Strengthened Approach to Public Financial Management Reform

(Developed by the Public Expenditure Working Group)

Public financial management (PFM) is an essential part of the development process. Sound PFM supports aggregate control, prioritization, accountability and efficiency in the management of public resources and delivery of services, which are critical to the achievement of public policy objectives, including achievement of the Millennium Development Goals (MDGs). In addition, sound public financial management systems are fundamental to the appropriate use and effectiveness of donor assistance since aid is increasingly provided through modalities that rely on well-functioning systems for budget development, execution and control.

Strengthening Country Public Financial Management: Concept Paper

Five principles have emerged that reflect good practice in PFM work. The principles, reflected throughout the following guidance, are:

• PFM work should facilitate and encourage country leadership in setting/managing the PFM reform strategy and action plan.
• PFM diagnostic work should be conducted in an integrated and coordinated manner, drawing upon the distinct competencies of the PFM country team and other donors, with the timing and scope determined largely by country needs.
• PFM work should be weighted toward supporting PFM reform implementation reforms and capacity building rather than detailed diagnostic analysis, should add value to Government budget and reform processes, and should be aligned with Government decision-making cycles.
• PFM reform work should be framed within a multi-year horizon, sequenced around agreed priorities, and built upon a coordinated donor approach.
• PFM work should be linked to a robust monitoring and evaluation framework, that clearly articulates the gains in PFM system performance that are sought or achieved.

These principles are reflected in the Strengthened Approach document, which has been developed by the World Bank in consultation with the PEFA partners, and with the OECD DAC Joint Venture on Public Financial Management.

1. Consultative Draft [PDF 61K]

2. Presentations

• Moving PFM reforms forward: A Strengthened Approach
• Monitoring Public Financial Management System Performance:Lessons and Future Directions
• Moving PFM reforms forward:A Strengthened Approach(June 21)

3. Staff Guidance PFM Performance Assessment and Monitoring (draft) - Over-all PFM System [PDF 68K]

Please check back regularly for updates, or visit the PEFA site at
www.pefa.org.

4. PFM Indicators and Guidance [PDF 162K]

• Guidance for Supporting Evidence [PDF 33K]

Mapping PEFA PFM Indicators to HIPC Expenditure Tracking Indicators

Procurement

5. Procurement indicators [PDF 851K]

PFM Reform Implementation Notes

6. Implementation Concept Note [PDF 23K]

7. Institutional Issues in PFM Reform [PDF125K]

Completed Implementation Notes

• Integrating Capital and Recurrent Budgets

Notes in preparation

• Integrating Procurement and Public Finance Issues

Background Documents

8. Background Paper [PDF 111K]

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NOTES:

1. In an effort to improve country public financial management performance, the World Bank’s Financial Management, PREM, and Procurement Networks came together to form the Public Expenditure Working Group, including representatives from the PEFA Secretariat and IMF.

This website is for sharing the results of the Working Group, including important resources for country public finance practitioners, staff of development institutions, and consultants engaged in strengthening public financial management systems and results.

The PE WG membership includes: Bill Dorotinsky (chair); Richard Allen (PREM MENA); T.K. Balakrishnan (OPCSFM); Pamela Bigart (OPCSPR); Parminder Brar (OPCSFM); Jim Brumby (IMF FAD); Poul Engberg-Pederson (PRMPS); Colum Garrity (Consultant); Robert Hunja (OPSCPR); Odile Keller (PEFA); Steve Knack (PREM/DEC); Pascale Lettenhove (ECAFM); Bernard Myers (Consultant); Anand Rajaram (PRMPS); Feridoun Sarraf (Consultant); David Shand (OPCSFM); Nicola Smithers (PEFA); Mike Stevens (Consultant); Eivind Tandberg (IMF FAD); Theo Thomas (IMF FAD); Joel A. Turkewitz (OPCSPR).

2. Public financial management includes all phases of the budget cycle, including the preparation of the budget, internal control and audit, procurement, monitoring and reporting arrangements, and external audit. The broad objectives of public financial management are to achieve overall fiscal discipline, allocation of resources to priority needs, and efficient and effective allocation of public services. See Harmonizing Donor Practices for Effective Aid Delivery – Good Practice Papers – A DAC Reference Document, OECD, 2003.