While acknowledging the need to build some basic foundations, Richard Allen's paper seems to be a thoughtful expansion on ideas in my earlier post on sequencing reforms (I have to be honest and admit having already read the paper!). I would point to the following useful passages from the final section on 'Suggested Approaches':
'An important implication of this simpler, scaled-down approach is that the topic of sequencing, over which there is much debate in recent literature, becomes a largely redundant issue in relation to the overall design of the reform program since, as noted, strategies that include hundreds of measures, and are distributed over several “platforms,” are unlikely to be successful. The concept of sequencing continues to be relevant, however, in relation to specific components of a reform strategy―such as reorganizing the central finance institution (ministry of finance), or establishing an integrated revenue authority, or a new debt management office―and how these changes should be planned and implemented.'
‘Of course, focusing on the basics as a core organizing principle of the budget reform process should not be interpreted too literally. In the practical circumstances of a developing country, given its political and institutional drivers, there may be situations in which action x is initiated before action y, despite x’s “inferior” position in the reform hierarchy. Reformers need to leverage existing institutions and human capacity. Thus, a country may decide to establish an external audit authority even though its basic systems of accounting and financial reporting are very weak. Such an initiative may be required politically to satisfy the requirements of a burgeoning parliamentary system, or a special interest group, or to pay off a political supporter, for example; and may indeed be helpful in building external pressure (through the legislature, NGOs, the media, or the general public) for improvement in more basic areas of budgeting. Similarly, it may be useful for a developing country to introduce some elements of a simple program classification, or a performance management framework―at a basic level―to meet external demands for greater social accountability, even though it is not yet ready to introduce a fully developed performance budgeting system.’
'Finally, in applying the approach outlined above, the overly complex, rigid, and technocratic budget improvement programs that have bedeviled would-be reformers in many developing countries need to be avoided. Budget reform is an art, not a science. Moreover, modernization of the budget needs to be linked to reforms in public administration more generally, and to the establishment of a professional, merit-based civil service. There is much value in the guidance given by Hirschman (1958), namely to focus on changes that either impel or facilitate further changes.'
Richard Allen also warns against blindly using PEFA scores to drive reform sequencing, i.e., focusing first on the D-rated areas: 'In practice, a more sophisticated, nuanced approach is required in which all relevant variables—including the regulatory framework, business processes, human resource issues such as developing appropriate skills and training facilities, and IT systems―are taken into account. Is sufficient external finance and technical assistance available to support the program? Are the proposed measures dependent on government decisions to institute other improvements in the public sector—for example, a new civil service law, or recruitment and training arrangements; or a reorganization of ministries that may affect the role and responsibilities of the finance ministry and its staff? How will these various elements be coordinated and prioritized? Another key issue is to make a thorough assessment of the institutional and political drivers in the country that will shape and influence the reform process, and may be obstacles to improvement unless adequately dealt with.'
The historical perspective (at the beginning of the paper) on the length of time taken to institute reforms in certain OECD countries is also both enlightening and daunting.
Daniel Tommasi also gives pragmatic guidance on sequencing. He doesn't dismiss the platform approach, but says that the chronology might not be so important - which kind of undermines the idea doesn't it? You can download the paper here and listen/watch Daniel talking about it:
http://capacity4dev.ec.europa.eu/strengthening-public-expenditure-management-developing-countriesAny volunteers for the first video clip on the PFM Board?!
