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Financial Management

Home : Topics : Governance : Financial Management : Harmonization of MDBs Financial Management and Analysis Practice

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Harmonization of MDBs Financial Management and Analysis Practice

Harmonization of Multilateral Development Banks' (MDBs) Operational Policies and Procedures on Financial Management and Analysis

Sound financial analysis and management for efficient use of scarce resources is the objective for the recent move of Mulitilateral Development Banks (MDBs) to harmonize their policies and procedures.

In February 2001, recognizing the inconsistency and conflicts in our financial management policies and practices, the MDB Working Group on Harmonizing Financial Analysis and Management (the Working Group) began its work. The Working Group consisted of representatives from ADB, African Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, and World Bank.

The Working Group initially explored the extent of harmonizing the operational policies and methodologies for financial management, analysis, reporting and auditing, and identified areas for early progress on these issues. The Working Group prepared these reports tackling different areas for harmonization:

  • Financial Management Assessment, Financial Reporting and Auditing (study undertaken by World Bank)
  • Affordability, Subsidies and Tariffs (study undertaken by ADB)
  • Financial Ratios and Covenants (study undertaken by EBRD)

During the Rome Forum on Harmonization* on 24-25 February 2003, together with the other heads of multilateral and bilateral development institutions, ADB endorsed the good practices work done by the technical groups of MDBs and the Development Assistance Committee/Organization for Economic Cooperation and Development (DAC/OECD) Task Force.

  • Framework for Collaboration among Participating MDBs on Financial Management Diagnostic Work
  • Framework for Collaboration among Participating MDBs on Financial Reporting and Auditing
  • Good Practice Guideline on Financial Analysis of Revenue-Generating Entities: Sector Analysis and Financial Ratios and Covenants

    • Most of the harmonization work however revolved around our requirements for financial management systems, reporting, and auditing. Next in the agenda of the Working Group will be to harmonize requirements for financial analysis.

    More details can be viewed in World Bank's report on harmonization*.


    *This link takes you outside the ADB website. Please use the back button to return to ADB.org.