Tales of the Unexpected: Public Financial Management Reform in Difficult Environments – CAPE conference, ODI, London

Snap2 Posted by Ian Lienert

The 4th annual conference of the Centre for Aid and Public Expenditure (CAPE) was held at the Overseas Development Institute (ODI) London during November 14-15. The conference theme was “Tales of the Unexpected: Public Financial Management Reform in Difficult Environments” in which participants explored the interface between the technical dimensions of public financial management (PFM) reform and the wider research and policy agenda on governance and the political economy of reform.

Conference presentations were organized around four sessions: (1) PFM and governance - How are they related? (2) What do we mean by successful PFM outcomes and performance? (3) Reflections from country reformers; and (4) What are the key explanatory factors underlying successful PFM reform?

A framework for relating the stages of PFM reform with governance categories, ranging from States that are “failing or collapsed” through to “institutionalized and competitive”, was presented. However, it was difficult to pin down the links between PFM reform frameworks and governance, in part because the concepts of “governance” and “political economy” are multi-dimensional and ill-defined. The measurement of PFM outcomes was more conclusive: there was general agreement that PFM outcomes can be adequately measured by the PEFA framework, especially accompanied by qualitative, in-depth analysis of country contextual factors.

Country experiences of PFM reforms were presented for Chile, Cambodia, and Bangladesh. The far-reaching budget and PFM reforms in Chile – including wide use of evaluations of budget program performance – contrasted with the much more rudimentary state of PFM reforms in the Cambodia and Bangladesh. Cambodia’s “platform approach” to PFM reform attracted considerable interest. In principle, the sequenced approach begins with basic PFM reforms and advances to more sophisticated reforms. In practice, however, many PFM reforms are taking place at once, and lack of prioritization has become an issue. In all three cases, the role of the legislature in the PFM reform process has been minimal. There was also a review of fiscal reforms and budget institutions in Latin America.

Other presentations focussed: (1) on the influence of actors on PFM reform other than the executive branch of government, and (2) the need to integrate civil service reforms with PFM reforms—evidence was presented to show that the former often lag the latter.

It was difficult to synthesize the wide-ranging conference discussions and to draw firm conclusions. However, there seemed to be general agreement that more detailed knowledge of country-specific institutional settings and rules – both formal and informal – are essential for understanding the dynamics of the political economy influences on PFM reform programs.

All presentations are available on the conference website.