PUBLIC FINANCIAL MANAGEMENT REFORMS WORKSHOP THE WORLD BANK, MARCH 21, 2008 PRESENTATION BY ROBERT R. HUNJA

1. PUBLIC FINANCIAL MANAGEMENT REFORMS WORKSHOP THE WORLD BANK, MARCH 21, 2008 PRESENTATION BY ROBERT R. HUNJA INTERIM DIRECTOR GENERAL PUBLIC PROCUREMENT OVERSIGHT AUTHORITY, KENYA

2. PRESENTATION OVERVIEW • Some “random” reflections on PFM reforms • The “proper place” for procurement • What works, when and how? • Conclusion

3. Some Random Reflections on PFM Reforms The PFM Reforms Quandary i.e. • Very vital for modernizing the state • Yet very difficult to achieve real results where a reformist “ethos” is not present: why • Resistance is both passive (“this is what we know”) and Active (political and Financial beneficiaries) • PFM’s financing of undemocratic politics • The bureaucracy is very clever leading to:

4. The Inverted Duck Syndrome Normal Duck Inverted Duck

5. The PFM donor/recipient Equation in “reform veneer” states For Donors: Disbursements = Reforms For Recipients: donors happy with disbursement = less real reforms Happiness quotient keeps increasing while reform quotient keeps decreasing Lots of mutual pretense

6. Can Donors Help ? Yes but limited to diagnostics, knowledge & learning and convening. But a fallacy to imagine donors can finance reforms Usually also bring very complex solutions and processes in very “murky” environments

7. The place for procurement in PFM • Procurement is receiving greater recognition – Spectacular scandals + donor attention • Procurement covers the entire budget cycle: e.g., • at entry, Proper procurement planning aligned to budgets = more realistic resource allocation • at exit, the auditing function must have a deeper, systematic analysis of procurement systems and results

8. How then to sequence and ensure achievements results? • Not clear we fully appreciate that we are “sequencing” • But procurement reforms in most countries have been phased • 1st. Generation is normally the setting up of appropriate legal frameworks and regulatory institutions- updating codes in civil law countries and new procurement legislation in common law countries • 2nd generation – improving performance and practice, modernizing systems (incld. E-procurement) and professionalizing the function procurement

9. How then to sequence and ensure achievements results.. Cont 2… • 3rd generation - Process re-engineering and full modernization (few are here) • Main challenge has been how to catalyze reforms in the other areas in the PFM cycle that impact on procurement – need for greater coordination and collaboration A COUPLE OF TECHNICS • Be very opportunistic – catch a ride on areas where reforms are moving e.g inject procurement planning early in budget preparation.

10. How then to sequence and ensure achievements results.. Cont 3… • Precipitate discussions on glaring problems and offer systemic solutions e.g exorbitant prices paid for commonly used items. • Communicate loudly and often • Talk numbers to economists , the political class, e.t.c

12. Achievements so far? • Public procurement statutes enacted in many countries • Paris Declaration follow up precipitating good diagnostics • Public procurement regulatory authorities being formed. • Procurement reforms driving change in other areas especially on the accountability front, e.g., on payment systems. • Many challenges remain and thus THE NEED TO KEEP ENGAGED.