Module 5.3: Introduction to PFM reform

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Presentation transcript:

Module 5.3: Introduction to PFM reform PUBLIC FINANCE MANAGEMENT Module 5.3: Introduction to PFM reform

Important to note : This is not a reform sequencing course so the following points are purely introductory and a basis for discussing the content of this weeks course and where they lie in developing a good PFM system

A schematic view of the reform decision process Stage One: Analysis and Diagnosis--PFM Technical factors Stage Two: Analysis and Diagnosis--Factors External to PFM Stage Three: Settling on a sub-set of reform options Stage Four: Dialogue with stakeholders to agree reform actions Stage Five: Decide sequencing of reform actions Stage Six: Put in place an adequate delivery mechanism Stage Seven: Formal monitoring and review of reform efforts Jack Diamond 2013

Assess reform risk (1) Assessing Reform Risks at the Top Political Economy Level 1. Change management is essential to address the external factors 2. Deciding on what is possible within the "basics" in PFM reform 3. Change management as risk management 4. Reform implications in deciding the feasibility of reforms Assessing Reform Risks at the Institutional Organizational Levels 1. An approach to assessing risks from external factors at the lower level 2. The institutional structure of PFM systems 3. The internal organization of PFM systems Jack Diamond 2013

Assess reform risk (2) A Risk-based Approach to Sequencing within the Basics 1. Reform risk as a criterion for sequencing decisions 2. Operationalizing the risk-based approach 3. Employing the risk analysis to determine reform strategy 4. Choosing the sequence of reform actions Jack Diamond 2013

Key references Jack Diamonds' 2013 "Good Practice note" shows lessons learnt and guidance, but it is not a manual; Focus on order and timing: ensure core functions first, : fiscal control (financial compliance) then sophisticated reforms concrete sequencing is country-specific contextual factors are crucial (risks). Diamonds 2013 is available here http://capacity4dev.ec.europa.eu/macro-eco_pub-fin/blog/pfm-reform-sequencing