Capacity Development for Public Resource Management: Achieving Effectiveness in Prioritization and Finance Alignment

1. Capacity Development for Public Resource Management / Effectiveness Hierarchy of Effectiveness Concerns: • Setting National Priorities: Strategic Planning - "Doing the Right Things" • Public Finance Management: Aligning Resources with Priorities - "Doing the Things Right" • Ensuring Aid Complements Own Resources • Aid only Efficient, Effective, Relevant if Objectives for aid are clear • Capacity Development (CD) for Aid Effectiveness must thus address all three levels

2. Getting Priorities Right National Policy Setting – Strategic Planning Instruments: • Long-term: National "Vision Documents", General Policies • Medium-Term: Dev't Plans, Expenditure/Financial Frameworks • Annual: Budgets, Government/Sector Action Plans • MDGs (Poverty Reduction Strategies), UN Conventions • Overarching: EU Accession (European Partnership, CARDS/IPA...) • General: Need for broader consultative processes for consensus • Political process needs to be able to manage this • Need clear National Priorities, that are coherent, comprehensive, consistent, with resource commitments  Credibility • Capacity for political and public admin to do strategic planning

3. Aligning Resources with Priorities Public Finance Management Cycle Instruments: • Budgeting: Transparent, Comprehensive  $ to Priorities • Revenues, Exp's: Follow Budgets, Collected/Disbursed per plan • Accounts and Audits according to International Standards • (External) Audits both Financial and Performance • Accountability to Parliaments, Public: (i) Budgets, (ii) Expenditures • Management must get feed-back for decision taking • Weakest point Accountability: (i) External Audit, (ii) Parliamentary Oversight, (iii) Reporting to Public • Capacity: Build overall system, BUT ensure compliance throughout.

4. Aid Effectiveness External Resources Management: • Credits:Are National Resources, On-budget, captured by Debt Management Systems  No Coordination Problems • Grants/Project Aid: If clear National/Sectoral/Regional Programmes, usually aligned. If NOT  Headache! • Grants/Technical Assistance (support to Capacity Development): • Highly Donor-Driven, • Often other agendas than just Capacity Building, • Small sums but very costly to manage/ time intensive, • Strategic for Capacity Development but not paid much attention • New modalities (SWAPs, Budget Support) support Alignment • Challenge is CD support  Major Transaction Costs

5. Capacity Development I Systems and Staff: • Overall System for Public Resources Management: Over time how to achieve "4 C's": Coherent, Comprehensive, Consistent, Quality • Staff: Provide data, analysis for decision making (unit costs, benchmarking, trend lines, .... ) • "3 R's": Clear Responsibilities, Roles, Resources • CD Programme must be long-term, with clear Outputs, Targets, Indicators, Monitoring System  Resources • Quality at Entry critical, since CD programmes are management, transaction cost intensive

6. Capacity Development II Management Key to Success: • Systems and Staff may be good – Management makes it work • Management Role much more demanding: • Decision making under greater time pressures + greater uncertainty • Need more, faster decisions lower down  empower, manage, skilled staff much better • Accountability tending to increase • Public Sector, Big Business invest ever more in Management CD • Poorly Resourced Underinvest  Those who need most do Least • Management Training  Key Component of CD • Political Level needs to be included