered. And sanctions for inadequate performance should be specified in contracts, and enforced. Staff must have adequate time to supervise consultants and should be held accountable for TA outputs and outcomes.