Governance: The Key to Effective Policies is Accountability

Domenico Lombardi

Weak governance is by far the most expensive tax levied on the populations of poor countries. It is regressive, so the poorest of the already poor pay the highest rates, and it is firmly enforced, without exception or appeal.

Despite their weak governance, many poor economies have managed to achieve some noticeable economic and social gains. Yet, in the face of widespread poverty, substantial progress is unlikely to materialize if these countries do not fully address the constraints posed by their underlying institutional weaknesses.

Governance is about fostering relationships of accountability among citizens, government institutions, and private suppliers. Thus it affects the efficiency and effectiveness of how policies are formulated and how resources are allocated.

The experience so far shows that, while building bridges or roads is a costly if reasonably straightforward exercise, forging accountable relationships between citizens and public and private sector institutions has often proved elusive.

The donor community can do more in this respect by focusing on the accountability dimension of the policies and programs it promotes. By encouraging a greater involvement of communities in program delivery and monitoring, for instance, donors can help ensure that the onus of enforcing accountability for results and for the management of resources increasingly shifts from the donors themselves to beneficiaries.

The IMF also has an important role to play by promoting greater transparency, broader consultations, and a stronger accountability dimension in the economic policies it advises on and by strengthening the governance of economic institutions in poor countries.