Fire-side conversation with Shanta Devarajan, Chief VP, MENA, Economics, World Bank on PFM and public sector delivery

Here Shanta's introduction to the conversation:

 "Since the purpose of good public financial management is to improve the effectiveness of government, the discussion will focus at the other end, namely the delivery of public services and ask, how--if at all--PFM can improve their outcomes. First, I will question whether the activities that governments actually spend on are those that they should spend on. Using a simple, welfare-economics framework, I will show that most items in the government budget do not pass the test. In this context, strengthening PFM is like making the trains run faster...to the wrong station. Next, I will show that, even those government interventions that meet the welfare test often fail to deliver what they are supposed to because of (i) poor incentives in the service delivery system; and (ii) capture of public funds by political elites. In these cases, better PFM can help only if they change incentives in the same direction as is necessary to improve service delivery. Specifically, better monitoring of public expenditures can help if the information is shared with people who can influence decisions about service delivery. If it is shared with other government entities, it may increase their power over service beneficiaries and reinforce elite capture. Finally, better PFM for aid projects in an otherwise dysfunctional system rarely helps outcomes and may make matters worse, by increasing government's accountability to donors as opposed to its own citizens."

Come on line at http://pfmboard.com/index.php?topic=7523.msg22487#msg22487 and be part of the discussion.

Best, Mauro Napodano, PFM Board Founder.