Global Facilitation Network for Security Sector Reform (GFN-SSR)

Post Conflict Security Sector & Public Finance Management

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While international organisations have concluded that principles of Public Finance Management (PFM) are applicable to all areas of national budgets, few reviews of PFM systems have included the security sector. This report, authored by Peter Middlebrook, Rima Simpson and Karene Melloul, examines a recent World Bank review of Afghanistan’s national budget vis-à-vis inclusion of security sector expenditures. Full application of PFM principles in post-conflict national budgets is key to establishing an accountable security sector.

Security in post-conflict situations is a condition for the return to political normalcy. Traditionally, donors have ignored the security sector in favour of sectors such as education, health and infrastructure. Security sector spending (armed forces, police and judicial services) in most post-conflict countries often dominates both operational and capital budgets. Separating the costs of the security sector from a national budget often results in a budget that is neither comprehensive nor realistic.

Following the removal of the Taliban in 2001, re-establishing effective and accountable security sector institutions in Afghanistan was perceived as both a national and international imperative. However, international resource allocation to the security sector has been conducted in isolation from the overall national budget. Reconstituting an accountable PFM system according to international best practices is key to establishing a sustainable security structure.

At the request of the Afghan Ministry of Finance, the World Bank (WB) conducted a review of Afghan security sector expenditures in relation to the national budget. The objectives of the WB review were to:

• Understand Afghan security sector expenditures;
• Assess coherence, consistency and fiscal sustainability of security sector expenditures:
• Review PFM processes in the security sector and assess the extent to which sound PFM principles are followed; and
• Analyse the institutional framework of the security sector and its capacity to apply sound PFM principles.

The WB review produced the following findings:

• A holistic and integrated security sector strategy and policy framework is key to reforming Afghanistan’s security sector expenditures vis-à-vis the national budget.
• There is unsustainably high donor-executed spending through the external budget.
• Difficulties exist in coordinating and prioritising security expenditures and actions.
• There are concerns about fiscal sustainability of security sector staffing levels.
• There is an imbalance in the development of the national army and other security institutions.
• Good governance and sound, sustainable financial management practices need to be developed in the security sector.

In the interest of “getting the future right”, the following lessons can be gleaned from the WB’s review of Afghan security sector expenditures and national budget priorities:

• PFM practices can take into consideration the most complex and confidential issues without undermining the application of the fundamental principles of accountability to elected civil authorities.
• Security remains a critical concern in many country contexts.
• There is no justification for treating the security sector as separate or sacrosanct, and not subjecting it to budgetary and fiduciary processes.
• There is a need for analytical work in the security sector from the perspectives of development and PFM.
• Reviewing security reform through a PFM lens reduces risks and costs to both recipient countries and donors.
• Effective donor coordination and partnerships are essential.

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