Evaluation Team

Joint evaluation with:AfDB

Swedish International Development Cooperation Agency (SIDA)
Danish International Development Agency (DANIDA)
AfDB Task Manager: J. Asquith (as Chief Evaluation Officer, OPEV)

Objective

The evaluation aimed to address two core questions:

a) Where and why do Public Finance Management (PFM) reforms deliver results, in terms of improvements in the quality of budget systems?; and

b) Where and how does donor support to PFM reform efforts contribute most effectively to results?

It has thus been a dual evaluation, involving both an evaluation of the overall programmes of PFM reform conducted over 2001 to 2010 in Burkina Faso, Ghana and Malawi and an evaluation of the external support provided to these reforms by Development Agencies. This Synthesis Report focuses in particular on the wider lessons of the evaluation for future design and management of PFM reforms by Governments and for the design and management of support to such reforms by Development Agencies.

Main Findings

• PFM reforms deliver results when there is a strong political commitment to their implementation, when reform designs and implementation models are well tailored to the institutional and capacity context and when strong management and coordination arrangements – led by government officials – are in place to monitor and guide reforms

• Strong leadership and commitment to reform is also needed at the technical level. In the case study countries, this emerged naturally where there was political commitment and leadership. By contrast, commitment at the technical level was not sufficient to generate political commitment.

• Neither external donor pressure nor domestic pressure from the Legislature or Civil Society proved sufficient to generate political commitment for PFM reform, where it was lacking, although they may have contributed to preserving it, where it already existed.

• A common weakness of the management and coordination mechanisms  for PFM reform was that they did not make adequate provision for the regular, independent evaluation of performance. As a result, the learning process essential to the continuous evolution and adaptation of reform designs and models was generally weak, with the result that corrective processes were slow to kick in, where reforms were not proceeding well.

• Direct funding for PFM reforms by governments is more substantial and more common than generally supposed, particularly in contexts where the resources available for discretionary spending are boosted by the presence of Budget Support. However, the case study countries frequently found themselves facing a constraint in respect of the policy space for reforms, where the menu of available policy designs and models for PFM reform were not appropriate to the institutional and capacity context. Reform outcomes were more favourable where a better range of policy options was available or where the mechanisms for monitoring and coordination of reforms promoted lesson learning and adaptation during the implementation process.

• In the case study countries, the influence of the Legislature and Civil Society on PFM reform proved limited, in part because of the limited expertise of these stakeholders with regard to PFM reform but more significantly because of the relative absence of a culture of public accountability. In this context, advocacy work by CSOs and activism by the Legislature are more likely to be useful, when focused on a narrow set of objectives.

• Donor funding for PFM reform has facilitated its implementation in those countries where the context and mechanisms were right for success, and where external funding was focused on the Government’s reform programme. On the other hand, governments in the case study countries showed a willingness to fund PFM reforms directly and their ability to do so was significantly facilitated by the General Budget Support inflows they were receiving. Hence, in many cases, direct external funding for PFM reform may not be essential.

• Donor pressure to develop comprehensive PFM reform plans and to establish clearly defined monitoring frameworks has been a positive influence in countries receiving Budget Support.

• By contrast, attempts to overtly influence either the pace or the content of PFM reforms through Budget Support conditionality have been ineffective and often counter-productive.

• Donor promises to enhance the utilisation of country systems have not generally advanced very far. In the case study countries, the late disbursement of Budget Support and the partial use of country procedures have been inimical to good public finance management.

• On the other hand, when focused on the Government’s reform programme, external technical assistance and advisory support have been of great help to PFM reform processes in the study countries and were generally well appreciated by recipient governments.

• Nevertheless, the provision of poor advice and the promotion of inappropriate reform models by external agencies remain an unfortunate feature of many PFM reform programmes. Greater attention to the appropriateness of reform models is needed, within an adaptive, learning approach to PFM reform implementation.

 

Main Lessons

• A common mistake made in perceiving Public Finance Manangement reforms as purely “technical” measures and without wide political support for reform which must first must start within the Executive, with the Minister of Finance and his/ her team working closely with the President and/ or Prime Minister to promote reforms and then widening the scope of consultations to include the Cabinet and other members of the ruling party and opposition to ensure success even in the event of a change of goverment.

• Public Finance Management reforms deliver results when there is a strong political commitment to their implementation, when reform designs and implementation models are tailored to the institutional and capacity context and when strong coordination arrangements – led by government officials – are in place to monitor and guide reforms.  

•  In the study countries – and elsewhere significant problems have been created by aid mechanisms making partial use of government systems, or adopting special disbursement criteria for the use of the Government budget. Three particular problems arose, which undermined the good management of public finances in the study countries: a) The late disbursement of budget support tranches scheduled in the treasury/ cash flow plan for the 1st or 2nd quarter. b) The imposition of special disbursement conditions or special reporting requirements for “basket funds” or “trust funds” managed through the national budget process. c) The opening of special project accounts outside of the Single Treasury Account.Ensure that aid policy and practise works in favour of the PFM system and not against it. Aid dependent countries face the perpetual problem of having to adapt their domestic PFM systems to the requirements of their external aid partners.
   
• External support can play a useful role in bringing to bear new and more widely informed perspectives on Public Finance Manangement problems, with which the Government is struggling. By opening “policy space” in this way, it can help to resolve problems but, when external advice is not well informed, it serves to close policy space and to perpetuate existing problems.
   
• Each of the case study countries suffered from the continued implementation over several years of inappropriate reform models and approaches. Policy advice will not always be right from the outset, in particular when working on PFM reform issues where a degree of experimentation is often necessary, but it is important to ensure there are mechanisms in place to ensure mistakes do not go uncorrected for too long. This requires the creation of a learning and adaptation culture, supported by a process of continuous evaluation. Ensure that internal procedures for the supervision and peer review of initiatives to support PFM reform are effective in providing a continuous check on progress.
   
• In the case study countries, both regional governmental institutions – such as WAEMU – and regional professional associations – such as CABRI and Afrosai – were found to be relatively influential in generating improved practises on public finance management. In so far as the scope of influence of such bodies could be expanded by more substantial external support, then clearly such investments would be of benefit. However, it should be recalled that much of the value of these bodies derives from their ability to promote peer-to-peer learning: an excessive amount of external funding by DPs might undermine the effectiveness of this role. The Bank shoud Provide support, where necessary, to regional institutions and professional associations working on PFM reform issues.
  professional associations working on PFM reform issues.