Aid

July 09, 2014

Australia to Enhance its Performance Management Framework

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Posted by Kris Kauffmann

Australia is widely recognized as a pioneer of the medium-term programmatic approach to budgeting but recent self-examination of these reforms indicates a need to strengthen the government’s approach. A strong performance management framework remains critical to the success of the Australian reforms. A range of recommendations to strengthen the framework have now been adopted that should be of interest to other jurisdictions intent on strengthening performance management in the public sector.

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August 29, 2011

IMF Technical Assistance: Positive Impact on the Ground

Posted by Camille Karamaga

Country leadership has been essential to the past and on-going success in implementing public financial management reforms in Liberia. But the IMF technical assistance seems to have played an important role, as acknowledged by the Liberian authorities in a video featured on the IMF external web.

Well coordinated assistance has been, and continues to be, provided by the IMF Fiscal Affairs department (FAD) and other development partners. FAD’s assistance, which is currently funded by the Swedish Development Agency (Sida) and the EU, relies on a resident advisor who provides intensive on-the-job capacity building and day-to-day guidance to support the ownership and sustainability of the reforms, in addition to regional activities funded by the Japanese government and routine visit from headquarters staff.

One of the lynchpins of the ongoing economic governance reforms has been the passage in 2009 of a new public financial management law, which along with its associated financial regulations, has re-established the legal basis for public financial transactions in Liberia, as portrayed in a recent blog post. As Minister Augustine Ngafuan stresses in the video, since 2007 FAD has assisted the authorities in designing and putting in place a modern legislative framework that will help Liberia manage its public finances for years to come.

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August 18, 2011

Certifying PFM Systems for Donor Budget Support to Fragile States – Professor Collier’s Proposal

Posted by Tej Prakash

In a recent op-ed (later also presented at an Overseas Development Institute (ODI) meeting), Prof. Paul Collier has put forward the argument that where donor aid is allowed to flow through the budget system of a fragile state, it has largely failed to deliver the results promised. The reasons given for this failure, range from incompetence to corruption. And, it is suggested that in the near future, there seems to be little chance of any meaningful improvement in these outcomes. He argues that the governance system in many of these countries is broken, and its focus is by no means primarily to provide services to the citizens. It is suggested that budget systems of these countries are extremely ‘leaky’ (‘looting of the public purse”) and that donors do not have, by and large, either the information or the technical expertise, to prevent misuse of aid money.

Collier makes a distinction between aid given for critical operations and for more general budget support operations. For critical operations he recommends using ‘imported administrative capacity’ to manage all spending, including donor funds through specific project support arrangements. His proposal relates only to donor budget support and does not address existing parallel project based arrangements operated by many donors. He does suggest that it is possible to improve the ‘technical’ aspects of donor flows. The focus of technical improvements would not be to introduce policy ‘conditionalities’ through a back door, but to enforce the country’s own laws. He cites the insight of Tinbergen that to implement any objective, there should be a distinct instrument with its distinct effect. Hence, the two main objectives: meeting the need for funds (how much) and ensuring their effective use (on what), should be managed by two different instruments.

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April 04, 2011

Global Aid Transparency Movement: A Call for Action?

Posted by Florence Kuteesa, former budget director of Uganda

A global aid transparency movement, bringing together several initiatives with a shared vision[1], has received increasing interest and attention since the 2005 Paris Declaration for Aid Effectiveness. The main thrust of the movement is to make information about aid spending easier to access and understand by promoting public disclosure of regular, detailed, and timely reports on volume, allocations, and, where available, results of aid spending.

The movement is premised on the understanding that joint commitment from both donors and recipient governments is required to enforce global aid transparency. The International Aid Transparency Initiative (IATI) advocates for one gateway to access information from different sources by setting up an online registry that records the location of information. Publish What You Fundconducted an assessment of donor transparency levels whose findings were published in the 2010 Aid Transparency Assessment Report and discussed below. A joint initiative[2] is underway to formulate common standards to determine what information participating donors will publish and formats in which it will be presented.

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October 05, 2007

Good Financial Governance in Africa - Insights into G-8 GTZ Effort

The G-8 Action Plan for Good Financial Governance in Africa was adopted by the G-8 earlier this year in Potsdam (Germany), and was one of the signature German efforts during their G-8 presidency.  GTZ, one of the German Development Agencies, in their latest Newsletter (September 2007, No. 9), focuses on the origins of the Action Plan concept.

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October 03, 2007

Low-Income Countries' Public Financial Management Systems Need Upgrading to Enhance the Benefits of Scaled-Up Aid

A September 2007, IMF Survey article, and associated staff working paper, examines the challenges facing low-income countries in upgrading their public financial management (PFM) systems, and their implications for international development assistance. The article notes that PFM systems in most low-income countries (LICs) need strengthening if these countries are to fully benefit from scaled-up aid. Weaknesses in PFM can undermine budgetary planning, execution and reporting, reduce fiscal transparency, and result in leakage of scarce resources.

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