Public Sector Governance and Accountability Series: Budgeting and ...

Automating Public Financial Management in Developing Countries 339
Sequence of
implementing
the reform
Transaction platform
Budget (cost center)
Accounts (double entry, modified cash)
Disbursement (single pool)
Financial information systems (IBEX)
International bestpractice
sequence of
implementing
financial reform
Control
(inputs)
Line-item budgets
Cash accounting
Policy and performance platform
Macroeconomic and fiscal framework
Budget strategy paper
Intraregional transfer
Wereda performance agreement
Multiyear budget planning
Regional economic policy review
Management information system
Management
(outputs)
Performance
Budgets
–(double-entry
–bookkeeping)
Modified cash
accounts
Legislative platform
Policy development
Appropriation
Expenditure evaluation
Planning
(outcomes)
Program budgets
Accrual accounting
Source: Penrose and Peterson 2003.
FIGURE 10.3 The DSA Strategy of Public Financial Management Reform
in Ethiopia
principles were simplification, elimination of backlogs, and sequential
procedural change (budget first, followed a year later with accounts). Before
a regional government implemented the budget and accounts reforms, it
had to bring the existing systems up to date. Financial management was simplified
(for example, limit the number of budget institutions, concentrate
financial management into a single pool), and the budget reform was then
initiated, to be followed by the reform of accounts procedures. Implementation
was carefully designed and heavily resourced, and mass training
programs in detailed procedures were launched using extensive training
materials developed in local languages.
In summary, the approach involved bringing efficiency and closure to
the existing system and partially introducing the new system (budget reform
in the first year, followed by accounts reform in the second year). The existing
system was first completed so that scarce finance staff could move on to
managing the new system and not be burdened with managing two systems
simultaneously. Limiting the burden on scarce staff members was a key consideration
and was one reason the budget and accounts procedures were