- For process indicators - coverage, duration and cost benckmarks.

- For output indicators - time, quantity and, where possible, quality benchmarks.

PIs are, by definition, _"quantitative_ indicators for use in the management, or assessing the performance, of an agency, program or activity".<sup>2</sup> While outcome PIs and PIs to judge quality are difficult to devise and while congruence between PIs an-d objectives may not be easily ascertained (Box 7), other PIs for inputs, processes and outputs are not difficult to devise or are already available. The World Bank, Operations Poiicy Department (1996) provides data pertaining to the use of Pls in TALs during 1993-1995 and points out that 39 out of 70 TALs were "Projects with comprehensive matrix, including PIs and quantitative measures" while 11 projects had no PIs. As pointed out earlier, Datta-Mitra (1997) identifies the absence of perfonnance indicators as a major weakness in the design of tax administration components in SALs/SECALs.

# Box 7: Non-congruence Between Pls and Objectives. Enforcement **Collections**

One indicator of administration effectiveness, present in some projects in the sample is the amount of enforcement collections or its ratio to total colections. Enforcement collections are collections of tax and, possibly, penalties and fines due to the efforts of the administration and exclude taxes paid voluntarily or t'compliance collections". Yet some refiection shows that an increase in the value of this indicator, in level or in ratio form, does not always indicalte improved effectiveness. If the effectiveness of an ineffective administration increases, it is of course likely that enforcement collections will increase. But excluding genuine mistakes? taxpayers will truithfully report their taxes due if the administration is very effective to ensure that they are not subjected to penalties or fines. So any increase in the effectiveness of an already effective admninistration should result in _adecrease_ in enforcement collections. Low enforcement collections could, therefore, indicate either a very ineffective or a very effective administration.

_PIs in the sam;ple._ Annex Table A2 lists performnance indicators used in the 12 TLSRs and 5 SALs/SECALs where perfornance indicators (other than compliance with covenants and the tax/GDP ratio) were specified. In addition, 1 SAC had a condition that the governnent would develop a set of performance indicators cdunng the project. The table shows that performance indicators specified in TLSRs were considerably more detailed than those in SALs/SECALs. Nevertheless, even among TLSRs, corrlprehensiveness varies and indicators specified lack uniformity across projects. There is also significant use of qualitative information in lieu of performance indicators. Judging from the table, the design weakness identified by Datta-Mitra (1997) in SALs/SECALs is only somewhat lower in TLSR loans. A case in which there is dramatic variation in the quality of "PIs", f.or customs and tax reform components, even in within the same project, is in Box 8. Box 8 also gives details of a tax administration reform project, where the set of PIs is relatively comprehensive even if some of them are "qualitative PIs".

> 2 World Bank, Operations Policy Department (1996).

18