Reforming public finance management

Public finance management (PFM) is at the very heart of how governments translate public resources into development results.

Cape Town Port Authority, Susan, in the office where Vessel Traffic Control takes place.South Africa. Flickr, Trevor Samson / World Bank

Public finance management (PFM) used by governments to mobilise, allocate and account spending for public finances. Weak PFM systems in developing countries are a major constraint on delivering services to the public and, as more governments and donors prefer to deliver aid through domestic systems, PFM reforms have become ever more important.

Our programme is a leader in research on PFM issues in developing and transition countries, focusing on the following key areas:

  • diagnosis of PFM system performance through tools such as the ‘Public Expenditure and Financial Accountability’ (PEFA) framework;
  • development of recommendations for government-led and donor-supported PFM reform strategies in developing and transition countries, and in fragile states;
  • reinforcement of accountability structures by strengthening actors such as official oversight bodies and civil society organisations that demand information on budget processes;
  • evaluation of approaches to strengthen country PFM systems through aid modalities such as general budget support, sector budget support and joint trust funds;
  • improved understanding of the political economy of PFM reform to assist policy makers in their choices and understand their specific impact across countries;
  • new research under development aims to improve understanding of the relationship between PFM reforms and improvements in public sector performance and government service delivery.