Community-driven development decision tools for rural - IFAD

government will not rescue local governments that commit to expenditures beyond availableresources, and (b) officers responsible for exceeding such limits must face the legalconsequences of unsound financial practices. Neither of these conditions are often applied,particularly the second one, which would make the condition more effective.17. The impact of the IGFT on the development of effective local governments depends onwhether they embody the three basic qualities of transparency, predictability and autonomy(already defined in the main text). However, these qualities only establish the conditionsnecessary for local governments to operate effectively and autonomously. The conditions thatensure that the transferred resources are used to achieve specific CDD objectives need to befurther negotiated with the autonomous local governments.Box A-1The Balanced Budget Rules• Committed expenditure must not exceedrevenue;• There must be precise limits onborrowing from the financial market;• There must be full disclosure on thecommitment of funds;• There must be uniform, comprehensiveand transparent accounting;• Reporting on the financial situation mustbe timely;• There must be regular bank reconciliationstatements;• Audits must be timely.89