Serving the Public Interest: A Global Development Perspective

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Serving the Public InterestA Global Development
Perspective
Tony Hegarty Regional Manager Financial
Management The World Bank

• CIPFA Annual Conference
• International Convention Centre
• Manchester
• June 16, 2005

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The World Bank Group

• Working for a world free of poverty

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Poverty Reduction Global Challenge

• 1.2 billion people live on less than 1 a day
• 2 billion do not have access to clean drinking
  water
• 200,000 children under 5 die each week of
  treatable and preventable diseases
• 2004 over 40 million living with HIV, new
  infections 5 million and over 3 million deaths
  due to AIDS
• Globally, 1 child in 4 does not finish primary
  school, and in Africa almost 50 do not

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Poverty Reduction Global Challenge
In this new century, millions of people in the
worlds poorest countries remain imprisoned,
enslaved and in chains. They are trapped in the
prison of poverty. It is time to set them free.
Nelson Mandela International Global Call For
Action (Make Poverty History) Campaign, London,
February 2005
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Millennium Development Goals

• Endorsed by 189 countries at the UN Millennium
  General Assembly in Sept 2000.
• Aim to halve the proportion of people in extreme
  poverty by 2015.
• Set targets for reductions in poverty,
  improvements in health and education, and
  protection of the environment.

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Millennium Development Goals
"The Millennium Development Goals offer concrete
targets for everyone to rally around in the
global fight against poverty. But reaching the
goals will require action from both developed and
developing countries.
James D. Wolfensohn, Past President,
The World Bank
Developed countries must boost foreign aid to the
developing world, remove barriers to the exports
of developing countries, encourage private
investment, and make the benefits of science and
technology available to all the world's peoples.
Developing countries, meanwhile, must put in
place the right economic policies, work to
improve governance, invest in their people, and
create an enabling environment that is conducive
to growth and development.
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Progress Towards MDGs

• Prospects are promising for halving the income
  poverty goal at a global level between 1990 and
  2015
• East Asia has already achieved the poverty MDG
• South Asia is on target
• Daunting challenges remain
• Most MDGs will not be met in most countries on
  present trends
• Sub-Saharan Africa is not on-track to achieve any
  of the MDGs by 2015.

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Progress Towards MDGs Growth

• Progress in reducing poverty has not been
  universal largely due to lack of parity in growth

Source Chen and Ravallion, 2004 WDI 2004
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Accelerating Progress Towards MDGs

• Anchor efforts to achieve the MDGs in country-led
  strategies that aim higher
• Improve the environment for growth strengthen
  fiscal management  and governance, ease
  constraints on business and strengthen economic
  infrastructure
• Scale up human development services
• Dismantle barriers to trade
• Double development aid in the next 5 years and
  improve its quality and delivery

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Financing Development

• ODA increased from 52b in 2001 to 78.6b in 2004
• This represents 0.25 of DAC members GNI
• Substantial additional ODA is required to meet
  MDGs
• UN Millennium Project (2005) 66b - 126b per
  year
• Development Committee (2003, 2004) 30b 50b
  per year
• Commission for Africa (2005) 25b 50b per
  year
• 0.70 of DAC members GNI is the target

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Raising the Quality of Aid

• Magnitude
• Timing
• Predictability
• Harmonization

Special Advisor, UN Secretary General
Paris Declaration on Aid Effectiveness, March 2005
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Governance and Poverty Reduction

• Governance has a significant impact on poverty
  reduction
• Weak governance has blighted development
• Good governance
• requires robust government-wide systems to
  promote efficient and effective use of all public
  resources
• a target under MDG 8
• Improving governance a major challenge

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Public Financial Management and Governance

• Improved PFM capacity is at the core of good
  governance and lies at the heart of achieving the
  MDGs ensuring that public and
  donor resources are used economically,
  efficiently, effectively and transparently for
  the intended purposes.

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Funds Flow Arrangements for ODA
Project
Country-level
Sector
Capacity of implementing agency
Capacity of sector institutions
Country financial accountability arrangements
Assessment
Bank rules for most transactions
Country rules for most transactions Bank
rules for high-value transactions
Country rules apply, with few Bank restrictions
Rules on use of funds
Periodic Financial Monitoring Reports (FMRs)
and annual accounts
Common financial and other reports on sector
performance
Countrys normal reporting arrangements on
public finances
Reporting
Audit of annual project accounts
Common sector auditing arrangements
Countrys normal auditing arrangements on
public finances
Auditing
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Diagnosis of Country PFM Systems?

• A CFAA a diagnostic tool to enhance the knowledge
  of PFM in client countries.
• It supports fiduciary responsibilities by
  identifying the strengths/weaknesses of PFM so
  that potential risks to funds can be
  assessed/managed.
• It supports development objectives that lead to
  the design and implementation of capacity
  building programs (Action Plan) to improve a
  countrys PFM

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Diagnosis of Country PFM Systems
CFAAs involve Collaboration/Partnership

• Government
• Donors
• World Bank

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Diagnostics Emerging Cross-cutting Issues

• Incomplete Budget Information
• Inadequate Accounting Systems
• Obsolete Legal Framework
• Ineffective Internal and External Audit
• Poor dissemination of PFM information
• Shortage of qualified PFM Professionals
• Barriers to IFMIS

Mostly due to weak capacity
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How do we get there?
From Diagnostics to Implementation
From compliance to
capacity development
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Building PFM Capacity Strengthened Approach

• Drawing on the lessons and good country
  practices, donors have developed a strengthened
  PFM approach

Government PFM Reform Strategy, Action Plan and
Results
Monitoring results
Coordinated program of analytical/TA/funding
support
Government/Donor Policy Dialogue
PFM performance measurement framework
Donor Country Assistance Strategy and knowledge
requirement
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Building PFM Capacity Harmonization and Global
Partnerships

• Donors are harmonizing fiduciary requirements and
  are aligning those with strengthened country PFM
  systems
• Multilateral Development Banks and OECD-DAC
• Donors are supporting international FM
  organizations
• IFAC
• INTOSAI
• IASB

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Building PFM Capacity How Can CIPFA Contribute?

• CIPFA is a global leader in professionalizing
  PFM.
• Lead role to play in capacity strengthening
• Provision of training in PFM from basic to higher
  levels
• Adapting training materials and technical
  knowledge to local needs in collaboration with
  local partners
• Support for local bodies, or help to establish
  new bodies, to cater for public sector needs
  (twinning support)
• Dissemination of IPSAs in collaboration with
  IFAC/local bodies
• CIPFAs International Program step in the right
  direction

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Summary and Conclusion

• Poverty reduction is primary global development
  challenge
• MDGs created a powerful compact for fighting
  poverty but reaching them will require
  accelerated and concerted actions from developed
  and developing countries
• Improved governance and enhanced PFM capacity
  required
• Partnership required in support of government led
  strategy

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There is a tsunami every month in Africa. But
its deadly tide of disease and hunger steals
silently and secretly across the continent. It
is not dramatic, and it rarely makes the
television news. Its victims die quietly, out of
sight, hidden in their pitiful homes. But they
perish in the same numbers. The eyes of the world
may be averted from their routine suffering, but
the eyes of history are upon us. In years to
come, future generations will look back and
wonder, how could our world have known and failed
to act? Now is the time to act.