A Case For Demerging Planning from MOFED

By P. Pandey

On the MID project, food security, energy and water issues, industrial development policy and more recently the national debate on the reform of the CPE, the Ministry of Finance had very little to contribute. On most of the issues of national importance they are totally absent — on their own website, in board meetings, in meetings with line ministries, on the sectoral plans, with the IMF and World Bank and other consultants, you name it!!!

This would never have been tolerated by the earlier Ministry of Economic Development with a stewardship that ensured that its economists participated and brought value addition to general and technical debates/discussions on sectoral and national issues.

This is inconceivable from a mega-ministry that has merged three cadres — the Finance Management Analysts of the ex-Management Audit Bureau, economists of the ex-Ministry of Economic Development (MED) and Budget Analysts of the Ministry of Finance (MOF). The merger was effective as from 2006. It was expected to improve economic management and facilitate the work towards programme or results-based management within a medium- to long-term macroeconomic framework. The objective was to optimize use of public resources including skills and capacity, as well as to ensure better coordination and consistency in the execution of specific activities and functions. And, more importantly, it was expected to help in generating holistic planning for the economy in order to evaluate if actions and policies are consistent with government’s vision and priorities and participate/produce detailed analysis of the existing policies and their costs, as well as a review of other policy options that may enable government to achieve policy objectives more effectively.

Unfortunately the new MOFED has failed to deliver so preoccupied has it been with short-termism to allow the economists to generate a more long-term view of sectoral and national issues. Mahmood Cheeroo is the latest among the increasing long list of our intellectual elite and corporate leaders (comprising Governor R. Bheenick, Mohamad Vayid, Kadress Pillay, Nita Deerpalsing, Dr Ashok Kumar Aubeeluck, ex-director of the Budget at MOF, Nikhil Treebhoohun, former director of the NPCC, economists Philip Lam, G. Cheung and KC Li Kwong Wing, Tim Taylor and the World Bank) who have been advocating a more medium- to long-term approach.

The World Bank had noted in its August 2011 report ‘Draft Technical Overview Note — From Programme Based Budgeting to Delivering Results: Improving the Performance of the Civil Service in Mauritius’: “The merger of the Ministry of Economic Planning and Development, which used to develop the National Strategic Plan for 5 years, with the Ministry of Finance in 2003 resulted in a loss of strategic planning capacity within the Government at the national level. This has created a challenge for ministries in developing their strategic plans – as the link between sectoral and national objectives is not explicit. Sector planning capacity needs to be developed in order for the proper costing and evaluation of policy options to occur. ”

Another reason that is being put forward to explain why MOFED continues to play truant on national policy debates is that the merger has lamentably failed to carve out the appropriate structure for the three cadres to express their capability and core competencies. The driving force underpinning the merger was to reconcile planning with budgeting, whilst simultaneously allowing each entity to operate in its own orbit of competencies and specialisation. But the merger of the three cadres in a single structure has not produced the desired outcome. The economist cadre, for example, has to operate within a new culture alien to their core skills. They were trained to being sector specialists/policy analysts/researchers/thinkers/strategists/pace setters and exposed to a multitude of national and international issues of high complexities; they have been reduced to mere “mathematico-accounting” instruments and number crunchers.

Industrial relations have been strained for quite some time with the Union of Government Economists contesting the Scheme of Service (SoS) on the grounds that it is inconsistent and unfair and seriously undermines their legitimate expectations, their ability to excel in their core competencies and their career advancement prospects. This has led to a deadlock and since 2007 there has not been any promotion or filling of vacancies in the Ministry. The frustration and discontents were contained by doling out generous budget and responsibility allowances that were mere administrative arrangements and in some cases these were supplemented by lucrative missions abroad. There was however a pervading mistrust between the three cadres with a climat de méfiance where everyone was trying to negotiate the best deal for personal gains and advantage. It was not a healthy and sound working environment.

But lately the situation has deteriorated as a result of a new SoS for new analysts that is causing havoc in the Ministry. The economist cadre continue to have strained relations with management and their main points of dispute are: a) an irrelevant SoS which is incoherent, ambiguous, incongruent and inconsistent, b) three different salary entry points for similar work that goes against the principle of equal pay for equal work, c) the disruption of relativity, d) failure to set up an appropriate structure to accommodate the existing cadres with different skills as stipulated in the PRB 2008 Report, e) poor prospects of promotion, and f) the non-recognition of their legitimate aspirations.

The PRB 2008 Report advocates the setting up of a structure that would accommodate the different competencies of the existing cadre and allow for a more comfortable integration of three cadres that would have given full play for the different skills to excel in their respective areas of specialisation. Six years after the merger, the SoS for Lead Analysts has not yet been agreed upon between Management and the Union because of inherent incompatibilities. The SoS for Analysts is being presently contested. Quite a sizeable number among the three cadres consider that it is not healthy to work in an environment that they consider discriminatory and unfair. An atmosphere of mistrust has already been installed; many young analysts are disappointed and are looking for opportunities elsewhere.

Re-establishment of the planning function: The absence of strategic planning has left an important vacuum unfilled for too long. Even the Prime Minister, referring to the water sector, stated that we are not planning properly. Therefore, in compliance with PRB 2008 Report, the planning function should be reinstated and manned by ex-economists of MED. A country needs vision, strategic thinking and research to support its future development. Most of the economists are now convinced that there is a case to demerge from MOFED and set up a Planning Commission, preferably under the Prime Minister’s Office.

Why the demerging from MOFED?

• A Planning Commission or a Planning Ministry will tend to have a more long-term vision that spans over some 25 years — a Vision that adequately reflects the value of essential factors like climate change, clean air and water and social and generational equity. A vision that is key to bridging the gap between the long-term and the short-term. We need to know what we want to be so we can plan to be that. That goes beyond the short-term macroeconomic fiscal framework of budget analysts. The foundation for a long-term development plan is the macroeconomic framework that ideally should be an inter-disciplinary framework that embraces the linkages between economic growth, environmental degradation and social inequity. MOFED outlook is more limited, working on a macro-fiscal framework whose output would be financial envelopes.
• Just as effective problem solving requires the insights and tools from of a variety of disciplines, defining the goals towards which we strive would benefit from open discussions of the value sets of different sectors/groups/classes /stakeholders. MOFED does not provide this. Its focus is only on the financial resources.
• Policymaking needs to be preceded by research and analysis. Research and analysis need to be central because of crosscutting issues. Line ministries on their own do not carry out research and analysis effectively and efficiently. They are mainly implementation ministries. MOFED is organized in such a way that it focuses on executing tasks, not on strategic thinking and planning, which should have as basis research and analysis.
• It is important to have an institution/entity that supports the promotion and implementation of structural reform. Beneficial structural reforms may not be adopted if ministries are not aware of the policy choices, or lack the capacity to implement them. Alternatively, government may face resistance from vested interests. A systematic policy review process can help to overcome both these obstacles. MOFED’s objective is to keep the end decision with the Ministry of Finance through the budget. This objective is contradictory to reform.

The Ministry of Economic Planning once served as a reform team in charge of formulating and updating reform strategies, building consensus, coordinating and mobilizing resources for implementing the medium- to long-term strategies to realise the country’s vision. This Planning team is required again today given the uncertainties of the current economic climate. This team will formulate plans for the most effective and balanced utilization of country’s resources, indicate the factors which are hampering economic development, construct a long-term strategic vision for the future and develop a holistic approach to the formulation of policies in critical areas of human and economic development. This team needs to be tied to the highest political instance in the civil service, the Prime Minister’s Office.

* Published in print edition on 27 January 2012