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Is There a Place for Virtual Poverty Funds in Pro‐Poor Public Spending Reform? Lessons from Uganda's PAF
Author(s) -
Williamson Tim,
Canagarajah Sudharshan
Publication year - 2003
Publication title -
development policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.671
H-Index - 61
eISSN - 1467-7679
pISSN - 0950-6764
DOI - 10.1111/1467-7679.00219
Subject(s) - poverty , public expenditure , economics , public spending , public economics , public sector , developing country , private sector , balance (ability) , public fund , business , development economics , economic policy , economic growth , public finance , macroeconomics , political science , medicine , economy , politics , law , physical medicine and rehabilitation
Various developing countries with weak public expenditure management systems are establishing virtual poverty funds (VPFs), drawing on the experience of Uganda's Poverty Action Fund. As a mechanism for tagging and tracking the performance of specific poverty‐reducing expenditures in the budget, a VPF can be useful. However, this article argues that such devices should be treated from the outset as transitional, and as part of wider processes of strengthening public expenditure management; otherwise, they can seriously distort public expenditure allocations and management systems, potentially undermining growth. Emphasis needs to be placed on identifying the right balance of expenditures in the entire budget; improving the effectiveness and efficiency of existing allocations; and developing better public‐sector policies for promoting pro‐poor private sector growth.