Public Financial Accountability at the Local Level : The role of PFM in Service Delivery and Accountability Rama Krishnan, Senior Financial Management Specialist, The World Bank, Washington DC

 Service Delivery is a key priority for all Governments – public goods, market failures  Increased public spending does not result in service improvements  Accountability in Public spending is necessary to achieve service delivery outcomes  Conceptualizing the service delivery and accountability relationship – WDR 2004 – long and short routes to accountability Service Delivery and Accountability

Long and Short Routes to Accountability Accountability in Service Delivery: the WDR 2004 Model

 Strengthening institutional relationships among key actors is key to enhancing accountability  Decentralization and local governance is a critical reform that reinforces accountability relationships in service delivery  Local Governments are best suited to fulfill the accountability relationships in service delivery – Voice, Subsidiarity Principle  PFM underpinnings of Decentralization  Caveat: Decentralization is multi-dimensional ! Accountability and Service Delivery: the institutional dimension

Local Governments and Service Delivery Fiscal Decentralization Financing Service Delivery Efficiency in Service Delivery Accountability in Service Delivery

PFM Aspects of Service Delivery : Financing Local Service Delivery Strengthening Property Tax Systems Strengthening Local Revenue Administration Systems (Bhutan) Local Revenues Principle Based Transfer System Transparent and Predictable Flow of Resources (Ghana) Intergovernmental Fiscal Transfers Municipal Development Funds (TNUDF, Fonds d’Equipment Communal, Morocco) Municipal Borrowing (South Africa, India) Financing Capital Investments

 Participative Planning and Budgeting – the Peoples Planning Model in Kerala, India and the Participative Budgeting in Porto Allegre, Brazil  Realistic Costing of services (ABC analysis, Cost Controls)  Procurement and Budget Execution  Internal Controls  Strengthening MIS for financial and operational monitoring PFM aspects of local service delivery: efficiency in delivering services

PFM Aspects of Service Delivery: Strengthening Financial Accountability Financial Accountability in Service Delivery Modern Accounting Systems (Karnataka, India) Performance and Financial Reporting Community Reporting (Citizen Report Cards in Bangalore) Timely Audits (Bangladesh Audit Strategy) Legislative Oversight (Local Govt PAC in Uganda) Monitoring Systems (FAC in Sri Lanka)

 The Legal and Procedural Framework to support PFM – the de jure and de facto aspects (Cote d’Ivoire)  The question of Capacity Building: how to do it? (Learning by Doing, Mobile Teams, Demand driven training)  The Role of the Central and Provincial Governments  The Political Economy of PFM Reforms (Sri Lanka) The Enabling Environment for PFM in local service delivery

 PFM interventions need to be Results Focused  Sequencing of reforms is important  Integrated approach to PFM is essential : (bringing together the demand and supply sides, linking the revenue with the expenditure aspects)  Be ready for the long haul: the long term nature of PFM reforms Concluding Thoughts

THANK YOU Thank You. Let us get going !!