ISP offers policy solutions, one country at a time
at the Andrew Young School of Policy Studies

When governments of transitional or developing countries decide to update and improve their fiscal policy, their starting point is often the International Studies Program at AYSPS, where new projects are announced every month. Recent ISP announcements reflect the team’s continued success at researching, analyzing and providing policy options that work.

India planning fiscal reform

The Government of India and USAID have hired ISP’s fiscal experts to aid the Indian Ministry of Finance in developing policy options for the government’s program of state fiscal reforms. This project follows an earlier USAID India-sponsored fiscal assessment of state governments. Mark Rider, associate professor of economics, is principal investigator for both projects.

“Most states in India operate with an unacceptably high level of debt and high revenue deficits,” says Rider. “India’s central government is pursuing a program to help its states move their revenue deficits to zero, then to address their debt problem. Our job is to help them develop a useful set of options for reform.”

Rider began working on this project as technical advisor to an Indian study tour that talked to federal and state government officials in the United States, Canada, Russia, Australia and Brazil. Rider says the tour was developed to give Indian officials the opportunity to learn how other federalist countries deal with fiscal issues such as state government finance, borrowing, intergovernmental transfer systems and value-added taxes.

The ISP team, which includes Jorge Martinez-Vazquez, director of ISP, and Dean Roy Bahl, will help India’s finance ministry develop a white paper that outlines the options. In February, in-country fiscal experts led by the ministry will conduct a group review of the document with the objective of reaching consensus on the recommendations before they are presented to the Indian government for consideration.

Success in Swaziland

Swaziland’s Cabinet recently approved a system of intergovernmental fiscal transfers recommended in a study prepared by the ISP team for the Swazi Ministry of Finance in December 2003. This system is considered critical to implementing the country’s 1996 Urban Government Policy. It will shift public funding from Swaziland’s Central Government to popularly elected local councils, providing them the means to deliver local public services.

ISP’s objective was to assist the government in establishing a system for allocating intergovernmental fiscal transfers in a predictable and timely manner. The study proposes improvements in the regulatory and budgetary framework for local governments, local financial management and accounting reforms, and a re-orientation of the coordinating role of the Department of Urban Government within the Ministry of Housing and Urban Development.

“The approved transfer system harmonizes recurrent grants into a single formula-based transfer and provides for the introduction of formula-based capital development grants,” says ISP Senior Associate Jamie Boex (pictured above), an assistant research professor of economics at the Andrew Young School who led the Swaziland study.

For more information on ISP, see the story Many more ISP projects underway.