## _cr0671

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---

### I. INTRODUCTION
- The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) was approved by the Prime Minister of Vietnam on May 21, 2002 and was discussed by the Boards of the IMF and IDA in July 2002.
- The CPRGS is Vietnam’s PRSP and is linked to the ten-year Socioeconomic Development Strategy (SEDS) and the five-year Socioeconomic Development Plan 2001-2005 (SEDP).
- The first Annual CPRGS Progress Report was prepared in November 2003 and discussed by the Boards of the IMF and IDA in February 2004.
- The Government of Vietnam completed the “Vietnam Growth and Reduction of Poverty Annual Progress Report 2003-2004” (the “Report”) in November 2004.
- Key institutional development:
  - Prime Minister’s directive and MPI instructions require the SEDP 2006-2010 to emulate participatory approaches used in the CPRGS and to address the Vietnam Development Goals (VDGs) and the Millennium Development Goals (MDGs).
  - MPI instructions encourage use of international methods and standards for the analysis underpinning the five-year plan.

### II. IMPLEMENTATION OF THE STRATEGY

#### A. Macroeconomic Performance — Findings and concerns
- 2004 macroeconomic outturns:
  - GDP growth accelerated to 7.7 percent in 2004 despite exogenous shocks (avian influenza, severe weather, and a sharp rise in prices of key imported commodities).
  - Inflation rose sharply in 2004 as an adverse consequence of supply shocks.
  - Credit expansion was in excess of 40 percent by end-2004.
- Risks and fiscal/financial concerns:
  - Rapid credit growth raises concern about potential accumulation of non-performing loans of state-owned commercial banks and possible fiscal burdens that could threaten medium-term debt sustainability.
  - The depiction of monetary and foreign exchange policies as flexible appears inconsistent with the State Bank of Vietnam’s public announcement that the dong’s depreciation for the whole of 2005 would be limited to one percent.
- Policy targets and recommendations:
  - The Government foresees that a largely unchanged fiscal stance, together with maintenance of broad-based stability in the exchange rate and interest rates, would suffice to contain the inflation rate below 6.5 percent in 2005.
  - To fulfill the SEDP 5-year goal, real GDP would need to reach 8.6 percent in 2005; the Staffs recommend viewing this target as indicative rather than mandatory to avoid imprudent macroeconomic policies.
  - The Staffs recommend the development of a contingency plan to tighten macroeconomic policies if inflation threatens to remain significantly higher than targeted in 2005.
  - Future Reports should include an updated medium-term macroeconomic framework with medium-term fiscal targets, associated measures, and debt sustainability objectives.

#### B. Implementing structural reforms — Progress and gaps
- Financial sector and banking:
  - The Report describes gradual resolution of bad debts and bank recapitalization but lacks discussion of a broader range of measures that could accelerate progress or reduce medium-term public costs.
  - No assessment is provided of the Development Assistance Fund (DAF), which is mobilizing much more capital than the Vietnam Bank for Social Policies.
  - Equitization of State-owned Commercial Banks (SOCBs) is mentioned but with limited discussion.
  - Staffs suggest next Report include:
    - An assessment of asset quality of the banking sector against recently adopted standards reflecting international good practices.
    - Commentary on reforms under discussion, such as transforming SBV into a modern and independent central bank and separating SBV’s management and supervision functions regarding SOCBs.
- State-Owned Enterprise (SOE) reform:
  - By September 2004, about 55 percent of the planned SOE transformations had been completed; the Report concludes progress has been slow and cites reasons including lack of detailed guidance on valuation and bad debts, and uncertainties about post-equitization management.
  - Targets for SOE reform have been ambitious; ownership transformation is associated with substantive restructuring and impacts on the social safety net for redundant SOE workers.
  - The Report omits discussion of performance assessment stipulated by Decision 271.
- Legal and institutional changes supporting equitization and private sector:
  - Decision 155 reduced the list of sectors for justified state intervention to strategic activities (national defense, printing of banknotes, the national electricity grid, and major ports).
  - A decree to convert large General Corporations to the holding company model has been approved.
  - Reforms allow outside agencies to conduct valuations, extend ability of strategic investors and outsiders to buy shares, and introduce auctions for share sales.
- Private sector and FDI:
  - Number of SOEs shrunk in absolute terms in 2004.
  - 35,000 new private businesses were registered in 2004, representing a year-on-year increase of 26 percent in number and 24 percent in registered capital.
  - FDI commitments rose in 2004 to a seven year high of $4.2 billion; disbursements reached $3.1 billion.
  - The Report could have assessed factors contributing to the increase in FDI and constraints to more rapid disbursements of past FDI commitments.
  - Government policy goals for 2005 include a common investment law, a “unified” enterprise law, and substantial streamlining of business registration procedures and regulations.
- International integration and WTO accession:
  - Compliance with tariff reduction schedules on regional trade agreements and adoption of international codes for classification of imports and exports are noted.
  - Vietnam's average MFN tariffs remain high and various non-tariff barriers remain in place.
  - Ninth Working Party meeting for WTO accession took place in December 2004; an informal meeting was held on May 20, 2005; next meeting tentatively scheduled for September 2005.
  - The “Working Party Report” was drafted in November 2004.
  - Ten WTO bilateral agreements had been concluded as of July 11, 2005 (Argentina, Brazil, Canada, Chile, Cuba, the EU, Japan, Korea, Singapore, and Uruguay); more than a dozen agreements remained to be signed before accession with a target accession date of end-2005.
  - To facilitate accession, an ambitious legislative agenda is required, including passage of a common investment law and a unified enterprise law; negotiations are ongoing with Australia, China, Colombia, India, New Zealand, Switzerland and the U.S.
- Public investment management:
  - Public investment accounts for over 30 percent of budgetary expenditure.
  - The Report emphasizes need for increased efficiency of public investment projects through better project selection, implementation and supervision; the Staffs welcome this recognition and encourage greater accountability for improving project quality.

#### C. Inclusive and sustainable development — Social indicators and vulnerabilities
- Poverty monitoring and data:
  - The Report describes continued poverty reduction using data from the Ministry of Labor, Invalids and Social Affairs (MOLISA).
  - The Staffs believe the Vietnam Household Living Standards Survey (VHLSS) is likely to confirm continued poverty decline when new data become available in the third quarter of 2005.
  - The Staffs strongly recommend that the Government consider using VHLSS as an instrument for estimating poverty at national and provincial level because household survey data are likely to produce a more accurate picture of changes in poverty over time.
- Ethnic minority poverty and inequality:
  - The Report presents data on poverty in ethnic minority areas suggesting very rapid rates of poverty reduction over the past two years, but these data are not clearly disaggregated by ethnicity.
  - The Staffs caution that these data may overstate success and recommend examining the full range of quantitative and qualitative data on ethnic minority poverty in SEDP 2006-2010 development.
  - The Staffs recommend more analysis of drivers of growing inequality and potential measures to address increasing disparities.
- Migration and urban vulnerability:
  - Issues related to vulnerability of people migrating to urban areas are not covered in the Report.
  - Data from the recent mid-term Census of Ho Chi Minh City suggest recently-arrived migrants are approximately one third of the city population.
  - The VHLSS has included questions to better track poverty of mobile populations; Staffs believe rapid urban development challenges merit stronger attention in the forthcoming SEDP.
- Health, education, and natural resource governance:
  - Progress noted in extending coverage of the Healthcare Funds for the Poor to a national level and establishing a structure for implementing the HIV/AIDS strategy.
  - The new law on forestry and the new Land Law, though not described in the Report, are viewed by the Staffs as providing legal basis for structural reform in forestry that could benefit poor, forest-dependent communities.
- Environment:
  - Introduction of Resolution 41 on improvement of environmental protection is welcomed.
  - Staffs encourage a cross-cutting approach to environmental protection, locating it centrally in sustainable development and Agenda 21.
  - Concerns about the Environmental Protection Fund:
    - Possible diversion of funds away from maintenance of drainage systems and waste water treatment.
    - Centralized nature of the Fund, with only half retained at sub-national level.
- Gender equity:
  - Achievements in promoting gender equity are recognized.
  - Circular 1 by the Ministry of Natural Resources and the Environment (MONRE) is welcomed for bringing land allocation procedures in line with legal provisions to protect women’s rights to land tenure.

#### D. Promoting modern Governance — Public finance, debt, and administration
- Tax and revenue administration:
  - The Report describes unifying corporate tax rates, modifying personal income tax, and piloting VAT self assessment; Staffs support these developments.
  - Staffs see a need for strengthened tax administration and simplified procedures and regret the lack of detail in the Report on these topics.
- Medium Term Expenditure Framework (MTEF) and budgeting:
  - The Report mentions use of MTEFs to improve expenditure planning and linking budgets to outcomes.
  - MPI has published a CPRGS-linked report on managing public resources for poverty reduction and growth and has played an active role in this analysis.
  - Staffs strongly support recommendations to accelerate the MTEF process and to connect it to the CPRGS/SEDP process to strengthen the link between planning and budgeting.
  - Staffs emphasize importance of incorporating a budgetary dimension in the next SEDP.
- Debt management and transparency:
  - Debt management is stressed in the Report; Staffs recommend extending this to publishing debt data.
  - Consideration should be given to monitoring debt arising from off-budget expenditures and the build-up of contingent liabilities related to DAF operations and SOCB lending.

### Community participation, transparency, and legal framework
- Progress noted in people’s participation through the Grassroots Democracy regulations, but incentives to implement the policy remain a challenge.
- The Ministry of Finance supported research, proposed in the last JSA, to investigate systemic impediments to increasing transparency and accountability in the commune budgeting process.
- The Report outlines a vision for strengthening community participation in preparing plans and policies but fails to delineate specific devices for this.
- Staffs believe the establishment of a comprehensive legal framework for NGOs and community organizations is overdue.
- Staffs note with concern that the NGO law does not appear on the legislative agenda of the National Assembly in either 2005 or 2006.
- The role for civil society in contributing to policymaking, planning and monitoring processes remains vague.

### Anti-corruption and public service delivery
- Staffs welcome the Government’s increased emphasis on systemic measures in the fight against corruption, representing a move away from a more punitive approach.
- The Government Inspectorate has been requested to take the lead in drafting a new law on anti-corruption to be approved by the National Assembly in 2005.
- Staffs hope that the ongoing diagnostic assessment on corruption will inform the implementation guidelines of the new anti-corruption law.
- Progress in implementing the One Stop Shop at local levels is commendable; the One Stop Shop:
  - provides the framework for an accessible and recognizable entry point for people in need of administrative services,
  - increases transparency on fees and procedures,
  - improves the quality of services, and
  - streamlines procedures.
- Staffs emphasize increased focus on ensuring the quality of the One Stop Shop model, particularly regarding procedural streamlining and enhanced transparency for service users.

### Management and coordination mechanisms (CPRGS rollout and planning)
- The Report draws on collaborative pilots in reforming planning processes at sub-national levels (“CPRGS rollout”) and proposes intensive provincial-level work in coming years.
- This progress addresses previous JSA concerns about forging a stronger connection between nationally defined strategic targets and local realities and resource allocation decisions.
- With adoption of the CPRGS, the Government introduced new economic and social indicators, many referring to attainment of actual development results as embodied in the VDGs and MDGs.
- Government agencies and provinces preparing new five year plans for the period 2006-2010 have been issued clear instructions that plans should be based on reaching actual development outcomes and results, accompanied by an appropriate system to track achievements.
- Staffs welcome this development but encourage the Government to review the ‘national system of indicators’ to ensure it is based on the monitoring framework of the new national and sectoral five year plans.
- Implementing this review would require intense cross-departmental debate within ministries, and between ministries and MPI, on priority goals, social outcomes and a limited set of indicators within the VDG framework.

### Role of GSO, data collection, and results frameworks
- Information on development outcomes is often best collected directly from households and enterprises through surveys; the national system of indicators discussion requires close collaboration between line ministries, MPI and the General Statistics Office (GSO).
- The GSO:
  - has the required technical expertise in the definition of indicators and their measurement,
  - given its neutrality is best placed to collect reliable data on actual results and outcomes of public actions,
  - can collaborate in the compilation of information generated through government reporting systems.
- Staffs believe there is an opportunity to accompany the new five year plans with a clear results framework consisting of a ‘core’ set of clearly defined indicators that are linked to social outcomes, and each linked to an agreed reliable method of data collection and the agency responsible.
- The GSO would need to step up dissemination of survey results and raw data to line ministries, research institutes and provinces.
- These results should be included in future performance reviews to allow direct comparison of outcomes with initial targets.

### Concluding remarks — priorities for the SEDP preparation
- Staffs welcome the intention of the Government to integrate the CPRGS into the next SEDP, suggesting the next SEDP will focus strongly on core challenges of how to promote growth and reduce poverty over the next five years.
- Important areas for consideration as the SEDP is prepared:
  - Elaboration of a macroeconomic framework to allow better informed consideration of policy trade-offs and management of the economy.
  - Reforms to the financial sector are a pressing concern and require explicit articulation.
  - Decision to use high quality survey data as a basis for analyzing and monitoring trends in poverty to allow improved public actions and resource allocation for poverty reduction and management of growing inequality.
  - A concerted and collaborative effort across Government to identify outcomes and associated indicators to build focus and accountability in the next SEDP.
  - Determined implementation of the Government’s articulated agenda for improved management of public finances in relation to clearly identified outcomes to enhance prospects of achieving SEDP goals.
  - Actions which improve participation of poor communities in the planning and monitoring process of the next SEDP will lead to stronger accountability in delivery; this is likely to involve empowering local civil society organizations to play a more meaningful role.

*Prepared by the Staff of the International Development Association (IDA) and the International Monetary Fund (IMF). Jemal-ud-din Kassum (IDA), Masahiko Takeda and Mark Plant (IMF). July 12, 2005.*

### Section 1

### _cr0671 - Section 1

### I. INTRODUCTION
- The Comprehensive Poverty Reduction and Growth Strategy (CPRGS) was approved by the Prime Minister of Vietnam on May 21, 2002 and was discussed by the Boards of the IMF and IDA in July 2002.
- The CPRGS is Vietnam’s PRSP and is linked to the ten-year Socioeconomic Development Strategy (SEDS) and the five-year Socioeconomic Development Plan 2001-2005 (SEDP).
- The first Annual CPRGS Progress Report was prepared in November 2003 and discussed by the Boards of the IMF and IDA in February 2004.
- The Government of Vietnam completed the “Vietnam Growth and Reduction of Poverty Annual Progress Report 2003-2004” (the “Report”) in November 2004.
- Key institutional development:
  - Prime Minister’s directive and MPI instructions require the SEDP 2006-2010 to emulate participatory approaches used in the CPRGS and to address the Vietnam Development Goals (VDGs) and the Millennium Development Goals (MDGs).
  - MPI instructions encourage use of international methods and standards for the analysis underpinning the five-year plan.

### II. IMPLEMENTATION OF THE STRATEGY

#### A. Macroeconomic Performance — Findings and concerns
- 2004 macroeconomic outturns:
  - GDP growth accelerated to 7.7 percent in 2004 despite exogenous shocks (avian influenza, severe weather, and a sharp rise in prices of key imported commodities).
  - Inflation rose sharply in 2004 as an adverse consequence of supply shocks.
  - Credit expansion was in excess of 40 percent by end-2004.
- Risks and fiscal/financial concerns:
  - Rapid credit growth raises concern about potential accumulation of non-performing loans of state-owned commercial banks and possible fiscal burdens that could threaten medium-term debt sustainability.
  - The depiction of monetary and foreign exchange policies as flexible appears inconsistent with the State Bank of Vietnam’s public announcement that the dong’s depreciation for the whole of 2005 would be limited to one percent.
- Policy targets and recommendations:
  - The Government foresees that a largely unchanged fiscal stance, together with maintenance of broad-based stability in the exchange rate and interest rates, would suffice to contain the inflation rate below 6.5 percent in 2005.
  - To fulfill the SEDP 5-year goal, real GDP would need to reach 8.6 percent in 2005; the Staffs recommend viewing this target as indicative rather than mandatory to avoid imprudent macroeconomic policies.
  - The Staffs recommend the development of a contingency plan to tighten macroeconomic policies if inflation threatens to remain significantly higher than targeted in 2005.
  - Future Reports should include an updated medium-term macroeconomic framework with medium-term fiscal targets, associated measures, and debt sustainability objectives.

#### B. Implementing structural reforms — Progress and gaps
- Financial sector and banking:
  - The Report describes gradual resolution of bad debts and bank recapitalization but lacks discussion of a broader range of measures that could accelerate progress or reduce medium-term public costs.
  - No assessment is provided of the Development Assistance Fund (DAF), which is mobilizing much more capital than the Vietnam Bank for Social Policies.
  - Equitization of State-owned Commercial Banks (SOCBs) is mentioned but with limited discussion.
  - Staffs suggest next Report include:
    - An assessment of asset quality of the banking sector against recently adopted standards reflecting international good practices.
    - Commentary on reforms under discussion, such as transforming SBV into a modern and independent central bank and separating SBV’s management and supervision functions regarding SOCBs.
- State-Owned Enterprise (SOE) reform:
  - By September 2004, about 55 percent of the planned SOE transformations had been completed; the Report concludes progress has been slow and cites reasons including lack of detailed guidance on valuation and bad debts, and uncertainties about post-equitization management.
  - Targets for SOE reform have been ambitious; ownership transformation is associated with substantive restructuring and impacts on the social safety net for redundant SOE workers.
  - The Report omits discussion of performance assessment stipulated by Decision 271.
- Legal and institutional changes supporting equitization and private sector:
  - Decision 155 reduced the list of sectors for justified state intervention to strategic activities (national defense, printing of banknotes, the national electricity grid, and major ports).
  - A decree to convert large General Corporations to the holding company model has been approved.
  - Reforms allow outside agencies to conduct valuations, extend ability of strategic investors and outsiders to buy shares, and introduce auctions for share sales.
- Private sector and FDI:
  - Number of SOEs shrunk in absolute terms in 2004.
  - 35,000 new private businesses were registered in 2004, representing a year-on-year increase of 26 percent in number and 24 percent in registered capital.
  - FDI commitments rose in 2004 to a seven year high of $4.2 billion; disbursements reached $3.1 billion.
  - The Report could have assessed factors contributing to the increase in FDI and constraints to more rapid disbursements of past FDI commitments.
  - Government policy goals for 2005 include a common investment law, a “unified” enterprise law, and substantial streamlining of business registration procedures and regulations.
- International integration and WTO accession:
  - Compliance with tariff reduction schedules on regional trade agreements and adoption of international codes for classification of imports and exports are noted.
  - Vietnam's average MFN tariffs remain high and various non-tariff barriers remain in place.
  - Ninth Working Party meeting for WTO accession took place in December 2004; an informal meeting was held on May 20, 2005; next meeting tentatively scheduled for September 2005.
  - The “Working Party Report” was drafted in November 2004.
  - Ten WTO bilateral agreements had been concluded as of July 11, 2005 (Argentina, Brazil, Canada, Chile, Cuba, the EU, Japan, Korea, Singapore, and Uruguay); more than a dozen agreements remained to be signed before accession with a target accession date of end-2005.
  - To facilitate accession, an ambitious legislative agenda is required, including passage of a common investment law and a unified enterprise law; negotiations are ongoing with Australia, China, Colombia, India, New Zealand, Switzerland and the U.S.
- Public investment management:
  - Public investment accounts for over 30 percent of budgetary expenditure.
  - The Report emphasizes need for increased efficiency of public investment projects through better project selection, implementation and supervision; the Staffs welcome this recognition and encourage greater accountability for improving project quality.

#### C. Inclusive and sustainable development — Social indicators and vulnerabilities
- Poverty monitoring and data:
  - The Report describes continued poverty reduction using data from the Ministry of Labor, Invalids and Social Affairs (MOLISA).
  - The Staffs believe the Vietnam Household Living Standards Survey (VHLSS) is likely to confirm continued poverty decline when new data become available in the third quarter of 2005.
  - The Staffs strongly recommend that the Government consider using VHLSS as an instrument for estimating poverty at national and provincial level because household survey data are likely to produce a more accurate picture of changes in poverty over time.
- Ethnic minority poverty and inequality:
  - The Report presents data on poverty in ethnic minority areas suggesting very rapid rates of poverty reduction over the past two years, but these data are not clearly disaggregated by ethnicity.
  - The Staffs caution that these data may overstate success and recommend examining the full range of quantitative and qualitative data on ethnic minority poverty in SEDP 2006-2010 development.
  - The Staffs recommend more analysis of drivers of growing inequality and potential measures to address increasing disparities.
- Migration and urban vulnerability:
  - Issues related to vulnerability of people migrating to urban areas are not covered in the Report.
  - Data from the recent mid-term Census of Ho Chi Minh City suggest recently-arrived migrants are approximately one third of the city population.
  - The VHLSS has included questions to better track poverty of mobile populations; Staffs believe rapid urban development challenges merit stronger attention in the forthcoming SEDP.
- Health, education, and natural resource governance:
  - Progress noted in extending coverage of the Healthcare Funds for the Poor to a national level and establishing a structure for implementing the HIV/AIDS strategy.
  - The new law on forestry and the new Land Law, though not described in the Report, are viewed by the Staffs as providing legal basis for structural reform in forestry that could benefit poor, forest-dependent communities.
- Environment:
  - Introduction of Resolution 41 on improvement of environmental protection is welcomed.
  - Staffs encourage a cross-cutting approach to environmental protection, locating it centrally in sustainable development and Agenda 21.
  - Concerns about the Environmental Protection Fund:
    - Possible diversion of funds away from maintenance of drainage systems and waste water treatment.
    - Centralized nature of the Fund, with only half retained at sub-national level.
- Gender equity:
  - Achievements in promoting gender equity are recognized.
  - Circular 1 by the Ministry of Natural Resources and the Environment (MONRE) is welcomed for bringing land allocation procedures in line with legal provisions to protect women’s rights to land tenure.

#### D. Promoting modern Governance — Public finance, debt, and administration
- Tax and revenue administration:
  - The Report describes unifying corporate tax rates, modifying personal income tax, and piloting VAT self assessment; Staffs support these developments.
  - Staffs see a need for strengthened tax administration and simplified procedures and regret the lack of detail in the Report on these topics.
- Medium Term Expenditure Framework (MTEF) and budgeting:
  - The Report mentions use of MTEFs to improve expenditure planning and linking budgets to outcomes.
  - MPI has published a CPRGS-linked report on managing public resources for poverty reduction and growth and has played an active role in this analysis.
  - Staffs strongly support recommendations to accelerate the MTEF process and to connect it to the CPRGS/SEDP process to strengthen the link between planning and budgeting.
  - Staffs emphasize importance of incorporating a budgetary dimension in the next SEDP.
- Debt management and transparency:
  - Debt management is stressed in the Report; Staffs recommend extending this to publishing debt data.
  - Consideration should be given to monitoring debt arising from off-budget expenditures and the build-up of contingent liabilities related to DAF operations and SOCB lending.

*Prepared by the Staff of the International Development Association (IDA) and the International Monetary Fund (IMF). Jemal-ud-din Kassum (IDA), Masahiko Takeda and Mark Plant (IMF). July 12, 2005.*

### Section 2

### _cr0671 - Section 2

### Community participation, transparency, and legal framework
- Progress noted in people’s participation through the Grassroots Democracy regulations, but incentives to implement the policy remain a challenge.
- The Ministry of Finance supported research, proposed in the last JSA, to investigate systemic impediments to increasing transparency and accountability in the commune budgeting process.
- The Report outlines a vision for strengthening community participation in preparing plans and policies but fails to delineate specific devices for this.
- Staffs believe the establishment of a comprehensive legal framework for NGOs and community organizations is overdue.
- Staffs note with concern that the NGO law does not appear on the legislative agenda of the National Assembly in either 2005 or 2006.
- The role for civil society in contributing to policymaking, planning and monitoring processes remains vague.

### Anti-corruption and public service delivery
- Staffs welcome the Government’s increased emphasis on systemic measures in the fight against corruption, representing a move away from a more punitive approach.
- The Government Inspectorate has been requested to take the lead in drafting a new law on anti-corruption to be approved by the National Assembly in 2005.
- Staffs hope that the ongoing diagnostic assessment on corruption will inform the implementation guidelines of the new anti-corruption law.
- Progress in implementing the One Stop Shop at local levels is commendable; the One Stop Shop:
  - provides the framework for an accessible and recognizable entry point for people in need of administrative services,
  - increases transparency on fees and procedures,
  - improves the quality of services, and
  - streamlines procedures.
- Staffs emphasize increased focus on ensuring the quality of the One Stop Shop model, particularly regarding procedural streamlining and enhanced transparency for service users.

### Management and coordination mechanisms (CPRGS rollout and planning)
- The Report draws on collaborative pilots in reforming planning processes at sub-national levels (“CPRGS rollout”) and proposes intensive provincial-level work in coming years.
- This progress addresses previous JSA concerns about forging a stronger connection between nationally defined strategic targets and local realities and resource allocation decisions.
- With adoption of the CPRGS, the Government introduced new economic and social indicators, many referring to attainment of actual development results as embodied in the VDGs and MDGs.
- Government agencies and provinces preparing new five year plans for the period 2006-2010 have been issued clear instructions that plans should be based on reaching actual development outcomes and results, accompanied by an appropriate system to track achievements.
- Staffs welcome this development but encourage the Government to review the ‘national system of indicators’ to ensure it is based on the monitoring framework of the new national and sectoral five year plans.
- Implementing this review would require intense cross-departmental debate within ministries, and between ministries and MPI, on priority goals, social outcomes and a limited set of indicators within the VDG framework.

### Role of GSO, data collection, and results frameworks
- Information on development outcomes is often best collected directly from households and enterprises through surveys; the national system of indicators discussion requires close collaboration between line ministries, MPI and the General Statistics Office (GSO).
- The GSO:
  - has the required technical expertise in the definition of indicators and their measurement,
  - given its neutrality is best placed to collect reliable data on actual results and outcomes of public actions,
  - can collaborate in the compilation of information generated through government reporting systems.
- Staffs believe there is an opportunity to accompany the new five year plans with a clear results framework consisting of a ‘core’ set of clearly defined indicators that are linked to social outcomes, and each linked to an agreed reliable method of data collection and the agency responsible.
- The GSO would need to step up dissemination of survey results and raw data to line ministries, research institutes and provinces.
- These results should be included in future performance reviews to allow direct comparison of outcomes with initial targets.

### Concluding remarks — priorities for the SEDP preparation
- Staffs welcome the intention of the Government to integrate the CPRGS into the next SEDP, suggesting the next SEDP will focus strongly on core challenges of how to promote growth and reduce poverty over the next five years.
- Important areas for consideration as the SEDP is prepared:
  - Elaboration of a macroeconomic framework to allow better informed consideration of policy trade-offs and management of the economy.
  - Reforms to the financial sector are a pressing concern and require explicit articulation.
  - Decision to use high quality survey data as a basis for analyzing and monitoring trends in poverty to allow improved public actions and resource allocation for poverty reduction and management of growing inequality.
  - A concerted and collaborative effort across Government to identify outcomes and associated indicators to build focus and accountability in the next SEDP.
  - Determined implementation of the Government’s articulated agenda for improved management of public finances in relation to clearly identified outcomes to enhance prospects of achieving SEDP goals.
  - Actions which improve participation of poor communities in the planning and monitoring process of the next SEDP will lead to stronger accountability in delivery; this is likely to involve empowering local civil society organizations to play a more meaningful role.

*Source: _cr0671 - Section 2*

---


_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0671.pdf_