I really like it when people in my consultancy world start saying that something should be better integrated with, or within, something else. I like it because that’s my time to start asking the nagging question, “Yes, but what exactly do you mean by that?” I put myself on repeat and observe how difficult it is for most people to move from theoretical concepts and general recommendations to anything more practical.

A recent external evaluation of the EU’s support for public financial management (PFM) reforms in the enlargement and neighborhood regions joined this love for integration by concluding that: PFM reforms are most likely to deliver sustainable results when embedded within broader public administration reform (PAR) agendas, as progress depends on complementary reforms in civil service reform, human resources management, organisational reform, accountability and oversight.

Based on this conclusion, the evaluation called for “making PAR/PFM integration more explicit and operational in EU programming.”

This may sound like a practical recommendation – but, of course, to put myself on repeat again, if one wants to make the integration more “explicit and operational”, one first needs to explain what exactly it is supposed to mean – or at least admit that it isn’t obvious or something we all already know.

This blog hopes to offer some starting points for answering the nagging question.

Integrating or working hand-in-hand?

Personally, I don’t believe that “integration” is the right frame of mind. Integration implies totality – either A is integrated into B to become an integral part of it, or A and B are integrated with one another to become C. Neither would likely work for PFM and PAR as two broad and only partly overlapping areas of reform.

Instead of thinking about integration, I propose starting with a more practical question:

What are the specific elements of the broad PAR agenda that need to be implemented hand-in-hand with PFM reforms, so that both reform agendas deliver better results?

The choice of words is not incidental. I use “implemented hand-in-hand” instead of the more common “implemented in parallel,” because parallels never touch, but hands do.

In short, I believe we should think in terms of intersections, not integration. Intersections are where the alleged “parallels” meet and where people working on one line should shake hands with those working on the other – but without the ambition of merging the two lines into one.

The rest of my contribution briefly describes three such intersections between PFM and PAR – there are more, for sure, but these are the ones that I have worked on, in large part as a CEF expert. These are also the areas where the CEF could promote its expertise and experience within the emerging “PAR and PFM integration” agenda.

Connecting strategic and budgetary planning

Many countries in the region have developed elaborate strategic planning frameworks and introduced medium-term and program budgeting. However, as our ongoing work with SIGMA has confirmed, the link between the two remains superficial. The reason may indeed be that the two reforms – of policy and budgetary planning – have been two distinct lines of reform, supported by different projects and donors, and implemented by separate departments of the administration. As a result, as the cited evaluation notes, PFM reforms had a limited impact on “advancing broader development and structural objectives.” The remedies are not rocket science – or any science whatsoever. In a nutshell, the objectives of budget programs and their targets should match those of the relevant policy documents. But these should only include objectives and targets achievable with available financial and human resources – otherwise, writing strategies and action plans becomes nothing more than a sophisticated way of wasting everybody’s time. This is the intersection: PFM reforms need to be supported by the right type of policy planning reforms to have a chance at “advancing broader objectives.”

The CEF has done extensive work on helping policy and budget people shake hands and work together instead of “in parallel.” Under the general objective of embedding structural and development reforms into the fiscal framework, the CEF supported the costing of reforms and the assessment of their fiscal and economic impact, and worked with center-of-government institutions, ministries of finance (MoFs), and line ministries in all key reform areas pertinent to EU accession.

Managerial discretion, accountability, and skills.

An essential and common element of well-performing public administration and effective results-based budgeting is the accountability of managers for the results achieved by their respective ministries or organizational units. But to be accountable, these managers – ministers, secretaries-general, heads of directorates, agencies, and other organizational units – must enjoy sufficient decision-making discretion, for example, in allocating their budgets among different uses and in managing their human resources. At the same time, their performance as managers must be regularly assessed against a well-defined set of objectives and expected results.

Decision-making discretion is often constrained by over-prescriptive regulations. Accountability, on the other hand, is undermined by the lack of a single hierarchical chain of accountability. In another SIGMA study, we found that there are between 50 and 100 first-level budget organizations in all countries in the region[KP1.1], compared to around twenty or even fewer in best-practice examples. This undermines the managerial capacity and accountability – for example, when agencies and other bodies submit their budget proposals directly to the MoF and set their outcome targets independently, how can the minister responsible for the policy sector in which they work be accountable for the results, or even effectively implement sectoral policies and reforms?

The complex organizational structure of budgeting largely reflects the equally complex structure of public administration, including the unnecessary proliferation of independent bodies and agencies. Both structures need an overhaul, and this is another intersection where PAR and PFM agendas need to be implemented hand-in-hand, or the two lines of reform will cross each other out.

However, even with sufficient discretion and accountability, public administration managers need to develop skills that match their responsibilities. The CEF has worked extensively with public administration managers in their different roles, for example, as coordinators of government-wide reform programs or as managers of organizational units within the MoF and line ministries, responsible for reform delivery. This work included the development of technical skills and understanding, leadership and interpersonal skills, coordination, and stakeholder engagement. Through this work, the CEF experimented with a number of approaches tailored to public officials in managerial roles, such as coaching and peer support. In the future, more attention should also be paid to the institutional and processual conditions that empower managers to use their newly acquired skills in practice. Building and losing capacity Capacity building could well be the most frequently used phrase in projects and programs supporting reforms in the region. But capacity has often been built and lost.

The conventional explanation is high staff turnover. The remedy is to focus on the retention of skills within an organization, instead of focusing on the retention of people with skills. This is not pure wordplay. The CEF is developing capacity-building approaches where specific attention is paid to ensuring that the skills learned by participants are shared with peers in their organizations or documented in a format that can serve incoming staff. Another reason for capacity losses is that skills not used are skills lost. When the skills learned at capacity-building events are not demanded by the managers or required by workplace processes, the newly learned skills fade away over time.

The remedy is to deliver capacity building at the time when officials are already working on something that requires new skills. In many cases, we based the CEF’s in-country workshops on practical work with real-life examples, geared toward performing the tasks that the participants were asked to do in their work environment. I like to call this a learning-as-you-go approach. You only learn when you need to, and only remember what you have learned when you need to use it repeatedly.

In short…

The idea of integrating PAR and PFM reforms is not new. It is also, in my view, not the right frame of thinking. What we need are practical intervention points that would help both lines of reform support one another better. I tried to outline some of those where the CEF has something to offer. It is not really about asking, “What do you mean by integration?” It is about raising a hand and saying, "Hey, we are already doing this.”