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Key Text Integrating Defence Into Public Expenditure Work

Author: N Ball and M Holmes
Date: 2002
Size: 64 pages (876 KB)

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Summary

The importance of security to development has become widely recognised in recent years. Yet donor involvement in providing support to the security sector lacks a coherent framework, particularly in the area of defence. This report commissioned by the UK’s Department for International Development (DFID), argues that donors need to accept security and the defence sector as one core component of a well functioning public sector and adjust their policies accordingly. The report presents options for the World Bank and other donors for incorporating the defence sector into public expenditure work.

Although both governments and donors have tended to avoid this task, from a public policy perspective, defence shares key characteristics with other sectors, and citizens should benefit if it is subject to the same broad set of rules. In policy making and budgeting systems, defence should be treated in a manner consistent with democratic, civil control of the armed forces. The objective is to ensure that defence policy and spending support development aims, not undermine them. Undoubtedly, engaging with the defence sector carries risks for donors. Yet the risks of non-engagement seem to outweigh those of engagement.

This paper argues for and provides guidance on integrating defence into the planning, policy-making and budgeting systems and processes of a country in a manner consistent with democratic, civil control of the defence forces. Throughout the discussion, three themes recur; 1)effective defence budgeting requires a defence strategy - planning and resource allocation in the defence sector must be tied to a sectoral plan; 2) performance information is essential - it is not sufficient to ‘get budget allocation right’ and 3)defence spending must be on budget and the defence sector must be subject to competition with other sectors for funding.

World Bank work in countries such as the Federal Republic of Yugoslavia and Russia has the potential to help integrate defence into their public expenditure systems. This paper identifies a number of considerations in carrying out this work:

The main deviation from standard practice across other public sector areas is that some aspects of defence may justify greater confidentiality.
Defence sector confidentiality should not, however, be used as an excuse for evading public expenditure management principles such as comprehensiveness and transparency.
Defence must be covered by government-wide treasury systems to ensure that financial information is available during the budget cycle.
Defence should be subject to basic rules of government procurement, and defence expenditure should be appropriately allocated and coded.
Various analytical and tracking tools can be used to improve transparency and accountability, as well as effectiveness and efficiency of resource use.

When engaging with the defence sector, all donors, and particularly the Bank, should operate according to an appropriate risk management strategy. Recommendations are that:

As the Bank lacks defence expertise and conditionality is forbidden in this area, it should establish a firewall between involvement in helping integrate defence into public expenditure management systems and managing defence resources.
The Bank should only provide support in defence planning, budgeting or management when requested (recognising that it may be easier for bilateral donors to carry out this work).
The Bank should consult with other donors in assessing the reform environment and matching expenditure management in defence with systems in other sectors.
To avoid giving the impression that the Bank’s main aim is to cut defence budgets, Bank staff should emphasise their interest in process, and involve defence officials in ongoing expenditure work.
To avoid creating disincentives to reform, the Bank should demonstrate how poor process in defence undermines other government objectives.
Bank staff should gain the confidence of defence officials, and allow defence ministries to retain some of the savings generated by efficiency gains.

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Source: Ball, N. and Holmes, M., 2002, 'Integrating Defence Into Public Expenditure Work', DFID, London.
Author: Nicole Ball , njball3@cs.com