6 Ways that COVID-19 Pandemic is Driving PFM Reform (and 1 way it’s not)

Lessons learned from the ICGFM virtual training symposium

The acceleration of Public Financial Management (PFM) reform and government technology modernization were major themes from presenters and panelists at the International Consortium on Financial Management symposium (February 9 & 10th). What’s accelerating? The overwhelming motivation for reform from the recognition that PFM is the core of government resilience for emergencies like Covid-19:

  1. Use of remote training and remote services
  2. Use of PFM for improved service delivery, especially in the health sector with health budgeting and program budgeting
  3. Use of PFM to improve spending in support of the Sustainable Development Goals (SDGs)
  4. Use of accrual accounting to get the full picture on government accounts
  5. Use of risk management and contingency budgeting to improve resilience in a Volatile, Uncertain, Complex and Ambiguous (VUCA) world
  6. Integration of financial management sub-systems, like procurement, with core Financial Management Information Systems (FMIS), to maintain controls even in emergencies

What’s reversing? Donor use of country systems creating high transaction costs and the inability of governments to easily understand Covid-19 spending. The use of country systems was part of the Paris Declaration and the Accra Agenda for Action.

For aid to be effective, donors need to respect partner country ownership over their own development policies and practices. This means, among other things, using a country’s own administrative systems to deliver aid. Decades of development experience show that bypassing country systems and policies weakens a country’s ability to determine its own future.

Sustainable Public Financial Management

Session: Public Financial Management for Sustainable Public Finances in a Post COVID-19 World

Public Financial Management (PFM) is at a crossroads with demands for realignment with post-COVID-19 requirements. The unprecedented increase in government debt, fall in revenues and higher fiscal spending by governments place greater emphasis on sustainable public finances. Health and education sectors are emerging as key focus sectors to be ‘built back better’ leading to expectations that PFM systems support improved service delivery. PFM systems are gaining significance to support specific policy objectives of climate and gender. In this background, PFM systems need to be responsive and flexible, while ensuring value for money and minimizing fraud and corruption. They need to support progress towards Sustainable Development Goals. Public Expenditure and Financial Accountability (PEFA), an initiative of nine development partners, is known as the gold standard for Public Financial Management assessments globally. The PEFA assessment reports from 153 countries provide interesting trends on the evolution of PFM systems globally.

Srinivas Gurazada

Government and Public Finance Innovation

Sessions: Innovation Roundtable

John ThissenLaura Robinson, Richard Chambers

Government COVID-19 Vulnerability and Resilience

Session: Tools to Help Countries Plan for Complex Crises: The Impact of COVID-19 Shutdowns on Economies, Jobs, and Poverty

The COVID-19 crisis is a health crisis and an economic crisis. Indeed, our economies are suffering from a medically induced coma. Travel, entertainment, getting goods to market and even food processing have all taken serious hits, resulting in massive job loss and rises in poverty. Two of the tools we developed for USAID to assess and quantify the impacts of COVID-19 on partner country economies and incomes; job losses and rises in poverty among men and women; and the macroeconomic resilience of these countries or their relative capacity to overcome these impacts. DevTech developed these tools as part of the work of USAID’s worldwide Fiscal Accountability and Sustainable Trade (FAST) project.

John YatesMark Gallagher, and Welmar Rosado

The analysis included:

  • 14 indicators of fiscal and monetary space
  • 134 low- and middle-income countries in the indicator set
  • Indicators are color coded (red, yellow, green)
    • Low-resilience (red) countries are less likely to have effective monetary or fiscal instruments to face the macroeconomic challenges posed by COVID- 19
    • Difficulty financing new borrowing
    • ow availability of savings to draw on
    • Difficulty using the budget to help recovery
    • High cost of using monetary instruments Overall composite indicator

Government Risk Management

Session: Optimizing Public Value through Risk Management

Public sector risk management is the process of managing the impact of uncertainty on varying aspects of public value. The panel will discuss public sector risk management from a global framework perspective, from the perspective

of a country rolling out a government-wide risk management guideline, and from the perspective of a practitioner in crisis management and business continuity planning. The discussion centred around the critical need to protect, create, and reimagine public value globally in 2021 and how risk management can assist in encouraging diverse parties to pull in the same direction in this herculean effort.

Laura RobinsonPaul SobelFredrick Riaga, Gary Irvine

Business Continuity Management

Business Continuity Management (BCM) is a both a component of risk management and a discipline unto itself. While risk management seeks to manage the likelihood and impact of uncertain events, BCM seeks a narrower objective – to plan and manage the impact of disruptions by maintaining the continuity of operations after a disruption. All Business Continuity planning activities are based upon the assumption that one or more identified threats have been realized.

Optimizing Public Value through Risk Management Additional Resources

Risk management is a broad discipline with significant resources available guidance, reference, and training. The resources herein provide a starting point for further investigation into risk management. These were provided as links:

Guidance

Risk Reports

Risk Management Training & Certification

Business Continuity Training & Certification

Government Budget Management

Session: Budgeting in Uncertain Times

Aleksi Aleksishvili, Ekaterine Guntsadze, Salvador Elmazi, Shelby Kerns

Kosovo example: new fields (in the Chart of Accounts) supported as part of anti Covid measures

  • Health sector (medical supplies and equipment)
  • Business sector including self-employed and women owned businesses
  • Education, culture and sport activities
  • Anti-Covid measures in municipal level
  • Wage allowances to health and security employees

Government Procurement

Session: COVID-19 and Governance

The pandemic has led to challenges in the public procurement landscape as governments strive
to deliver front-line services and emergency procurements by fast-tracking expenditure procedures, utilizing exemptions within the law, and accelerating electronic services to reduce face-to-face interactions. This panel session provides country case studies and examples on how accelerated competitive procurements, electronic procurement tools, transparency and accountability mechanisms for reporting, and increased capacity building, can contribute to transparent and accountable procurements, while promoting integrity, fairness and confidence in public procurement processes during the COVID-19 pandemic. The panel provided experiences from three USAID-funded projects that have been at the forefront of technical assistance in public financial management, public procurement and fiscal transparency, supporting COVID-19 response policies and service delivery.

Eunice Heredia-Ortiz, Darrell Freund, Enrique Giraldo, Aferdita Mekuli 

Technology in Government

Session: Deploying Digital Technologies to Support Resilient Public Financial Management, A Case Study — Building a Strong Tunisia During Covid-19

This presentation used the example in Tunisia to demonstrate that by harnessing the power
of data-driven digital technologies — business intelligence tools, secure data exchange technology, dashboards, decision support systems, and models — the country is now better prepared to face the unique public financial management- related challenges brought on by the pandemic.

When the COVID-19 pandemic reached Tunisia in March 2020, the Tunisian authorities ordered a national lockdown. The Tunisian Ministry of Finance reached out to the United States Agency for International Development (USAID) to accelerate the digital transformation that was already underway to improve public financial management. The USAID Fiscal Reform for a Strong Tunisia (FIRST) project sprang into action to assist Government of Tunisia officials in being virtually connected; develop priority web applications to enable the remote payment of taxes and automatic electronic tax withdrawals; complete the implementation of an inter- operability platform to allow different institutions involved in budget planning to share data electronically; and use models and data to make projections of the potential budget and economic impacts of the pandemic.

John ThissenMario KerbyJanusz Szyrmer

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