Budgeting for Results in West Africa

In 2009, the West African Economic and Monetary Union (WAEMU) adopted six directives inviting its member countries to make a significant change in their public financial management procedures. WAEMU member countries must now apply the directive of March 2009 concerning the Transparency Code, and the five other directives of June 2009, which mainly concern financial legislation and the public accounting general regulations. Mr. Simisso Célestin Palenfo, Head of WAEMU’s Public Financial Management Division, talks to AfCoP about this sweeping reform and the issues it involves for West Africa.

What is WAEMU’s public financial management role and authority in relation to member countries?

The Union’s mechanisms exercise the normative power conferred by the WAEMU treaty of January 10, 1994. In this regard, they promote the drafting of minimal prescriptions and regulations, which member states must complete based on their constitutional regulations. The idea of reforming the Union’s public financial management goes back to the 1980s. For the member states of the West African Monetary Union (WAMU), this period was characterized by a very difficult economic and financial situation, as a result of declining economic and budgetary balances, and the accumulation of significant internal and external public debt. According to Article 67 of the Treaty, the Union harmonizes budgetary legislation and procedures, mainly to synchronize them with the Union’s multilateral monitoring procedure. The harmonization of public financial management has two principal objectives:

• Harmonization provides the Union’s member states with modern instruments that allow rigorous and transparent public financial management. This ensures the stability of their common currency.
  
• Harmonization facilitates multilateral monitoring of national budgetary policies. It gives member states access to systems that allow easier comparison and analysis of their financial data.

The WAEMU Commission proposes draft legislation to the Council of Ministers for adoption. The Commission coordinates and evaluates the implementation of adopted guidelines. This legislation transcends national boundaries.

What are the focuses of the public financial management reform adopted in March and June 2009?

This reform has the following main focuses:

• Making the transition from resource management to management for results – The reform introduces new rules for developing, executing, and monitoring government budgets. The objective is to increase the effectiveness of public expenditure, and thus public policy. From now on, budgets must not only propose resources for the activities of public authorities. Budgets must also justify the allocation of these resources in relation to the achievement of predefined objectives for each expenditure item. Management for results is the core of the reform.
• Reforming management procedures – The function of chief authorizing officer is now vested in all ministers and presidents of constitutional institutions.
• Strengthening transparency – When appropriations are submitted in the form of programs, budgets are easier for Parliament and citizens to understand. When appropriations are submitted to reflect public policies pursued by the Government, this will make it easier to evaluate budgetary choices and government priorities. Program managers have all of the leverage they need to ensure the implementation of public policy in their sector and coordinate services responsible for these policies.
• Developing multi-year plans – Introducing multi-year plans constitutes a significant innovation in public financial management. Annual plans continue to be the framework for government revenue and expenditure. However, budget planning must now look ahead to future fiscal years through the multi-year expenditure programming document (MYEPD) and the multi-year budget and economic programming document (DPBEP).
• Ensuring that the reform meets the community’s obligations relating to the base budget balance, contained in the Convergence, Stability, Growth, and Solidarity Pact, and those relating to the debt policies of member states
• Recording budget transactions based on the principle of payables and receivables

How does this reform constitute a paradigm shift for member countries accustomed to budget resource management?

With this reform, member states will now enshrine management for results in their financial legislation. The new directives consider international public financial management standards and best practices. The new directives also ensure consistency with the objectives of the Convergence, Stability, Growth, and Solidarity Pact. This reform allows more effective and transparent public financial management.

Looking back a year later, what progress have WAEMU member countries made in implementing this reform?

The public financial management directives were adopted in March and June 2009. States have until December 31, 2001, to enshrine these directives in their national legislation. One of the public financial management objectives assigned to the Union’s member states is to continue efforts to improve their management by implementing the principles of good governance. Several member states have begun the transition process and are finalizing the development of draft legislation.

What capacity-building initiatives have been launched in this regard?

Two initiatives can be cited:

• One initiative involves general and technical training in the content of the directives, through initial and continuous training.
• The other initiative involves adapting and strengthening information systems to meet new needs as a result of adopting the directives.