Public Financial Management and Accountability (PFMA) is a central plank of contemporary development programmes and as such is strongly supported by DfID and its international partner institutions. PFMA is premised on the idea that governments must utilise financial resources effectively and efficiently in relation to their citizens’ needs. In this way improved development outcomes will be facilitated. This document, issued by DfID and the UK Treasury, outlines the centrality of PFMA to the attainment of the Millennium Development Goals and identifies the institutional changes required to facilitate the delivery of effective PFMA. The document focuses on DfID’s partnership with the World Bank and International Montetary Fund, but also considers the roles of other partners.
Serious absences in PFMA have been highlighted in a study of Heavily Indebted Poor Countries (HIPCs). Donors can help to address these problems by offering diagnosis, technical assistance and capacity building. DfID and its partners have made some progress towards these aims and have identified ways to continue progress:
- Efforts have been made by the International Financial Institutions to integrate PFMA and poverty-reduction strategies.
- Tools and systems for monitoring expenditure and accountability systems are being more widely disseminated.
- Various efforts have been made in concert with other institutional donor partners to harmonise PFMA strategies and systems.
- Donor technical assistance in the realms of PFMA needs to be upgraded. Capacity building must be integral to poverty reduction strategies. Agencies need to review their respective roles in providing technical assistance and capacity building.
- Accountability to local stakeholders is essential. The poor should be assured involvement in the monitoring and accountability of national public expenditure programmes.
The World Bank, IMF and other donors need to develop closer, more co-ordinated partnerships. Overlapping mandates need to be avoided in areas such as diagnostics and capacity building performed within government finance departments.
In order to implement the above strategy, DfID and the UK Treasury need to liase with key partners on the following matters:
- Commitment is needed from the World Bank and the IMF on the harmonisation and rationalisation of their respective activities. An independent review process of Bank and Fund systems needs to be agreed.
- Commonwealth Finance Ministry Meeting to be approached with regard to the setting of targets for PFMA in HIPCs.
- Support and agreement to be solicited from key agencies such as the African Development Bank, the European Union’s Economic and Financial Committee (ECOFIN), Group of Seven Industrialised Nations (G7) representatives, United States Agency for International Development (USAID) and the United States Treasury.
