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March 04, 2011

Budget Reforms After Conflicts: Insight From Southern Sudan

By Gregory Smith and Fiona Davies

The semi-autonomous Government of Southern Sudan (GoSS) was established in 2005 after a Comprehensive Peace Agreement (CPA) ended 22 years of conflict between the Government of Sudan and Sudan People’s Liberation Movement (SPLM).  The recent referendum has paved the way for independence on 9th July 2011 and efforts are being made to build and develop public financial management systems.

Perhaps uniquely for a post-conflict government, GoSS had immediate access to millions of dollars of domestic oil resources with which to fund its budget.  The Ministry of Finance faced the immediate challenge of introducing a budget system capable of managing the resource inflows in a context of limited capacity.  Details of how these systems were built and factors behind the success are provided in a new ODI Briefing Paper.  

The Southern Sudan experience provides useful insight into appropriate approaches to developing planning and budgeting systems in other post-con¬flict settings.  Above all, it injects a note of realism about what can be achieved. The key policy lessons are as follows:

1. A strong technical lead by an integrated Ministry of Finance is essential. Although international technical assistance can provide support to system design and management, it is not a replacement for the leadership role and decision-making capacity of Government. 
2. When designing post-conflict support programmes, efforts are needed to fully understand the levels of local capacity, and the systems used prior to and during the conflict, so that starting points are realistic.
3. For system development to be fully grounded, it needs to be aligned with the rate of improvement of local capacity.  This means accepting that process development can take years, and that best practice, however desirable, cannot always be achieved overnight.

The Ministry of Finance received continuous technical assistance throughout the development process, including long-term TA based in the Ministry, short-term consultants for training and quality assurance, and logistical and financial support for workshops. Although this support played a key role in the design and development of the systems, decision-making and strategic direction always belonged to the Ministry of Finance.  In addition, the gradual recruitment of technical staff meant that the Ministry was increasingly able to manage systems itself, although with back-up support.  Key providers of support included the UNDP’s ‘Support to Economic Planning’ project, Overseas Development Institute (ODI) fellows, USAID and more recently the ODI’s Budget Strengthening Initiative.

However, the success that the Ministry of Finance has achieved to date is mainly in ‘upstream’ areas, focusing on planning and budget preparation.  As South Sudan approaches independence it still has significant weaknesses in ‘downstream’ areas of budget execution and accountability. The immediate priority is to ensure that budget execution is consistent with budget allocations, a major weakness in GoSS to date. In addition, commitment controls and monitoring and evaluation need to be strengthened.  A legislative framework for PFM also needs to be approved, and efforts are required to enhance domestic accountability and transparency, a particular concern in Southern Sudan, where corruption is considered to be extensive, and external pressure for accountability carries limited weight due to the significant level of domestic oil resources.

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.

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Comments

I was lucky enough to visit Juba again, a couple of years ago, and the thing that struck me was that public financial management reform is never "starting from scratch" which is the unfortunate sub-title to this ODI Briefing Paper.

Reforms should always build on (and hopefully improve) existing systems. So the starting point is a clear understanding of what currently exists.

In South Sudan the financial managers faced enormous problems. One indicator is that the Financial Regulations were only available in Arabic which few could understand. However, there were a range of experienced financial managers who had been operating the existing financial systems for many years (especially at state level).

The knowledge and experience of these local managers is essential for successful reform. Would be reformers have to understand the current systems and work with their managers to ensure the benefits of the existing systems are not lost.

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