Take country X where the public expenditure process is extremely lengthy: the standard expenditure file follows a Kafka-like trajectory, bouncing back and forth between ministries and subjected to the scrutiny of redundant financial controls imposed by officials eager to demonstrate their importance. Now, if you happen to know someone politically well connected, the process can be accelerated and your file can follow an “exceptional procedure”, moving with un-Kafka-like speed from the purchase order to the payment, sometimes so quickly, that the certification of delivery may be forgotten in the process.
Eager to solve the difficulties faced by the common man, the authorities of country X may send a well argued request for the visit of an advisor. Eager to help, the sometimes naïve advisor designs a strategy. Working from the top, you may propose to merge ministries, in order to simplify the whole process. Alas, this may sometimes be politically unacceptable (two concerned ministers may not like each other and/or may be representatives from important regions and each considering that he has a legitimate right to control its share of public expenditures).
Wrong approach! Instead, the (less naïve) advisor could start from the bottom and reform the basic procedures. The strategy could start with suppressing or merging some of the redundant controls as this is unlikely to be too sensitive (it is easier to move an assistant-manager than a minister). Should there nevertheless be some resistance from the higher-ups, reforming the information systems can help: only some officials know that the data they store is strategic; and even fewer realize that should the procedure they define for the system ultimately end up being enforced without exception one day, they may open the way for the unthinkable: the exceptional procedures will then be traceable.
Such technical reforms may not immediately change the way local ministers do business, but they will help increase fiscal transparency. Indeed, it is then possible to build into the work program criteria to decrease the percentage of exceptional procedures (I hesitate to say that, but this could be a useful conditionality).
On the budgetary side, sarcastic criticisms abound as well, in particular because the procedure is often viewed as irrelevant: the budget, fully executed by the executive, would have little to do with the document approved by Parliament. Let’s be fair and recall that developed countries may not have escaped the same criticism in the past. In France, for example, the budget discussion in parliament was once considered as “the comparison between something that did not exist (i.e., the original budget from the previous year) and something that will not exist (i.e., the approved budget of next year)” . It was also described as “litany, liturgy, lethargy” by Edgar Faure, an enduring French politician of the fourth Republic.
The fact is, though, that in this area as well, there are ways of tying the political Gulliver down. We shall call it the apparently benign (and highly fashionable) introduction of program budgeting. Its virtue: Gulliver will be put to sleep with the illusion that nothing substantial has changed, because the architecture of missions and programs will more or less mirror the existing administrative organization. False impression! The truth is that, in the long run, program budgeting will produce transparency and efficiency-enhancing effects. Through the reinforcement of parliamentary control, some structures, which cost far outweigh the usefulness of their output, will become so visibly redundant that a consensus should emerge to dismantle them.
Our Gulliver analogy has a useful didactical purpose but—like all analogies—it runs the risk of leaving the reader with some wrong impressions. In this case, it is of course not the purpose of PFM reforms to keep Gulliver down, implicitly allowing the (suddenly not naïve at all) PFM advisor to run the show. In Jonathan Swift’s tale, after his swords have been confiscated, Gulliver is given residence in Lilliput and becomes a favorite of the court. Similarly, the success of PFM reforms has to be assessed over time, when politicians take ownership of the necessary reforms and comply with the strange customs that PFM Lilliputians call “best practices”.
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