A Critical Analysis of Public Financial Management Reform in Ethiopia and Tanzania.

Abstract

In developing countries, reform of wasteful public financial management systems is vital to secure economic growth and development by capitalizing on the efficient use of limited public finance. Successful reform needs to take account of local conditions and should focus on both the process of reform. Both the Ethiopian and Tanzanian reforms have been successful. Both pathways were selective and focused on systematically addressing key weaknesses in financial control. The first order task was to instill effective control while the second order task is to improve the efficiency of control. Both involved extensive customization. In comparing the two countries of public financial management reform, actions of Ethiopian reform have been the following: evolve existing systems, Hybrid approach, Focus on legal framework, budget, accounts, Reporting, automation replicates, Strong manual controls over commitments, Procurement, disbursement and Sequencing. Whereas Tanzanian PFM Reform Actions: driven by Information Technology- install new, procedures and discipline, Insulated ‘turnkey’ Information Technology approach using a commercial Software package, Focus on Central Payment System—procurement and Disbursement—a cash budget.

Keywords: Ethiopia, Tanzania, Budget reform, Expenditure planning reform, Accounts reform, Integrated Financial Management System.