The country focus of the Bank's financial management (FM) sector has become more prominent with a deeper understanding of the broader financial accountability environment gained from country diagnostic reviews and project work. This country-oriented focus evolved in the late 1990s with the introduction of the Comprehensive Development Framework (CDF) as a country-led and country-owned development program to which the Bank and its partners would contribute.
The Bank's FM work in each country is determined by the country's development priorities and institutional environment, and by the nature of the Bank's engagement in the country, as described in the Country Assistance Strategy (CAS). Country priorities and institutions influence the size and nature of the program as well as the objectives and design of Bank-financed projects.
A major focus of the Bank's work is supporting the development of more effective and accountable states, in partnership with other actors, including multilateral and bilateral organizations. Reforms to strengthen the accountability and transparency of state institutions are an increasingly important focus of partner countries. The Bank acquires the necessary knowledge of the country's institutional framework through:
- country FM diagnostic assessments done by the Bank or other donor organizations;
- similar assessments by competent country institutions; and
- experience with the implementation of Bank-financed projects.
This knowledge helps identify fiduciary risks to Bank-supported programs -- that public funds are not being used for their intended purposes. It also helps determine the extent to which the Bank may make use of the public financial management (PFM) institutions of the country. In addition, it provides a basis for capacity building initiatives that support institutional strengthening of the PFM system. In particular, the World Bank has recognized the important role that Supreme Audit Institutions (SAI's) play in PFM and it has developed an approach to support and strengthen these institutions.
In addition, a country FM strategy is prepared as an internal Bank document that articulates and facilitates the Bank's FM work in a country. The Bank uses this strategy to document the environment in which FM work is to be carried out, summarize key FM issues, plan priority tasks, set performance targets for a defined period, and allocate Bank FM resources most effectively. By focusing the strategy at the country level, the Bank aims to support the scaling-up agenda and multisector programs. With this strategy, it seeks to make FM work more responsive to institutional performance objectives while continuing to provide acceptable FM coverage of individual projects. Preparation of the strategy helps to shape the agenda for dialogue with borrowers on FM issues, and to identify opportunities for more effective partnerships and harmonization with other donors. Finally, it helps do FM work more cost-effectively, allowing resources to be directed to high-priority or high-risk areas, informing inputs to the CAS and Country Portfolio Performance Review, and offering country-specific off-the-shelf solutions for individual projects.