September 15, 2017

How Peer Learning Can Advance Fiscal Transparency

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Posted by Juan Pablo Guerrero[1]

When it comes to learning, few methods surpass learning from experience. Practice, trials and errors, help people become experts. Unfortunately, such learning by trial and error can be an expensive way to design public policy, in terms of institutional resources, as well as in terms of social and political implications. For the introduction of new policy practices, a second-best method can involve learning from peers. A peer who deals with similar tasks and institutional objectives, such as advancing fiscal transparency, might very well find comparable obstacles and lessons along the way. The shared experience of peers incorporates crucial elements of teaching, such as methodology, approaches and lessons learned. At the same time, the peer-to-peer rapport gives significant value and credibility to the experiences shared and exchanged.

With the above in mind, the Global Initiative for Fiscal Transparency (GIFT) network has invested strongly in peer-to-peer learning activities since 2014. GIFT is a multi-stakeholder action-network which aims to achieve sustained, measurable improvements in fiscal transparency, public participation and accountability in countries around the world. The network aims to advance incentives, norms, peer-learning, technical assistance, and new technologies. Its 37 members, called stewards, see in GIFT meetings an opportunity to exchange their experiences on a wide range of topics, and to learn from others.[2] 

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September 12, 2017

Why Medium-Term Budget Frameworks Under-Perform in Africa

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Posted by Taz Chaponda and Richard Allen[1]

Medium-term budget frameworks (MTBFs) have established a strong track record in advanced countries, but how do they fare in countries with much weaker budgeting and governance systems? To what extent do they contribute to the preparation of macro-economic and fiscal projections that are more reliable, budgets that are more credible, and more broadly to better fiscal policies? 

To examine these questions, a new IMF Working Paper focuses on the performance of MTBFs in six countries––Kenya, Namibia, South Africa, Tanzania, Uganda, and Zambia. More than 15 years ago, these countries, and many others in sub-Saharan Africa embarked on a program of budgetary reform, an important element of which was an MTBF. The working paper assesses the effectiveness of MTBFs in achieving improved fiscal discipline, resource allocation, and certainty of funding, as well as wider economic and social development goals.

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September 08, 2017

Transforming Reports into Modern Social Communication  

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Posted by Esther Palacio[1]

Traditional reports are losing their effectiveness and efficiency in the modern IT-dependent world, as more friendly forms of communication appear. We are talking here primarily about reports written by government agencies or think tanks, or by international finance agencies or donors, or by other public sector bodies. How should we take advantage of the new technologies and transform long and often unread reports into modern social communications that strengthen the impact of policy and technical advice? 

Reports are written with the intention to communicate. Nevertheless, in the modern era, most people rely on the traditional media and the social media. Few people have the time or inclination to read long reports. As a result, excellent reports containing important messages, analysis and data, risk not reaching their target audience, and often have little impact in practice. Moreover, the authors of reports rarely think through the key messages that need to be communicated to a wider audience, and who are the members of that audience.

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August 30, 2017

Challenges of Implementing a TSA in Africa  

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 By Jean-Philippe Vion[1]

For years, development partners have promoted the implementation of a treasury single account (TSA) in developing countries as the main instrument to optimize cash management. Centralizing all public monies in a single account should strengthen oversight and facilitate the mobilization of idle cash to cover essential expenditure.

The TSA reforms in sub-Saharan Africa have focused mainly so far on coverage. The TSA must be as comprehensive as possible. That means consolidating most of the public entities' bank accounts that are scattered in commercial banks into the national TSA. Consolidation can be achieved by identifying all public bank accounts opened in commercial banks, defining closure plans and transferring the balances to the TSA at the central bank. This approach was successfully implemented, with the support of the IMF, in Mali for instance.[2]

In Francophone Western Africa, the coverage of TSAs has significantly improved over the last years.[3] Now, it’s time to have a look at a second issue, which has not drawn much attention so far. This issue concerns the structure of the national TSA. In many countries, the TSA remains just a set of bank accounts, juxtaposed side by side in the central bank's accounting books, without much linkage between them.

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August 14, 2017

Latin American Treasurers Discuss Controlling Expenditure Arrears

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Posted by Mario Pessoa[1]

The Costa Rican Ministry of Finance recently organized the eighth Latin American Treasury Forum (FOTEGAL) together with the International Monetary Fund (IMF), the Inter-American Development Bank (IDB), and the World Bank[2]. FOTEGAL aims at providing a permanent dialogue for technical discussions and exchange of experiences among the national treasurers of the region. The annual seminar has been a key component of the IMF’s technical assistance program and a testimony of significant improvements in treasury management in Latin America.

The Vice President and Minister of Finance of Costa Rica, Mr. Helio Fallas Venegas, in his opening remarks emphasized the importance of FOTEGAL in exchanging knowledge and identifying opportunities to improve treasury management. The Minister highlighted the role of strong treasuries in controlling the fiscal balance, strengthening budget execution, and improving the coordination of debt management and budgetary control.

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August 08, 2017

Digital Money is Spearheading the Next Wave of Public Financial Management (PFM) Reforms in EAP

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Post by Khuram Farooq and Leah April[1]

The use of digital money is increasingly the dominant PFM reform priority for most governments in the EAP region. This trend is being led by Korea.  China, Indonesia, Vietnam, Philippines, and Mongolia are also at various stages of implementing and expanding their use of digital money. With this reform, countries are aiming to transform their government payments, disbursements and receipt systems.

This is the key conclusion from the Public Expenditure Management Network in Asia – Treasury Community of Practice (PEMNA T- COP) meeting, which was held on March 1-2 in Bangkok. Twelve PEMNA member countries from the EAP region participated in the conference. The central theme of the meeting was eliminating and reducing the use of cash in government transactions.

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August 03, 2017

Thinking About ‘Opportunity Savings’

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Posted by David Gentry[1]

A major effort in PFM in the last few decades has been to extend the time horizon of the budget. While there are many variations of a medium-term budget framework (MTBF), and much discussion about the various benefits of each variation, one benefit is common to all. That is, to show more fully the financial consequences of decisions made today. This is often called a baseline.

Like MTBFs, there is no precise definition of a baseline. Most countries publish a medium-term fiscal forecast, comprising a single baseline or baseline scenarios to illustrate uncertainty. In addition, many countries are now publishing baselines for major recurrent programs, some publishing program expenditure forecasts of up to 10 years. Because baselines are inherently policy based, they are not calculated for ministries or other organizational units without regard to the policies they implement.

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July 28, 2017

Burkina Faso Moves Forward on PFM Reform

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Posted by Marie-Christine Uguen and Vieux Soulama Abdoul Rachid[1]

In 2017, the state budget of Burkina Faso was prepared, voted, and executed in program mode. The country thus became the first in the region to prepare a program budget in conformity with the 2009 West African Economic and Monetary Union (WAEMU) directives. This achievement is the result of sound preparation that began a few years ago, the strong commitment of the authorities, and sustained support from the IMF’s Fiscal Affairs Department and its Technical Assistance Center for West Africa (AFRITAC West 1).

To prepare the ground, the WAEMU directives were transposed into the national law of Burkina Faso in stages, starting with the law on transparency of public finance in 2013, the organic budget law in 2015, and subsequent regulations in 2016.  A dedicated reform unit – absorbed into the General Directorate of Budget in 2016 - was established in the Ministry of Economy, Finance and Development (MINEFID) to implement the directives. The unit was responsible for putting in place an integrated action plan and a communications strategy, and supporting line ministries and institutions through the preparation of technical manuals and capacity building initiatives. For example, the unit has provided training on program budgeting, and supported the revision of the financial control framework.

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July 26, 2017

Improving Internal Audit in the Caribbean

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Posted by Celeste Kubasta[1]

A workshop held in Barbados in June 2017 showcased the progress made by many countries of the Caribbean region in improving the efficiency and effectiveness of internal audit units over recent years. The workshop was organized by the IMF’s Caribbean Regional Technical Assistance Center (CARTAC). It was the fourth annual workshop which brought together internal audit practitioners from CARTAC member countries. The representatives shared their experiences and to discussed best practices, opportunities, and challenges in building capacity and improving effectiveness.

The popularity of this workshop has increased each year. This year 42 participants from 15 CARTAC countries, as well as Haiti and the Eastern Caribbean Central Bank, attended the workshop.

Over the years, the focus of the annual workshop has evolved. More specialized topics such as fraud assessment and systems audits of payroll and revenues, have been added to the agenda. A survey carried out in 2015, summarized below, highlighted opportunities for further development of internal audit in the region. The results of this survey have assisted CARTAC in planning subsequent workshops and other capacity-building activities.

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July 21, 2017

Implementation of GFS in IMF Reports

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Posted by Majdeline El Rayess and Zaijin Zhan[1]

A recently published policy paper by the IMF presents the second review of the implementation of the government finance statistics (GFS) framework in reports prepared by IMF staff. It follows the first review that was published in 2013, and calls for a continuation of the strategy approved by the IMF Board in 2010 to implement the Government Finance Statistics Manual 2001.

The policy paper shows that the presentation of GFS data in staff reports has decreased in 2017 compared to the 2013 review, although progress since 2011—the year following the 2010 Board decision—has been noticeable (see the chart below). In addition, staff reports are disclosing less balance sheet data, while the coverage of fiscal data has slightly improved, especially coverage of the general government sector. The paper identifies the various challenges that have led to a reduced level of reporting. These challenges include lack of familiarity of some countries with GFS concepts and practices, and technical difficulties in setting up fiscal databases.

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