By Adil Ababou, Vishal Gujadhur, Margaux Lucrece Lelong, and Devesh Sharma
The Gates Foundation and the World Bank share similar goals: to reduce maternal and child mortality from preventable causes, to decrease the impact of infectious diseases, to improve access to quality education for children, and to expand economic opportunities for all. Achieving these goals requires both innovative solutions and robust systems to deliver tangible results. The Gates Foundation and the World Bank collaborate to strengthen public financial management (PFM) systems so that human and financial resources are used effectively and transparently. This collaboration combines innovation with institution-building, ensuring that progress in health, education, and economic opportunities for all are both scalable and sustainable.
The critical role of public financial management
While increasing the overall magnitude of resources for development goals is critical, it does not guarantee better service delivery. The rules, laws, systems, processes and human resources used by governments to manage public funds, also known as PFM, are also important to ensure that money is effectively spent. PFM covers how budgets are prepared, as well as how money is spent, tracked and reported. Effective PFM is essential to ensure that policy interventions and government spending benefits the targeted people they are intending to support.
For example, many countries have adopted Integrated Financial Management Information Systems, which help link planned budgets with actual spending. However, current PFM systems tend to be complex, provide officials with excessive discretion, and lack transparency — making them vulnerable to breakdowns at multiple stages. As a result, funds may be misallocated, delayed, or even diverted, before reaching intended service delivery points. For example, in health systems, unpredictable or delayed disbursement of funds can impact service delivery.
The urgent need for reform
Effectively managing public finance helps address service delivery challenges and improves citizens’ well-being. Countries with better PFM systems tend to have lower maternal mortality rates, and fewer childhood deaths from noncommunicable diseases, which is why the Gates Foundation supports PFM reform. The Gates Foundation and the World Bank support three mutually reinforcing approaches:
- Generating ideas and evidence,
- Testing them via experimentation and learning, and
- Scaling those that work.
These principles have helped build global support for a more outcome-focused and problem-driven approach to PFM reforms. For example, the Collaborative Africa Budget Reform Initiative has increased the Central African Republic’s domestic investment budget execution rate from 1% in 2017 to 56% in 2019. The World Bank is supporting countries in identifying and addressing PFM-related service delivery bottlenecks; in Pakistan’s Khyber Pakhtunkhwa province, a new health budgeting policy now better meets frontline needs. But more work needs to be done.
The digital transformation of PFM
Despite its potential, digital public finance has not met expectations or kept pace with technological advancements. Many reforms still rely on outdated models from the 1980s, and digital tools have too often been perceived as ideas rather than enablers for better policy. To improve PFM, we are fostering new ideas and experiments that make digital public finance work for public services. In India, The Gates Foundation partners, such as Janaagraha, have helped ministries reduce wage payment timelines for urban workers from over 130 days to less than 15, saving $350 million through improved cash management. Lower-income countries stand to benefit the most from an emerging digital PFM paradigm, which will require development partners to adjust their funding models to support digital approaches.
Next steps
The World Bank’s upcoming conference, Reimagining Public Finance – Making Public Resources Work for Development Outcomes, on September 29 and 30 comes at a critical juncture when the need for efficient and effective public spending is more urgent than ever. Reimagining public finance means addressing these challenges with new approaches, moving beyond traditional PFM reform practices to focus on outcomes, and evaluating not only how money is spent, but whether it achieves health, education, and economic opportunities for all.
The conference is structured around the why, what, and how of reform—why outcomes are important, what bottlenecks prevent resources from having an impact, and how governments and partners can work together to overcome these obstacles. Central to the discussions will be an analysis of common bottlenecks that hinder the translation of resources into results.
We, at the Gates Foundation and the World Bank, are working together to advance this transition, strengthening PFM systems so that scarce resources are managed transparently, used efficiently, and result in measurable improvements in people’s lives.
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