The management of public resources plays a central role in shaping development policies that lead to poverty alleviation and inclusive growth. The quality of preparation and implementation of a government’s budget goes a long way toward determining how development policies actually impact national well-being. Public financial management (PFM) reforms feature in many development policy and investment project financing operations, and the success of efforts to strengthen PFM is critical to the World Bank Group (WBG) and its clients. A key objective of the Governance Global Practice is to help governments strengthen the development impact of both domestic and external financing through the national budget. This effort is spearheaded by the Managing Public Finance Global Solution Group (GSG).
The GSG is concerned with a wide range of public expenditure, budget management and accountability issues including: public expenditure analysis and expenditure efficiency; budget preparation and management techniques; public investment management; budget execution, treasury management and internal control; program monitoring and evaluation systems; accounting and financial reporting; and external and performance audit. The GSG aims to strengthen the impact of government spending through more efficient and effective PFM systems by promoting and supporting:
a) A multidisciplinary and integrated approach to managing public finances
b) Greater attention to prioritization, problem-solving, change management and peer learning in the design and implementation of PFM operations
c) Strengthening workstreams in critical and expanding areas of demand, such as public investment management.
Key features of the multidisciplinary approach include: addressing the interdependency and synergies around the budget cycle; linking the upstream cross-cutting PFM reforms with downstream improvements in sector management performance and service delivery; and taking a holistic view of the overall PFM ecosystem including both the supply (executive) and demand sides (citizens, legislatures, CSOs).
Central to the GSG is the involvement of staff concerned with PFM from across the Governance Global Practice and other Global Practices, to support a truly integrated approach. The GSG is building on the innovative operations and practices taking place, and learning lessons systematically.
Public Investment Management in Myanmar
Challenge: A major constraint on Myanmar’s development is its infrastructure deficit. A growing resource envelope means there is the potential for expanding public spending to address some of the gaps. However, ensuring that this spending is effective will depend on improving the quality of institutions and systems for managing public investments, which are currently in considerable flux.
Approach: The Ministry of National Planning and Economic Development is leading a cross-government working group to assess the PIM system and develop recommendations for its modernization. The WBG is playing a mentoring, facilitation and knowledge sharing role to support the working group.
Expected Results: This approach should enable robust diagnosis, wide ownership, and design informed by global experience.
Bangladesh PFM Strategy
Challenge: The Government of Bangladesh is developing a new PFM reform strategy. This follows comprehensive reform efforts over a number of years that involved heavy investments but have delivered mixed results. The Government is seeking an overhaul of its strategy and a new engagement with development partners going forward.
Approach: The WBG is adapting its support and providing a package of programmatic and tailored assistance over a critical period of 18 months to help the Government make this shift. Support for the PFM strategy development includes: (a) technical analysis through a Public Expenditure and Financial Accountability (PEFA) assessment and deeper dives into key policies that are critical to unblocking PFM reforms; and (b) facilitation support for the strategy development involving a problem-driven and service-delivery oriented approach, led by the finance ministry and involving a wide range of stakeholders. An important feature of this package is its multidisciplinary and multi-sectoral approach: led by an integrated team from the GGP, it involves close engagement and collaboration with the Bank's sector teams. The latter is particularly important given the substantial health and education sector programs being supported.
Expected results: The package is expected to assist the Government in the development of a PFM strategy that prioritizes and focuses on the major PFM blockages to improved service delivery and development results; has strong evidence and technical underpinnings and design; incorporates flexibility and adaptability; and has the broad ownership and buy-in needed for successful implementation.
Peer Learning in East Asia and Pacific
Challenge: Many countries in East Asia and Pacific have been implementing public expenditure management (PEM) reform programs. Government officials who are managing their PEM reform programs have been asking the Bank real-time questions, such as: How should we set performance targets? How should we calculate fiscal risk? How should treasury functions be organized in a ministry? How should we manage financial management information through IT systems? These questions and reform challenges are not unique to one country, but similar across the region.
Approach: The Bank, in partnership with the Government of Korea and the Philippines, is supporting the Public Expenditure Management Network in Asia (PEMNA), a peer-learning network for public finance officials. PEMNA facilitates the exchange of practical knowledge in public expenditure management, particularly in budget and treasury. It does this by (i) discussing how to strategize and implement these complex reforms, (ii) analyzing common challenges faced by countries, and (iii) benchmarking country experiences. PEMNA (www.pemna.org) is comprised of 14 member countries and operates through a Steering Committee, two Communities of Practice in budget and treasury, and the Secretariat.
Expected results: Members consult their peers on their reform challenges with colleagues in other countries, and provide their own insights to other members’ challenges. Members also report back to senior officials in their governments what other countries are doing and how those experiences and lessons can be useful to their own country. With the PEMNA network, members are also increasingly learning from peers outside regular PEMNA meetings. For example, Vietnam officials visited Mongolia to learn about the implementation of Mongolia’s financial management information system, which helped officials from Vietnam strategize about next steps in designing the next phase of their system. Similarly, Thai officials visited Malaysia to learn how Malaysia uses information systems for managing public sector performance