Overview of PFM-MDF

In line with the Paris Declaration on Aid Effectiveness (March 2005) and the commitments at the high level forum on Aid Effectiveness in Accra (2008) and Busan (2011), the World Bank (the Bank) recognizes the advantages in joint cooperation and technical assistance amongst the donors. 


One of the aid modality (financing instrument) through which the Bank endeavors to achieve this is the Multi Donor Fund (MDF) [1] which is funded by donors and administered by the Bank that provides a grant to the beneficiary to implement its reform agenda, thus enhancing country ownership. A Multi Donor Fund  is an effective instrument to support and spearhead and accelerate Bhutan’s PFM Reform Agenda.

Bhutan Multi Donor Fund for PFM Reform Program (PFM-MDF or the Program) :The key rationale of the Bhutan PFM–MDF or the Program is to help RGoB implement its PFM Reform Program in a coordinated and holistic basis and to scale it up. This is proposed to be done through a basket-funding mechanism by establishing a MDF which will provide a common platform for DPs to come together by pooling their resources and efforts in strengthening PFM in Bhutan.              


The advantages of a MDF are:

  • Sector-wide holistic approach to support RGoB’s reform vision and strategy for PFM reforms with a higher planning and implementation horizon.
  • Leveraging resources from multiple development partners for enhanced level of activity and widened scope.
  • Harmonized and coordinated donor approach (thereby avoiding duplication of efforts) which has the potential of increasing the efficiency of available funds and minimizing preferences of individual donors.
  • Sufficient and predictable funds available to deal with an area in a sustainable manner, vis-a-vis a piecemeal approach and funding possible for reforms involving large capital intensive activities (such as GIFMIS implementation).
  • World Bank’s technical expertise, experience and resources available for preparation, implementation and M&E.
  • Lower administration and transaction costs for RGoB and Development Partners in terms of common financial reporting and audit report.

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