The World Bank's 'Political Economy of PFM Reforms' Book Launch Presentation

POLITICAL ECONOMY OF PFM REFORMS

million USD
Motivation: why take a fresh look at PFM reforms?
• Using fiscal resources well is critical for equitable
development
• Many countries have engaged on PFM reforms, and they have
also attracted substantial donor resources
• While the technical reform approaches are similar across
many countries, actual progress and impact seems to differ
• General notion that non-technical drivers matter, but little
systematic evidence of what these are and how they affect
progress & impact
• Intention of this work is to
• Take the discussion on PFM reforms into some new directions – also in
light of the 2017 WDR
• Provide empirical evidence and a suggested framework for how to look
at non-technical drivers
• Tease out operational implications from the available evidence
400.0
• No assumption to be able to provide all the answers through
200.0
one study 0.0
2000.0
1800.0
1600.0
1400.0
1200.0
1000.0
800.0
600.0
ODA for public financial management reforms
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Approach taken to explore non-technical drivers
• Statistical analysis:
• Covers 117 countries for which PEFA data was available, cross-checking with CPIA 13
• Looks at descriptives and at correlations with characteristics across countries as well as ‘first
difference’, testing for a range of demographic, political, and economic factors (next slide)
• Case studies:
Tracking evolution of PFM reforms and political
economy drivers over past ca 10 years
• Five cases covered: Georgia, Nepal, Nigeria,
Philippines, Tanzania
• Plus a case-study framework, included as an
annex in the report

While some countries have progressed, still more gains to be made
PEFA by region
Revenue
Budget
Credibility
4
3
2
Comprehensiv
eness and
Transparency
Revenue
External
Scrutiny and
Audit
Accounting
and
Reporting
Budget
Credibility
4
3
2
1
Predictabilit
y/Control of
Budget
Execution
LIC LMIC UMIC
PEFA by income group
Comprehens
iveness and
Transparenc
y
Policy-based
Budgeting
4
CPIA 13 -- regional and income group average performance
External
Scrutiny and
Audit
1
Policy-based
Budgeting
3.5
3
Accounting
and Reporting
Predictability/
Control of
Budget
Execution
EAP ECA LAC MENA SAR SSA
2.5
2
1.5
1
LAC SAR EAP SSA MENA ECA LIC LMIC UMIC SIDS Global
2001 (average) 2007 (average) 2014 (average)

Statistical Analysis – main findings
• Factors tested:
• [economic] GDP per capita and GDP growth, fiscal crisis, natural resource dependency,
• [demographic] population, SIDS,
• [sources of revenue] aid dependency, own revenue to GDP ratio,
• [political and institutional] political stability, political regime, presence of programmatic parties
• All factors combined explain about 40% of variation in PFM performance
• As intuitive, countries that have higher income levels tend to have better PFM
• the fit is not very close – i.e. many countries perform far from the trend-line
• Apart from GDP per capita levels, the main & most robust factors are
• (i) high dependency on natural resources (negative), (ii) being a Small Island Developing State
(SIDS) (negative), (iii) recent GDP per capita growth (positive)
• weaker and/or less robust relationships: population size, having programmatic parties, political
stability, and regime type
• levels of revenue and ODA relative to GDP are not significant
Correlations, not causal
Non-correlation can mean a total non-relationship, or can also be associated that in
some countries factor x was associated with reforms, while in others, it was not

1.5
1.5
2
2.5
Most Recent PEFA Score
2
2.5
3
3
3.5
3.5
Relationship with GDP per capita – and dispersion
earliest PEFA available
most recent PEFA data available
ETH
MOZ
NER
LBR
ZAR
BDI
MWI
CAF
PFM Quality and Income
ZAF
BRA
PER MUS
CRI
BTN
TUR
ARM SLV
JOR TUN
COL
MAR
BLR THA
MDA
NAM
GEO
GRD
KAZ
BFA
IND
MNE
ALB
DZA
TZA
BWA
WSM AZE
KSV UKR SRB
PAK PRY DMA
VCT EGY
RUS
JAM
KEN VUT
GTM
NIC
IDN
RWASLE TMP MDG ZMB KHM
GUY
UGA
MLI
NPL
MRT
LCA
TJK CMR
TON PHL
ECU MDV
GMB SEN
BEN
DOM
BGD
AFG
GAB
KGZ
WBG
SLBKIR
TCD PNG CIV SDN
SWZ
FJI
SUR
TUV COG
GIN
TGO
BLZ IRQ
GNBCOM
LBR
ZAR NER BDI
CAF
MOZ
MWI
PFM Quality and Income
ETH
BFA RWA
MLI
AFG
NPL
TMP
UGA
TJK
TZA
GMBSLB
SLE
KENCIV
ZWE
KHM
SEN
GHA
TUV
GIN TGO
MDG
COM
HTI
BEN LSO
PNG
KGZ
ZMB
BGD
STP VUT
LAO MRT
FSM SSD
MHL
MDA
GEO
BTN
ARM
KSV
ALB
AZE
MAR
CRI
PHL IDN ECU
UZBHND
MNE
PAK
TUNMKD
BWA
SLV UKR COL SRB
NIC VNM
MNG
JOR
PRY
MUS
WSM
LKA
BLR
TON
DOM
GTM NAM
BOL
WBG
NGA
COG
SWZ JAM DMA
GRD
VCT
BLZ
PER
LCA
MDV
ZAF
PAN
SURGAB
6 7 8 9 10
Log GDP per capita (PPP, lagged 5-year average)
EAP ECA LAC MENA SAR SSA
6 7 8 9 10
Log GDP per capita (PPP, lagged 5-year average)
EAP ECA LAC MENA SAR SSA

Cross-country correlation results (all available PEFA reports, excluding HICs)
(1) (2) (3) (4) (5) (6)
GDP per capita (log) 0.2378*** 0.1958*** 0.2568*** 0.2171*** 0.2052*** 0.1887***
(0.0403) (0.0495) (0.0580) (0.0391) (0.0387) (0.0489)
Growth (per capita) 0.0276** 0.0335*** 0.0242** 0.0223** 0.0285*** 0.0317***
(0.0115) (0.0096) (0.0116) (0.0106) (0.0099) (0.0112)
Population (log) 0.0411* 0.0579** 0.0481* 0.1085*** 0.0502** 0.0259
(0.0232) (0.0241) (0.0255) (0.0288) (0.0228) (0.0277)
SIDS −0.2223* −0.1728 −0.2216* −0.2967*** −0.3336*** −0.2480*
(0.1225) (0.1295) (0.1242) (0.1087) (0.1142) (0.1253)
Resource −0.3386*** −0.3498*** −0.3342*** −0.3542*** −0.2777*** −0.2918***
(0.0911) (0.0864) (0.0931) (0.0841) (0.0881) (0.0911)
Tax 0.0106
(0.0074)
Aid 0.0017
(0.0037)
Political Stability 0.0867***
(0.0212)
Regime 0.0487***
(0.0159)
Programmatic parties 0.4791***
(0.1639)
Observations 262 244 258 252 256 231
R-squared 0.340 0.384 0.344 0.436 0.386 0.351

Case Studies: five different experiences with PFM reforms
Georgia – 2008 and 2013 Nepal – 2008 and 2014 Nigeria – 2012 (not officially endorsed)
External
Scrutinity and
Audit
Accounting
and Reporting
Budget
Credibility
4
3
2
1
Predictability/
Control of
Budget
Execution
External
Scrutinity and
Audit
Comprehensiv
eness and
Transparency
Policy-based
Budgeting
Philippines – 2010 and 2016
Budget
Credibility
4
3
2
External
Scrutinity and
Audit
Accounting
and Reporting
Comprehensive
ness and
Transparency
Budget
Credibility
4
3
2
1
Predictability
/Control of
Budget
Execution
Comprehensi
veness and
Transparency
Policy-based
Budgeting
External
Scrutiny and
Audit
Accounting and
Reporting
Tanzania – 2006, 2009, 2010, 2013
External
Scrutiny and
Audit
Budget
Credibility
4.0
3.0
2.0
Budget
Credibility
4
3
2
1
Comprehensiv
eness and
Transparency
Predictability of
Budget
Execution
Comprehensiven
ess and
Transparency
Policy Based
Budgeting
1
1.0
Accounting and
Reporting
Policy-based
Budgeting
Accounting
and Reporting
Policy Based
Budgeting
Predictability/C
ontrol of Budget
Execution
Predictability
of Budget
Execution

So, what’s the story behind those diverging trends in PFM performance?
Chapter 3 – ‘the big picture’/overall political commitment
Chapter 4 – institutions, ideas, demand
Chapter 5 – specific reform efforts across the budget cycle/PFM areas
Chapter 6 – implications for operational approaches and policy dialogue
Institutions,
ideas,
demand
‘Big picture’
incentives/
political
commitment
PFM reform
plans and
specific
efforts
Refining our approaches to supporting PFM reforms
PFM performance changes

Potential drivers of political commitment to PFM reforms
From the perspective of politicians, PFM reforms are a means to an
end, rather than an end in itself – so understanding the main highlevel
policy goals also matters for anticipating reform commitment
• Looking at a set of key drivers:
• electoral pledges made, strength of mandate, and readiness to pursue
reforms
• overarching policy goals
• need to react to fiscal trends
• Interacting with the institutional set-up and interests in influencing
opportunities for reform

Key ingredients of political commitment and readiness for reforms
Georgia Nepal Nigeria Philippines Tanzania
Election year 2004 2008 2007 2010 2005
Electoral pledge to
reform?
+++
Commitment to
overhaul the state
++
Commitment mainly
to greater inclusion
+
‘National unity’ and
stability focused
+++
Anti-corruption and
poverty reduction
+ to ++
Limited commitment
to change
Strength of electoral
mandate
+++
Exceptionally strong
+
Weak – highly
fragmented, resulting
in high gov’t turnover
++
Strong (70-80%), but
allegations of fraud &
president falling ill
+ to ++
Medium (42%
president)
++
Strong (80%)
Preparedness for
reforms & technical
expertise
++
Several ministers had
gathered initial
experience during the
previous
administration
+ to ++
Former rebels
Relatively good
technical expertise in
the bureaucracy
+ to ++
Technical expertise
good, reform plans
‘hang-over’ from HIPC
effort
++
Well trained and
experienced
Secretary of Budget,
plan to make Gov’t
much more
transparent
+ to ++
Donor-driven reform
plans
Technical expertise
and experience with
PFM reforms since
late 1990s

2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013
2013
2014
2014
2015
2015
2016
2016
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Fiscal trends, elections, and timing of reform episodes
Georgia
Nepal
Nigeria
40
35
30
25
20
15
10
5
0
Start of new Gov’t
40
35
30
25
20
15
10
5
0
2006 Peace agreement
40
35
30
25
20
15
10
5
2007
Yar’Adua
elected
Buhari Gov’t elected,
starts moving PFM
and tax reforms
forward
0
Revenue (incl grants)
Expenditure
Revenue (incl grants)
Expenditure
Tanzania
Philippines
Revenue (incl grants)
Expenditure
40
Earlier fiscal
35
stress & reforms
30
25
20
15
10
5
0
2005
elections
40
35
30
25
20
15
10
5
0
2010 elections
of a reformoriented
gov’t
Revenue (incl grants)
Expenditure
Revenue (incl grants)
Expenditure

Relevant implications
Opportunities for transformative progress exist, but are rare
• Opportunities vary substantially by context
• Different approaches relative to context: preparing the ground/moving incrementally
forward/limiting back-sliding; or pursuing more transformative opportunities –
subject to changes over time
Windows of opportunity are important but typically short
• They may last 1, 2, maybe 3 years
• Flexible (and agile) engagement is critical for providing rapid support – with
implications for the time to prepare projects, and also the likely need to restructure
‘up’ or ‘down’
Some reform efforts are motivated by fiscal crises
• Attention both to revenue and expenditure reforms is critical to reduce fiscal losses
and accountability gaps on both sides
• In a case like Nigeria, focusing on improved expenditure management alone would
not address some of the biggest resource and accountability problems

Legal and institutional aspects
• Are part of the conditions as well as target for reforms
• Influence how easy/difficult it is to move reforms forward and to achieve functional
improvements
• Legal: Organic PFM legislation, External Audit, and Procurement
• other legislation or regulations regarding PIM, SOEs
• Institutional:
• (i) organization of CFAs
• (ii) executive-legislative relationship concerning (a) passage of annual budget laws,
(b) review of audit reports, and (c) passage of pertinent reform legislation
• Other aspects such as the clarity of intergovernmental roles and responsibilities
• Legal and institutional challenges can be linked: the same countries that
have the most fragmented CFA functions (Nigeria and Philippines) also lack
a comprehensive organic budget law

Parliaments play a broader
and in some ways a worse role
than expected
Accountability
function
PI-26 [PI- 30]
External audit
PI-27 [PI-18] c
Legislative
of budgets
PI-28 [PI-31]
scrutiny
Legislative scrutiny
of audit reports
Georgia Nepal Nigeria Philippines Tanzania
2008 2013 2008 2015 2012 2010 2016 2006 2010 2013
D+ B+ D+ C+ D+ B+ B
[C+] b D+ B C+
B+ A D+ D C+ C+ B+ C+ C+ B
C+ D+ D+ D D D D C D+ D+
→ External audit functions as such improve – but parliamentary follow-up remains a
weak link
Parliaments
Budget
approval
function
Approval of
PFM and
related reform
legislation
Parliaments play a critical role when new organic
budget laws are needed
Long delayed budget approvals and negative impacts on budget execution esp in Nepal and Nigeria
+ support for budget realism is important

PFM Legislation – current and pending
Country Budget preparation and execution External audit Procurement
Georgia Budget Code (2009) Audit Office (2008) Law on State Procurement (2010)
Nepal Financial Procedures Act (1999)
Audit Act (1991) Public Procurement Act (2007)
Nigeria
Philippines
New Fiscal Responsibility and Budget
Management Act under development
Public Finance (Control and
Management) Act (1958)
Last attempt to pass a new law: 2009
No unified PFM act
Budget Reform Bill drafted and under
discussion since 2015
Audit Act (1957); Office of the Auditor
General regulated by the 1999
Constitution, adoption of separate law
failed in the 2000s; re-submitted in
2016
No external audit act
Public Procurement Law (2007)
Government Procurement Reform Act
(2003)
Tanzania Public Finance Act (2001; revised 2004) Public Audit Act 2008 Public Procurement Act (2016;
amending the Act of 2011)
Three countries seeking new organic budget legislation: Nepal, Nigeria, and Philippines; also challenges with SAI laws
All five countries adopted new procurement legislation within the last 10-15 years

Institutional arrangements influence level of reform challenge
• Standard international ‘best-practice’ ideas: integrated CFA model -- varied reality & challenges
‘fragmented/duplicative/idiosyncratic’
Philippines:
Department of Budget and
Management
Department of Finance –
revenue policy and admin,
debt
Semi-autonomous Bureau of
Treasury
National Economic
Development Agency (NEDA)
-- planning and PIM
coordination functions
Commission on Audit with
overlapping accounting and
external audit mandates
Nigeria:
- 2015: MOF as a ‘shell’:
separate Budget Office,
Office of the Accountant
General, Debt Management
Office, Planning Commission
Since late 2015: new
Ministry of Budget and
National Planning; and
separate Ministry of Finance
Federal structure with
limited role of federal gov’t
Nepal:
MOF responsible for budget
preparation; plus oversight over
semi-autonomous agencies:
FCGO – treasury, semiautonomous
PPMO – procurement
NPC – planning/PIM; re-approves
project plans of MDAs during
implementation
Revenue agencies (tax & customs)
semi-autonomous under MOF
Debt and aid management shared
between MOF, FCGO, Central
Bank
Tanzania:
Most main functions in
MOF, but investment
planning moved to
Presidency (2008) and
back to MOF (2015)
Civil service pay in
Presidency (Planning
Commission + PSM)
Intergovernmental fiscal
relations in Prime
Minister’s Office
‘integrated’
Georgia:
Integrated Ministry of
Finance
Full integration of
treasury functions and
oversight of revenue
functions introduced as
part of reforms made
since 2004
Fluctuation in MOF’s role, scope, and capacities over time in most cases; influences where reform efforts are located
& coordination

Relevant implications
• Being clear about institutional
arrangements and roles, and their impact
• to assess likely difficulties, implications for
PFM functionalities, as well as for identifying
priorities for institutional changes
• Especially where institutional changes appear
essential – e.g. new laws, but also
clarifying/improving accountability between
levels of gov’t – it is critical to engage with
stakeholders beyond MOF develop a vision
and eventual compromise on reforms

Limited direct role of the demand side
• Social dynamics have mattered for elections – i.e. the ‘long route’ of
accountability – that also feed into PFM reforms
• Rose revolution (Georgia), Marxist/Maoist uprising (Nepal), election of more reform
oriented president (Philippines in 2010; Nigeria and Tanzania in 2015)
• Level of NGO interest in PFM/budgeting/procurement
• Georgia – a few NGOs with a significant focus on procurement; particular issues such
as civil service bonuses receive greater public attention
• Nepal – civil society focused on bringing about greater equity; limited direct
engagement with those driving PFM reforms; WB (and other international) support
for community level budget literacy (PRAN)
• Nigeria – NGOs interest is still recent, growing from EITI and stolen assets; NGOs at
the state level face threats/dependent on the appetite of the governor;
• Philippines – most active NGOs on budgeting and fiscal issues for the longest time;
and close links with office holders, push for transparency and participatory budgeting
– but the data that is being made public continues to be messy
• Tanzania – active/established NGOs, some involved in sectoral PETS, but limited
space given by gov’t prior to 2015; increasingly active media, focused on corruption
cases; private sector focused on taxation issues

Implications
• Given that citizen demand for PFM reforms is found to
play a limited role in driving PFM reforms even in
countries with relatively active civil society organizations –
should we still engage?
• Yes in principle, with a greater emphasis on:
• a) recognizing the importance of the ‘long route’ of accountability
• b) explaining and opening up PFM reforms to citizens/CSOs +
promoting transparency that allows checking on how funds are
managed + clarifying the distinction between better use of funds
and getting more funds

Similarity/Uniformity of stated reform intentions
Georgia Nepal Nigeria Philippines Tanzania
MTEF √ √ (halted) √ √ Started since the late
1990s, still in
progress
Program-based budgeting √ x x √ √
Introducing TSA √ √ √ √ √
FMIS √ √ √ √ Initial introduction in
the late 1990s
Introducing IPSAS √ √
√ √ √
Introducing
e-procurement
Introducing/strengthening
internal audit
Strengthening
external audit
(cash basis)
√ √ x E-procurement
introduced during
earlier reform period;
still work in progress
√ √ √ √ √
√ √ x √ √
Partially in place at
start of period
Barely any reform that is not being pursued in each of the countries

But the ‘binding constraints’ actually vary
• Variation in timeliness of budget approvals
• Significant delays especially in Nepal and Nigeria, earlier in the Philippines
• Cash management poses a major problem in some not in others
• Affects how well line ministries and sub-national governments can rely on funds being
released to them as planned
• Major problem: Nigeria, more recently again in Tanzania
• Intermediate: Nepal
• Not a problem or resolved: Philippines, Georgia
• Degree and quality of public finance transparency
• E.g. Philippines publishes accounts, but the underlying accounting and reporting remains
weak and fragmented
• Importantly, uniformity in reform intentions appears more as a choice than an
imposed ‘isomorphism’
• International norms, standards, and networks play an important role – standards for
reforms to accounting and audit, templates for budget preparation reforms

Partial, incomplete reforms are common
• … but are not always clearly acknowledged as such
• Common partial PFM reforms:
• MTEFs used to define some broad goals, but not to firmly establish multi-year
allocations
• Many half-way TSAs
• some accounts have been unified, others not
• IT systems of which only some modules are used, or that are not as widely
rolled out as originally intended to line ministries and sub-national levels, or
which are only integrated for some aspects if at all
• Program budgets as supplementary to line-item budgets
• Partial reforms are not per se problematic if they are an intermediate
stage, but …
• … need to be clearly recognized as such – since more remains to be done
• … can be a sign of stalled progress
• … problematic if they lead to a clash between what is prescribed in
regulations and what happens in practice (e.g. manual work-arounds)

Relevant implications
• Being clear on what the priority functional gaps are and having a realistic approach to how
these can be addressed
• Focus on identifying functional gaps and how best to address them – based on existing global experiences,
and possibly new ideas
• Important to be (more) realistic about what functional improvements a given instrument is likely to deliver;
e.g. FMISs are likely to deliver better data on funds spent, less likely on their own to deliver effective
commitment control
• We also need to know more about the investment and recurrent costs of PFM reforms (notably IT systems,
introducing IPSAS), and capacity requirements – especially important for LICs/low income FCS
• ‘Isomorphic mimicry’ (i.e. superficial copying) and increasing promotion of international
norms
• International norms can help to make the case for politically less attractive reforms (e.g. SAI independence)
• Citizens and relevant CSOs need to be given a chance to understand reforms -- also as a check for ‘real’
implementation rather than mere ‘mimicry’, i.e. highly/intentionally superficial implementation
• Should reform stakeholders deliberately target partial reforms?
• Can be smart, e.g. to utilize short reform windows and to lock in some progress without triggering larger
resistance or losing time on assembling very large reform coalitions; the main downside is that partial
reforms have partial impacts

Evidence of new tools working as intended and having expected impacts
• The ‘theories of change’ of various PFM reforms can be incomplete or overstated
• One Accountant General proclaimed that introducing new accounting standards would abolish
corruption
• Program budgets are expected to contribute to improving accountability and accessibility of budgets
• … but de facto even Georgia has struggled with this reform and demand side interest remained limited
• Sustainability, ‘use as intended’, and impact are still far from being systematically
documented
• Even when roll-out is eventually achieved – e.g. for the Nigeria FMIS at the federal level by 2016 – the
quality of use often remains an issue of concern
• Tanzania which adopted a number of reforms earlier than the four other case study countries – and
hence should allow greater observance of impacts – in fact saw a sliding back of several functionalities;
in particular commitment controls not assured despite having an FMIS since the late 1990s
• Many countries introduced new procurement legislation + there is an assumption that savings are
substantial, but thus far limited empirical evidence – also about potential variation of realized savings –
Methodology for Assessing Procurement Systems is planned but not yet rolled-out, PEFA indicator 19
checks basic compliance but not impact
• Generally, results indicators and other evidence target the degree of roll-out of systems more than
actual use or impact

Relevant implications
• Focusing on and addressing sustainability and
impact
• Embedding reforms and systems + incentivizing
their good use
• Looking at results of repeat PEFA assessment, but
also going further – e.g. to check veracity of
accounting after the introduction of new standards
(e.g. fiscal ROSCs/fiscal transparency reports)
• Increased operational attention to embedding
reforms/proper use of systems, e.g. through
inclusion as continued results in follow-on projects

Cross-cutting: sequencing and stakeholders
• A nontechnical perspective for PFM reforms suggests a need to reconsider and nuance
arguments about the sequencing of PFM reforms
• Improving ‘the basics’ is critical in terms of key expected impacts of PFM reforms. However, they are
also often particularly difficult because they are focused on constraining rent-seeking.
• Rather than simply accepting a ‘free for all’, or insisting on unachievable ‘basics first’ keep pursuing
the basics throughout: ‘basics continually’
• Engaging with stakeholder interests, incentives, and constraints more explicitly
• Paying attention to what stakeholders believe can be done and will stick, without assuming a simple
dichotomy of ‘reform supporters’ and ‘reform opponents’
• Including attention to the incentives and constraints of different stakeholders: senior MOF staff, line
ministries, elected leaders, etc.; this can be addressed in a variety of ways, and updated over time
• Plus, we can encourage greater discussion about non-technical factors in international fora

Thank you/Q&A

Annex 1: overview of the five countries
Georgia Nepal Nigeria Philippines Tanzania
Population (millions, 2016) 3.7 29.0 186.0 103.3 55.6
Per capita income (current US$, 2005) 1,391 293 483 1,355 385
Per capita income (current US$, 2016) 3,854 730 2,178 2,951 879
Average growth 2001–2014 a
Average growth 2015–2016
Projections 2017–2019
Projections 2020–2022
6.1
2.8
4.0
5.3
4.1
1.6
4.6
3.8
Average per capita growth 2001–2016 6.8 2.5 4.3 3.4 3.5
Annual population growth (average 2002–
2015)
8.0
0.6
1.5
1.8
-1.3 1.2 2.6 1.7 3.0
Natural resource dependence b 1.2 5.5 33.2 2.7 7.2
Political stability/conflict
Brief war with the
Russian Federation in
2008
Civil war, 1996– 2006
Decreasing conflict in
the South/Delta;
increasing conflict in
the North
5.1
6.5
6.9
7.0
Peaceful in most areas,
increasing tensions and
conflict in Mindanao
Political regime c Partly free Partly free Partly free Partly free Partly free
Federal or unitary Unitary Unitary in transition
(2007–2015);
Federal (since 2015)
Federal
Unitary (federalism
under discussion)
Programmatic parties
0.25 to 0 0.75 0.25 0.5 0.25
(0 to 1 - higher = more programmatic) d
6.7
7.0
6.8
6.5
Largely peaceful, some
tensions in Zanzibar
Unitary (union with
Zanzibar), some
discussions about
potential changes

Challenges (ii): do PFM reforms have expected impacts?
• We know that there are service delivery improvements (outputs and outcomes) in
quite a range of countries [although still many caveats e.g. about quality]
• … and there is varied progress on PFM
• However, available data does not show a relationship with cost-effectiveness in the
delivery of health and education services [caveats as this is hard to measure]
• So what do we know about the PFM ‘impact chain’ and possible disconnects?