Aid effectiveness

Public Financial Management: An overview

 

The OECD's work on public financial management builds on the development community's efforts to strengthen developing countries' capacity to better manage their public finances. It looks for ways to more effectively support country efforts: in particular, by bringing together development partners and country authorities to:

  • foster good practices in implementing PFM reforms  
  • harmonise the measurement of PFM performance 
  • share knowledge and experiences among development partners and countries on using country PFM systems 
  • strengthen accountability in PFM systems
  Strong public financial management (PFM) systems are essential for effective and sustainable economic management and public service delivery. States are effective and accountable when they are underpinned by good PFM institutions and systems. Good PFM systems are also indispensable in ensuring that aid is being used to achieve development goals.
 
The Paris Declaration, Accra Agenda for Action and the Busan Partnership for Effective Development Co-operation commit countries to strengthen their Public Financial Management systems and commit development partners to increase the amount of external assistance that flows through a country’s PFM system - not as an end in itself - but as part of efforts to achieve more effective and sustainable development.

 

 

 

 

 

 

 

 

 

 

 

 

 

Manila Consensus on Public Financial Management (2011)

The Manila Consensus on PFM contributed to shaping PFM-related commitments in Busan. It called on partner countries to be ambitious in strengthening their PFM systems through credible reform programmes. And urged development partners to increase the amount of external assistance flowing through a country’s PFM system as part of efforts to improve implementation of public policy and its results for sustainable development.

 The Manila Consensus on Public Financial Management recognises that: (i) more needs to be done at country level to support and strengthen PFM as an essential component of better economic governance; and (ii) international fora can assist in providing a peer review mechanism as well as a platform for knowledge sharing on strengthening and using country PFM systems. It sets out a number of commitments specifically focusing on PFM.

Manila Consensus

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Benefits of using country systems

 These policy briefs outline the benefits of using country PFM Systems for the following audiences :

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The OECD DAC's guidance on public financial management

Practitioner’s Guide to Using Country PFM Systems

The Practitioner’s Guide determines different approaches by donors on the use of country systems in different country contexts (middle income, low income, fragile states); for different components (planning, budgeting, accounting, auditing); and for different aid modalities (budget support, project support). The Guide sets out a number of recommendations on Using Country Systems which informed the recommendations in the Manila Consensus on PFM.

 

Practitioner’s Guide to Strengthening Country PFM Systems

The Practitioner’s Guide to Strengthening Country PFM Systems outlines both ‘good’ and ‘bad’ practices in how donors support Capacity Development in Public Financial Management and outlines expectations from countries for donor support to their capacity development efforts in PFM. The guide is based on case study evidence (Mali, Rwanda, Lesotho, Nepal, Morocco) on different ways in which donors approach capacity development in PFM to strengthen a country’s sustainable development. Based on this evidence, the Practitioner’s Guide outlines a number of recommendations and approaches to respond to capacity development demand from countries, how to design support programmes and implement capacity development in PFM.

The Practitioner's Guide to Strengthening Country Systems, Volume I

The Practitioner's Guide to Strengthening Country Systems, Volume II

 

Stocktaking Study on PFM Diagnostic Instruments

The stocktake is a follow up to the 2004 Public Expenditure and Financial Accountability (PEFA) mapping exercise and identifies PFM analytical/diagnostic tools currently in use or in an advanced stage of development. It is both descriptive (providing an overview of the tools and how they are applied) and analytical (identifying knowledge gaps and areas where custodians of assessment tools could improve collaboration and reduce transaction costs). The stocktake provides important insights into the way that donors are using assessment tools and how they perceive that they will evolve in the future. The stocktake sets out a number of recommendations on Assessing PFM Systems and how to improve donor co-ordination and government leadership in this area.

 

Good Practices in Supporting Supreme Audit Institutions

The Guidance describes the Supreme Audit Institution (SAI) community and how SAIs are currently working together internationally to help strengthen the capacity of members, and outlines ways donors can contribute to this process. In particular, the guide outlines recommendations on how donors can best support this process by working together to: develop and support long-term capacity development projects; ask SAIs to audit donor-supported projects; help raise the profile of the SAI; and utilise the results of SAI audits to help ensure that an SAI’s work is used to achieve beneficial change. The Guide also highlights the need for development partners to build stronger links to SAIs and their key stakeholders.

Available in Spanish

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Managing Development Resources (links to the OECD bookshop)

Managing Development Resources takes stock of progress in strengthening PFM systems and also provides recommendations on how best to facilitate achieving the 2010 targets set out in the Paris Declaration. Improving the rules and institutions governing these activities should be a major component of any development approach.

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DAC Guidelines and Reference Series: Publication: Harmonising Donor Practices for Effective Aid Delivery Volume 2: Budget Support, Sector Wide Approaches and Capacity Development in Public Financial Management

 This publication examines budget support, sector wide approaches and capacity development in Public Financial Management
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Additional Resources: Links

 

Related Documents

 

Effective Institutions

Procurement

Capacity Development

Strengthening and Using Country Systems

Aid and domestic accountability

 

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