Ecuador - Creating Fiscal Space for Poverty Reduction : A Fiscal Management and Public Expenditure Review, Volume 2. Background Papers
The report, a joint effort by the Bank, and the Inter-American Development Bank, seeks to provide the Ecuadorian authorities with a comprehensive account of both institutions' diagnoses and recommendations in the area of fiscal management and public expenditure. This report consists of two volumes. Volume I examines whether, and how, the core goals of public expenditure management, i.e., balanced fiscal aggregates, resource allocations to strategic sectors, and equity and microeconomic efficiency of public spending are met in Ecuador. Volume II presents sector studies on fiscal sustainability, the fiscal rules, education, health, pensions, water and sanitation, electricity, telecommunications, and oil, including the results of a national teachers tracking survey, as it concerns the education sector. It focuses on the main themes that are critical to Ecuador's fiscal consolidation and poverty reduction following dollarization. In most cases, it does provide choices for key policy questions, and, provides an independent analysis of the selected areas where both Banks are specifically involved, and a set of possible recommendations to address them. Volume I, in particular, correctly identifies fiscal vulnerabilities in the new context of dollarization, and proposes an adequate fiscal management that increases expenditure flexibility, develops budget management reform, increases public (social) investment, and brings transparency to public expenditure. All this is supported by an implicit proposal for a Fiscal Pact for Poverty Reduction. For its part, Volume II deals with sectoral policies and their link to fiscal management. It identifies the most efficient and cost-effective interventions in the social sectors, while making an optimal use of the reduced and available fiscal space. The study also recognizes the importance of political constraints, and the difficulties of setting steady rules in a non-cooperative game among national political actors that are particularly reflected in budget allocations. It correctly emphasizes the need to bring full transparency of information on the management of public accounts among all domestic actors, as a starting point for sectoral reform. The study should contribute to align fiscal and institutional policies in the social and basic infrastructure sectors, and to strengthen them in the context of the ongoing negotiations for a Free Trade Agreement with the United States, while preserving difficult domestic equilibria on the development agenda.
| Summary: | The report, a joint effort by the Bank,
and the Inter-American Development Bank, seeks to provide
the Ecuadorian authorities with a comprehensive account of
both institutions' diagnoses and recommendations in the
area of fiscal management and public expenditure. This
report consists of two volumes. Volume I examines whether,
and how, the core goals of public expenditure management,
i.e., balanced fiscal aggregates, resource allocations to
strategic sectors, and equity and microeconomic efficiency
of public spending are met in Ecuador. Volume II presents
sector studies on fiscal sustainability, the fiscal rules,
education, health, pensions, water and sanitation,
electricity, telecommunications, and oil, including the
results of a national teachers tracking survey, as it
concerns the education sector. It focuses on the main themes
that are critical to Ecuador's fiscal consolidation and
poverty reduction following dollarization. In most cases, it
does provide choices for key policy questions, and, provides
an independent analysis of the selected areas where both
Banks are specifically involved, and a set of possible
recommendations to address them. Volume I, in particular,
correctly identifies fiscal vulnerabilities in the new
context of dollarization, and proposes an adequate fiscal
management that increases expenditure flexibility, develops
budget management reform, increases public (social)
investment, and brings transparency to public expenditure.
All this is supported by an implicit proposal for a Fiscal
Pact for Poverty Reduction. For its part, Volume II deals
with sectoral policies and their link to fiscal management.
It identifies the most efficient and cost-effective
interventions in the social sectors, while making an optimal
use of the reduced and available fiscal space. The study
also recognizes the importance of political constraints, and
the difficulties of setting steady rules in a
non-cooperative game among national political actors that
are particularly reflected in budget allocations. It
correctly emphasizes the need to bring full transparency of
information on the management of public accounts among all
domestic actors, as a starting point for sectoral reform.
The study should contribute to align fiscal and
institutional policies in the social and basic
infrastructure sectors, and to strengthen them in the
context of the ongoing negotiations for a Free Trade
Agreement with the United States, while preserving difficult
domestic equilibria on the development agenda. |
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