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Lesson
In small island economies, fiscal consolidation measures should take into account the size of the public sector. The role and magnitude of the public sector in a small, island economy and sporadic wage increases for civil servants put pressure on recurrent expenditure. These make it difficult to manage fiscal expenditure over time. A small economic base limits areas for alternative employment opportunities. This could imply that the share of the public sector in the economy would remain large in the longer term.

Project Number: 46385-001
Project Name: Strengthening Public Financial Management Program
Report Date:
Lesson
Short-duration programs should consider time lags for policy actions. A program of short timeframe should adequately reflect the time lags that usually occur in implementing policy actions. It would be difficult for a short-duration program, even with up-front delivery of vital reforms, to achieve indicators involving external debt-togross domestic product, revenue mobilization, sustainable fiscal outturn, and improvements in Public Expenditure and Financial Accountability ratings due to time lags of these actions.

Project Number: 46385-001
Project Name: Strengthening Public Financial Management Program
Report Date:
Lesson
Limited capacity of government staff should be considered in designing reform programs. The 34 policy actions for a crisis response operation stretched out the government’s capacity in absorbing a substantial reform agenda. Constraints to capacity were reflected in the delays in complying with the policy actions, in particular with the policy action on financial ratios, which resulted in waiver of this action.

Project Number: 43152-012
Project Name: Economic Support Program
Report Date:
Lesson
Reform prioritization and sequencing could lead to more durable results. A steady, step-by-step pace of reforms may be more suitable in the Tongan context, given prevailing capacity constraints. The process of implementing reforms takes time, especially for reforms that require specialized skills, such as those in PFM and those that are structural in nature; these types of reforms take time to implement and cannot be completed by a single quick-disbursing stand-alone program.

Project Number: 43152-012
Project Name: Economic Support Program
Report Date: