The Sunday Times Economic Analysis

The Sunday Times Economic Analysis By the Economist

Lack of monitoring mechanisms and downfall of our economy
Effective Implementation is the key to economic progress. We have stressed this in this column on the last two Sundays. The lack of mechanisms to ensure that accepted policies are implemented is an important reason for the slow progress of the economy. One of the key indicators of this deficiency is the fact that the country utilises only a small proportion of the foreign aid committed each year. The tsunami aid utilisation in 2005 is evidence of this. Although we take great pride when foreign aid has been increased each year, the amount of aid that is utilised has always been a small proportion. There have been renewed efforts to increase foreign aid utilisation in recent years. These have met with some success, albeit inadequate.

The ineffective implementation of government projects is not confined to the use of foreign aid. Even capital expenditure allocated in the Budget lie under-utilised. This deficiency is in addition to the fact that inadequate expenditure is allocated for capital expenditure. Consequently economic and social infrastructure is underdeveloped. This in turn affects the productivity of the economy. Related to this is the fact that the government machinery is very inefficient.

It is not merely that public servants come late and leave early, a well-known fact that has once again been exposed recently, but they do not work even during the limited time they are in office. The inefficiency of the administrative machinery is a cost to private individuals and companies. Fortunately the amount of bureaucratic regulations has diminished since the reforms of 1977 and after and therefore the impact of public administration’s inefficiency is limited. Yet it has a bearing on the productivity of the private sector as well.

In this context it is heartening to note that the Ministry of Plan Implementation is reviving the National Operations Room, a system of monitoring put into practice initially during the Dudley Senanayake regime of 1965-70. The National Operations Room exhibited the latest statistics of implementing the targets of the government. In fact it was at this stage that there was a realisation that elaborate plans were of little use if they were not implemented. Therefore the strategy was to implement short-term policies and plans within a framework of longer-term perspective planning as the means of achieving rapid economic growth.

This system of a National Operations Room enables the monitoring of progress achieved by the various ministries and departments. Where the agencies have not achieved the targets, the Ministry of Plan Implementation could examine the constraints to the realisation of the goals and hopefully remedy these. If the problems of the tardy implementation are identified in time it may be possible to resolve these and get the programmes back on track for completion as planned. The problems, difficulties and constraints could be many.

The constraints could very well be delay in the release of funds by the Treasury. In fact many departments and agencies complain that their projects have had to be delayed owing to the tardy release of funds by the Treasury. This may not be the inefficiency of the Treasury but a cash flow problem. The financial stringency owing to revenue inflows not being as expected and therefore the cash availability being limited often causes delays in the release of committed expenditures. There is also the converse problem of agencies not utilising the funds owing to their inefficiency or other constraints to their completing work undertaken. An overview of the implementation of projects, the monitoring of their progress, the evaluation of the causes for any lapses and remedial actions and interventions could make a difference to the pace of progress of economically significant projects.

Therefore the resurgent stress on monitoring progress in implementation is indeed a good move in the right direction. However the efficacy of the system depends on the efficiency of the Ministry of Plan implementation that is undertaking this task. It presupposes a task force that is seriously committed to the objectives of the scheme and also possessed with a competency in various facets of the development programme. This is particularly so as there is a tendency for departments and ministries to send highly inflated figures on their achievements to avoid admonition. Wrong facts and figures of the progress of schemes may be therefore presented to the Ministry of Plan Implementation and the Operations Room may provide inaccurate facts on which the progress of implementation is judged.

This process of falsification can begin from the bottom and gain in exaggeration as the progress reports are prepared by higher officials.
The final icing of the cake of misrepresentation could be by the higher officials themselves, who are the ones accountable to the Ministry of Plan implementation. This is not a fanciful story but one that happened in the past and keeps happening. So one of the most important tasks of the Ministry of Plan Implementation is to put in place checks to ensure the veracity of the facts, figures and information they obtain.

We hope Mr. Nivad Cabraal’s revival of the National Operations Room would succeed in changing a history of poor implementation of economic policies. The effective implementation of development projects, especially those of infrastructure development could have a decisive impact on the country’s pace of economic development.

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