Public Financial Management for PRSP - Deutsches Institut für ...

Stefan Leiderer et al.
and systematic integration of PFM work into international development cooperation
was only recently recognised with the PRSP approach and new
modes of aid delivery increasingly gaining importance. There is no universal
definition of the term Public Financial Management. In this study, PFM is
used to denote the different stages of the budget process as well as the design
of the legal and institutional framework for PFM and for the management of
human and technical capacity that determine the effectiveness and efficiency
of processes on each of these stages. The stages are strategic and budget planning,
budget formulation, budget execution as well as budget control and
evaluation (Leiderer 2004, 7).
The primary research focus of this study is on the PFM system because it
links and ideally integrates the two prominent approaches to poverty reduction,
PRSP and decentralisation. The public budget is the central tool for
operationalising and implementing policies based on national strategic plans.
However, if a country pursues a strategy of decentralisation, it means either
that a new level of government is created or the existing sub-national government
levels gain power, responsibilities and resources. This fundamental
reorganisation of the state has strong implications for the national PFM system.
It also has to be reorganised in a way that provides for effective coordination
or integration of planning, budgeting and implementation processes
across the various levels.
To implement just one these approaches, either PRSP or decentralisation,
already is a very complex and long-term process. Nevertheless, particularly in
sub-Saharan Africa, many countries are currently in the process of implementing
both reforms. For both reform approaches to be successful, a parallel
reform of the PFM system is thus crucial. So far, most research has focussed
either on PRSP and PFM or – less frequently – on decentralisation and PFM.
This study tries to examine the existing and missing links, the contradictions,
and the space for synergy between the implementation of PRSP and decentralisation
in PFM. Therefore, the main research question of this case study is
the following:
18 German Development Institute