Sustainable Public Financial Management

Excitement over Millennium Development Goals can Hide what Works!

Doug Hadden, VP Products

Bright lights and big stars in New York this week. Speeches at the United Nations. Explosion in social media discussion. Today is #socialgood day, so make sure your view is heard on this Millenium Development Goal - “MDG Idol”. What goal is best for you?  In the smorgasbord of causes. Advocates press their case for their chosen cause. And, it is hard to determine which cause to pick with such celebrities as Bono, Bill Clinton, Ed Norton and Gina Davis sharing stages. You can’t disagree with any of these points of view.

This where the lesson gets lost. For all the improvement in MDGs, there remains a group of survivors with limited improvements to date. “MDG Survivor.” So, we should be less concerned about what the G7 will do in aid and more about what the G7+ needs. Who is the G7+?  Burundi, Chad, Republic Democratic of Congo, Nepal, Salomon Islands, Sierra Leona, South of Sudan and Timor-Leste. What do these fragile states need?

Statebuilding and Governance and MDGs

‘”Aid is given based on MDG criteria, and from our experience we have found out that before we can get the MDGs, we have to do a few things first. We have to have peace and stability,” Timor Leste Minister of Finance Emilia Pires told IPS in Dili ”It means that you have to build peace and then you have to build a state to manage the whole thing. Peacebuilding and statebuilding must come before the MDGs and if you look at all the literature of the MDGs, it doesn’t talk about that.”‘ That’s why the G7+ have the Dili Declaration that states:

 ”Conflict and fragility are major obstacles for achieving the Millennium Development Goals (MDGs). We recognize that it will be extremely difficult to achieve the MDGs in most fragile and conflict-affected states by 2015. We urgently need to address conflict and fragility by supporting country-led peacebuilding and statebuilding processes. To improve the impact of our efforts we will take immediate actions and develop an International Action Plan on peacebuilding and statebuilding.”

As Daniel Kauffman of the Brookings observes: “there are many explanations for slow and uneven progress on the MDGs, ranging from insufficient donor commitments to the choice of indicators. But, as we have written about before a big part of the answer lies in the highly variable quality of governance across countries.” Good Governance is required to advance MDGs. The Dili Declaration shows “governance” as a key priority.

Transparency for Aid Effectiveness

As our friends at Publish What You Fund emphasize, aid effectiveness is as much about donor transparency as it is recipient government governance. Aid transparency improves aid effectiveness through improved aid harmonization and citizen oversight. That’s the intent behind the International Aid Transparency Initiative (IATI). That’s also why there will be a significant positive impact from the World Bank decision to provide open data at http://data.worldbank.org/.

What is FreeBalance doing about it?

As a For Profit Social Enterprise (FOPSE) whose mission is to bring tools for good governance around the world, the MDGs are critically important. Of course, it helps to have Government Resource Planning software that can be implemented and operated successfully in fragile states like Sierra Leone, Timor-Leste, Liberia, Afghanistan and South of Sudan. We remain active in IATI pushing for improved budget integration. And, we try to share lessons learned.

Doug Hadden, VP Products

Sharing Good Practices in Public Financial Management Reform

Delegates from the Government of Liberia Ministry of Finance recently visited Sierra Leone for a study tour to learn good practices in “macro-economic and fiscal projections and analysis; revenue tax policy, forecasting and analysis.” Study tours are particularly effective because the sequence of PFM reform differs based on country context. Study tours provide the depth needed for governments to understand what works under different circumstances.

Of course, the governments of Sierra Leone and Liberia share many characteristics that made this study tour effective. Both are post-conflict countries with similar macroeconomic situations. Sierra Leone has successful implemented the FreeBalance Accountability Suite

GoSL first Electronic Cheque

. Liberia has acquired the same software and the project is in development.

The Government of Sierra Leone has achieved significant progress in RFP reform and governance despite trying circumstances. We’re in process of completing a Case Study of PFM Reform for Sierra Leone, similar in scope to the recent study of Kosovo. We hope that our Case Study series will help the knowledge transfer of what works.

“The Government of the Republic of Liberia is committed to advancing key governance reform initiatives in support of its reconstruction efforts,” said the Honorable Tarnue Mawolo, Deputy Minister Administration. “The FreeBalance Accountability Suite will serve as a tool to support reform initiatives and will provide the foundation for economic growth and transparency. By building a more transparent government, public trust in the Government of Liberia will only increase.” 

Among the good practices leveraged by the Government of Sierra Leone, according to the 2007 Public Expenditure and Financial Accountability(PEFA) assessment, is an excellent budget classification and good reporting. We’ve heard since 2007, at our FreeBalance International Steering Committee meetings that Sierra Leone has achieved:

• Improved purchasing and procurement control
• Decentralization of PFM processes
• Reduction in financial management processing time
• Clearance of all backlog of annual financial statements and timely preparation of annual Accounts
• Legal reform for PFM and sequencing of reform and transparency
• Integrated Public Financial Management Reform Program (IPFMRP)
• Improved governance through the proper segregation of duties and availability of audit trails

The first phase of the Sierra Leone FreeBalance Accountability Suite implementation went into production in June of 2005 – 7 months from project inception. The Government of Sierra Leone current uses the following Government Resource Planning (GRP) modules and is very active in our software enhancement initiatives:

• FreeBalance Financials
• FreeBalance Revenue
• FreeBalance Purchasing
• FreeBalance Assets
• FreeBalance Human Capital
• FreeBalance Performance Budgeting

Liberia and Sierra Leone are continuing to improve governance mechanisms despite technical infrastructure and capacity challenges. This is why the Sierra Leone experience in capacity building is critical for Liberia.