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A main channel to accomplish this is through reform of the budgeting system.
Public financial management (PFM) institutions are integral to governance (Andrews 2010).
For governance to work, public organizations must have sufficient institutional capacity to design and implement policies in ways that are ‘effective, transparent, impartial and accountable’ (World Bank 2001).Therefore, the study of how public budget reforms actually work in the health sector is of critical importance.This article presents evidence from a study in the hospital sector in Lesotho, a small, land-locked country in Southern Africa which has been implementing public finance and budgeting reforms since 2005 in an effort to create more realistic budgets and provide incentives for efficient and effective management of government services (Central Bank of Lesotho 2007).The success of public budgeting reforms also has implications for health systems strengthening (World Health Organization 2007).
If successful, budget reform could help improve health sector governance, strengthening the capacity of governments to implement health policies efficiently and fairly and achieve better outcomes (Veenstra and Lomas 1999; Siddiqi 2009).It also highlights the importance of measuring reform implementation at the sectoral level.