Assessment and Recommendations

Introduction

Paraguay, a landlocked country with a population of just under 7 million people, is situated in the heart of South America. One of the last of the continent’s countries to overcome dictatorship, Paraguay began a slow move towards democracy in 1989. Notwithstanding Paraguay’s difficult past, the country has become one of the most dynamic economies in the region, with annual growth rates well above the OECD and Latin American averages. Thanks to a strong macroeconomic performance and to important structural reforms, many Paraguayans have overcome poverty and middle classes have started to emerge.

The country remains highly unequal, however; poverty is far from eradicated and more needs to be done to create well-paying formal jobs for all Paraguayans. Paraguay’s National Development Plan (NDP) 2030, adopted in 2014, highlights these challenges and provides the country with a long-term strategic development vision. Addressing the country’s most pressing socio-economic challenges and achieving the NDP’s vision require an effective, efficient, strategic, open and transparent state.

In recognising this, the Government of Paraguay asked the OECD to conduct a Public Governance Review (PGR) to obtain practical advice and recommendations to support its efforts in tackling key public governance barriers to inclusive and sustainable growth. The PGR identifies key aspects of public governance that the Government of Paraguay has deemed important to achieve its vision and that need to be addressed in order to create a public administration that can deliver inclusive growth results for all.

The PGR discusses ways to enhance whole-of-government co-ordination efforts led by Paraguay’s centre of government in order for the CoG to articulate integrated multi-dimensional policy responses to the increasingly complex challenges the country and its people are facing. It discusses the need for a better connection between the budgeting process and Paraguay’s different strategic policy agendas, including the National Development Plan 2030, in order for the country to adopt and implement reforms for inclusive growth that are fully funded. The PGR highlights the need for a greater focus on a coherent, strategic approach to regional development and better multi-level governance to ensure that policies are tailored to the circumstances and conditions in different regions of Paraguay and can actually meet citizens’ needs properly across territories characterised by acute regional disparities. It discusses Paraguay’s need to broaden and deepen its strategy to move towards more modern human resources management practices to ensure that the civil service has the skills to address the country’s development challenges successfully. It focuses on the need for a more open, transparent, accountable and participatory government to ensure that policies adequately reflect the population’s needs.

Taken together, the PGR provide a coherent, holistic picture of the governance reform needs of the Paraguayan public sector. This integrated narrative includes tailor-made policy recommendations the implementation of which could contribute to Paraguay achieving its reform objectives while at the same time bringing the country closer to OECD standards.

Better planning and delivery through more integrated co-ordination led by the Centre of Government

Robust co-ordination to design and deliver multi-dimensional strategic policy is critical to addressing complex policy challenges successfully. To design effective whole-of-government strategy, OECD countries are strengthening the institutional and financial capacity of their Centre of Government (CoG), the body or group bodies that provide direct support and advice to the Head of Government and the Council of Ministries. In OECD countries the CoG has progressively moved from providing administrative support to the President or Prime Minister to becoming a key player in multidimensional policy development with a mandate to ensure coherence in decision-making on policy design and implementation, and to provide evidence-based, strategic, coherent and timely advice to the Head of Government and the Council of Ministers.

In Paraguay, the Centre of Government supports the President of the Republic and the Council of Ministers. The CoG not only refers to the Presidency itself but includes such key institutions as the Ministry of Finance, responsible for the National Budget, and the Technical Secretariat for Economic and Social Development Planning (STP), which plays a key role in developing and co-ordinating strategic planning. Additional ministries and secretariats play an important role in supporting whole-of-government policy co-ordination across administrative silos, such as the Ministry of Foreign Affairs and the Secretariat of the Public Service (Secretaría de la Función Pública - SFP).

Since 2014 Paraguay has made substantial progress in setting a long-term vision for the country through its National Development Plan as well as in enhancing the CoG’s institutional and technical capacity to pursue its implementation. However, these can only be seen as first steps in a long process of changing institutional, cultural and political practices. Paraguay’s Centre of Government co-ordination capacity needs to be assessed in the context of the organisation of the country’s public administration, which combines a highly centralized Presidency with an atomized, fragmented administration:

• Indeed the Presidency houses 22 executive secretariats with ministerial rank and entities that report directly to the President. This is partly due to a decades-long accumulation of public bodies and entities responding to emerging needs and/or to give effect to international commitments, and to a lack of a normative legal/regulatory framework that would otherwise enable Paraguay to organise its public administration (e.g. a “Ley de Ministerios”, legislation that guides the creation of ministries, etc.).

• Since the return to democracy in 1989, no comprehensive public administration reform has been implemented. The absence of such a framework has created gaps, overlaps and contradictions in the responsibilities and competences of ministries and secretariats while contributing to the institutional atomisation of the public administration. This has led to significant fragmentation of the Executive, which by definition magnifies co-ordination challenges.

• Only a tiny number of the Presidency’s 22 Executive Secretariats and entities perform tasks related to classic CoG responsibilities. Most of the remaining Secretariats are responsible for sector-based operational policy themes, such as sports, culture, science and technology, refugees and repatriations which, while multi-dimensional in nature in some cases, load the Presidency with a huge number of transactional mandates which could be assigned to line ministries.

Hence the Presidency’s current structure generates the need to expend substantive administrative energy on sector-specific activities, which detracts from its capacity to focus on high-level whole-of-government strategic co-ordination. OECD evidence suggests that governments tend to co-ordinate better when the presidency/prime minister’s office plays a strategically agile whole-of-government role, focusing on medium-term strategic issues rather than solely on transactional policy implementation. The Government of Paraguay could therefore consider streamlining the Presidency in order to create an agile structure oriented to the performing centre-of-government functions more effectively and efficiently.

Box 1. Recommendations on strengthening the Centre of Government’s co-ordination capacity (see the complete list of recommendations at the end of Chapter 2)

To strengthen the capacity of its CoG to lead and co-ordinate multi-dimensional, whole-of-government strategic policy design, planning, implementation and the monitoring and evaluation of policy performance, the Government of Paraguay could consider the following:

• Consolidate the Presidency’s whole-of-government co-ordination mandate and capacity, by transferring into the portfolio responsibilities of existing line ministries all units that do not contribute to its core mandate so that it can concentrate its responsibilities, resources, and efforts in sustaining effective whole-of-government coordination, integrated planning and strategic performance-monitoring.

• Strengthen capacity for high-level whole-of-government policy discussion and decision-making, notably by:

  • Strengthening the Council of Ministers;

  • Merging the Social Cabinet and Economic Team into a National Economic and Social Development Cabinet, and mandating this merged Cabinet to act as the key strategic policy committee of the Council of Ministers;

• Strengthen inter-institutional co-ordination between CoG units to reinforce whole-of-government, integrated policy design, medium-term strategic planning and strategic performance-monitoring capacity, in particular by:

  • Strengthening the newly created “Centro de Gobierno”;

  • Engaging the Presidency/“Centro de Gobierno” more actively in coordinating the design and implementation of the National Development Plan and of national development strategies more generally, for instance by creating a NDP Co-ordination Technical Roundtable to sustain greater ongoing cooperation between the Presidency, the Centro de Gobierno, the Ministry of Finance, the STP and the CoG technical/policy support units/secretariats currently serving the Social Cabinet and the Economic Team. This could encourage all these CoG entities to work together as a single team to support the President, the Council of Ministers and eventually this merged National Economic and Social Development Cabinet in pursuing integrated economic and social development in a way that reflects the strategic medium-term development objectives identified for the country in the NDP.

• Continue improving the CoG’s strategic planning and monitoring and evaluation capacity, in particular by:

  • Strengthening strategic foresight capacity within the CoG and the integration of its results into medium-term planning;

  • Strengthening monitoring and evaluation capacity within the CoG and across government, notably as it relates to assessing the performance of the NDP against its development outcomes for the country;

  • Articulating the next phases of a State Modernisation Agenda, and align this agenda with the National Development Plan.

Stronger linkages between strategic planning and budgeting to improve outcomes

The need to strengthen co-ordination capacity in the Centre-of-Government to lead the design, delivery and performance-monitoring of integrated, whole-of-government strategic planning finds resonance in the assessment of the relationship between the Presidency and the Ministry of Finance in ensuring that the National Development Plan and the National Budget are fully aligned. This alignment is a sine qua non condition for ensuring that the NDP can be implemented properly over time, and that spending decisions can be evaluated against the strategic development objectives identified in the Plan.

Paraguay has developed interesting practices to ensure alignment of annual budgets and capital expenditures with strategic policy objectives, such as the formulation of the NDP and its long-term planning horizon, reforms to the budget structure and setting annual targets at the institutional level. Despite these improvements, the country faces challenges respecting the sustainability of such reforms and the need to complement them with more developed performance-budgeting and medium-term budget frameworks.

The budget is a central policy document of the Government, showing how annual and multi-annual objectives will be prioritised and achieved through resource allocation. The budget is therefore a planning tool and a reflection of a government’s priorities. It requires sound governance to make it efficient, strategic, clear, transparent, and trusted by citizens.

Improving the quality of public finance management to optimise the achievement of strategic national development objectives is a key challenge in Paraguay, as it is in many countries. Paraguay has implemented several reforms in this field, most notably the formulation of a national development plan with a long-term planning horizon, reforming the budget structure, and setting annual targets at the institutional level.

Despite these improvements, the government and civil society are concerned about the sustainability of such reforms, which could be bolstered with a robust medium term expenditure framework and performance budgeting tools. Paraguay could consider consolidating other inter-connected and mutually supportive elements of budgetary governance, such as inclusive, participative and realistic debate on budgetary choices, transparency, openness and accessibility of budget documents, citizen engagement, effective budget execution, fiscal risks and budgeting within fiscal objectives.

OECD countries have implemented different public finance management tools that contribute to the alignment of the budget with the strategic objectives of the government:

• Most OECD countries have a medium-term expenditure framework (MTEF) in place. A well-designed MTEF forces stakeholders to deal with the medium-term perspective of budgeting and budgetary policies rather than adopting an exclusively year-by-year approach. It provides greater assurance to policy planners about multi-year resource availability, and helps align these resources against the government’s medium-term goals;

• Most OECD countries have also undertaken reforms to ensure that budget allocations are organised and structured in a way that corresponds readily with strategic national development objectives. In particular, some countries have introduced programme budgeting, structuring the budget by reference to functional and/or strategic programmes (as distinct from traditional financial “line items”, heads and subheads of expenditure) in order to focus more clearly on the impacts of public spending, and thus to promote closer linkages with medium-term planning and development objectives.

Paraguay has a budget-setting process that is clear and understood by relevant stakeholders. However, Paraguay presents particular institutional arrangements that affect the credibility, transparency and sustainability of the budget document. In particular, the different roles and prerogatives of the Legislative and Executive Branches are not well-aligned; these tend to undermine the predictability and efficiency of budget allocations. Indeed the particular characteristics of the Budget process in Paraguay lead to substantial differences between the initial budget bill prepared by the Executive, the budget law approved by Congress, and actual expenditures. This undermines the important advances made in linking the National Development Plan with the Budget.

The government of Paraguay has made significant efforts to restructure the budget document to strengthen the link with the Government’s strategic objectives. In 2014 the Government began implementing a “results-based planning system” (Sistema de Planificación por Resultados SPR), where results are placed upfront in the planning process and are the basis for defining the combination of inputs, activities and productive processes best needed to obtain these results.

Currently, the National Development Plan’s 12 strategies are considered as budget programmes, which provide an estimate of the allocation of resources assigned to each strategy. This new structure has helped reduce the number of budgetary programmes while improving their clarity, and has provided a clearer understanding of their links to and coherence with the NDP.

However, there is still space to improve the programme budgeting reform. Although there is a relation between the NDP’s objectives and annual results and the annual budget, there is no relation between objectives and the financial allocation that would be assigned to them. In addition the medium term expenditure framework does not take into account targets or medium-term objectives identified in the National Development Plan.

One of the most challenging elements of budgetary governance is ensuring that public funds, once they have been allocated and spent, can be subject to ongoing monitoring and evaluation to ensure that value-for-money is being attained. Performance budgeting is a critical tool to improve the link between the Government’s strategic objectives and the annual and multiannual budget process. A government’s strategic objectives should be monitored and evaluated so that the Government and society as a whole can see the improvements achieved and implement corrective measures when needed.

However the monitoring and evaluation framework is not well defined in Paraguay. Both the Ministry of Finance and the STP have developed interesting initiatives to measure performance, but as pointed out in the section on CoG co-ordination, responsibilities are not clearly defined and co-ordination mechanisms are lacking. Furthermore, the new Council mandated by the NDP to evaluate performance of public programmes and institutions has not yet been created.

Developing a stronger medium-term dimension in the budgeting process (beyond the traditional annual cycle) is a key element to ensure that budgets are closely aligned with the medium-term strategic priorities of government. Medium-term expenditure frameworks (MTEFs) strengthen the ability of the Government in general, and the Ministry of Finance in particular, to plan and enforce a sustainable fiscal path. If properly designed, a MTEF should force stakeholders to deal with the medium term perspective of budgeting and budgetary policies rather than adopt an exclusively year-by-year approach.

Paraguay presents some of the basic foundations of medium-term budgeting. In particular, the Fiscal Responsibility Law (2013) provides a multi-annual perspective to the budget process. That said:

• The MTEF is still embryonic. The multi-annual expenditure ceilings are only used as a reference in the budget document. In practice, they are redefined each year by the Ministry of Finance during the annual programing phase.

• Paraguay’s Multiannual Financial Programming exercise does not take into account targets or medium term objectives linked to the long term strategic plan. Although there is a relation between the objectives or annual results and the annual budget, there is no relation between objectives and the financial allocation that would be assigned to them. Expenditures are projected based on a comparative percentage increase, without a clear link with the National Development Plan.

• In countries with effective medium-term budgeting, medium-term projections of budget programmes are based on existing spending policies, together with the impact of proposed new budget policies, which are clearly linked to annual budgets, all on a programme basis. However, in Paraguay, the government does not produce expenditure estimates for medium-term programs and investments; expenditure priorities are studied only for the current budget year. In addition, the system used to program the annual budget is not linked to the multiannual framework programing exercise.

The credibility of the medium term expenditure framework is further challenged by the unlimited powers exercised by Congress during the budget approval phase. Congress has unfettered powers to introduce substantive amendments to the budget bill submitted by the Executive, compromising fiscal sustainability, and reducing the credibility of the multiyear expenditure estimates.

To address these issues, Paraguay could consider strengthening the links between strategic planning and the budget’s design and execution process, notably its programme-based budgeting methods, and align the planning horizon of the budget process more closely with that of the National Development plan.

Box 2. Recommendations on linking national planning and budgeting (see the complete list of recommendations at the end of Chapter 3)

To enhance the links between strategic planning and the budget-setting and execution process, Paraguay could consider the following:

• Increase transparency by informing citizens about the budget law, the differences with the budget bill presented by the Executive, the financial plan and actual expenditures.

• Promote a sustained, responsible engagement of Congress during the full cycle of the budget process.

• Link the national plan with institutional and sector plans (and the decentralisation framework – see recommendations below).

• Consolidate the “Results-Based Planning System” reform by strengthening the performance budgeting framework.

• Strengthen the Medium-Term Expenditure Framework.

• Make full use of the newly created Fiscal Advisory Council (FAC) to strengthen revenue projection estimates.

• Consolidate other inter-connected and mutually supportive elements of budgetary governance.

Design a regional development strategy and pursue it through effective decentralisation and multi-level governance

Driven by sustained economic growth, Paraguay has significantly reduced income inequality over the past decade. The GINI coefficient has dropped from above 0.5 in 2006 to around 0.48 in 2015 which, while slightly above the average in Latin America, is still high compared to the OECD average of around 0.32. The country has made substantial progress in reducing poverty; extreme poverty has decreased from 15% to 5.4% over the same period. However, the country still displays territorial pockets of acute poverty:

• Rural poverty is almost double that in urban areas. This disparity is aggravated in the case of extreme poverty, where in rural areas the figure is almost 7.5 times higher than that of urban areas.

• Poverty rates differ significantly across Paraguay’s 17 departments. Elevated poverty rates are prevalent in Caazapá, followed by Concepción and San Pedro, while Asunción exhibits a poverty rate of less than a quarter of that in the poorest department. Departmental GINI coefficients also tell the story of acute disparities: the departments of Canindeyú and Presidente Hayes display some of the country’s highest inequality levels, with Gini coefficients at 0.56 and 0.59 respectively, surpassed only by the department of Boquerón with 0.63.

Addressing these territorial disparities and development challenges requires a concerted effort on the part of the national government to define and deliver an integrated regional development strategy that inter alia addresses the current institutional framework at the subnational level as well as the political and administrative relationship between the central government and subnational governments.

There is no a universal consensus on a single approach to decentralisation or an optimal multi-level governance structure to deliver regional development results successfully. The nature and scope of decentralisation depend on the complex relationship between levels of government in which historical, political and economic factors play a crucial role. Paraguay has been characterised throughout its history as highly centralised, both politically and administratively, a characteristic that was intensified during the 34-year dictatorship. Any analysis must take into consideration that, in comparison with other Latin American countries, the Paraguayan decentralisation process is relatively new, since it only began after the return to democracy in 1989. Since then, Paraguay has made substantive efforts to improve the efficiency of the provision of local services as well as to enhance transparency and accountability by pursuing a strategy to increase political, administrative and fiscal decentralisation.

• The first significant step toward political decentralisation, understood as the devolution or transfer of powers to democratically elected local authorities, came with the democratic transition and the reform of the Electoral Code in 1990, which led to municipal elections in 1991.

• The 1992 Constitution created Department Governments (Departamento) as an intermediate tier of government, recognised the political, administrative and legal autonomy of departments and municipalities through the direct election of their governors and mayors, and established municipal financial autonomy.

• The second advance was related to the transfer of administrative responsibilities, particularly to municipalities.

Paraguay's multi-level governance system can thus be described as an "hourglass", meaning that the intermediate tier of government, represented by the departments, has fewer attributions compared to the highest tier, the central government, and the lowest tier, the municipalities.

OECD evidence shows that pursuing effective regional development is a means to address regional disparities and spur national growth. This often implies the need to articulate a dedicated multi-dimensional strategy to achieve clearly defined regional development objectives through effective decentralisation and multi-level governance. This also implies institutional and public management changes at the territorial level, as well as a reorganisation of responsibilities and human, technical and financial resources across the different levels of government. How public goods and services are funded, and how mandates and funding are allocated between levels of government, speak to the capacity of governments to address poverty and inequality in the territories and are central elements of effective multi-level governance.

Paraguay could therefore consider the identification of modernisation objectives at the subnational level, within the framework of a national decentralisation strategy aligned with the state modernisation plan recommended in the CoG section above. For this purpose, the Government could consider a more active role for the departments in providing technical assistance to municipalities and in developing skills at the municipal level.

Given the level of centralization of the Paraguayan public administration, the country has developed a tradition of siloed vertical implementation across levels of government: most line ministries in charge of public investments, such as public works, health and education, implement their territorial policies without consulting other institutions at the central level, departments or municipalities.

As highlighted above, Paraguay has limited experience in the development of co-ordination mechanisms. The strategic co-ordination challenges that the centre of government faces are also reflected in the lack of collaboration across ministry siloes to design effective regional development strategies. In addition, most of the co-ordination activities between subnational entities and the central government are carried out on an ad hoc basis, strongly influenced by political alliances rather than regional planning.

Departments could thus play a more central role in vertical co-ordination. Departments appear not to have the capacity to articulate inter-municipal co-ordination nor do they play an active role in territorial planning. Yet in most if not all cases the departments actually reflect functional regional economies: this provides an ideal opportunity to enhance the management of economies of scale in service design and delivery in such key strategic service areas as transportation and mobility, health, education, public security and water, waste-water and solid-waste management.

• Departments could constitute a valuable channel through which the central government implements strategic and integrated territorial development policies that simultaneously contribute to advancing national development objectives, optimising the outcome of line ministries’ spending at the territorial level;

• Departments could also be a legitimate channel through which neighbouring municipalities can transmit collective requests to the central government. However, in order to legitimise the role of the departments, Paraguay should clarify the Governor’s role, as they are simultaneously representatives of the central government and democratically elected officials, thereby generating a tension-filled contradiction in terms of accountability.

One of the main multi-level governance challenges that Paraguay faces is the lack of public management skills and administrative capacity at the subnational level. Public servants are paid less than their counterparts in the central government. Indeed, the most skilled officials usually move to the central government after some years, aggravating the situation in municipalities.

The lack of skills at the local level affects subnational capacity to receive fiscal transfers from the Central Government. Many municipalities have few employees and lack the capacity and skills to comply with the transfers’ technical requirements. Therefore, they are less likely to receive transfer funds which simply aggravates regional disparities, as these funds mainly end absorbed by the larger municipalities.

Improving this situation requires not only a more coherent, integrated national approach to territorial development but an ambitious and comprehensive public-sector reform process at the subnational level as well, which represents a complex task from both a public management point of view and the political and economic perspective.

Regional development strategies can be a useful tool for vertical co-ordination and multi-level governance. In this connection, one of the main multi-level governance challenges that the Government of Paraguay itself highlighted is its relative incapacity to translate strategic decisions into actual concrete policies at the territorial level. Thus, the creation of the National Development Plan was an important instrument that establishes territorial development as a cross-cutting long term goal, and that aligns national and sub-national policy agendas. Indeed all national decentralisation objectives are implemented through the NDP.

In order to implement this territorial vision, the NPD mandated the preparation of Department and Municipal Development Plans. These local development plans aim to synthesise the aspirations of the local population. They are co-created with representatives of civil society; they therefore constitute an innovative democratic action concerning local participation in policy design in Paraguay.

Each plan must be aligned with the national development plan and must be approved by the STP. For their design, the Government of Paraguay has developed specific guidelines and provided technical assistance in situ. Their preparation is mandatory and a condition for access to national transfers.

However, a critical barrier limiting the effectiveness of this process and therefore the territorial impact of the NDP is the fact that local development plans are not linked to national and sub-national budgets. Moreover, the vast majority of municipalities do not earn enough revenues from their fiscal autonomy and depend on earmarked grants from the central government to perform a limited range of tasks. In addition, the Ministry of Finance is not involved in their design process; therefore it does not have the capacity to assess if the plans are achievable in terms of budget.

Hence, this interesting participatory process has raised expectations both in local governments and the civil society that largely go unmet through lack of concrete policy outcomes due to lack of financing. The capacity of the local councils both as a space for dialogue and a co-ordination instrument has therefore been negatively affected; in several municipalities they eventually stopped meeting due to the lack of concrete results.

The STP could improve the impact of these plans if they were more integrated into the work of the Ministry of Finance and other line ministries, exploring potential links between municipal needs and the national budget. A comprehensive decentralisation strategy could address these governance issues by taking into consideration the need to co-ordinate planning across levels of government to address regional disparities along with the fiscal and administrative capacity challenges highlighted here.

OECD experience shows that multi-level governance reforms are best approached holistically, in a multi-dimensional and comprehensive way. This does not mean that the initial focus cannot be put on specific areas, such as infrastructure, land-use or transportation/mobility, for example, or that decentralisation cannot be a flexible process that supports different regions in taking up responsibilities at their own pace according to their needs and capacity. But multi-dimensional reforms aimed at pursuing regional development and reducing regional disparities should take into account the need to improve co-ordination across levels of government, constraints on public management and fiscal capacity in sub-national governments, and the consolidation of stakeholder engagement mechanisms to ensure the sustainability of reforms through greater accountability and responsiveness to citizens.

In sum, high levels of inequality persist across regions in Paraguay, as do significant limitations on sub-national administrative and fiscal capacity to deliver services to citizens properly. Department governments face significant capacity challenges to design and pursue local and regional development strategies that build on endogenous strengths and assets in each Department to drive regional economic growth in a way that contributes materially to the country’s development. They also face significant challenges in sustaining effective inter-governmental co-ordination to pursue common regional and national development objectives successfully.

The Government of Paraguay could therefore consider designing and implementing a comprehensive, integrated regional development strategy that is fully aligned with the Government’s National Development Plan. In so doing, the Government could continue forging a broad national consensus on the importance of coherent decentralisation, effective multilevel governance and robust regional and local administrative capacity to pursue regional (and national) development successfully, and on the idea that these can constitute key strategic tools to address the challenges noted above.

Box 3. Recommendations on decentralisation and multi-level governance (see the end of Chapter 4 for the complete list of recommendations)

In light of the above, Paraguay could consider the following recommendations:

• Develop a holistic, integrated regional development strategy that defines and implements political, fiscal and administrative decentralisation and strengthens effective multi-level governance.

  • Engage with national and regional stakeholders within and beyond government at all stages in the development and implementation of the strategy, in order to generate buy-in and consensus on its merits;

• Strengthen institutional arrangements at the national level to lead and co-ordinate the design, implementation and performance-monitoring of this regional development strategy. To do so, Paraguay could build on its existing institutional make-up to maximise efficiencies and synergies across strategy frameworks; in so doing it could consider the following:

  • Provide a clear mandate and proper human and financial resources to an existing national government institution for this purpose on an ongoing basis.

  • If the selected institution is not responsible for both policy and programming, consider creating a national Regional Development Agency to operationalise the regional development strategy.

  • Create a Decentralisation Committee of the Council of Ministers, mandated to oversee and co-ordinate across administrative silos the design and implementation of this whole-of-government regional development strategy and ensure that it is coherent with the NDP and other framework strategies of the government, with the institution assigned the task of leading the design of the strategy also mandated to act as the technical secretariat for this Committee. This Committee could be a sub-committee of the National Social and Economic Development Cabinet recommended above, should the Government implement this recommendation.

• Strengthen departments’ capacities in regional development and in the articulation of inter-municipal co-ordination, in particular by:

  • Resolving the current tension in the Governor's mandate;

  • Ensuring that Departments constitute an institutional partner with which the central government can pursue strategic, integrated decentralisation and regional development goals that simultaneously contribute to advancing national development objectives and optimising the outcome of line ministries’ spending at the territorial level;

  • Giving Departments more responsibilities for regional development and capacity-building at the municipal level, in particular through the creation of Regional Development Units in the Gobernación, mandated to co-ordinate the implementation of decentralisation at the department level and act as interlocutor with their counterpart institutions at the national level.

• Encourage the production of data at the sub-national level to inform investment strategies and produce evidence for decision-making.

• Strengthen skills and management capacities at the subnational level.

• Foster horizontal co-operation between Departments and between municipalities where this makes sense, inter alia by providing financial incentives to projects involving inter-municipal co-operation in order to stimulate horizontal co-ordination across sub-national governments.

• Make further efforts to link department and municipal development plans with the national and departmental budgets, fiscal frameworks and investment strategies.

Broaden and deepen the implementation of strategic workforce management and planning

A professional and skilled civil service is a basic building-block for governmental efficiency. Having the right laws, regulations and structures in place to attract, recruit, develop and retain skilled civil servants is essential to make sure that the government can deliver on its priorities, be responsive and provide services to citizens. This implies first and foremost having in place a system where the best candidates are recruited based on merit. A transparent and merit-based recruitment system is a first step to building a skilled workforce and to ensuring that resources assigned to workforce management and planning are well spent. Transparent and merit based recruitment systems also promote trust on the part of civil society in the civil service and the public administration as a whole.

As stated in the National Development Plan, an efficient and professional civil service is a foundational element for the successful implementation of the Plan. Social development and poverty reduction, inclusive economic growth, and international integration cannot be achieved without a professional and efficient civil service.

A professional civil service starts with merit-based recruitment to bring the right competencies into the civil service; it is also the starting point for a culture of public service. When patronage or political influence affects the recruitment system, professionalism can no longer be ensured as loyalty is diverted from serving citizens. Political influence in the recruitment system leads to a reduction in citizens’ trust in the civil service and more broadly in the public administration. At the same time, political influence also affects civil-service capacity to recruit talent through regular channels, since potential candidates are deterred from applying through processes which lack credibility. Concrete human resources (HR) practices and policies can support the government’s public governance reform agenda by looking at the challenges and opportunities faced by Paraguay’s civil service.

Paraguay ranks 123rd out of 176 in the 2016 Corruption Perception Index, and it scores amongst the lowest in the World Bank World Wide Governance Indicators. Up until recently, Paraguay appears amongst Latin American countries as one with the lowest scores in terms of HR planning in the public sector, performance appraisals and compensation management. The weakness of basic planning instruments directly affects workforce quality and balance, even though Paraguay has recently made progress in terms of organisation of the HR function and civil-service merit through reforms implemented right before 2015.

Although Paraguay’s Constitution ensures equal access to civil service positions, in practice patronage had traditionally greatly influenced recruitment into the civil service. Political influence negatively affects the capacity of the civil service to recruit needed skills and deliver on government priorities in an environment in which individual loyalty lies with the “patron” instead of with civil-service values and serving the public interest.

As a result, for Paraguay, improving the professionalization of the civil service has become an imperative to create a more efficient and responsive civil service, and is one of the areas where Paraguay has made the greatest improvements. Paraguay is making efforts to professionalise its civil service by investing in merit-based recruitment, establishing a more transparent compensation system, and building a more effective performance system. Progressive investment in digital tools for recruitment and HR management is changing the way public institutions operate, making it more efficient, merit-based and transparent, acknowledged in the IABD’s latest civil service diagnosis.

As the civil service is becoming more transparent and accountable, it also becomes more attractive. Since 2012, the number of candidates to civil servants’ positions has increased significantly. In 2012 there were 3 applicants for each vacancy; in 2017 14 applicants were registered for each vacancy, suggesting a substantial increase in the civil service’s capacity to attract skilled candidates.

Fragmentation and the opacity of the compensation system created space to raise salaries arbitrarily for certain categories, multiply the creation of positions without institutional requirements, and use personal influence to obtain the right to accumulate multiple salaries. With a wage bill difficult to control, the Government has limited resources to allocate to NDP priorities. In addition, salary increases based on subjective assessments affect the capacity of the civil service to maximise the benefits citizens receive from their taxes. Within such complex and hard-to-reform system, the Public Service Secretariat under the President of the Republic (Secretaría de la Función Publica - SFP) is working to increase the system’s transparency in order to raise awareness in civil society of the importance of a merit-based, professional civil service, and use public pressure to reduce manipulation of the system.

Careful implementation of civil-service reforms will be essential for the professionalization and modernisation of the public sector in Paraguay over the coming years. Once implemented, these reforms can contribute to a more merit-based and competent civil service capable of attracting and managing the right people with the right skills to deliver on the NDP’s priorities. As the civil service pursues the implementation of HR reforms, attention should be paid to the sustainability of HR reforms:

• First and foremost, political resistance or change may reduce the scope for action of the SFP. The SFP has a small team and small budget, and needs capacity to be able to engage other public stakeholders in the reform process.

• Second, the SFP should keep in mind the long term vision for the civil service while building a strong professional foundation for the civil service.

Further strengthening transparency and public visibility of HR processes should continue to build broad support and exert pressure for pursuing reforms. Citizen pressure for a more professional civil service and for a more efficient use of the HR budget may be an effective counterbalance to an eventual political resistance. Institutional performance metrics should help getting evidence for greater support to the different HR initiatives.

Comparison with civil service trends in OECD countries shows that Paraguay’s Centralized Integrated System for Administrative Career, the government’s civil-service management framework (SICCA) has the potential to strengthen professionalization of the civil service. Yet, it depends on its successful implementation and its resilience, not a foregone conclusion in Paraguay:

• First, many of these changes were introduced through decrees and regulations that can be easily removed once another government takes office. For this reason, it’s important that the SFP can make the case for the relevance of the different civil service reforms to get political buy in from different political parties, and increase the chances of sustainability. The current efforts in terms of transparency may provide leverage to the SFP because the media and the citizens can help make the case for a more professional civil service.

• Second, budget constraints may affect SFP’s capacity to implement its work programme. Most of the programmes implemented so far have been supported by international donors, including training or performance management systems. Political support to the civil service professionalization should be reflected through a better alignment between the role of the SFP and the resources available to it. In this regard, reforming the compensation system may help achieve this goal.

• Third, while the SFP is to be commended for the work it has developed in recent years, it has limited human and financial capacity. In parallel with reinforcing the SFP’s capacity, HR reforms should involve other institutions and civil servants as much as possible (for example through HR networks), to get institutional buy-in and increase the chances of success and sustainability over time.

Paraguay should thus continue efforts to implement a transparent and merit based civil service, and reduce political influence in the HR system. To achieve this, it is essential that Paraguay continue its efforts in this area and find resources to ensure the systems are implemented effectively. Until now, Paraguay’s civil service reform has been highly dependent on foreign aid, especially for investments in the digitalisation of recruitment and capacity development of civil servants. In addition, as the extension of SFP’s role is affecting its capacity to provide services efficiently, and considering SICCA’s positive impact in the merit-based recruitment, it becomes urgent that more resources, both human and financial, are allocated to the SFP so that it can provide the proper quality control and support, including communications support across the system, for the process in a timely manner.

Box 4. Recommendations to strengthen the strategic management and planning of the government’s workforce (see the complete list of recommendations at the end of Chapter 5)

Based on this assessment, Paraguay could consider the following as a means to strengthen strategic human resources management and planning in the government:

• Promote wider use of transparent and standardised recruitment procedures across the public administration, especially for managers and extend this to internal competitions.

• Make efforts to speed up recruitment processes so as to avoid creating long delays due to complaints and approval procedures. Additional resources assigned to the SFP and/or collaboration with other HR departments could help.

• Develop a communications strategy to build awareness and commitment for the open and transparent systems.

• Ensure that all implicated bodies are appropriately resourced to carry out these functions in a timely and effective manner.

• Increase the transparency of the compensation system in order to limit opportunities for manipulation and promote merit in compensation. To this end, Paraguay could:

  • Continue efforts to clean up the salary system by reducing salary categories and developing standardised pay bands.

  • Assess pay discrepancies in the public sector and take necessary steps to equalise pay for work of equal value.

  • Reduce opportunities for manipulation and corruption of the salary system.

• Pursue efforts to develop a culture of public service and performance. To this end, Paraguay could consider:

  • Delivering induction training.

  • Enhancing attractive individual career paths.

  • Setting up a more stable funding stream according to the availability of resources.

• Focus on Leadership/Senior Civil Service. To this end Paraguay could consider:

  • Developing training for senior managers in key areas for civil service performance.

  • Using merit-based selection mechanisms to recruit top management positions.

Strengthen Open Government Policies and Frameworks in all levels of Government

Paraguay has placed the open government principles of transparency, accountability and stakeholder participation high on its political agenda. In fact, these principles constitute a cross-cutting axis underpinning the National Development Plan. In line with the NDP’s objective to raise the country’s international profile, Paraguay has also made strategic use of its open government agenda to enhance its international profile.

A solid enabling environment for Open Government is an essential and necessary pre-condition for the successful implementation of open government strategies and initiatives in any country. OECD evidence points to the importance for countries to have a clear definition of open government in place in order to guide a country’s approach to the implementation of open government reforms. The OECD Recommendation of the Council on Open Government further highlights the importance for countries to develop an open government strategy with all stakeholders and points to the crucial necessity for countries to adopt a robust legal and regulatory framework for Open Government to flourish.

Paraguay has started making use of the vision for Open Government that is outlined by the OGP in recent years. For instance, the country’s third OGP Action Plans states that “Open Government is a form of relationship between public power and citizenship; based on the participation and permanent collaboration of its members in the exercise of citizen rights and the compliance with obligations”.

While the inclusion of this vision in the third OGP Action Plan is an important step forward, by OECD standards, a government’s vision for Open Government does not represent a single definition. More efforts are needed to make sure that all stakeholders develop a common understanding of Open Government. The government of Paraguay could therefore consider developing a single national definition that is tailored to the national context together with all stakeholders. The National Open Government Roundtable (Mesa Conjunta de Gobierno Abierto, the “OG Roundtable”) or the Parliamentary Commission on Open Government could provide a useful forum for the development of such a definition.

Paraguay joined the Open Government Partnership in 2011. Since then, the country has elaborated three Action Plans and is currently in the process of elaborating its fourth plan. These National Action Plan (NAP) processes have contributed to raising the profile of open government initiatives in the country and have allowed the government to make new connections with external stakeholders and the organised civil society. Moreover, the OGP process in Paraguay has contributed to the achievement of an important number of immediate and high-level policy objectives related to the promotion of transparency, accountability and stakeholder participation, such as the implementation of legislation on Access to Information (ATI).

While the NAPs have allowed Paraguay to make important progress in certain open government areas, given their biannual nature (which, in many cases, is not aligned with the government’s policy cycle) and their focus on more short-term policy issues, NAPs do not constitute a comprehensive National Open Government Strategy and should be complemented with OG provisions in other policy documents, including National Development Plans (as in the case of Paraguay). A National Open Government Strategy can provide the missing link between high-level commitments and short-term delivery-oriented commitments included in the biannual OGP Action Plans.

The implementation of OG strategies and initiatives should be a means to an end: OECD experience shows that open government policies can actually be a valuable tool to contribute to the achievement of broader policy objectives, including fostering trust in public institutions and more inclusive economic development. Therefore, it is recommended for countries to make the link between their open government agendas and broader national development objectives. In this connection the Government of Paraguay has made important efforts to align the NAP with the NDP. The government should continue along these lines by ensuring that the fourth OGP Action Plan, which it is currently designing, is also fully linked to the objectives of the National Development Plan.

A single National Open Government Strategy (NOGS) can provide the missing link between high-level commitments (such as the ones in the NDP) and short-term delivery-oriented commitments included in the biannual OGP Action Plans. The development and implementation of a NOGS can also streamline those existing initiatives in areas of relevance to OG principles that are not reflected in the OGP Action Plan.

If Paraguay decides to develop a NOGS, it should be co-created through a participatory methodology like the one that is currently being used in the development of the OGP Action Plans. The government could also consider including additional actors such as the legislative and judicial branches in the co-creation in order to support the ongoing move towards an open state (see below). The STP as the co-ordinating entity of the National Open Government Roundtable could take the lead in the development of the NOGS which could take place in the framework of the National Open Government Roundtable or the Parliament’s Open Government Commission.

A law regulating access to public information is the cornerstone of any country’s enabling environment for open government. To date, all OECD countries and most LAC countries have an access to information legislation in place. In 2014, after a lengthy process, Paraguay’s Congress adopted the country’s first access to information law (two pieces of legislation, in fact).

One weakness of the law is that it does not create a formal guarantor for its implementation, as is the case in other countries such as in Mexico and Chile. It only establishes the Ministry of Justice as the co-ordinator of its implementation. The Ministry of Justice does not, however, have formal enforcement powers and is understaffed, which may hinder its capacity to follow-up on requests. More human and financial resources for the office of the Ministry of Justice responsible for the implementation of the law should be foreseen. In addition the government could identify more ways to incentivise compliance since sanctions are not an option under the legislation.

A solid legal framework for Open Government can guarantee continuity of efforts from one government to another and hence provide implementation stability. Paraguay could therefore make efforts to complement its legal and regulatory framework for Open Government over the next years. The inclusion of relevant commitments in the fourth OGP Action Plan could provide the necessary impetus for these efforts.

There are currently several legal provisions that foresee stakeholder engagement in policy processes in Paraguay such as mandatory public hearings and participatory budgeting processes. However, the lack of a unified legislation that promotes stakeholder participation prevents it from becoming a mainstreamed practice and makes it difficult for citizens to understand where and when they can participate. Paraguay could learn from the positive experience with co-creation made in the OGP process and engage stakeholders more actively in the development, implementation and monitoring and evaluation of policies. Adopting a law on participation, as done by Colombia, or creating an overarching document on stakeholder participation, could help Paraguay in this endeavour.

The implementation of open government policies requires vision and leadership, as well as the capacity to effectively and efficiently co-ordinate, tasks that according to OECD experience are best taken over by an institution located in a country’s Centre-of-Government. The CoG can facilitate the link between open government objectives with the broader national ones by connecting open government principles, strategies and initiatives across government (including different sectors and different levels of government) and with non-state actors in order to foster a shared vision on open government agenda. It can also promote visibility across the government and towards citizens of existing good practices in the area of open government, as well as institutional champions. The CoG can strengthen the strategic use of performance data across the public sector in order to support the monitoring and evaluation of the impact of open government strategies and initiatives.

This is the case in Paraguay, where the open government agenda is co-ordinated by the STP, which has been driving the national OGP process since its beginning. The STP is also the institution responsible for co-ordinating the National Open Government Roundtable, the “Mesa Conjunta de Gobierno Abierto”, for developing, co-ordinating the implementation, monitoring and communicating the OGP Action Plans, as well as for promoting open government principles in the country. However, the STP does not assign resources for the implementation of open government initiatives and it does not evaluate impact, except for the self-assessment done in the framework of the OGP that includes an evaluation on processes and outputs of the OGP commitments.

In addition, as mentioned above, the co-ordination of Local Development Plans (both departmental and municipal) and of the NDP is also ensured by the STP, an important and highly strategic competence that puts it in an ideal position to link the country’s OG agenda with the wider development agenda.

In Paraguay, the Joint Open Government Roundtable (Mesa Conjunta de Gobierno Abierto) is the main co-ordination entity of the OGP process and includes a wide variety of public institutions from the public sector as well as civil society. The important number of public institutions and of civil society organisations is a great opportunity to ensure inclusiveness but, if not well managed, can also create a co-ordination challenge and hinder the Roundtable’s effectiveness. The government could consider selecting a number of key public institutions that represent the government’s position in the Committee and, one the other hand, letting civil society organisations select a smaller number of organisations to represent them in the Committee. A smaller number of present organisations would allow for Committee meetings to take place in a more participatory manner and to take more management decisions.

Paraguay could also consider extending the Roundtable’s responsibilities to the broader open government agenda of the country and to transform it into a real Open Government Steering Committee that meets more regularly and takes management decisions, as for instance done in Tunisia where the Committee is composed of five government institutions and five civil society organisations and meets monthly.

In addition to hiring or assigning staff that is especially dedicated to Ministries’ open government agendas (beyond the OGP process), further efforts are needed to embed an open government culture in the public service. For the time being, there are no specific open government requirements in terms of skills for civil servants in Paraguay. Except for some training on the implementation of the access to information law, new employees of the state do not receive open government training, and human resources management policies (such as recruitment etc.) are not used to promote open government nor include open government related skills in their competencies frameworks.

• The government could consider collaborating with INAPP, its National Institute for Public Administration (Instituto Nacional de Administracion Publica de Paraguay, inter alia Paraguay’s main continuous training provider for civil servants, or a national university, to design an open government curriculum for interested students and/or civil servants, as for instance done by Chile.

• The SFP as the driver of the civil service reform in Paraguay and is one of the STP’s most important partners in the promotion of Open Government though HRM. Paraguay could involve the SFP even more actively in the open government agenda, and could also consider including HRM elements in its fourth OGP Action Plan.

As highlighted in previous sections, monitoring and evaluation systems are indispensable to ensure that public policies achieve their goals and to enable government to adjust course if results are not being achieved properly. In the specific context of Open Government, monitoring and evaluation mechanisms are all the more important, as data availability, communication of impacts and their evaluation from stakeholders, the so-called “feedback loop”, lay at the heart of the open government principles. Hence, monitoring and evaluation should be an essential element of the policy process, yet it is still done in a limited way in most countries, including in Paraguay.

A successful open government agenda cannot be implemented without efforts to disseminate achievements/challenges as well as the benefits of the implementation of open government initiatives to all key stakeholders inside and outside of government.

The STP has made important efforts to enhance the communication of its open government efforts to the wider public.

For many years, the global open government movement has focused its attention mainly on strategies and initiatives taken by the executive branch of the state. These days, however, countries across the world are increasingly acknowledging that open government initiatives should not be seen as an endeavour solely of the executive branch. Some countries have started mainstreaming open government principles across the three branches of the state, and are moving towards a truly holistic approach to their efforts to foster transparency, integrity, accountability and stakeholder participation which also includes a wide variety of other actors. In recent years, Paraguay has started taking first important steps towards the creation of an Open State. For instance:

• Different initiatives to foster open government at local level have been taken;

• Congress has its own open parliamentary initiative;

• The judiciary has included open government principles in its Institutional Strategic Plan; and

• The third OGP Action Plan includes elements related to the participation of independent state institutions such as the Comptroller General (Contraloria).

Box 5. Recommendations to broaden and deepen Open Government Policies and Frameworks ion Paraguay (see complete list of recommendations at the end of Chapter 6)

The assessment identifies a number of good practices in Paraguay in the area of Open Government as well as a number of challenges to foster institutionalisation and guarantee the sustainability of its efforts. In order to address these challenges, the OECD recommends that the government of Paraguay consider the following:

• Co-create a single national definition of “Open Government” with all stakeholders.

• Pursue efforts to link the OGP Action Plans with the national development agenda by making sure that the fourth OGP Action Plan is also fully connected to the objectives of the National Development Plan.

• Co-create a single National Open Government Strategy (NOGS) with all stakeholders, including the other branches of power.

• Make further efforts to enhance the legal and regulatory framework for open government, including by working on regulation on stakeholder participation and on a national archives law.

  • Harmonise access to information legislation.

  • Focus on the effective implementation of the access to information legislation.

  • Provide more human and financial resources to the office of the Ministry of Justice responsible for the implementation of the access to information legislation.

  • Conduct outreach campaigns about the laws.

• Involve the Secretariat for the Civil Service (SFP) even more actively in the open government agenda.

• Extend the Open Government Roundtable’s responsibilities to the wider open government process of the country.

• Broaden the scope and functions of the Equipo Nacional de Transparencia for it to become the government’s internal open government decision-making body.

• Diversify the range of donors supporting the national open government agenda in order to reduce the dependency on Official Development Assistance from a single country.

• Improve the monitoring and evaluation of open government strategies and initiatives.

• Continue the ongoing move to bring the benefits of open government to the sub-national level.

• Foster open government communication.

• Continue empowering civil society organisations and citizens, including by giving them more and better opportunities to participate in policy cycles outside of the OGP process.

• Continue the ongoing move towards an “Open State”.

Sub-national governments have to be key players when it comes to the implementation of open government strategies and initiatives. Paraguay has made important progress in fostering open government at sub-national level. However there is a need for more support and guidance from both the central and departmental governments to implement OG practices at the regional and local levels.

• The central government should continue its efforts to provide Municipal Development Councils with clear guidelines in order to support them. It will be important to share information on lessons learned in order to support continuous improvement of the Councils.

• The government could make use of the existing Network of MDCs which currently meets once a year. The Network could meet on a more regular basis and have a permanent secretariat that facilitates the exchange of experiences and peer-learning.

For its fourth NAP, due to be presented in 2018, the government of Paraguay could consider including concrete commitments by the other branches of power and by the regional and local levels of the Executive. Colombia’s third OGP Action Plan entitled “Toward an Open State” could provide a useful example of a way forward in this area.

Conclusion

This Public Governance Review advises Paraguay to pursue a robust, comprehensive public governance reform agenda to enhance the capacity of its Centre of Government to pursue policy co-ordination, strategic planning and monitoring and evaluation more effectively to support more strategic, integrated whole-of-government decision-making. In so doing the Review recognises that important reform efforts have been made to link strategic planning to budgeting, and recommends building on these efforts and strengthen the links between the multi-year planning system and Paraguay’s nascent results-based budgeting framework. The Review recommends that Paraguay develop and implement an integrated regional development strategy through effective decentralisation and multi-level governance to address acute regional disparities and to make sure that all Paraguayans benefit from economic growth. It commends Paraguay on progress made in implementing human resources management reforms and advises on how to pursue the professionalization of a merit-based, professional civil service. Lastly, the Review recognises that reforms have been undertaken to foster Open Government, including the adoption of legislation on access to information, and recommends that Paraguay, through more robust CoG co-ordination, broaden and deepen the application of Open Government policies and frameworks in all levels of the Executive while pursuing its ambitious agenda to move toward becoming an “Open State”.

The OECD stands ready to support Paraguay in implementing any and all of the advice contained herein. The recommendations in this PGR reflect OECD best practices in the thematic areas under review – much of the advice reflects the codification of these practices in the various legal instruments referenced throughout the PGR. In implementing the advice, Paraguay will better be able over time to close gaps between national practice and OECD standards in these areas. Doing so will enable Paraguay to pursue its efforts to become a more modern, agile, effective and efficient state capable of designing and delivering better policies – through better governance – for better lives.