of system requirements must also be scrutinized. The guidelines stipulate the need for detailed institutional analysis of key government ministries and agencies in the actual performance of public procurement responsibilities, their strengths and weaknesses, priority capacity building needs, the governance environment in which they operate, and the incentives needed to improve performance. Moreover, action plans should carefully assess the political feasibility of the main recommendations.

In addition, the CPAR checklist and questionnaires have a strong implicit focus on corruption in that most of the rules, regulations, and procedures are designed to ensure transparency and efficiency. The CPAR guidelines (along with those for EC audits) contain the most explicit, extensive references to institutional and governance issues of all the assessment instruments-though this does not mean that the issues are adequately reviewed in the field or fully reflected in assessment reports.

The treatment of institutional and governance issues by CFAAs and CPARs has evolved since the Banks Quality Assurance Group reviewed fiduciary economic and sector work undertaken in 2000-01 and recommended changes in their guidelines (World Bank 2002e). The review found that CPARs and CFAAs generally failed to identify how weaknesses in areas such as incentives, technical competence, and the governance environment contributed to poor performance. The reports studied also did not adequately address weak application and enforcement of formal laws, rules, and procedures for public expenditure management. More recent CFAAs and CPARs have paid more attention to institutional and organizational issues, including the extent to which rules and procedures are followed. Still, the instruments contain little analysis of the nature and possible causes of cases where they are not.6

Fiscal ROSCs cover broad institutional elements such as the structure of the public sector-including the roles and responsibilities of the executive branch, parliament, and supreme audit institutions-and touch on a number of governance issues. In particular, these reports examine:

Whether commitments and expenditures of public monies are governed by comprehensive laws and openly available administrative rules.

Practices for extrabudgetary expenditures and quasi-fiscal activities.

Regulation of the private sector and whether public-private relations are conducted in an open manner.

The degree of discretion in taxation and regulation.

Whether procedures are in place to verify the accuracy of fiscal data.

Whether internal controls are sufficient to safeguard public monies.

The degree to which laws are observed in practice.

Weaknesses of watchdog and oversight organizations.

Whether recommendations from internal and external audits are followed.

Fiscal ROSCs also indicate whether corruption or poor governance is impeding the achievement of international standards for transparency, though they do not analyze the causes of such problems.

The guidelines proposed for EC audits emphasize the importance of examining the institutional and governance factors that affect public expenditure management, including the legal framework, arrangements for democratic oversight and control, anticorruption efforts, incentives of civil servants performing these functions, and organizational constraints (EC 2002). Based on the findings and other information and analysis, the guidelines urge the European Commission and the government concerned to agree on a corrective action plan.

The next section, on issues for further consideration, offers recommendations for remedying assessment instruments neglect of institutional and governance considerations, including by preparing new and comprehensive guidelines on these issues.

SUMMARY

The mapping of the assessment instruments has led to the following conclusions:

Although the instruments reviewed in this study are often called assessments of public expenditure management, they include issues-such as forecasting government revenue and management of public debt-that are outside the expenditure domain. This broader concept should be used in streamlining and rationalizing the use of these instruments.

There is overlap between the coverage of the instruments, especially between CFAAs and Fiscal ROSCs. The next section offers some proposals for rationalizing and simplifying these instruments.

Though there are differences in the objectives of the instruments that may justify some overlap, they also result in a lack of clarity about how assessment information and analysis should be interpreted and used. For example, PERs have largely developmental objectives, while CFAAs and CPARs have both a fiduciary and developmental orientation-a mix that can reduce the clarity of their information and analysis as well as confuse relationships between the World Bank and client governments. Similarly, though Fiscal ROSCs are primarily concerned with assessing how well transparency and accountability arrangements match the IMFs fiscal code, they can also be given a fiduciary interpretation. And while EC audits have traditionally had a fiduciary focus, the commission is increasing its emphasis on developmental objectives.

Though there is overlap between PERs and CFAAs, especially in assessing upstream (and sometimes downstream) aspects of the budget process, in most cases it is more potential than real. This is because CFAA coverage of budget preparation is largely confined to issues of comprehensiveness, realism, and classification-and where such issues are covered by a PER, the recently updated CFAA guidelines make clear that the PER information should be used.

HIPC AAPs provide a comprehensive summary of a countrys public expenditure management system, including key indicators of performance. So, while this instrument overlaps with the others, and attention needs to be given to integrating it with other diagnostic work, it adds value through its different approach and objectives and its explicit use of performance indicators.

EC audits and compliance tests should be considered complementary to CFAAs, which do not use audit techniques. But as discussed below, greater efforts are needed to substantiate this complementarity, through stronger collaboration between the European Commission and the

World Bank.

Technical synergies between the instruments could be more fully exploited. For example, CPARs address issues-such as control and audit of procurement transactions, allocations of funds for capital investment projects, and procedures for cash disbursements-that also receive substantial coverage in some PERs, CFAAs, and EC audits. Addressing such cross-cutting issues requires taking a fresh look at World Bank (and IMF) business practices, including the skill mix of the teams of econo-