Ruffner Fallacy of Best Practice
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Ruffner Fallacy of Best Practice

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Michael Ruffner, Director Office of Technical Assistance, US Department of the Treasury discusses the "Fallacy of Best Practices"

Michael Ruffner, Director Office of Technical Assistance, US Department of the Treasury discusses the "Fallacy of Best Practices"

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Ruffner Fallacy of Best Practice Ruffner Fallacy of Best Practice Presentation Transcript

  • The Fallacy of Best Practice* * And other thoughts on PFM reforms Michael Ruffner Director, US Treasury Technical Assistance
  • Overview
    • Treasury TA Program
    • Importance of Economic Governance
    • Lessons Learned
      • Systemic, Tailored Reform
      • Ownership?
    • Towards a New Vision for PFM reform
  • What is the Focus of Treasury’s Technical Assistance?
    • Treasury provides technical assistance encompassing four core but linked areas to promote better economic governance:
      • Public Financial Management
      • Combating Financial Crime/Terrorist Financing
      • Financial Sector Strengthening
      • Combating Public Corruption
  • 5 Core Financial Disciplines
    • Banking and Financial Services
    • Budget Policy and Management
    • Financial Enforcement
    • Government Debt Issuance and Management
    • Tax Policy and Administration
  • Broad Based Agreement
    • Promoting good public financial management is universally agreed as good
      • PEFA Standards, IMF ROSC’s, FSAP’s
      • Communiques: Paris Declaration (DAC), G-8, APEC
      • IFI Loan Conditionalities
  • Why the Agreement?
    • PFM precondition (and outcome?) for Budget Support
    • Long term sustainability of investments
    • Economic governance precondition for growth
    • Virtuous Circle
      • Broad based economic growth will help promote prosperity, stability and peace.
  • How to Reform?
  • First Things First
    • How Do We Modernize Systems in a Way That Makes Sense?
    • Staging Reforms
      • Do you need an MTEF when you ration cash?
    • Weak Governance Regimes
      • Systemic
    • Gap Between Rules and Behaviors
    • Efficient International Learning
      • Contextual Variables – Systems, Not Instruments
      • Separate Good Principles from Fads
  • Enabling Conditions
    • Stable and Professional Civil Service
      • Social Control
    • Stable Economy
      • Predictable revenues
    • Confidence that Implementation Follows Plan
    • Countervailing Forces
    • Reliable Control Procedures
      • Caution: Devolution
  • Governance Changes
    • Anti-Corruption
      • A governance problem: Decision making is not safe from concentrated and obscure power
      • Instruments and Structures Not Sufficient
      • Need Systemic View
        • Anti-corruption is a part of all reforms
      • Real Change Requires Behavioral/Cultural Change
  • Most Important Question
    • What is the Problem?
  • Why is Problem Definition Important?
    • There is no model of reform –depends on nation’s problems and circumstances.
    • Changing rules and structures does not necessarily change behavior
    • Behavioral and value changes take time, a range of levers, and focused attention by management
  • Successful Reform Strategies
    • Are calibrated to specific risks and dynamics of the national system
    • Focus on desired cultural change
    • Mobilize all levers on behavior – formal and informal
    • Have persistent and committed leadership at all levels
  • Formulaic Reforms
    • Reforms not calibrated to country context
      • The Fallacy of “Best” Practice
    • Focus is on process, not culture
      • Behavioral change requires longer commitment than donor attention span
    • Instrumentalist
      • E.g Every country needs an MTEF
  • Why ?
    • The Usual Suspects: Politics, lack of will by counterparts, perception of gain versus effort, systemic effort is hard
    • Technical Assistance generally left to development agencies and contractors.
      • Not practitioners
    • Wrong method of TA delivery
      • Courses, fly by visits
    • Not Systemic/Sector Wide effort
  • Ownership
    • Real ownership is the exception
      • Real reform comes out of real ownership
    • It is ok to say No
    • There is an opportunity cost to assistance
    • Ownership, then accountability
  • Contractors
    • Systemic reform is complex and complexity requires flexibility
    • Contracts – little flexibility
    • Designed and Managed by non- practitioners
    • Ownership
  • An OECD Model?
    • Distilled, Stylized Model
    • Reality is far different
      • Even among most sophisticated
    • High Degree of Variation
    • Advertise what will happen, rather than what has happened
    • Processes not as important
      • Enabling conditions mean more
  • Use and Abuse of PEFA
    • Self-Assessment versus Decision-making document
    • Consequences?
    • Development Community need for the Silver Bullet
    • Careful! Over-reliance on Tools
  • A Systems View of OTA Machinery of Government Underpinning Of Economy If Men were Angels… Financial Enforcement Tax Admin and Policy Financial Institutions Budget Debt Management Economic Governance Anti-Corruption
  • The Conceptual Framework
    • Capacity building – practitioner advisors
    • Reform-focused – best appropriate solution
    • Co-Location
    • Ministry-to-Ministry
    • Results-oriented
    • Willingness to pull the plug
  • A New Role for Finance Ministries
    • Stewards of Public Resources
    • Economic Expertise
    • Finance Ministries sit on Boards of Agencies
    • Finance Ministries have the PRACTITIONERS