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The impact of public financial management interventions on corruption

Public financial management (PFM) is regarded as a central element of a functioning administration, and underlies all government financial activities. The main stages of the PFM cycle are revenue collection, budget preparation, budget execution, accounting and reporting, and audit and oversight. Improving a country’s PFM system is widely believed to provide extensive and enduring benefits, including stronger institutions, reduced poverty, greater gender equality and balanced growth. Evidence shows that interventions at every stage of the PFM cycle have a positive impact on curbing corruption, and a recent report also found a positive correlation between public expenditure and financial accountability (PEFA) scores and perceptions of corruption.

4 May 2021
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Main points

  • The PEFA framework was revised in 2016. It assesses PFM performance using 31 indicators across seven pillars: budget reliability, the transparency of public finances, the management of assets and liabilities, policy based strategy and budgeting, predictability and control in budget execution, accounting and reporting, and external scrutiny and audit.
  • Empirical evidence and the literature generally support the view that PFM reforms have a positive impact on reducing corruption. However, many of the findings are based on perceptions based indicators of corruption.
  • A recent World Bank study found a positive correlation between overall PEFA scores and Worldwide Governance Indicators’ Control of Corruption score.
  • Evidence from the available literature and case studies show that technical improvements on PFM are dependent on the political will to implement them.

Cite this publication


Duri, J.; (2021) The impact of public financial management interventions on corruption. Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Helpdesk Answer 2021:7)

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About the author

Jorum is a Research Coordinator at Transparency International, with his primary responsibilities at the Anti-Corruption Helpdesk.

Disclaimer


All views in this text are the author(s)’, and may differ from the U4 partner agencies’ policies.

This work is licenced under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International licence (CC BY-NC-ND 4.0)

Keywords


public financial management