Public Financial Management (PFM) and corruption: GSDRC Professional Development Reading Pack No. 42

This reading pack provide an introduction to the main issues and debates

Abstract

Public Financial Management (PFM) processes – revenue mobilisation (e.g. taxation and customs), budget preparation and resource allocation, budget execution (e.g. procurement and payroll), and the accounting and auditing of government expenditure – are a key focus of donor supported anti-corruption reforms. A focus on the budget and budgetary processes is not surprising given that:

  1. public expenditure is a substantial, and often the largest, part of most countries’ economy; and

  2. corruption in PFM can directly affect a range of different development outcomes, such as pro-poor growth, or the quality and availability of public services.

Most anti-corruption efforts targeted at PFM rely on a traditional “Klitgardian” theory of change: opportunity + discretion – sanctions = inclination for corruption. As a result interventions largely focus on reducing discretion, with the aim of limiting opportunities and incentives for corruption, for example, through greater transparency, the standardisation and automation of processes, and by opening budgetary processes to wider participation. They also focus on stronger sanctions to reduce incentives for corruption, such as greater monitoring and transparency to make the detection of corruption and the application of sanctions more likely, or through tougher sanctions. The latter is ideally coupled with more consistent and regular application to deter corrupt behaviour more effectively.

Citation

Zaum, D. (2016). PFM and corruption. GSDRC Professional Development Reading Pack no. 42.Birmingham, UK: University of Birmingham. 4pp

Public Financial Management (PFM) and corruption: GSDRC Professional Development Reading Pack No. 42

Published 1 June 2016