PUBLIC FINANCE POLICY AND REFORM

Challenges

Since the Paris Declaration on Aid Effectiveness was signed in 2005, Public Revenue and Public Expenditure Management have rapidly moved into prominence in the development assistance arena. The new focus on the use of country systems in aid implementation and the increased use of budget support as an aid delivery tool have highlighted the importance of functioning PFM systems. Improvements of these systems not only allow for enhancements in transparency and an increase in the financial scope of public institutions, but can also facilitate the greater participation of civil society in the appropriation of public funds.

  

Instead of defining PFM, the breadth of this field in development cooperation can best be illustrated by the diversity of projects supposed to evaluate and strengthen PFM systems. Public finance diagnostics is often used as a first step towards PFM reforms, e.g. through a Public Expenditure Financial Accountability (PEFA) assessment. Planning and budgeting of governments can be addressed through the update of treasury and financial rules or the introduction of multi-annual planning instruments such as Medium Term Expenditure Frameworks (MTEFs). Developing new tax schemes on national and regional levels as well as capacity building within existing tax administrations are common approaches to strengthen the revenue side of a budget. Moreover, the flow and quality of information can be enhanced through the design and installation of new accounting software or through the development of integrated information systems for ministries of finance or accounting units within line ministries. PFM projects support control, prioritization, accountability and efficiency in the management of public resources and the delivery of services, which are critical to the achievement of national development strategies and international objectives such as the Millennium Development Goals.


GFA services

Over the past ten years, GFA Consulting Group has advised national, regional and local governments on the application of sound PFM principles around the world. Thereby, we have worked together with a wide range of key institutions in public resource management such as ministries of finance, accounting and budgeting units of line ministries or local tax authorities. From our experience and insights into how public institutions conduct their financial dealings we are well positioned to support government and donor agencies in applying PFM diagnostic instruments and in developing and implementing projects that strengthen public revenue, expenditure and administrative systems. Moreover, GFA expert teams support the decentralization of public finances by the appropriate adoption of structures and procedures applied from the central government level to local and regional levels. Developing and implementing technology solutions for public services such as tailor-made accounting software is another service GFA offers to clients worldwide.