A Public Expenditure Review (PER) updatewas conducted in 2006 which highlighted: (i) the large andincreasing weight of non-discretionary expenditures in thetotal budget; (ii) the importance of improving coordinationamong the various planning instruments; (iii) the need tostrengthen public finance management; (iv) the fiscal risksthat emerge from the energy sector; and (v) the need tofurther progress with the pension reform. During 2006-07 theGovernment implemented several of the 2006 PER updaterecommendations. Building on the findings of the 2006 PERupdate, in mid 2007 the Government and the World Bankdecided to prepare jointly an updated PER that would informthe preparation of the second Growth and Poverty ReductionStrategy Paper (GPRSP-2) and the Country Assistance Strategy(CAS). The objectives of the PER were to: (i) examine recentmacro and fiscal developments (chapter one and two); (ii)provide an update of the strengths and shortcomings of thepublic finance management system, the recent reformsimplemented in this area and the new emerging challenges(chapter three); (iii) conduct an analysis of the fiscaldecentralization issues, with particular emphasis on themunicipalities' resources, expenditures, budgetprocesses, capacity and systems, and accountability to thecitizens (chapter four); and (iv) examine public expenditureissues in infrastructure, focusing on issues of adequacy,allocation and efficiency of spending in electricity, water,roads, air transportation, and ports (chapter five).
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