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Public Financial Management and Procurement at the Busan 4th High Level Forum on Aid Effectiveness -- 29 Nov - 1 Dec 2011

December 3, 2011

From: Anthony Martin Hegarty, Chief Financial Management Officer, OPCFM


The Fourth High-Level Forum on Aid Effectiveness took place in Busan, Korea, this week. The Busan HLF-4 followed meetings in Rome, Paris and Accra to help transform aid relationships between donors and partners into better vehicles for development cooperation. In Busan, some 3000 delegates reviewed global progress in improving the impact and value for money of development aid and adopted the Busan Partnership for Effective Development Cooperation.

We are pleased to report that Public Financial Management and Procurement themes had a strong presence in the event, particularly from the perspectives of using country systems for aid effectiveness and strengthening country systems for effective institutions and development outcomes. Below we summarize the main messages and provide you with additional information on this important agenda for the FM and Procurement Sectors.

1.  Busan Partnership for Effective Development Cooperation

Based on the Outcome Document agreed by the elected sherpas, some important messages emerge for our Sectors. To a large degree, we already conduct business in accordance with these principles, but now it becomes even more critical to keep them in mind  (paragraphs 19 and 23):

  • The use and strengthening of developing countries’ systems remains central to the efforts to build effective institutions. Building on the commitments set out in the Paris Declaration and Accra Agenda for Action, the use of country systems should be the default approach for development co-operation in support of activities managed by the public sector, working with and respecting the governance structures of both the provider of development co-operation and the developing country. 
  • Whilst providers of development co-operation will continue to use their risk assessment and management frameworks to decide on the extent to which they can use country systems, the assessments of country systems should be done jointly using mutually agreed diagnostic tools.
  • Where the use of country systems is not possible, the provider of development co-operation should state the reasons for non-use, and discuss with government what would be required to increase use, including any necessary assistance or changes for the strengthening of systems. 
  • The use and strengthening of country systems should be placed within the overall context of national capacity development for sustainable outcomes. 
  • Focus should be placed, at the country level, on establishing transparent public financial management (and aid information management systems), and strengthen the capacities of all relevant stakeholders to make better use of this information (paragraph 23).

2. New Consensus on More Effective Institutions for Development

2.1.  The new consensus (PDF, 294 Kb) supported by the Bank and other partners, including INTOSAI and IFAC, endorses a reinvigorated approach to supporting and strengthening institutions and policies. The following key principles or foundations are particularly relevant to our PFM & Procurement strengthening activities:

  • Country leadership is key for building institutions with a focus on results, change management, and effective sequencing of institutional change. 
  • We need to build on the strategic roles of public financial management, procurement and oversight functions for development effectiveness and transparency.
  • The use of country systems in the delivery of external assistance can play a catalytic role in building effective institutions.
  • Partner-led evidence gathering on institutional performance is critical to inform decision making and enable accountability.
  • Systematic regional and global knowledge-sharing can facilitate learning on what works to make institutions more effective and reforms happen.

2.2.  The thematic session summary (below) elaborates on these principles.

3.  Additional Information

3.1.  Effective Institutions Plenary, chaired by Sri Mulyani Indrawati, World Bank MD: VIDEO 

3.2.  Country Systems Thematic Session: VIDEO | Summary Notes (DOCX, 30 Kb)

3.3.  New Strategic Directions on PFM & Procurement: Summary (DOCX, 33 Kb)

3.4.  Supporting the Accountancy Profession: MOU (PDF, 47 Kb)Event Summary 

3.5.  Guidance: Recent publications of the Task Forces on PFM & Procurement, which are co-chaired by the World Bank

4.  Contacts

4.1.  Task Force on PFM

4.2.  Task Force on Procurement

For Information: Daniela Ribeiro dos Santos

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