In 1995, when Luiz Carlos Bresser-Pereira took charge of the Brazilian ministry responsible for administration and reform, problems plagued the nation’s public sector. Laws and regulations prevented ministries and public sector organizations from working efficiently. Payrolls had ballooned because of rapidly rising retirement costs. Irregular recruitment and a lack of proper training had eroded the talent pool. Soon after taking office, Bresser-Pereira put together an ambitious plan to overhaul public administration. He proposed amending the constitution to loosen constraints on hiring and firing. At the same time, he pressed for a new model of governance that relied on restructuring ministries and public sector organizations as contract-based “executive agencies” and “social organizations.” Under his leadership, the Ministry of Federal Administration and State Reform (MARE) collected and centralized payroll and personnel data, recruited successfully to fill crucial policy and management positions, and set up regular training programs. By 1998, MARE had guided the constitutional amendment through Congress and set up pilot programs for executive agencies and social organizations. While some efforts stalled after MARE merged with another ministry in 1998, the ideas and principles put forward by its team continued to inform subsequent changes. This case offers insights into the challenges of building accountable services.

 

 

Associated Interview(s):  Luiz Carlos Bresser-Pereira, Ciro Fernandes, Humberto Falcao Martins

Before 2003, the Central Bank of Egypt, called the CBE, had exerted little control over monetary and foreign exchange conditions. High levels of bad debt in the banking sector and erratic government policies had undermined economic growth. Without a credible and independent supervisory authority, Egypt’s economic woes deepened. In the early 2000s, political will for change grew within the ruling National Democratic Party. In June 2003, the Unified Banking Law, pushed through by the party’s economic committee, paved the way for revitalizing the central bank. To implement this law’s mandate and oversee sweeping banking sector reforms, President Hosni Mubarak appointed Farouk El Okdah in late 2003 as CBE governor. El Okdah realized that the central bank had to be overhauled before it could begin the job of cleaning up the banking sector. El Okdah and his team restructured the CBE, aggressively recruiting private sector talent by amending the Unified Banking Law to permit higher salaries, instituting performance-based promotion, expanding training programs and strengthening information-technology systems. By 2009, the results of this institution building were apparent. The CBE commanded authority in the Egyptian banking sector, engaged in independent open-market operations and issued credible monetary and foreign exchange policies. The bank’s structural changes enabled the successful management of a broader banking sector reform effort that helped lift Egypt out of a three-year recession.