ODI Publishes findings of CAPE conference in London
Posted by Ian Lienert
The Overseas Development Institute (ODI) recently published the main findings of its conference on “Tales of the Unexpected: Public Financial Management Reform in Difficult Environments” (see posting of December 3, 2007). The Executive Summary make ten main conclusions on the interface between the technical dimensions of public financial management (PFM) reform, the policy agenda on governance, and the political economy of reform. Read on to discover these ten conclusions.
The following key points arose from the conference proceedings (The full report can be downloaded by clicking on this link.)
- There are complexities in defining ‘governance’. This makes it difficult to establish the relationship between governance quality and successful PFM reform. Aggregate governance concepts and broad typologies for groups of countries may disregard important country specific differences that influence PFM reform progress. Equally, formal interpretations of governance may exclude the informal accountability relationships that are prevalent in many developing countries.
- There is a lack of consensus on how to define ‘successful’ PFM reform. Progress towards substantive PFM reform is a journey rather than a destination, and ‘success’ is often declared too early without due regard to the substance and sustainability of the reform. The notion of success may also be viewed differently by different stakeholders in the reform process.
- There is demand for a more sophisticated framework to explore the influence of different types of governance environments for PFM reforms. Moving beyond simple typologies, it is important to understand country-specifi c complexities and to focus on the combination of positive governance conditions that is ‘good enough’ for a particular set of PFM reforms to succeed.
- The role of politics in motivating and sustaining PFM reforms is integral to succesful implementation. Political leadership of the reform process is an important driving force that may be harnessed by making more explicit the political gains from a particular PFM reform path. Senior technocrats can play an instrumental role in highlighting the political benefits and proposing the sequence of reforms.
- Greater attention should be directed to domestic ‘demand-side’ actors in the reform process. These actors include: the taxpaying electorate, the legislature and civil society groups. The influence of these actors remains weak in many developing countries, but they have the potential to play a forceful role in motivating reforms, especially when they form alliances with reformers in the executive.
- International ‘donor’ agencies have a beneficial influence in developing countries when they act coherently as providers of technical advice to domestic reformers. However, they may be most effective when they stimulate enhanced domestic accountability by placing information on PFM performance in the public domain and helping to strengthen public expectations for improved PFM outcomes.
- The ultimate success of PFM reform is dependent upon making progress with corresponding civil service reform. The two types of reforms are integrally linked and must proceed in parallel for there to be real changes in PFM outcomes such as fi scal sustainability, more efficient resource allocation, and improved service delivery. As providers of technical advice, donor agencies can help to ensure better alignment between these two sets of reforms and greater overall reform coherence.
- The development of the PEFA framework for measuring PFM performance has resulted in significant benefits, most notably the wide international consensus over a single set of indicators. However, as the framework continues to develop greater attention may need to be focused on whether the normative assumptions underlying the framework undermine neutral dialogue on PFM performance and reform objectives.
- Better analytical tools are needed that can go beyond establishing a technical understanding of PFM reform and attempt to understand more fully the political and institutional dynamics of reform in a particular country context. This needs to include robust, systematic and deeper examination of a range of cases of both stronger performance and weaker performance.
- Further research is required to better understand the complex nature of public financial management reform in poor governance contexts so that clear implications may emerge for policy-makers and practitioners.
