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New Public Management

.. to the extent that systems of accountability fully satisfactory to the MoF are in place (IMF 1997). ? The IMF mission recommended applying the New Zealand model for public administration reform in Mongolia. Apparently it has been a serious challenge for the Government of Mongolia. This can be noted by the Cabinet decision of March 1997 to transfer functions for formulating strategies for public administration reforms from the Cabinet Secretariat to the Ministry of Finance.

Accordingly the Ministry of Finance has formed a Public Administration Reform team. The team was assisted by two missions from New Zealand visited Mongolia in March and May 1997 as a response to the request from the Government of Mongolia for technical assistance on public administration reform. The purpose of the two missions was to evaluate the current situation and design a new strategy for public administration reform in Mongolia. The new strategy is aimed at reorienting the public administration reform program undertaken by the previous government in line with the needs to improve the efficiency of government operations and public expenditure management and increase financial control and managerial accountability. Recommendations of the consultants and the new strategy are greatly focused on adopting all the possible elements of the New Zealand model including output specification, budgeting, contracting, performance agreements, and agency status.

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One centrepiece of the reforms is the new Public Sector Management and Finance Act, which was submitted for Parliament debates in November 1997. The bill defines the functions, powers, performance specifications and channels of accountability for the full array of government institutions, including the cabinet, ministries, agencies, state-owned enterprises, parliamentary bodies and so on. However, the bill was not complete as a legal document, failed to conceptualise the modern approaches to public sector management into their Mongolian context, briefly it was a foreign law written by foreigners. Thus major amendments were required to improve the bill with regard to clarification of practical aspects of practical aspects of public sector management that were left beyond regulation such as division of functional responsibilities among public sector institutions and relationship central and local authorities under the conceptual arrangements. The government, however, was strongly pushing the adoption of the law and deemed to get the approval by any means possible, although reformers recognised the weakness of the bill.

This may be justified by the reasonable explanation that the Government wanted to start the implementation immediately without wasting time on the design issues and as they advocated, to see some first fruits of the reform before the next political election to be held in 2000. It has been quite ambitious to declare or believe that transitional programs will be completed by the year 2003. During the last period two big delegations consisting of the Parliament members, government senior officials, and representatives from the opposition party were sent to New Zealand and State of Victoria of Australia to learn practical experience of implementing the NPM ideas in these countries. In addition, a quite large number of national and international workshops were organised among different actors as part of the lobbying activities. Despite these significant efforts made by the advocates and lobbying measures the new law still has not received the final endorsement from the legislative authority.

The opposition the adoption of the new law. There are only few people in the Government who are greatly impressed and strongly believe that the model will perfectly work in Mongolia. There is a great uncertainty about what will happen with the new program even in the immediate future. SUITABILITY OF THE NEW ZEALAND MODEL FOR MONGOLIA The reasons explaining why the Government wants such a radical approach to public administration reform in the country are quite clear. The previous administrative reforms did not bring significant improvements in the public sector management and were limited by a number of structural changes in state institutions.

Although there were the first attempts by the Government to separate policy coordination, regulatory and implementing functions, the question of whether the structures and functions of recently established agencies are appropriately designed to ensure efficiency and effectiveness of government operations has not been clear. At the same time, the demand for accelerating public reform with the aim to improve overall efficiency has been increased by the pressures from donor organisations. However, it should be noted that there is not sufficient justification and factual arguments developed by both the advocates and the opponents for why the country should not adopt the New Zealand model. Before making a final decision the questions such as what are the real obstacles to success of NPM in Mongolia and what are the real recipes for potential success need to be answered, in other words, there is a need to study the consequences first. It must be admitted that the task to make such a complete analysis is beyond the scope of the current work and for the time being there is very limited literature available to make a base for developing the arguments for why the country should implement NPM. Schick stresses the importance of preconditions for successfully implementing the NPM approach and claims that countries striving to uplift themselves after decades of mismanagement should not ignore these preconditions.

He identifies the establishment of a formal public sector, which is based on strong civil service system and long standing habit of public managers to spend public money according to prescribed rules as one of the preconditions. In addition, he notes that if contracts and the rule of law are underdeveloped in business relations, it is highly improbable that they can be safely or effectively applied in the conduct of the governments business (Schick 1998:6). Whether Mongolia has these preconditions may be even questionable that some other developing countries, the public sector of which were operating under colonial systems and in which market mechanisms have been established for years. The transitional features of the public management of Mongolia mentioned earlier could serve as an explanation for why such emphasis should be made. If the New Zealend model is all about applying the best techniques of private sector management in public management, the question of whether just newly emerging private sector of Mongolia has accumulated those techniques and practices is even more doubtful.

NPM is often attempted assuming that proper capacity exists, which is not always the case. The actual capacity of Mongolia to apply NPM should be thoroughly investigated, especially when it comes to managers ability decide and to have responsibility. Otherwise the reform may have a impact on the public confidence in the government operations. In Addition, as Hughes (1994: 83) claims, implementation is a real problem if there is insufficient attention paid to it. Implementation is much more costly in developing countries where a traditional model bureaucracy is not well developed and some basic preconditions are not ensured.

In Mongolia, informal estimates have been made that USD 20 million are required to implement NPM reforms. This accounts only for the transitional periods from the old to the new system. Some potential donors like the Asian Development Bank and the World Bank are committed to provide technical assistance and program loans in support of the reforms. So far neither the national government nor the donor agencies have made an estimation of how much the country would benefit from the reforms. It is not meaningful to think that if USD 20 million were available to the country today, this would have an automatic impact on the structure, efficiency and vision of the public administration and sustainability of reforms. NPM requires good planning and a very good estimate of the real capacities to implement it and a good program of assistance or training to build these capacities.

To some extent, the donors commitments are influenced by their willingness to show at least ane developing or transitional country, where the NPM model will successfully work and it has been encouraged by the interest of the current Government of Mongolia in the model. The major donors are often quick to sell a model that is pre-packaged without carefully looking at the implementation side of it. Public management reform is a difficult process to define and implement in general. In the developing countries problems of inefficiency, culture impact, political pressure and other factors such as corruption and a lack of competitiveness and sophisticated markets render this task even more difficult. Reform programs should have a long-term perspective and be free from political ambitions that could negatively affect their long-term effects and objectives.

As there has always been a tendency for the public sector reforms to be donor driven, it is much more desirable to develop a Mongolian version of reform that satisfies the needs of the country and its administrative environment and reality, which may or may not be NPM. The conclusion to be made here is that sooner or later the country should move towards some forms of NPM. However, rather than taking such an extreme and prompt action to immediately adopt the most advanced model of it, the focus should be on capacity building to ensure necessary pre-conditions have been established for its future successful implementation. Political Issues.


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