Public Financial Management
Robust public finances are essential to effective government
Transparent, equitable and accountable expenditure and appropriate management and monitoring systems allow governments to deliver a strong enabling environment for business and effective public services.
Public financial management focuses on economic and governance reform programmes of developing and transitional economies, using principles of fiscal discipline, legitimacy, predictability, transparency and accountability to reform and strengthen public finances.
Using principles of fiscal discipline, legitimacy, predictability, transparency and accountability reform and strengthen public finances
Areas of expertise
Budget Policy, Systems & Management
Developing and managing national or regional budgets is a critical component of effective public service implementation. If public funds are to deliver the services for which they have been allocated, financial planning, execution and monitoring systems need to be in place, and working. Many conflict-affected or transitional countries have very weak linkages between policy and budget allocation. Combined with limited capacity to analyse and prioritise budget allocations, this can mean that too few or too many resources are allocated to particular priorities. This reduces effectiveness, as services are then either under-funded or seek to disburse resources without the capacity to do so effectively and accountably.
National budgets are an important source of information as they set out the priorities of the government and link them directly to spending. Budget transparency is a key element of the broader process of public financial management reform as it allows the public to scrutinise and respond to the government programme.
Transparent budgeting has a range of powerful benefits including the development of greater trust in government institutions and in the willingness to contribute through taxes. A transparent budget process also holds governments to account as progress against – or deviations from – the budget are easy to see.
A vital component of a transparent and accountable public financial management system is the ability of a government to undertake external audit, where the auditor is independent of the institution or the individual it is assessing. This is a system that holds ministers, officials, and implementing partners to account for spending public resources.
Effective external audit reduces the opportunity for corruption and makes policy development more effective – so that there is better public service delivery and greater value for money for taxpayers.
PEFA & FRA
The Public Expenditure and Financial Accountability (PEFA) programme has been developed as part of the collective efforts of many stakeholders to improve the performance of a country’s public financial management system, aiming to support economic growth and government service delivery.
We have provided PEFA assessments in countries such as Iraq and Pakistan and we see them as part of benchmarking public financial management systems and measuring progress as reforms are implemented.
Fiduciary Risk Assessments (FRAs) are undertaken by donors to identify the level of risk associated with financial aid granted directly to a government, where the partner is responsible for expenditure. FRAs are mandatory where such aid is being given: evaluations of the national public financial management system are critical to assessing the level of risk involved in any financial assistance.
We have completed FRAs in countries from Afghanistan, Bangladesh, Burundi, Palestine, Papua New Guinea, and Vietnam, to Zambia.