The problem
Strong PFM assessments do not guarantee delivery when a crisis hits
"When disaster strikes, we have to cobble together funds for a relief and reconstruction package.... The entire fiscal landscape gets affected.... [W]hen towns and farms get flooded, our revenue base gets submerged, and our tax collection goes under too."
Ralph G. Recto, Secretary of Finance, Philippines, remarks at the launch of the 2024 PEFA++ and DRR-PFM assessment reports — a country that had just received a high rating on a PFM crisis-readiness assessment.
That observation points to a structural problem: strong institutional readiness does not guarantee operational responsiveness. Governments can have financing in place, score well on PFM assessments, and still struggle to move resources quickly when a shock hits. Plans, allocations, and institutional frameworks are necessary — but they are not the same as knowing whether resources can move from commitment to execution when the system is under pressure.
The gap between institutional readiness and delivery performance is real, recurring, and often under-examined before decisions are made. Fiscal Hydraulics is designed to make that delivery-risk gap visible.
How Fiscal Hydraulics sits alongside other tools
PEFA
Theme
Overall PFM performance
Focus
Institutions, information, systems, and processes
Use
Baseline and reform dialogue
Outputs
Scores and narrative
How it fits
Foundational benchmark
WB DRR-PFM
Theme
Disaster-resilient PFM systems
Focus
DRR capacity across PFM functions
Use
Identify opportunities to strengthen DRR-PFM
Outputs
Pillar findings and recommendations
How it fits
Thematic deep dive on institutional DRR readiness
Fiscal Hydraulics
Theme
Delivery-risk due diligence
Focus
Commitment → pathway → execution
Use
Identify where delivery risk is likely to concentrate
Outputs
Pathway map + constraint hypothesis + evidence register
How it fits
Execution-focused diagnostic — complements both
Fiscal Hydraulics is not a replacement for PEFA or DRR-PFM. It addresses a different question: whether resources can move through the systems they depend on, and where delivery risk is likely to concentrate between commitment and execution. Outputs are evidence-bounded hypotheses with explicit coverage and data gaps, designed to guide validation rather than substitute for audit, evaluation, or transaction testing.
Who this is for
Fiscal Hydraulics focuses on a gap not captured by most tools: the difference between institutional readiness and delivery performance under pressure. This gap is fundamentally about absorptive capacity — how effectively systems can translate resources, authority, and decisions into delivery.
Donors
IFI and bilateral donors
Without a structured approach, screening country systems for delivery risk can be inconsistent across teams and difficult to complete before programmes commit.
Where it fits
Pre-investment screening for crisis finance, DRF, resilience, reconstruction, and PFM programmes — and scoping before committing technical assistance or larger instruments.
How it is used
Commission a Scan for rapid country-level screening, or a Diagnostic where you need a more defensible evidence base before committing to a direction.
What it provides
A faster, more consistent basis for country comparison — and a clearer starting point for targeting technical assistance or follow-up analysis.
Government
Finance ministries and counterparts
Reform sequencing is difficult when the weakest points in the delivery pathway are not yet visible — or not agreed across the agencies that would need to act on them.
Where it fits
In readiness planning, reform sequencing, and cross-agency review — before a shock forces the diagnosis under pressure.
How it is used
Use a Diagnostic to build the evidence base, then run a facilitated Workshop to align ministries, agencies, and counterparts on priority constraints and next steps.
What it provides
A shared, documented baseline that focuses reform effort on the most likely weak points and gives institutions a common starting point for action.
Risk finance
Risk financing facilities and insurers
Parametric instruments are designed around hazard triggers. But how well do the systems that receive and deploy the payout hold up under pressure?
Where it fits
Between instrument design and deployment planning — where payout speed may be modelled, but the downstream public-system pathway that determines whether funds reach delivery points has not been tested.
How it is used
Commission a Scan for a rapid first read of delivery capacity in a target sovereign before or during instrument design. Use a Diagnostic where stronger evidence is needed for country dialogue, instrument refinement, or post-event review.
What it provides
A structured view of whether an instrument is operationally backed by the systems it relies on — and a clearer basis for dialogue on where delivery risk sits and what would need to change before the next event.
Climate finance
Climate finance providers
Approved and committed funds still depend on domestic systems to reach execution — but delivery risk is not always examined before programmes are designed.
Where it fits
At country readiness, accreditation, and programme design stage — where delivery assumptions are built into programme structure before the resource pathway has been tested.
How it is used
Use a Scan for initial country screening, or a Diagnostic where the stakes of getting delivery assumptions wrong are higher and a more defensible evidence base is needed.
What it provides
An evidence-based view of where delivery risk sits in the system — and a more grounded starting point for readiness support, country dialogue, and programme design.
Consultancies
Development consultancies and implementation partners
Early-stage country analysis on public systems, resilience, and delivery risk is often unstructured and difficult to replicate consistently across teams and scopes.
Where it fits
Within assignments on public finance reform, resilience, climate finance, decentralised delivery, anticipatory action, shock-responsive social protection, or crisis readiness.
How it is used
Integrate a Diagnostic as a complementary screening module within an existing scope, or run a Workshop to align client and counterpart stakeholders on delivery constraints at assignment outset.
What it provides
A more consistent way to structure early analysis, more repeatable reporting, and a clearer basis for scoping and follow-up.
Research
Research institutions and policy analysts
Understanding how resources actually move through public systems — rather than how systems are designed to work — is difficult without a structured, replicable method.
Where it fits
Where institutional analysis needs a replicable approach to examining delivery risk across sovereign systems — for single-country depth or comparative work.
How it is used
Apply a Diagnostic as the primary data-collection instrument for single-country or comparative analysis. Use a Workshop to test hypotheses with government and institutional stakeholders.
What it provides
A consistent analytical framework, structured evidence extraction, and a documented hypothesis set that supports comparison across countries and contexts.
Start with the right level of due diligence
Each product can be commissioned independently or in combination. Start with a Scan where a rapid first view is enough, a Diagnostic where decisions need a stronger evidence base, or a Workshop where alignment across actors is part of the problem.
Over time, assessments can support a more comparable view of how public systems perform under pressure — while each commission remains bounded by its own evidence base and context.
Scan
First view
Choose this if —
You need a quick first view, based on what the available evidence can support, before commissioning deeper work.
Diagnostic
Deeper view
Choose this if —
You need a document-verified assessment with an evidence register, confidence signalling, and a stronger basis for decisions.
Workshop
Alignment
Choose this if —
You need to bring actors together to map the pathway, test assumptions, identify gate owners, and agree follow-up evidence actions.
Not sure where to start?
Book an introductory call
Sources
• Republic of the Philippines, Department of Finance (2025). 2024 PEFA++ and DRR-PFM Assessment Reports Launch.
https://www.dof.gov.ph/2024-philippines-public-expenditure-and-financial-accountability-pefa-and-disaster-resilient-and-responsive-public-financial-management-drr-pfm-assessment-reports-launch/
• Independent Fiscal Commission (2026). IFC Evaluates Jamaica’s Economic Performance and Outlook. Kingston: Independent Fiscal Commission.
https://ifc.gov.jm/assets/files/Independent-FiscalCommissionIFCEvaluatesJamaicasEconomicPerformanceandOutlookFINAL1.pdf
• Republic of the Philippines, Department of Finance (2025). 2024 PEFA++ and DRR-PFM Assessment Reports Launch.
https://www.dof.gov.ph/2024-philippines-public-expenditure-and-financial-accountability-pefa-and-disaster-resilient-and-responsive-public-financial-management-drr-pfm-assessment-reports-launch/
• Independent Fiscal Commission (2026). IFC Evaluates Jamaica’s Economic Performance and Outlook. Kingston: Independent Fiscal Commission.
https://ifc.gov.jm/assets/files/Independent-FiscalCommissionIFCEvaluatesJamaicasEconomicPerformanceandOutlookFINAL1.pdf