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 and Accountability
 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
Accountability in Service Delivery: the
WDR 2004 Model
Long and Short Routes to Accountability
Accountability and Service Delivery:
the institutional dimension
 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 !
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
Local Revenues
Intergovernmental
Fiscal Transfers
Financing Capital
Investments
•Strengthening Property Tax Systems
•Strengthening Local Revenue Administration
Systems (Bhutan)
•Principle Based Transfer System
•Transparent and Predictable Flow of
Resources (Ghana)
•Municipal Development Funds (TNUDF,
Fonds d’Equipment Communal, Morocco)
•Municipal Borrowing (South Africa, India)
PFM aspects of local service delivery:
efficiency in delivering services
 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 Service Delivery:
Strengthening Financial Accountability
Modern
Accounting
Systems
(Karnataka,
India)
Monitoring
Systems (FAC
in Sri Lanka)
Performance
and Financial
Reporting
Financial
Accountability
in Service
Delivery
Community
Reporting
(Citizen Report
Cards in
Bangalore)
Legislative
Oversight
(Local Govt
PAC in Uganda)
Timely Audits
(Bangladesh
Audit
Strategy)
The Enabling Environment for PFM in
local service delivery
 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)
Concluding Thoughts
 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
THANK YOU
Thank You. Let us get going !!