On 7 August, consultations opened for the revised Public Expenditure and Financial Accountability (PEFA) framework. Launched in 2005, PEFA has become the ‘go-to’ measure of quality in public finance systems. Now, nearly ten years on, sweeping changes are being proposed. But the PEFA members should tread carefully: it will take a lot more effort to make sure the new indicators are used appropriately.
The issue of incredibility – defined in the dictionary as something that is ‘impossible or very difficult to achieve’ – matters hugely for understanding how public money is used in developing country budgets. But as much as it matters to donors and institutions like the IMF who work closely with governments in low-income countries, budget credibility also is a major contributor to building trust in accountable public institutions. So why, in spite of this considerable effort to strengthen budget credibility, do many governments still struggle to execute their budgets to plan? Last week’s announcement that the Public Expenditure and Accountability Program (PEFA) is now open for public consultation merits a closer look at why budget management in developing countries often goes wrong.
It must be a tough time for donors. From every side new research is showing that the development world is more complex and more political than their standard approaches can cope with. The rise of Political Economy Analysis points to the need to think and work politically, and to ensure that foreign aid does not undermine local institutions. Meanwhile evidence of successful institutional reform points to the need for problem-driven iterative adaptation (PDIA) – not a one-size-fits-all, best-practice approach. Research on the underlying complexity of development problems suggests that a responsive, learning and networked approach is required. Recent work points to a negative effect on performance that comes from trying to monitor and manage complex projects too closely.
William Easterly’s “Tyranny of Experts” is an important and enjoyable book. Easterly aims to provoke a debate about the role of rights and freedom in development, and that he does. Not everyone will be sold on his argument, but this is a conversation worth having.
Helder Da Costa, General Secretary of the g7+ group of fragile states, is about to head to Mexico to represent the group at the First High-Level Meeting of the Global Partnership.
Ryan Flynn caught up with Helder in London to discuss what the g7+ would like to see come out of the meeting, progress implementing the New Deal for Engagement in Fragile States, and how the g7+ secretariat is changing and evolving as an organisation.