PFM and Politics

[Arjeta]

There are a lot of discussions about PFM and the factors that affect the success or failure of authorities in managing the public finance.
The role of political parties that come into power is very important. Look what is happening in Albania. Till 2013 there were some minor changes in Line Ministries and their duties and responsibilities. Big changes were done after the elections of 2013 and some of the strategic documents were out of date. Also, within 4 years. MoF had significant changes of its responsibilities. During this period was approved the national strategy of PFM 2014-2020. After the last election Albania has a new government that is totally different from the previous one. I think that this will create difficulties in the implementation of the Strategy.

Does any of you colleagues know about similar situations in other countries and their experience with the PFM and the strategic documents implementation?

[Napodano]

There are a lot of discussions about PFM and the factors that affect the success or failure of authorities in managing the public finance.
The role of political parties that come into power is very important. Look what is happening in Albania. Till 2013 there were some minor changes in Line Ministries and their duties and responsibilities. Big changes were done after the elections of 2013 and some of the strategic documents were out of date. Also, within 4 years. MoF had significant changes of its responsibilities. During this period was approved the national strategy of PFM 2014-2020. After the last election Albania has a new government that is totally different from the previous one. I think that this will create difficulties in the implementation of the Strategy.

Does any of you colleagues know about similar situations in other countries and their experience with the PFM and the strategic documents implementation?

Hi, Arjeta;

Nice to hear from you. What you describe is not unusual in other countries.
What in my view counts is the capacity of any new Government to include its new policy priorities (which are legitimate) in the existing policy and budget frameworks. It should not pretend to change the system altogether, especially if the one they have has been working well.

In the case of Albania I am concern with (i) the new policy of PPPs as a mechanism to potentially bypass fiscal constraints; (ii) the proposed changes in the MTBP which, if not properly implemented, may introduce the damaging concept of fiscal gaps (damaging to fiscal credibility).

BTW, I will be in Albania in 2018 Q1 and it would be a pleasure to meet up with you again.

All the best, Mauro

[John Short]

Arjeta

There is usually an introduction of  the new government's policy and spending framework based on the manifesto.  Often they find that it unaffordable so it is done piecemeal within the budget cycle!  They don't tend to alter existing systems, processes and procedures if these are part of a reform programme that is being established efficiently or is already well established.  The civil servants would caution them against that.  Given that there was serious reform of the PFM processes In Albania which, if maintained, would have served its purposes, any changes that were introduced would have to be assessed based on  if they attempted to restore previous "bad" changes to the system or were trying to bye-pass the system for other reasons.

[STONE]

Tanzania is an example that comes to mind. I can't remember all the details but in these days vague impressions seem to have value.  Tanzania like so many other countries developed Poverty Reduction Strategies (PRS)at the beginning of the century.  This was under the initiative of debt reduction to promote poverty reduction. They first had to do Interim Poverty Reduction Strategies , because the IMF wanted to show "rapid results". These were supposed to be 'participatory'.  (But in an Overseas Development Institute review with the donor support there was a brilliant quote of an attendee at a PRS conference to present the draft IPRS standing up to say "I have been participated".)  The implicit idea was that if a Strategy was participatory then it was "legitimate" until the next one came along.  No-one considered the political cycle and the relative legitimacy of a new government's programme and a prior determined DP supported PRS.  Perhaps this was because many of the PRS countries at the time were not multi-party (bi-party) democracies, with the frequent alternation of governments that such places enjoy.

Tanzania's Government has been of the same partly for a long, long time, but still its policies change and evolve.  There the medium term planning and budget processes have to take account of the National Strategy (or whatever it is called) and also the Government's programme.  The idea is that the one succeeds the other and that "news" and "new policies" should be taken into account.

I remember Gord Evans and I chuckling over the irony of DPs enthusiastically promoting democracy but lamenting the inconvenience of having to adapt their processes and "assistance strategies" to inconveniently timed expressions of the will of the people.

For me it is just the nature of the will of the voters.  As Aristotle (living in a different time and place, e.g., UK 2016 ) might say "all adults can vote, some adults are idiots, some idiots can vote".