In November 2010, around 100 of the world's leading experts in public financial management (PFM) met in London to debate why more progress is not being made in fragile states. Gathered at the sixth annual CAPE Conference, entitled Accelerating the transition out of fragility, these experts focused on the practical and policy aspects of using finance to support fragile states as they make the transition from fragility to stability, and the implications for Public Financial Management (PFM).

The participants included experts who had travelled to London from Afghanistan, Democratic Republic of Congo, Haiti, Liberia, Tajikistan, Timor Leste, Kosovo, Solomon Islands, South Africa and Zimbabwe, with four Ministers of Finance in attendance. They were joined by practitioners with experience of other countries. Despite years of support for reform in fragile states, there were still differences of opinion on many issues. However, the discussions provided clarity on seven key issues:

1. Donors are not respecting government ownership and are micromanaging aid delivery despite commitments to the Paris aid effectiveness agenda in fragile states. We heard accounts from four Ministers of Finance of the difficulties they have had in managing the donor relationship and were struck by the comment that it was only possible to gain control of the reform process once domestic revenues had reached a high enough level to marginalise the influence of donors.
2. Participants recognised that PFM reform in fragile states requires a major change in management practices and buy in from a wide range of stakeholders in the country, with important administrative and political implications. It is not a technocratic fix. Yet there seem to be few country examples of properly designed and applied change management processes.
3. Current procurement procedures required by the international community are too complex and cumbersome for fragile states. While such processes reflect a valid need for accountability, it seems that the balance between accountability and development progress is insufficiently considered.
4. Inadequate pay levels in the public service in fragile states are having a serious effect on the sustainability of reform. In this regard, the policymakers are faced with a difficult choice between retaining qualified staff and ensuring a sustainable fiscal position, without impeding private sector development.
5. As fragile states move towards more democratic structures the role of Parliaments in the budget process would become more important. While there is no unique model for interfacing with Parliament, more attention needs to be paid to it to enhance budget transparency.
6. Too much time can be spent making legislative changes. Often these are not necessary because administrative regulations will do as well and the implementation capacity often does not exist to back up the legislation.
7. Finally, the conference demonstrated that collectively we are not learning as much as we can from the range of fragile state experience. Bringing together representatives from such a diverse group of countries, all of them struggling with the same problems can be enormously productive.