HOW ARE THE CONSTRAINTS ADDRESSED?
This question relates to how the constraints can be resolved or mitigated; that is, what needs to be done to create the right conditions to successfully implement the reform? In the flowchart example in annex A, it is determined that there are no political constraints, but there are both institutional and technical constraints.
In the handbook’s matrix example, it is possible to resolve technical constraints through the creation of a dedicated macroeconomic and fiscal unit and the development of technical skills and capacity in economic modeling and fiscal forecasting for the staff of the macroeconomic and fiscal unit.
For many countries, capacity constraints—staff resources and technical skills—present the greatest impediment to reform. The need to address this constraint has to be considered closely in the design of any reform. Working in partnership with development partners—who may be able to provide technical assistance and other support—can be extremely effective.
If it is not possible to resolve or mitigate a constraint—for example, there is no political will or engagement for reform—then governments and stakeholders should not proceed with implementation until circumstances are more favourable or while acceptance and support for the reforms are being built through advocacy and other means. In cases where constraints can be mitigated in the short or medium term—for example, capacity development—governments should consider acting to do so. However, the cost, priority, and sequencing of these actions should also be considered as part of any PFM reform program.
