PFM Trends and Actions for the Accountancy Profession
Ed Olowo-Okere, Global Director, Governance Global Practice, The World Bank |
How governments use limited public resources has always been critical but is even more so in the current environment as the world faces dual global crises of immense proportions- the global pandemic alongside the intensifying impact of climate change.
The poor and vulnerable have been hit the hardest by the pandemic and the World Bank’s twin goals of poverty reduction and shared prosperity have suffered their worst setback in decades. Governments are facing unprecedented fiscal pressures, putting huge demands on country public financial management (PFM) systems, and heightening the need for better management of, and accountability for, public funds.
But amidst the crises is an opportunity to set countries on a pathway to recovery, fostering green, resilient, and inclusive development, while also tackling rising poverty and inequality. In this context, PFM reform is fundamental to the achievement of development results, for example because:
PFM has come a long way and matured as a discipline as norms and standards have been established. But these alone will not automatically create positive outcomes. Progress takes time and it is important to work more deliberately to ensure that PFM enables better public sector results. This requires three critical areas of focus:
Achieving these requires reform processes that target change in behaviors, focusing on the ‘how’ of PFM reform, not just the ‘what’. The World Bank is a global leader in supporting PFM initiatives, playing a key role through activities such as:
The World Bank is increasingly focused on reform results, rather than financing inputs, and also works at the global level, engaging and building partnerships with others to advance PFM, including the accountancy profession and standard setters.
The Public Expenditure and Financial Accountability (PEFA) framework establishes a set of benchmarks for assessing countries PFM systems. It is hosted by the World Bank and celebrated its 20th anniversary 2021.
The PEFA secretariat published the first ever global PFM performance report, drawing on country PFM assessments, this report shows incremental progress in strengthening PFM systems.