Good Practices for Sequencing PFM Reforms

Philip Joyce, Professor of Public Policy and Public Adminstration of the George Washington University (centre) moderated an ICGFM panel to get development partner perspectives for the sequencing of public financial management reform.

Sanjay Vani, Lead Financial Specialist at the World Bank (left), suggested that there in no golden rule for every situation, but there are many case studies about what does not work. He pointed out that a good accounting systems must be available for any reform to be successful. Many reforms are thrust on a county that works at first, but eventually fail because of a lack of political will. Countries need to take leadership over reform programs. Mr. Vani pointed out that there are many interdependencies among reform programs.

Marco Cangiano, Division Chief, International Monetary Fund (second from left), compared reform to making an excellent wine. He suggested that the notion of "quick wins" is consultant lingo that is very attractive to politicians. He cautioned about taking reform short cuts. Getting the data right is unrewarding work but is essential to reform. Mr. Cangiano pointed out that human resources is the most important determinant of successful reform.

Laura Trimble, Associate Director of Budget and Financial Accountability, Office of Technical Assistance, U.S. Department of Treasury (second from right), suggested that it is critical to understand what the country problem is. That way, the country understands the need. She believes that budget planning is not best first step. Cash management and expenditure forecasts are a more important first step. Monitoring and reporting, procurement and other reforms require accounting systems as a prerequisite.

Deborah Spietzer, Financial Management Specialist, Inter-American Development Bank (right), suggested that countries should start with the basics. Legal reform is required before embarking on public financial management reform. She recommends a top-down approach, big picture to small picture, beginning with strategic planning before executing the reform. She suggested that the "big-bang" approach should be avoided. Often, these projects are lead by donors and not the government. Ms. Spietzer described how coordination among donors has become difficult because there are so many multi-lateral and bi-lateral donors. Donors are moving to aid harmonization, yet there remains inconsistent advice among donors.

There were many questions about the best way to work with donors. Panel members recommended that countries should own reform. Nevertheless, donor conditionality can limit country flexibility. Mr. Cangiano pointed out that conditionality is becoming less strict and that there are ways to leverage any conditionality to encourage legal reform.

Good practices described by panel members included communications management to all stakeholders and civil servants and the provision of incentives to civil servants.