Allen Schick has just restated, quite categorically, that “Basics First is Best Practice”, whereas trying to apply international best practice irrespective of context is not. He re-joins a steady chorus of voices arguing that one should beware of advanced budget reforms and look towards non-technical factors to assess what PFM reforms make sense. This has been a theme of Matt Andrews’ work for a long time. In the same vein, Richard Allen has forcefully criticized platform approaches and pointed out how very long it took for Western countries to establish budget institutions that developing countries are now meant to set up in a few budget cycles. I’ve argued in a recent blog post that too many PFM practitioners still focus on the technical dimension of sequencing, in spite of the mounting evidence that doing so is a bad idea. Schiavo-Campo’s work describing Medium-Term Expenditure Frameworks (MTEFs) as “Potemkin Villages” is an example of the scathing criticism levelled on international best practice reforms. A recent study completed by the World Bank found that MTEFs, performance budgets and advanced accounting reforms have an abysmal success rate in post-conflict states. And the list continues…
One might conclude that this debate has now been settled. At least in the academic community, nobody would advocate to “leapfrog before you look”. And yet this is not quite the end of the story. For one thing, as Catherine Dom has rightly argued here, one should not assume that just because things happened a certain way in today’s rich countries, developing countries need to follow that path. Developing a PFM system reminiscent of Sweden in a decade might be ludicrous, but so too is assuming that just because the British budget institutions evolved over centuries, so must everyone else’s. There is a lot we still need to learn about what precisely it is about the “other stuff” around PFM that shapes the success of PFM reforms.
More importantly, best practice reforms are still the name of the game for development agencies. Check the websites of internationally active public sector consulting firms and you will find plenty of ongoing MTEF reforms, performance budgeting reforms and other such projects. Matt Andrews has shown that, at least for Africa, the attempt rate for best practice reforms is almost universal. Privately, some government officials complain of donor representatives actively pushing for state of the art PFM systems that the government doesn’t feel it needs. The reverse, governments being overly ambitious and consultants privately predicting failure, is also common. Occasionally the rationale for reform is merely a poor PEFA score that needs levelling up, even though PEFA dimensions are certainly not created equal. Carole Pretorius has rightly noted that there are complex reasons for why best practice reforms are still pursued so often. As Carol explains, peer pressure, professional pride and the prestige associated with being an internationally recognized reform leader, rather than a steady administrator of line-item budgets, all contribute.
There seems to be a growing gap between universities and think tanks, where best practice approaches are viewed very critically, and the reality in many countries, where best practice reforms are still attempted with great frequency. The debate on what the next generation of PFM reforms could look like is only getting started.
*Philipp Krause is Head of Research, Budget Strengthening Initiative at the Overseas Development Institute in London. He writes for Beyond Budgets, a blog about PFM, governance and state-building.
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.
