Most governments of the world still continue to deal with important fiscal imbalances because of the economic and financial crisis of 2008. Macro-responses have included increasing the International Monetary Fund (IMF) resources and coordinating a monetary policy between central banks and to some extent, a fiscal policy between national governments. Central banks, including the European Central Bank, have engaged in continual interest rate cuts to historically low levels, coupled with a measure called “quantitative easing”, which essentially increases money supply through the central bank buying up assets with money it creates. However, this deficit spending and process of quantitative easing cannot carry on indefinitely and the necessary repayments will mean constrained spending and increased taxes in the following years.
Almost all governments involved have and continue to respond by increasing taxes and decreasing expenditure. However, we propose that the focus should involve expenditure, not by lump sum (cross-sectional) expenditure cuts, but through improving efficiencies.
Public procurement, especially in transitional and post-transitional economies, is generally the major area for improving efficiencies. Many experts (e.g. Pavel, 2013) believe that such improvements will achieve 10–20% savings in public procurement under our current conditions. Potentially, this releases an amount equal to about 3% of Gross Domestic Product (GDP) for productive use!
The existing literature describes and analyses possible reasons for large inefficiencies in the public procurement processes. The common issue in literature is corruption. According to existing data, the general level of corruption in transitional and post-transitional economies is high (see for example the Corruption Perception Index 2014 prepared by the Transparency International) and unavoidably influences public procurement. The response of increased transparency does little to help, with it attracting only more sophisticated ways of channeling public resources through procurement. Another “top” issues are high transaction costs and limited competition for bids.
In this paper we plan to summarize the findings of our long term research on efficiency of public procurement in Slovakia. The analysis is based on our primary and secondary research and provides really interesting oversight of the situation in Slovakia.
Working with the private sector: externalisation, contracting, public-private partnerships
