greatest in the area of budget execution. (As argued later in the study, the solution does not lie in better defining the scope, definitions, and boundaries of the two instruments, but in better integrating them.)

CFAAs-and the Banks other instruments for fiduciary economic and sector work-have become more important in recent years. The Bank requires that recent CFAAs be available for all its major borrowers by the end of fiscal 2004. While a CFAA is not a formal prerequisite for adjustment lending, such lending does require an ex ante fiduciary assessment (such as a CFAA, CPAR, or PER) of a countrys public expenditure, procurement, and financial management systems (World Bank 2003 d).6 The assessment is to be done in cooperation with the government and nongovernment stakeholders; partnerships with other development agencies are also encouraged. But the possible tension between country ownership and the role of CFAAs, CPARs, and PERs in assessing fiduciary risk has yet to be resolved.

WORLD BANK COUNTRY PROCUREMENT ASSESSMENT REPORTS

The World Bank introduced CPARs in the mid-1980s to determine whether the procurement rules and practices of borrowing governments conform with Bank requirements. CPARs are the most focused of Bank instruments for fiduciary economic and sector work, though their emphasis has evolved from assessing procurement arrangements for Bank-financed projects to assessing national and subnational procurement laws, regulations, and procedures and encouraging dialogue with recipient governments (the current CPAR guidelines are described in World Bank 2002c). A CPAR is designed to:

Provide a comprehensive analysis of a countrys procurement system- including legislation, organizational responsibilities, control and oversight, and procedures and practices.

Assess institutional, organizational, and other risks associated with procurement-including identifying procurement practices that are not acceptable in Bank-financed projects.

Develop a prioritized action plan for institutional improvements.

Assess the domestic private sectors participation in public procurement and commercial practices related to public procurement.

IMF REPORTS ON THE OBSERVANCE OF STANDARDS AND CODES OF FISCAL TRANSPARENCY

Fiscal ROSCs originated from the IMFs Code of Good Practices on Fiscal Transparency, adopted in 1998 and revised in 2001. The IMF adopted this code in response to the East Asian and other financial crises of the late 1990s in the belief that focusing on fiscal transparency would provide strong market pressure for countries to improve public expenditure management. The code is intended to apply to all IMF member countries, but country participation in a Fiscal ROSC is voluntary.

Drawing on the four key requirements for fiscal transparency-clear roles and responsibilities, full provision of information, open budget preparation and execution, and assurances of integrity-a Fiscal ROSC:

Describes country systems and procedures relative to the good practices identified in the fiscal transparency code and manual.

Provides an assessment by IMF staff that prioritizes recommendations for possible improvements.

Fiscal ROSCs are formally limited to assessing fiscal transparency, although in practice other public expenditure management issues are also reviewed to a limited extent. They address the efficiency and effectiveness of expenditure processes and outcomes primarily from the viewpoint that lack of transparency contributes to weaknesses or difficulties in assessing these aspects. The exercise is carefully targeted and conducted in accordance with detailed instructions. It begins with the government filling out a standard questionnaire and concludes with the publication of the report (if the government agrees), which is based on a standard template.

Fiscal ROSCs are prepared as background for staff reports on the Article IV consultations that the IMF engages in with member countries as part of its regular surveillance, and are submitted to the IMFs Executive Board. Fiscal ROSCs inform the Board on the extent to which the fiscal transparency code is being observed and on progress over time. The reports also identify institutional constraints and guide IMF country programs and technical assistance.

Fiscal ROSCs are more closely linked to international surveillance of fiscal transparency and accountability than are the World Banks three main instruments for fiduciary economic and sector work. But the institutional scope and coverage of Fiscal ROSCs are similar to those of the Bank instruments, particularly CFAAs. Recognizing this, the IMF is taking steps to improve coordination

with Bank teams preparing CFAAs, and the two institutions are sharing information on mission schedules, undertaking occasional joint missions, exchanging draft reports for comments, and exploring the development of a joint questionnaire and a joint database containing information on fiscal institutions.

WORLD BANK-IMF PUBLIC EXPENDITURE TRACKING ASSESSMENTS AND ACTION PLANS FOR HEAVILY INDEBTED POOR COUNTRIES

HIPC AAPs were developed in spring 2000, stemming from the Bank and IMFs desire to ensure that HIPCs use resources freed by debt relief for poverty-reducing public expenditures based on full additionally-meaning that, because past aid levels would be maintained, debt relief would translate into additional real resources. Achieving that goal requires that HIPCs track poverty-reducing expenditures, which requires a public expenditure management system capable of planning, executing, and reporting on spending. HIPC AAPs are innovative because, instead of assessing every aspect of public expenditure management, they take a systems approach: identifying important indicators that reflect a systems overall capability and performance.

HIPC AAPs started with a questionnaire on public expenditure management that resulted in the identification of 15 benchmarks. In fall 2000, joint Bank-IMF teams conducted desk reviews of the 25 HIPCs that had reached their decision points or were expected to do so soon. A year later 24 AAPs were finalized, and in March 2002 the results were presented to the Bank and IMF boards. Missions for AAPs were often combined with ongoing work by country teams on, for example, Fiscal ROSCs, PERs, and CFAAs (World Bank and IMF 2002).

In spring 2003 the Bank and IMF boards reviewed a paper containing updates on progress in implementing HIPC action plans (World Bank 2003b). The updates, based on the 15 benchmarks for public expenditure management identified earlier, covered 21 HIPCs and were prepared by Bank and IMF staff in consultation with country authorities using standardized formats. The updates indicated that many HIPCs had improved their public expenditure systems and that a growing number were reporting on poverty-reducing spending. For example, more than three-quarters of the measures in HIPC action plans had been or were being implemented. Moreover, measures from the action plans had been incorporated in Poverty Reduction Strategy Papers (PRSPs), IMF-supported programs, and Bank adjustment operations. Still, the quality and performance of pub-