IMF Updates the Portal on Fiscal Transparency

Posted by Mario Pessoa

Fiscal transparency is one of the most relevant elements of a modern public financial management system. Because of that, starting in the late 1990s, the IMF developed a code of good practices in fiscal transparency and a specific framework to evaluate transparency practices in its member countries. The Fiscal Affairs Department developed a set of guides and manuals to help carry out a standardized evaluation. The Report on the Observance of Standards and Codes (ROSC) of Fiscal Transparency –often called the “Fiscal ROSC” is a voluntary exercise that has been already undertaken by more than 90 countries.

CIPFA Consultation on International Architecture for Public Financial Management

  Posted by Michel Lazare

 

The Chartered Institute of Public Finance and Accountancy (CIPFA) is a UK-based global professional accountancy body that specialises in the public services. We have an active international strategy including PEFA and PFM training, professionalisation and consultancy.

CIPFA is currently undertaking a PFM consultation on a document covering a definition of PFM (from a service delivery perspective) a whole system approach (holistic) process architecture and regional institutional architecture. The link to the CIPFA webpage announcing the consultation is here and the consultation paper can be accessed by clicking on the following link: Download PFM_IA_Whole_System_Approach[1]
 

Maintain Fiscal Support, but Devise Credible Exit Strategies, Says the IMF's Fiscal Monitor

Posted by Michel Lazare.

On November 3, 2009, the IMF published the second issue of its Cross-Country Fiscal Monitor.

This Fiscal Monitor stresses that while, fiscal policy will continue to provide substantial support to aggregate demand in most countries this year, and is projected to remain supportive of economic activity in advanced countries in 2010, government debt in advanced G-20 economies is projected to reach 118 percent of GDP in 2014.

To get debt below 60 percent by 2030 will require raising the average structural primary balance by 8 percentage points of GDP over 2010-20 and then keeping it there for a further decade.

This is not a trivial amount of fiscal consolidation to say the least. The FIscal Monitor, however, considers that this could be achieved by a combination of non-renewal of stimulus measures; a freeze in real per capita spending excluding pensions and health; reforms to keep the growth of pension and health spending in line with that of GDP; and tax increases averaging about 3 percentage points of GDP for advanced G-20 countries.

Most PFM experts would probably agree that such a sizable fiscal consolidation over such a long period also requires a sound PFM system and pretty solid fiscal institutions.

Legislative Oversight and Budgeting – A World Perspective

Posted by Ian Lienert

The legislature has three core functions—representation, lawmaking, and oversight. The oversight function is perhaps the least studied and practiced. This is perhaps because oversight is bolstered somewhat less by external institutions. Oversight involves assessing implementation processes. It comes toward the end of the policy process, during the implementation of laws. In many countries, even those with a formal separation of legislative policy making and executive administrative powers, oversight provides the opportunity for legislators to participate in implementation. When it comes to budgeting, evaluation is needed to assess how well policies have been implemented. Legislative oversight includes examining fidelity to budget laws, probity in spending, efficiency in choices, and the effectiveness of the budget in producing the desired outcomes. Since it is the legislature that examines executive behavior, oversight is also a tool for checking the behavior of the budget system’s single most powerful political actor.

Although policy making and lawmaking are central tasks of the legislature, concern with the implementation of law is the realm of legislative oversight. A World Bank Institute book, published in 2007, examines the different facets of how executives implement budget laws. This book, edited by Rick Stapenhurst, Riccardo Pelizzo, David Olson, and Lisa von Trapp, and originated in large part with the concern of practitioners about increasing and improving the part played by legislative oversight in governing developing democracies. As part of its governance program, the World Bank Institute seeks to strengthen parliamentary oversight and to promote enhanced government accountability and transparency. The book is an eclectic compilation that samples the worlds of practice and scholarship.

Performance-Based Budgeting in France: An Evaluation by Parliament

Posted by Franck Bessette.

 
  
  
In France, the parliament was the initiator and driver of performance-based budgeting, introduced by the organic by-law of  August 1, 2001 (the so-called Loi Organique sur les Finances Publiques -- LOLF) [for more details, see in particular this previous blogpost by Bill Dorotinsky  and its embedded PowerPoint presentation by Phillipe Debrose] and fully applied from January 1, 2006. This was a managerial “big bang” which reorganized completely the budget structure and public accounting (accrual based accounting was introduced), defined new players (program managers), new chains of decision, and for every program a series of objectives and indicators.

After three years of complete implementation, the Economic and Finance Committee of the National Assembly (Assemblée Nationale) has evaluated this performance-driven budgetary reform and made recommendations to further improve implementation. A general report followed by annexes for individual programs was recently published [click here for a copy of the report ]

The United States Government Accountability Office: Role and Functions -- Comparison with France and the UK's Cases

Posted by Tej Prakash.

 

The Acting Comptroller General of the USA (Gene L. Dodaro) in a recent meeting with parliamentarians from Georgia, Kosovo, Macedonia and Mongolia, talked about the role of the United States Government Accountability Office (GAO) -- click here for a copy of the presentation. This blog provides a brief summary of the main points. In the second part it also briefly reviews the roles and responsibilities of the National Audit office of the UK and of the French Court of Audit.

The Challenge of Reforming Budgetary Institutions in Developing Countries

Attached is a presentation by Richard Allen on "The Challenge of Reforming Budgetary Institutions in Developing Countries". The presentation was made to the African Department of the IMF on October 22.  It is based on Mr. Allen's Working Paper (WP/09/96) on this topic, published in May 2009.

Evaluating Transparency in Public Debt Management and Good Relations with Investors

Posted by Mario Pessoa

The Institute of International Finance (IIF), an association of financial institutions, published for the third time the report Investor Relations: An Approach to Effective Communication and Enhanced Transparency. This report provides detailed analysis of investor relations and data transparency practices by the most active emerging market borrowing countries. According to the IIF, by reporting advances in sovereign investor relations practices, the document aims to help authorities identify those aspects of their investor relations and data transparency practices that could benefit from strengthening.

While the focus of the report is on financial market issues and not on public financial management, it should be of high importance to public debt managers. It sets a benchmark for good practices in terms of level of transparency, and availability, timeliness, and comprehensiveness of debt information. In this respect, the report’s very detailed indicators give to the user a broad view of the information available and can be seen as a demonstration of countries’ commitment to transparency in debt management. On the downside, the report focuses only on the availability of information and does not discuss the quality of the information provided by the countries.

Commitment Appropriations: An Underestimated Tool?

Posted by Guilhem Blondy

Commitment appropriations can de defined as ceilings embedded in the budget law over the resources that a public entity may pledge to specifically defined third parties in a legal instrument (a contract or a unilateral instrument like a decision allowing a subsidy).

Commitment appropriations should be distinguished from cash appropriations on one side, and from accrual appropriations on the other. Cash appropriations are ceilings over the disbursements of a public entity. Accrual appropriations are ceilings over its new unconditioned obligations (or debts). In the case of a contract for the delivery of goods, a commitment appropriation authorizes the signature of the contract, an accrual appropriation authorizes the receipt of the goods, and a cash appropriation authorizes the payment of the contractor.   

Leverage ICT and eGovernment Infrastructure to Better Support National Goals/Objectives through the Budget Process

Posted by Mark Silins, CARTAC PFM Advisor

Thirty-five participants from seventeen Caribbean countries came together for three days in Belize City (Belize) in September 2009 to discuss strategic ICT issues to better enable PFM reform and PFM systems. The theme for the regional FMIS conference organized by CARTAC/CaPFA[1] was “Leverage ICT and eGovernment infrastructure to better support national goals/objectives through the budget process.”