Problem-driven diagnostics: the case for financial bottleneck analysis

In recent years there has been an increasing drive for public financial management (PFM) to transcend its traditional role of financial control and function to a greater extent as an enabler of service delivery. However, there is continuing difficulty in prioritising PFM reforms based on a systematically derived link between budgetary systems and service delivery. Recently, links between PFM and service delivery have been explored in diagnostic studies that seek to identify financial bottlenecks which inhibit or undermine service delivery. The World Bank and the EU recently commissioned a financial debottlenecking analysis of the education sector in Myanmar.The primary innovation of the financial debottlenecking method is to focus directly on the interface between financial management weaknesses and sector outputs. This explicitly problem driven and bottom-up approach brings PFM and sector stakeholders closer together and provides a platform for constructive dialogue ensuring that recommendations are owned, relevant and actionable. A sound understanding of institutional nuances further strengthens the recognition of challenges by counterparts and therefore the ownership of the reform strategy.