August 14, 2017

Latin American Treasurers Discuss Controlling Expenditure Arrears


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

IMAGE FOR BLOG FOR JULY 18 - 4PEMNA Blog - Digitla money in EAP June 23_2017+TCclean

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’


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


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


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

Majdeline blog 2

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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July 14, 2017

Stressing the Public Finances – the UK Raises the Bar


Posted By Vitor Gaspar and Jason Harris[1]

Of all the major economies hit by the turbulent events of the global financial crisis, few were hit as hard and by as large a range of shocks as the United Kingdom. 

A housing bust, banking failures amid widespread financial market meltdown, and a large and persistent decline in output all played havoc with the public finances. The deficit blew out to 10 percent of GDP, government debt more than doubled to 89 percent of GDP, and the state’s balance sheet ballooned after the bailouts of some of the country’s largest commercial banks. Yet, prior to the crisis, the fiscal risks that became reality with such dire consequences had only been loosely considered.

Taking a big step forward in recognizing and managing future risks, the UK’s Independent Office of Budget Responsibility (OBR) has released its first Fiscal Risks Report. This landmark document identifies, quantifies and provides an estimated likelihood of the risks to which the UK public finances are exposed, including:

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July 11, 2017

The Future of Government Fiscal Reporting

For delphine blog

Post by Delphine Moretti[1]

In March 2017, the Organisation for Economic Cooperation and Development (OECD) organised the 17th Annual Meeting of the OECD network of Senior Financial Management Officials. The meeting was attended by around 120 delegates from OECD member countries, the European Commission, the International Monetary Fund (IMF), the World Bank Group (WBG) and international standards setters, such as the International Public Sector Accounting Standards Board (IPSASB).

The meeting discussed progress with accounting reforms in OECD member countries and the related modernisation of financial management. The participants discussed how “modern” financial management entails not only producing more complete and reliable financial data, but also making these data publicly available in fiscal reports that are transparent, clear, and useful.

The discussion, and recent OECD Surveys, highlight that, in the wake of the financial crisis, there has been a greater emphasis on budget discipline and transparency. This has led to significant changes in fiscal reporting practices in OECD countries, including:

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July 05, 2017

Politics and Budgets


Post by Vitor Gaspar, Sanjeev Gupta and Carlos Mulas-Granados [1]

Every year, parliaments in democratic countries discuss budget proposals for the following year to set the course for economic policy going forward. But the reality is that politics and budgets are deeply interwoven. This was recognized by Joseph Schumpeter who noted “the spirit of a people, its cultural level, its social structure, the deeds its policy may prepare – all this and more is written in its fiscal history”. The crucial role of politics in economic decision making was also acknowledged by the leading American political scientist Harold Laswell when he said that politics is “the matter of who gets what, when and how”.

We delve deeper into the political economy of fiscal policy in a recent IMF book, “Fiscal Politics”. This book uses a new dataset that combines political and economic variables for over 90 countries—advanced as well as emerging and developing--spanning four decades. We find that proximity of elections and political divisions (for example, as reflected in thin parliamentary majority) are key to influencing policymakers conduct in formulating and implementing fiscal policy. That is, these two considerations determine the size and the composition of public budgets. Political ideology (whether the government has a left or right orientation), while important, is not as decisive, despite rhetorical disputes between political groups on opposite sides of the aisle in almost every country.

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June 27, 2017

Public Participation in Fiscal Policies: Where do we Start?


Posted by Tania Sánchez Andrade[1]

Public participation in fiscal policy is based on the belief that those who are affected by government decisions have a right to be involved in the decision-making process. The comments or opinions received from the public on fiscal policy issues should be registered, published, and receive a response from the government. In an earlier post in this blog, Murray Petrie discussed what public participation in fiscal policy is, why it is important, and how it has been incorporated in international fiscal transparency standards. More guidance is needed, however, on how governments can meaningfully incorporate public participation in fiscal policy-making. To offer some answers, GIFT has worked systematically during the last five years to generate greater knowledge about country practices and innovations in citizen engagement. It has produced country case studies, the Principles of Public Participation in Fiscal Policy, and a Guide on Public Participation, which is being continuously expanded.

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