Description

Background

Since the mid-1990s, ADB had supported public sector reforms in Papua New Guinea through technical assistance (TA) and loans supporting the fisheries and public finance sectors. The Government recognized that poor governance was a causal factor in the country's weak economic performance. In response to the country's deteriorating social and economic situation, the 1999 PNG country strategy focused on reducing poverty by improving governance, developing the private sector, and improving social indicators through a mix of longer-term systemic change and direct poverty interventions.

The Public Service Program (PSP) aimed to support policy reform measures in four areas

• building a performance-oriented public service
• reorienting personnel management systems and processes
• strengthening probity and oversight agencies
• improving delivery of basic services by both national and provincial governments

Summary of Findings

Overall, the PSP is rated "partly successful."

Relevance. The PSP was rated "partly relevant." It supported the Government's public sector reform agenda and was consistent with ADB's country and institutional strategy to support good governance to reduce poverty. However, program design was overly ambitious in both scope and assumptions.

Effectiveness. The PSP was rated "less effective." By November 2002, the Government claimed 10 of 11 tranche release conditions were fully complied and one substantially complied with. ADB confirmed this in February 2003. ADB's engagement in public service reforms ended in November 2002. Through 2003 and 2004, there was considerable dialogue between the two parties, but they were unable to reconcile differing views on what was necessary to meet release conditions for the second tranche. The Government reportedly continued to pursue its public sector reform agenda after the loan was closed, but concerns remain about the depth of commitment to good governance as progress on reforms appeared to stall in 2007.

Efficiency. The PSP was rated "less efficient." Although only half the loan had been disbursed, almost all the policy actions had been implemented. This suggests the total loan of $70 million was not required to meet the policy conditions. The TA was efficiently utilized to support program loan formulation, but the lack of counterpart funds and the failure to release the second tranche undermined its efficiency.

Sustainability. The PSP was rated "less likely sustainable." A lack of synergy between central and local province and district agencies, and insufficient financial and operational support undermined the ability to improve service delivery.

Issues

Getting the Reform Context and Issues Right. Design should include a more realistic assessment of political risks—not just of elections but also of the form of government. Although the loan document seemed to recognize this, the time frame allocated for the reform program was unrealistic.

Limited use of DMF. Monitoring and tranching mentioned in the loan document does not refer to the design and monitoring framework (DMF) or the specified outcomes. The loan documents do not provide any analysis or linkages between the actions of the reform program and the expected outcomes and macroeconomic indicators set out in the DMF.

Institutional Capacity. The TA provided was too short and had insufficient focus on embedding reforms to achieve program outputs. The limited commitment and funding for the service improvement program (SIP), compounded by poor management by the executing agency, constrained program effectiveness. The TA provided was intermittent, with many gains earned from each consultant visit lost by the time of the next visit.

Reform Continuity. Public sector reform is a long-term and complex activity, and embedding reforms in the public service culture and administrative practices takes time. The PSP was designed to support short-term, "initial phase" policy changes while focusing primarily on institutional (legal, regulatory, and procedural) reforms that were expected to be achieved within 15 months of loan effectiveness (i.e., before the next elections), but took 39 months to completion (without the release of the second tranche).

Recognition of Social Structures in Policy Reforms. Reform programs need to take account of the social structures and cultural norms that may influence the actions of politicians and public service staff. This is particularly true in PNG, which is heavily fragmented along ethnic, tribal, and linguistic lines. Traditions, such as the wontok system of obligations and patronage, constrain the anticipated adoption and acceptance of western-oriented public sector behavior and standards.

Lessons Identified

• Legislation and regulations are in place. The challenge is to enforce the link between individual performance assessments and managing implementation.
• SIP is an effective diagnostic tool to analyze and reformulate business processes.
• Province-level officials (at least in the province visited) appreciate the value of reformed systems and recognize the importance of central-level reforms being coordinated with provinces and districts.
• Using the Government's public sector reform institutions for loan implementation arrangements will help keep transaction costs low.
• Central agencies can work directly with their provincial counterparts to analyze and address service delivery constraints.
• Earmark funds to ensure provincial officials receive the financial and operational support required to implement reforms in service delivery processes.
• Multi-year budgets will more effectively link multi-year plans (corporate plans) to the budget process.
• Engage implementers by ensuring senior and widespread levels of participation in developing systems and processes.
• The penchant to define reform of operational processes as "projects" creates parallel systems and separate budget allocations. It also marginalizes and undermines the effectiveness and institutionalization of diagnostic tools such as SIP.
• Provide managers with techniques that enable them to enforce accountability, as well as implement laws, regulations, and processes, while respecting cultural norms and social values.

Contents

• Table of Contents
• Executive Summary
• Introduction
• Design and Implementation
• Performance Assessment
• Other Assessments
• Issues, Lessons, and Follow-up Actions
• Appendixes