Article:

Public Financial Management Reform

12 December 2016

The international community is committed to achieving the Millennium Development Goals and eradicating absolute poverty – however, developing and transition countries rarely have sufficient funds to provide the level of public services necessary to achieve these goals. In recognition of this problem, development partners are committed to increasing Overseas Development Assistance – encouraging governments in developing, transitional and post-conflict countries to increase pro-poor expenditure.

In the past, inadequate Public Financial Management (PFM) systems in some recipient countries have subjected expenditure to a degree of fiduciary risk and reduced its effectiveness. To mitigate this problem, donor and recipient countries have designed ambitious programmes to reform PFM systems. BDO's International Projects Group (IPG) has assisted in the implementation of these programmes – increasing public sector accountability and transparency, reducing fiduciary risk, building Government capacity and increasing public expenditure's impact on poverty reduction.

Our approach

Our approach to PFM reform is based on some key principles:

Holistic and sequenced: we adopt a holistic and sequenced approach that incorporates all aspects of the PFM cycle from policy-led budget planning to external audit and scrutiny.

We take existing PFM processes, government capacity, international best practice and local sensitivities into account when sequencing PFM reforms – ensuring they are sustainable and effective.

Beneficiary focused: a country's citizens are the ultimate beneficiaries of the improvements in public services delivered by PFM reform. It is essential that these citizens have a "voice" in the policy formulation process and can demand increasingly effective public services. We have consistently assisted governments to include civil society and citizens in the PFM reform process.

Culturally adaptable: international best practice in PFM cannot be instantly adopted by developing, transitional and post-conflict countries where there is often limited absorptive capacity.

By building on the knowledge and experience of our international practitioners and global network which operates in over 140 countries, we are able to effectively adapt international best practice to address local capacity constraints.

Sustainable reform: PFM reform programmes often fail to build sustainable capacity. Our approach addresses this problem by making on-the job training, stakeholder seminars and workshops a central pillar of our projects, ensuring governmental capacity is increased in the long-term.

Our experience 

We have implemented this approach on behalf of development partners such as the World Bank, UK Department for International Development, European Commission and Inter-American Development Bank. The technical scope of these projects has encompassed many areas of PFM reform including:

  • policy analysis and development 
  • macro-economic and fiscal forecasting 
  • interlinking PRSP and Budgets 
  • implementing MTEFs
  • Public Expenditure Reviews 
  • Debt Management 
  • Aid Coordination 
  • Intergovernmental Fiscal Relations and sub-national finance 
  • Treasury systems and budget execution