Accounting systems

Rebuilding Financial Management in the Palestinian Authority, 2007-2012

Author
Tristan Dreisbach and ISS Staff
Focus Area(s)
Country of Reform
Abstract

In 2007, Salam Fayyad accepted the dual post of finance minister and prime minister in the Palestinian Authority (PA). The financial management practices he implemented during his first period as finance minister, from 2002 to 2004, had deteriorated. During the preceding two years, from November 2005 to March 2007, the government had resumed dealing largely in cash, had kept poor records of government financial transactions, and had added more employees to an already bloated public payroll. To reinstitute good practices and implement new reforms, Fayyad and his finance ministry colleagues also had to overcome challenges related to the division of the Palestinian territories into two separate areas governed by competing political parties. Fayyad relied heavily on a small group of trusted staff, delegated important responsibilities so he could also take on the demanding job of prime minister, and set clear guidelines to maximize the long-term benefits from any external technical assistance the ministry hired.  Under his guidance, the ministry rehabilitated financial records and quickly created a new financial information system by adapting existing, locally built software; reformed the way the PA used commercial bank accounts to conduct its financial transactions; and filled gaps in capacity.  

Tristan Dreisbach and staff drafted this case study based on multiple conversations with Salam Fayyad in Princeton, New Jersey, during 2019, as well as other interviews conducted in Ramallah, Nablus, Jericho, and Washington, D.C. the same year.  The case is part of a series on state building in Palestine in 2002–05 and 2007–11. Case published June 2022.

Managing Spending at the Palestinian Authority, 2002 - 2005

Author
Tristan Dreisbach
Country of Reform
Background
Abstract

When Salam Fayyad became finance minister of the Palestinian Authority (PA) in June 2002, the government was struggling to manage expenditures effectively and to deliver the budget to the legislative council on time. Success in addressing those problems required winning acceptance from President Yasser Arafat and other top officials for new work processes, securing other ministries’ compliance with changes in operations, and instituting radical new levels of transparency. Fayyad focused on fixing the system instead of investigating past malfeasance. Under his watch, the finance ministry began engaging with the council’s budget and finance committee, instituting monthly financial reporting, introducing reliable internal control and audit procedures, and adopting internationally recognized transparency measures. Those reforms enhanced the credibility of the authority’s financial management internationally, restarted the flow of external aid and PA revenues withheld by Israel, and helped temporarily end a financial crisis.

Tristan Dreisbach drafted this case study based on interviews conducted in the Palestinian cities of Ramallah, Nablus, and Jericho in June and July 2019 and on a series of conversations with Salam Fayyad in Princeton, New Jersey, the same year. The case is part of a series on state building in Palestine, 2002–05 and 2007–11. Case published March 2022.

Controlling Security Spending at the Palestinian Authority 2002 - 2004

Author
Tristan Dreisbach
Country of Reform
Background
Abstract

When Salam Fayyad became the Palestinian Authority’s finance minister in June 2002, one of his biggest challenges was to improve financial management in the security sector. To pay police, emergency workers, and other security personnel, commanders handed out cash to subordinates—a practice that was demeaning and that created opportunities for corruption. Procurement of equipment and supplies was neither open nor competitive and took place outside scrutiny by the finance ministry, which had little or no way of knowing where the government’s money ended up. To address the problems, Fayyad, a political outsider, had to take on a deep-rooted culture of secrecy, the reluctance of a powerful president, and resistance from some of the security officials. He began to tighten controls by working with a reform-minded legislature to incorporate procedural changes into the 2003 budget law. He then identified security service chiefs who were open to payroll reform, and he helped them become early adopters. After more than a year of private persuasion, backed by growing public discontent with corruption, Fayyad was able to implement reforms that reduced opportunities to divert funds and that increased security workers’ take-home pay. He also put security forces’ procurement activities under finance ministry oversight, thereby further limiting the risk of corruption.

Tristan Dreisbach drafted this case study based on interviews conducted in the cities of Ramallah, Nablus, and Jericho in June and July 2019 and on a series of conversations with Salam Fayyad in Princeton, New Jersey, the same year. The case is part of a series on state building in Palestine, 2002–05 and 2007–11. Case published March 2022.

Building a Healthier Rwanda: Linking Social Priorities to the National Budget, 2011–2016

Author
Simon Engler
Country of Reform
Abstract

Rwanda’s public health system was among the many casualties of the country’s 1994 genocide. In the aftermath of the violence, health workers were in short supply, maternal and child mortality rates spiked, and infectious diseases such as HIV/AIDs and tuberculosis often went untreated. By 2011, Rwanda had made enormous progress in remedying the situation, but much more remained to be done. From 2011 to 2016, officials in the finance ministry and health ministry worked together to develop five-year plans for public health, translate their new priorities into annual budgets, and monitor spending so as to ensure progress toward national goals. They revised the budget calendar to improve the planning process, helped local authorities build medium-term public-health strategies, and refined the tools used for tracking spending in the health sector. They met or surpassed more than half of the top targets they set for 2015, cementing the gains Rwanda had made since 1994.

Simon Engler drafted this case study with the assistance of Louise Umutoni Bower, based on interviews conducted in Kigali, Rwanda in March, April and August 2018. Case published September 2018.

To view a short version of the case, please click here

Offering a Lifeline: Delivering Critical Supplies to Ebola-Affected Communities in Liberia, 2014-2015

Author
David Paterson and Jennifer Widner
Focus Area(s)
Country of Reform
Abstract

When an outbreak of Ebola virus disease began to spill over national borders in West Africa in 2014, halting the epidemic depended as much on logistics as on addressing the medical challenge the virus posed. As the rate of infection in Liberia rose in June and July, J. Dorbor Jallah of the government’s Incident Management System knew that without chlorine, protective gear, and other critical items, it would be impossible for doctors and nurses to work safely. But Jallah faced obstacles at every level of the supply chain. Uncertain estimates of need, competing product standards, and limited vendor partnerships initially hampered procurement. Cargo volume strained capacity at ports of entry, and warehouse space was inadequate—or nonexistent. The country’s limited road network hampered the transport of materials to rural areas during the rainy season. At clinics, safe disposal of contaminated items presented additional difficulties. And to make matters worse, responding organizations all had different policies and approaches. After initial disarray, the Liberian government, international organizations, nonprofit groups, and private companies began cooperating to simulate some of the features of a centralized and integrated supply chain. The volume, speed, and responsiveness of delivery increased across Liberia—just as the epidemic began to wane. The experience triggered a search for innovations that could address similar constraints more effectively during any future infectious-disease outbreak whether in Liberia or elsewhere. 

David Paterson, Jennifer Widner, and staff drafted this case study based on interviews conducted in Liberia and other countries from 2015 to August 2016.

Pfizer Inc. supported the research and development of this case, which is part of a series on public management challenges in the West African Ebola outbreak response.

 

Timeline: West African Ebola Outbreak (poster infographic)

Timeline: West African Ebola Outbreak (page version)