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Tuesday, December 2, 2008

Case Study PFM Reforms in Costa Rica

Jason Orlando of the US Treasury introduced Fabian Quiros Alvarez, the General Sub-Director of the National Budget of the Ministry of the Treasury, Costa Rica. Mr. Orlando indicated that the PEFA tool was effectively used for government self-evaluation.

Mr. Alvarez described how small reforms have been very successful in Costa Rica. He attributed much of the success through the alignment with donors.

Mr. Alvarez described the budget planning reforms in the unitary government, particularly how performance planning and indicators in budget preparation is used. There have been some challenges because there remains a tendency to favour effectiveness measurements.
Mr. Alvarez emphasized the importance of the multi-year approach to planning and project planning. This reform has been difficult to implement. The Government of Costa Rica develops many multi-year scenarios.
Auditing and oversight of budget execution reform has been implemented by the Government of Costa Rica.
The Inter-American Development Bank has evaluated the financial management system in 18 countries in Latin America. Costa Rica has been evaluated as far above the average. However, challenges remain.
Mr. Alvarez described how political will is required for reform. Reform is often thought to be a problem of supply. In reality, there needs to be the creation of demand. Reform and modernization is not just about generated reports, it is about monitoring and evaluation.
Realistic expectations and a gradual approach is required for effective reform, according to Mr. Alvarez. Reforms are medium term and practitioners cannot expect immediate changes. Governments need to reflect on results to show improvement. Rules need to be simplified to be more effective.
The Government of Costa Rica operates on an accrual basis of accounting for expenditures but not yet for revenues. Costa Rica is creating new public sector accounting standards adapted from international public sector accounting rules.
Mr. Alvarez described how the government builds capacity in human resources. Continuous training is required. A fundamental change to a performance oriented civil service is required.
The Government of Costa Rica has developed numerous measurements for quality. Mr. Alvarez described how governments need to benchmark with reforms in other countries. The purpose of financial reform improves governments by sustained improvements.

Tue 1000 Alvarez
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Tue 1000 Alvarez Spanish
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Tue 1000 Alvarez Fr
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