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Public Financial Management Reforms in Post-Conflict Countries

World Bank
Global Center on Conflict Security and Development
Poverty Reduction and Economic Management Network (PREM Network)
2012

World Bank
Global Center on Conflict Security and Development
Poverty Reduction and Economic Management Network (PREM Network)
2012

Reforms of public financial management (PFM) systems are a key area of support that development partners and the World Bank in particular provide in many post-conflict environments. This eight-country comparative study seeks to capture experiences, successes, and challenges with PFM reforms in post-conflict contexts in systematic ways and to use such a mapping as a basis for lesson learning and recommendations for this important area of support to statebuilding. Country cases include Afghanistan, Cambodia, the Democratic Republic of Congo, Kosovo, Liberia, Sierra Leone, Tajikistan, and West Bank and Gaza. Key findings from the analysis are the following : (1) PFM reforms are feasible even in challenging post-conflict environments with initially very low skills and even where insecurity continues ; (2) seeking international recognition and/or major debt relief have been important motivating factors for governments to pursue PFM reforms ; (3) in most countries, the relatively greatest progress has been achieved on budget execution, while progress on budget planning has been more limited, especially on advanced reforms such as medium-term budget frameworks and program budgeting ; (4) progress on budget accountability has been uneven across countries and appears to depend most strongly on political buy-in.

There are important caveats about the sustainability of PFM reforms achieved due to (1) continuing strong donor support, including capacity substitution with
technical assistants in several countries ; (2) the need for continuous political support for reforms ; and (3) challenges in related public sector reform areas,
particularly civil service, pay, and decentralization. Looking at wider links and impacts, the study finds that most countries progressing well on PFM reforms
also make gains on overall government effectiveness and accountability. In contrast, gains on service delivery are widespread but show no correlation with PFM reform progress over the time period reviewed. Finally, while donor engagement on PFM reforms on balance is a positive factor, many problems remain, with regard to fragmentation of support as well as the overall use of aid modalities in a way that effectively incentivizes and rewards reforms.

The study is a joint product of the World Bank’s PREM Public Sector Governance unit and the Global Center on Conflict, Security and Development.

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