Public Financial Management Reform: Trends and Lessons Bill Dorotinsky World Bank

1. Public Financial Management Reform: Trends and Lessons Bill Dorotinsky World Bank ICGFM December 2008 Washington, D.C.

3. Popular Reforms Recommended reforms generally try to change incentives by changing rules, roles and information   External audit ? ? ? Accrual Accounting  Internal control/audit  Procurement    Reporting/ Transparency    Budget classification, chart of account   Treasury Single Account  Fiscal Responsibility Laws   IFMIS, automation   Performance, Program budgeting    Medium-Term Expenditure Frameworks Operational Efficiency Strategic Allocation Macrofiscal Discipline

7. Budget Formulation Recent Reform Emphasis Different drivers of reforms confuse the picture. Which are donor-driven? Which country driven? Which address real need? Which are simply fashionable? If higher income enables more self-direction, interesting that performance budgeting of greater interest in upper-middle income countries. * 2006 gross national income (GNI) per capita. The groups are: low income (LIC) US$905 or less; lower middle income (LMIC) US$906–3,595; upper middle income (UMIC) US$3,596–11,115. 23% 21% 9% Capital-Investment Bdgts 38% 15% 23% Performance/Program Budgeting 46% 39% 37% MT Expenditure Framework 31% 45% 29% MT Fiscal Framework UMIC* (13) LMIC* (33) LIC* (35)

8. Budget Execution Recent Reform Emphasis na 12% 14% Procurement na 12% 11% Internal audit/control 15% 9% 17% Payroll/Personnel 23% 42% 40% Accounting/classification 8% 18% 11% Debt management 15% 18% 26% Commitment controls 31% 36% 51% Treasury/Cash management UMIC (13) LMIC (33) LIC (35)

9. Other Reforms Recent Reform Emphasis 23% 15% 26% Decentralization 15% 21% 3% PPPs 15% 30% 20% Transparency 23% 36% 26% Budget Law/Legal 8% 18% 3% MoF Reorganization 23% 36% 49% IFMIS UMIC (13) LMIC (33) LIC (35)