This note was intended to inform Public Financial Management (PFM) reform in small Pacific Island Countries (PICs). PFM systems in PIC contexts are often very different from the sophisticated and comprehensive systems operating in larger, wealthier countries. Those working on PFM reform in such contexts must grapple with difficult questions: What needs to be done, when achieving across-the-board “good practice” standards is not feasible? What should be done immediately, and what can wait? How can reforms be effectively implemented and sustained with limited available capacity and financial resources? This note was intended to help government officials and donor agencies answer such questions.
The start point was that creative approaches are sometimes needed to PFM reform in Pacific Countries because of the extent and duration of capacity constraints. We have two key messages. Firstly, PFM capacity should be prioritized to areas that matter most in achieving development outcomes, and reforms should be intended to address specific, identified, problems, rather than to achieve blueprint “good practice” standards. Secondly, with small numbers of staff and high staff turnover limiting potential for sustainable gains from standard capacity building solutions (such as training programs and workshops), broader options for meeting capacity gaps should be considered, including accessing ongoing support for specialized tasks or even the wholesale “outsourcing” of certain functions.
The three main sections of this note discuss: i) how to plan PFM reforms, including through the development of PFM roadmaps; ii) how to prioritize limited PFM reform capacity to address the most pressing constraints to development; and iii) how to access additional capacity to implement and sustain required PFM reforms.