STEP 3 Establishing Public Financial Management Systems
Managing the inflows of resources and spending them effectively are challenging in a post-disaster environment. Risk financing is often disbursed across multiple teams. There is a risk that fragmentation across technical units and departments could prove to be an impediment to the effective coordination of investments, learning and identifying synergies (OECD, 2014):
- Strengthening and/or establishing effective Public Financial Management (PFM) modalities by the government could encourage international involvement and confidence in the recovery plan (considerations for developing national PFMs are presented in Annex 4).
- Transfer funding: Decentralized implementation speeds up resilient recovery and is more likely to correspond to the actual needs of the affected communities. Transferring funds from national to 1) sub-national entities and/or 2) non-governmental organizations, as well as communities and individual producers. An unresolved issue is the provision of assistance to agricultural entrepreneurs, who bare most of the cost of losses and damages. However, depending on government policy, SMEs could have access to concessional emergency loans or (one-time) subsidized insurance; appropriate products for SMEs are hardly available.
- Multi-Donor Trust Funds could be established to pool and channel donor resources in a coordinated way, in accordance with national priorities and by avoiding duplications and multiple bank accounts. Preconditions for effective management are a high degree of transparency and the will to avoid bureaucracy.
Tools and Guiding Questions
Are mechanisms in place to manage inflow of funds, e.g. a public financial management plan? Are there financial processes in place that effectively disburse funds between levels of government, or directly to communities or systems that manage external resources?
Is a work plan available, including sequencing of tasks associated with funding requirements?
Has the government established a Multi-Donor Trust Fund for channelling funds in a coordinated manner?
EU (2015): Information Note on Multidonor Trust Funds Supported by the European Union
DevEx International Development (2011): The world’s largest multidonor trust funds: A primer