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LESSONS:

Mongolia: Second Phase of the Governance Reform Program

sector: Public Sector Management | country: Mongolia

This validation agrees with the project completion report (PCR) on the general lessons drawn from the Second Phase of the Governance Reform Program (GRP II) and it offers additional lessons.

The Managing Government Expenditure prescription on the public financial management (PFM) would be appropriate: (i) never transpose into a different social and economic context reforms introduced elsewhere, without in-depth assessment of their impact and requirements and appropriate adaptation if necessary; (ii) never move beyond the basics until one is certain that the basics have been set right; (iii) never hope for a quick-and-easy technical solution to complex and long- standing budget process problems; and above all, (iv) keep the local authorities firmly in charge of the reform process, and never assume that the ‘experts’ are invariably right.

In view of the difference in opinion with development partners regarding the approach that should have been taken, even if already ensconced in a law (Public Sector Management and Finance Law), the product of earlier efforts to improve PFM in the country should have been subjected to greater scrutiny and raised certain concerns. Moreover, given the complexity and comprehensiveness of the program, as different government agencies and bodies were involved, much greater preparatory work should have been undertaken in formulating the program to properly adapt the scope, time frame of reforms, available resources, and institutional capacity to its proper pacing and sequencing. (For example, review of the basics, identifying weaknesses and deficiencies of the system, consensus building among all stakeholders, identifying causes of dissatisfaction with the process and the incentive framework, e.g., local governments complain their investment plans are not being taken into account as the process is centrally driven.)

For complex, complicated, and broad-based programs such as the GRP II, close monitoring is a must, such that greater responsibility can wholly or partly be devolved to the resident mission, with appropriate in-house expertise. In view of capacity limitation on the part of the government, closer and more intensive handholding would have been indicated, such that deploying in-house medium-to-long-term experts would have been advisable.

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