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

440 Salvatore Schiavo-Campo
strategic project—with proto-programs formulated around a few key
priority investments chosen to shake the economy out of the tangle of
despair and disrepair generated by the conflict.
The Importance of a Medium-Term Perspective
The subject of medium-term expenditure frameworks (MTEFs) was discussed
in chapter 8 and need not be recapitulated here. MTEFs are often
considered an unnecessary luxury in a postconflict situation. This view is
certainly true insofar as detailed, technical MTEFs are concerned, but postconflict
countries nevertheless have a special need for a broad medium-term
fiscal perspective. This need arises from a perverse pattern in postconflict
reconstruction financing, identified long ago but first analyzed in detail by
Paul Collier (personal communication, 2001).
Collier noted that international interest in assisting the country is at
its highest in the immediate postconflict period. This interest generates
large financial support for the country, but precisely at a time when its
capacity to absorb those resources effectively is at a minimum, because
the country has barely come out of the conflict. As time passes, the country’s
capacity to invest in and implement good expenditure programs
rises, but in the meantime international interest has waned and moved on
to some other crisis situation, and external financial support falls off
along with it. A credible medium-term expenditure perspective can help
considerably to resolve this dilemma by providing the economic and
political justification for firm donor commitments of external financial
resources for a period of years, but to be disbursed over the medium term
as and when the increase in the country’s absorptive capacity permits.
(Again, as in the case of investment programming, the medium-term
expenditure perspective need only be realistic and credible—it need not
be detailed and complex.)
Budgeting and Managing External Assistance
Although aid for postconflict reconstruction can come from a variety of
donors and in different forms, the bulk of the financial assistance for the
agreed program of reconstruction has often been channeled through an
umbrella multidonor trust fund (MDTF) administered by the World Bank.
Substantial experience has been gained with these devices during the past
15 years, resulting in a number of conclusions and recommendations (see
especially OED 1998; Schiavo-Campo 2003; Schiavo-Campo and Judd 2005).