OPM is implementing a five-year project in Pakistan to introduce a medium-term budget framework across government
We have long-term contracts to provide public financial management advisers in Sierra Leone, Malawi and the Caribbean
OPM is helping the World Bank develop a practitioner’s guide to conducting public expenditure reviews in the forestry sector
We regularly provide training on public financial management issues to UNICEF and other donors
We support Tanzania’s annual review of public expenditure in the energy sector
OPM is implementing a 6 year reform programme to establish a Medium-Term Budget Framework in Pakistan across government
Our approach is based on an in-depth understanding of the institutional and organisational needs of a functioning public sector budget process, as well as the necessary financial management and reporting systems.
Since the mid 1990s, there has been a surge in donor interest in the way public sector budgets are set, managed, delivered and reported on. OECD DAC figures suggest that investment in activities related to strengthening public financial management has risen form $85m in 1995 to almost $1,000m by 2007. This reflects not only an increased demand for transparency in the way aid is used, but also a recognition that effective financial management is pivotal to an effective administration.
Public expenditure reviews (PERs) help answer the most fundamental questions around public finance: did the money go where it was meant to go? Was expenditure consistent with policy priorities, and what did it achieve? Expenditure reviews of different types aim to improve expenditure allocation and management decisions made during budget formulation, and strengthen the composition and management of the budget to deliver policy priorities.
Recent studies show tangible improvements in budget preparation processes in many developing countries. However, budget execution remains a significant challenge. Once the budget has been approved, it must then be executed as planned with appropriate management control and accountability systems in place. This involves the development of incentive structures and sanctions, and systems of rules to control spending that ensures the efficient and effective use of funds. So where should donors, and committed partner governments, refocus their attention? Is the problem one of processes and systems, or skills and capacity?
From reviews conducted under the Public Expenditure and Financial Accountability (PEFA) framework to more in-depth fiduciary risk analyses, OPM is equipped to provide open and constructive assessments of the effectiveness of public finance management in different locations. Our comprehensive experience working in developing countries gives us additional insights into the challenges that may be encountered.
The increased emphasis placed on budget reform within development policy reflects the importance of effective financial management to a growing economy. But without understanding the political economy of the partner country, efforts to introduce budgetary reforms can flounder. In our experience, reform programmes need to focus as much on institutional analysis and change management disciplines as on financial management theory.