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May 11, 2017

Practical Ideas for Challenging Environments – ‘PFM Introductory Guides’

ODI

Posted by Bryn Welham, Sierd Hadley, and Mark Miller[1]

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The Overseas Development Institute (ODI), with funding from Sida, have recently published a series of ‘PFM Introductory Guides’ aimed at helping government officials, and their supporters, who work in low-capability environments. These documents (available in English and French) provide a summary of the key issues and some modest options for reform specifically aimed at challenging contexts. The Guides cover: (i) fiscal decentralisation; (ii) cash management; (iii) capital investment management; (iv) the strategic phase of the budget; and (v) the finance ministry challenge function. They are based on a review of the wide-ranging literature on these topics, supplemented by the first-hand experience of ODI and Budget Strengthening Initiative (BSI) staff who work on these issues.

That’s all very well, you might think – but does the world need to print more ‘guides’ and ‘introductions’ to topics that are already well discussed? Haven’t the world’s forests suffered enough?  ODI thinks this effort is useful for two reasons. These documents respond to gaps in the market for: (i) knowledge summaries aimed specifically at low-capability environments: (ii) practical options for reforms that are neither a straightforward adoption of ‘best practice’ nor just ‘finding your own way’ towards something better.

Let’s put this in context through an example. A former finance minister of a West European country sometimes used to begin his policy briefings with the phrase “Let’s refresh ourselves on this issue”; which his officials (correctly) interpreted to mean “I don’t really understand what we’re talking about.” The difficulty of retaining complex knowledge is understandable, of course, for a finance minister who must deal with a huge range of financial issues that affect the entire economy. In these situations, his officials can provide two things that come naturally to civil servants in advanced countries: (i) a summary briefing on the key issues; and (ii) a series of realistic options to inform the finance minister in reaching a decision. Such practices are rarely followed in low-capacity countries, however.

In terms of ‘refreshing ourselves on the issue’, these Introductory Guides can help civil servants without specialist knowledge to rapidly assimilate key information on complex topics. Summaries like this are useful not because the quantity of knowledge on certain PFM issues is low. In fact, often the issue is the opposite – for some PFM topics, there is such a wealth of information that it is difficult to know where to start in providing a summary of key points. Rather, it is difficult to select and summarise the material that is useful for low-capacity environments from a global literature that often focuses on best practice examples drawn from more developed countries.

Regarding ‘policy options’ for finance ministers, the Introductory Guides outline some basic options that would improve the efficiency of existing systems – while recognizing the constraints under which low-capacity countries operate. In these situations, realistic policy options are often in short supply (unrealistic options often proliferate, however). Accessing a ‘menu’ of basic policy reform options that have been tried elsewhere with success, and that relate to the summary of key issues, would allow for more effective decision-making.

The team preparing these Introductory Guides have all worked in low-capacity environments on PFM issues. In many ways, these are the documents we wish we had read at the start of our technical assistance careers many years ago. We hope these Introductory Guides can fill a gap that will help practitioners, advisors, and their government counterparts today.

[1] Overseas Development Institute, London, United Kingdom.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.

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