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Public Sector Program – Subprograms 1 and 2: Program Completion Report

sector: Public Sector Management | country: Marshall Islands, Republic of the

1. Program context and government ownership. The intended program outcome of achieving fiscal sustainability was overambitious, given the historically slow pace of reforms in the Republic of Marshall Islands and in other countries facing fragile situations. Moving forward with the reforms needed to fully deliver the program outputs required approval of three key pieces of enabling legislation, but the program design did not take into account the likelihood of a lengthy parliamentary approval process and underestimated the political opposition such reforms might encounter. The program’s design did anticipate the political sensitivity associated with some of the proposed reforms and supported a public consultation process to garner support and build ownership, but resistance has continued and is still delaying approval, which was initially expected to come by program completion. [Main text, para. 37]

2. Design and monitoring framework (DMF). The program’s DMF was overambitious (para. 8) and, based on ADB guidelines for DMF preparation could have been correctly recast to make the outcome the intended impact and output 1 the intended outcome. The outcome and impact statements and indicators and targets in a DMF need to be realistic and take into account the country context. [Main text, para. 38]

3. Policy actions: All Pacific developing member countries, including the Republic of Marshall Islands (RMI), have great difficulty implementing policies to support long-term adjustments. The program included several line expenditure conditions under output 2 that the government struggled to implement and monitor (para. 16). In the end, the government decided to make across-the-board expenditure cuts rather than the targeted cuts proposed under the program. The condition targets were related to budget estimates rather than budget outturns. Achieving these estimates requires a strong budgetary system, but the system in the RMI is weak. It may have been more appropriate to set conditions relating to budget processes and controls rather than estimates that proved difficult to execute. [Main text, para. 39]

4. On-the-ground support. Policy dialogue required on-the-ground support from ADB. Establishment of the ADB development coordination office in November 2011 played a key role in forging policy dialogue, although this was undertaken issue-by-issue (expenditure management, taxation, and state-owned enterprise reform) rather than through a holistic approach. Other development partners also provided substantial support for public sector reform in the Republic of Marshall Islands, but the coordinated dialogue with government that has been used successfully in programs elsewhere in the Pacific was missing. In the absence of a central foreign assistance unit or other aid coordination mechanism within government and if the proper channels for timely communication are not in place, risks of duplicated, excessive, or insufficient support in certain reform areas exist. [Main text, para. 40]

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