Engaging in Public Finance Management – a system-wide approach to sustainable development
MAPUTO, Mozambique, 10 May 2011 – In Lewis Carroll’s Alice in Wonderland, Alice asks the Cheshire cat to tell her the way to go. “That depends a good deal on where you want to get to,” answers the cat. “I don’t much care where,” Alice replies, “as long as I get somewhere.” The cat responds, “Oh, you’re sure to do that, if only you walk long enough.”
The passage strikes a chord with the way we’re used to do business at UNICEF. We’re often so caught up in trying to achieve results in our traditional focus areas that we forget the broader development context in which we operate. But our ‘traditional work’ does not emerge in a vacuum. The realisation of children’s right to health, for example, is contingent upon a complex decision-making process that determines how scarce productive resources are allocated and health services distributed in a particular society. Failure to understand this system-wide environment – and the trade-offs involved – may not only delay the achievement of results but make them unsustainable in the long term.
Working on Public Finance Management (PFM) system offers a means to better understand how national institutions, administrative processes and financial systems operate. As such, it complements UNICEF work in social sectors by grounding them in a broader discussion of accountability, ownership and sustainability of development assistance. If national PFM are functional, social sectors also tend to perform well. If PFM systems fail, repercussions will be visible everywhere.
But strengthening PFM systems is also a goal in itself. UNICEF Mozambique is supporting four PFM focus areas: (i) increasing transparency and participation of civil society and parliaments in PFM dialogue; (ii) strengthening domestic accountability around PFM issues; (iii) supporting government capacity-building for evidence-based strategic planning and budgeting; and (iv) supporting aid coordination. This work looks at the system-wide PFM environment – beyond the implementation of UNICEF programmes – as a point of departure to strengthen the formulation and implementation of evidenced-based policy priorities and child focused (but not child exclusive) budgeting. In a world of scarce resources, taking the most effective and efficient route to development is as important as the final destination.
1. Going beyond UNICEF-centric programmes. Working in PFM requires an understanding that the goal of development assistance is not the implementation of UNICEF-supported interventions per se. Rather, the goal is to make Government – through their public financial and administrative systems – more enabled to fulfil the rights of its population. This support is done in a very upstream manner, moving beyond small ad hoc projects and focusing on the “bigger picture.” This requires an understanding of where UNICEF-supported programmes can be more strategically placed to ensure efficient and effective results. A comprehensive knowledge of national Government systems is required.
2. Child focused (based on evidence) but not child-exclusive. A change in approach is needed when engaging in PFM. Preserving macro-economic stability is a key concern for the Ministry of Finance, for example. That requires maintaining fiscal balance, in addition to promoting stable economic growth, keeping inflation low and encouraging full employment. Against this background, a child-exclusive discourse may not be very persuasive. Instead, focus is placed on evidence, with a focus on child development indicators. For instance, mentioning that Mozambique has the 22nd highest under-five child mortality in the world or citing that almost half of the population suffers from malnutrition provide very strong arguments when discussing policy and budget allocations to the health sector.
3. It’s not always about increased allocations. When advocating for more funds for the Education Sector, for example, attention should be drawn to whether the ministry has the adequate absorptive capacity to manage increased funds. Efficiency of scarce resources is critical. One should also try to propose where these additional funds would come from. Finally, it’s also important to acknowledge that lack of money is not always the problem. Other elements – legislation, enforcement, overall capacity, economic growth, as well as demand-side constraints - all play a role in the realisation of children’s and women’s rights. Looking at PFM systems as a whole helps frame these advocacy interventions in a more cohesive way, while understanding the importance of macro-economic stability and fiscal space constraints.
4. Engaging in PFM requires comprehensive and concurrent interventions. Focusing only on budget analyses, for example, is not enough to even begin tackling the many inter-related elements of social budgeting work. Two areas that are often neglected are (i) aid coordination; and (ii) national planning processes and instruments. The former is critical in ensuring the comprehensiveness and predictability of the national budget – and this is also an area where the responsibility for action lays with donors and the UN, and not necessarily with the Government. Planning is also important as it provides (or should provide) the strategic foundation to decide on priorities and trade-offs required for efficient budget allocations. To ensure sustainable reforms, civil society organisations and the parliament should be included in this dialogue.
This web story was adapted from an article written by Natalia Adler, Knowledge Management Officer in the Social Protection, Planning, Information and Monitoring Section at UNICEF Mozambique. Follow the link on the right for the full article.
For more information, please contact:
Arild Drivdal, UNICEF Mozambique, tel. (+258) 21 481 100; email: firstname.lastname@example.org
Gabriel Pereira, UNICEF Mozambique, tel. (+258) 21 481 100; email: email@example.com
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