PUBLIC-EXPENDITURE POLICY AND POVERTY REDUCTION - HAS THE WORLD-BANK GOT IT RIGHT

This article discusses the impact of public expenditure policy on pove rty reduction, focusing on the interaction between poverty assessments (PAs) and public expenditure reviews (PERs). Most PAs have analysed p overty in terms of the constraints that prevent the poor from particip ating in labour intensive growth, with little appreciation of sociolog ical and political factors involved. Most PERs have concentrated on th ree issues: increasing the share of the education and health sectors w ithin total public expenditure, the composition of spending within the se sectors and the balance between staff and non-staff costs. However, increased budgetary allocations to the social sectors often do not ge t translated into reality because of poor management and monitoring of public expenditure. In addition, the use of cash budgeting to elimina te fiscal deficits in line with IMF conditionality works against World Bank conditionality aimed at increasing spending in priority social s ectors. Greater integration of PAs and PERs should be promoted by esti mating the net impact of government expenditure and taxation/user char ges on the poor. A central aim should be to facilitate a process of di alogue and consensus building around public expenditure decisions.