Donors generally recognized that by using country financial management systems, country ownership is enhanced and efforts at harmonization are facilitated. As a response to efforts by both donors and developing countries to increase the effectiveness of development assistance, the AfDB focuses on holistic approaches to addressing development issues.
Budget Support Loans/Policy-based Loans
Budget support loans provide funding intended to support agreed policy objectives, including reforms that result from policy changes. As a result, most budget support loans do not have a specific investment programme with a detailed cost schedule. However, in many cases the achievement of development goals envisaged under budget support loans depend entirely on the government making investments in a particular targeted sector. As a result, the programme is dependent on the government’s financial management system for the investment of funds to achieve the program goals.
Country Financial Management: Diagnostic Tools
The Bank encourages collaboration with other development partners in the assessment of the country environment. Collaboration may take the form of joint preparation of a diagnostic study with one or more development partners or member countries. The Bank often reviews and considers some of the following during preparation of a project or a programme:
- Public Expenditure and Financial Accountability Review (PEFAR) that reviews the Public Financial Management (PFM) arrangements in client countries. PEFAR has two main components – the Financial Accountability Assessment and the Public Expenditure Review;
- Public Expenditure and Financial Accountability (PEFA) Performance Measurement Framework, that provides a common pool of information for the measurement and monitoring of Public Financial Management performance;
- Country Financial Accountability Assessment (CFAA), an analytical assessment of the country’s public financial management system.