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December 2007

December 31, 2007

Promoting Fiscal Discipline - The Role of Fiscal Agencies

Posted by Mario Pessoa

A recent IMF book entitled "Promoting Fiscal Discipline", edited by by Manmohan Kumar and Teresa Ter-Minassian, addresses some of the key issues involved in promoting fiscal discipline (see December 2007 blog post). In Chapter 6, Xavier Debrun, David Hauner, and Manmohan Kumar discuss the role for fiscal agencies. The creation of a fiscal authority using an institutional arrangement similar to central banks is suggested. The success with delegation of monetary policy has led some to argue that analogous fiscal agencies could play a useful role in increasing fiscal discipline. It is also examined the current role of fiscal councils in developed and developing countries.

The authors discuss the advantages of creating fiscal agencies as a measure to influence the democratic debate through a more technical, non-partisan, analysis, forecasts, and judgment of the results achieved by fiscal policy, particularly in situation there is formal numerical fiscal targets to be accomplished. It is identified two main types of institutions: independent fiscal authorities and fiscal councils. These arrangements can be utilized to reshape policymakers’ incentives in activities susceptible to “government failure” to independent agencies or to establish arrangements that raise the reputation and electoral costs of distorted policies.

December 28, 2007

Promoting Fiscal Discipline - Fiscal Responsibility Laws

Posted by Mario Pessoa

Fiscal discipline is essential to improve and sustain economic performance, maintain macroeconomic stability, and reduce vulnerabilities. Discipline is especially important if countries, industrial as well as developing, are to successfully meet the challenges, and reap the benefits, of economic and financial globalization. Lack of fiscal discipline generally stems from the injudicious use of policy discretion. The benefits of discretion are seen in terms of the ability of policymakers to respond to unexpected shocks, and in allowing elected political representatives to fulfill their mandates. But discretion can be misused, resulting in persistent deficits and pro-cyclical policies, rising debt levels, and, over time, a loss in policy credibility.

A recent IMF book entitled "Promoting Fiscal Discipline", edited by by Manmohan Kumar and Teresa Ter-Minassian, addresses some of the key issues involved in promoting fiscal discipline, with particular emphasis on output stabilization and the cyclicality of fiscal policy, and on ways to avoid procyclicality in good times. It examines the role and determinants of fiscal discipline (chapter 1), the extent, consequences, and causes of procyclicality, and “mechanisms that could help reduce procyclicality and strengthen fiscal discipline-targeting cyclically adjusted fiscal balances (chapters 2 to 4), the introduction of fiscal responsibility laws (chapter 5), and the creation of nonpartisan fiscal agencies (chapter 6).

Continue reading "Promoting Fiscal Discipline - Fiscal Responsibility Laws" »

December 26, 2007

Two-years after the "Big Bang:" an update on France's PFM Reforms

Posted by Francois Michel

In 2001, France enacted a new organic budget law, including many reforms such as program budgeting, empowerment of the line ministries, increase of parliamentary controls, extension of commitment authorizations, and introduction of multifaceted accounting reforms. The law envisioned four years to plan the reform, with full implementation planned over a decade. Two years into implementation, many lessons are emerging from implementation of these significant transformations.

On December 7, 2007, the IMF Fiscal Affairs Department (FAD) hosted a high-level seminar with senior officials from the French government to explore the intricacies of the reform, and to try to identify the challenges that still lay ahead. Speakers were Messrs. Hürstel and Mordacq, respectively Assistant Director at the Budget Directorate and General Director of State Modernization, and Mrs. Morin, Deputy Director of the Accounting Directorate.

Continue reading "Two-years after the "Big Bang:" an update on France's PFM Reforms" »

December 24, 2007

Are we asking the right questions? -- Embedding a Medium-Term Perspective in Budgeting

CABRI annual seminar brings together African Budget Directors

Cabri_logo

Posted by Ian Lienert

During December 13–15, 2007, the 4th annual seminar of the Collaborative African Budget Reform Initiative (CABRI) was held in Accra, Ghana. The conference brought together high-level budget officials from 23 CABRI member countries, including Egypt for the first time. The conference theme was “Are we asking the right questions? -- Embedding a Medium-Term Perspective in Budgeting.”  Read on to review the five sessions of this year’s conference.

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December 21, 2007

Effective PFM Technical Assistance

The IMF, donors, and beneficiary countries: a unique tri-partite partnership for an efficient and effective provision of technical assistance

Posted by Teresa Daban

Experience has shown that technical assistance is most valuable and most effective when those who supply it and those who seek it work closely. Therefore, the Fund is increasingly seeking to build strong partnerships with beneficiary countries and donors for the provision of technical assistance. These partnerships are increasingly important in light of the large number of parties interested in PFM reform, numerous providers of technical assistance, and the high transactions costs that technical assistance imposes on recipient countries. But what are the benefits of working together? And what are the costs of poor coordination? What are the lessons from existing partnerships between donors, the Fund and recipient countries? This brief post summarizes the discussion on these questions included in the recently published IMF Survey On-Line Magazine article on Mozambique.

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December 20, 2007

IMF — New Webpage on IMF Technical Assistance in Public Financial Management and Other Topics

Snap3 Posted by Michel Lazare

The IMF's external website (www.imf.org) now includes a page devoted to presenting the technical assistance (TA) provided by the Fund. This page covers FAD's TA in the public financial management and other fiscal areas. It also covers TA provided by other IMF departments on financial and banking sector issues, statistics, and legal topics.

The address of this TA page is: http://www.imf.org/external/np/exr/key/tech.htm.

December 19, 2007

IFAC World Accountancy Forum:

Government, the Accountancy Profession and the Public Trust: Current Initiatives and Future Challenges

Posted by Richard Allen

Snap2 The International Federation of Accountants’ (IFAC) held its 30th Anniversary World Accountancy Forum on December 4, 2007, in New York. The forums theme covered the accountacny prfoessional and the public and private sectors as well as civil socity. Three forum sessions covered Imperatives for Strengthening Government Accountability; Convergence of Accounting and Audit Standards; and Finding the Right Balance between Corporate Governance, Oversight and Business Growth. The second and third topics were primarily focused on private sector accounting and oversight practices; the first, however, tackled issues of enormous importance for public finance.

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December 18, 2007

World Bank Launches New Financial Management Web Site

Posted by Bill Dorotinsky

The World Bank recently launched a new website on financial management, spanning both broader public financial management and World Bank/donor financial management issues. The site includes links to the World Bank's work in very topical areas, such as Governance and Anti-corruption and donor Financial Management Harmonization.

Included on the site is a PFM Reform Database, collecting reference material on many public financial management areas from numerous sources. The database includes case studies, guidance material, reference models, and various articles.

The site also has links to products entitled FM notes, which provide some detail on specific World Bank financial management work. For example, a note on the bank's financial management work in post-conflict Afghanistan, or a risk-based audit approach in Kenya.

Well worth visiting and book-marking in your web-browser.

December 17, 2007

Rebuilding Fiscal Institutions in a Post-conflict Setting

Developing Economic Stabilization

Posted by Bill Dorotinsky

 "The reconstruction of fiscal institutions can contribute to macroeconomic stabilisation and create a conducive environment for further institution building." That's the central idea of a recent note on "Rebuilding Fiscal Institutions in Post-Conflict Settings" by Sanjeev Gupta, Senior Adviser in the IMF's Fiscal Affairs Division, published in Capacity.org (Issue 32, December 2007) -- the on-line publication of the European Centre for Development Policy Management (ECDPM), SNV Netherlands Development Organisation, and the United Nations Development Programme (UNDP). The publication, including this article, is available in English, French, and Spanish.

Continue reading "Rebuilding Fiscal Institutions in a Post-conflict Setting" »

December 14, 2007

Ongoing Developments in Performance and Accountability — seminar with the Auditor-General of Australia

Australian A-G meets with Bank and Fund staff

Posted by Jim Brumby, World Bank

The Auditor-General of Australia, Mr. Ian McPhee, discussed wide ranging issues related to public sector performance and accountability at a joint Bank-Fund seminar held at the World Bank on December 11, 2007. Mr. McPhee drew attention to the importance of openness and transparency, not only in the work of the executive but also in the execution of the work of the Australian National Audit Office (ANAO).

Continue reading "Ongoing Developments in Performance and Accountability — seminar with the Auditor-General of Australia " »

December 13, 2007

African Development Governance Strategy — AfDB Request for Comments

Have your say! African Development Bank’s draft Governance Strategic Direction for 2008-2010

Posted by Carlos Santiso, AfDB

Dear colleagues,

As you may be aware, the African Development Bank is developing Strategic Directions to guide its support to the efforts of regional member countries in 2008-2010 to strengthen governance and promote integrity in the management of public resources, with a focus on promoting good economic and financial governance at the country, sector and regional levels while paying special attention to fragile states and the management of natural resources, with a strategic deployment of its panoply of instruments. The Bank considers these pillars as key levers for pro-poor change, citizen empowerment and government accountability.

In the spirit of openness, transparency and participation, the Bank is conducting a public consultation until 15 January 2008 on the draft governance orientations paper, which was shared with the African Development Fund’s Deputies in Bamako, Mali, in September 2007. The document, in French and English, is available through the Bank’s website. Internal and external stakeholders are cordially invited to comment and submit suggestions via e-mail (send to AFDB_Governance_Str_Paper@afdb.org). The submissions can be in English or French. Your input and involvement are important, as we work to finalising these orientations and its action plan in the first half of 2008.

Have your say !

Dr. Carlos Santiso

c.santiso@afdb.org

Manager, Governance Division (OSGE 1)

African Development Bank

December 12, 2007

Automating Public Financial Management Systems for Results

Posted by Bill Dorotinsky

Over the past few decades, governments and development agencies alike have invested enormous financial and human resources into automating public financial management (PFM) systems, and often the results have been less than hoped. Governments have had difficulty implementing systems, and not achieved desired functionality. And development partners have invested large sums of money, only to find systems delayed in implementation, having limited impact, and often with real challenges to the sustainability of the systems. On December 2-4, 2007, the International Consortium of Governmental Financial Management (ICGFM) held a two-day workshop entitled "Use of Financial Management Information Systems (FMIS) to Improve Financial Management and Accountability in the Public Sector".  While the conference title and topic might cause eyes to glaze over with visions of technical issues, the conference was a useful glimpse into current thinking on PFM system automation, and full of practical advice to those concerned with PFM system automation.

Conference presentations from government authorities, international organizations, and consultants covered topics such as how FMIS fits within the over-all PFM reform agenda, planning for FMIS development, FMIS design components, IT alternatives, project management, procurement, and capacity building. The conference program and all the presentations made are available on-line at the ICGFM website under Winter Conference.

Continue reading "Automating Public Financial Management Systems for Results" »

December 10, 2007

Country PFM Systems — Monitoring Performance and Lessons for Reform

Lessons from IMF-World Bank work with HIPCs, 2001-2005

Posted by Bill Dorotinsky

One of the many developments in public financial management (PFM) over the past several years, one of the more interesting was in the field of monitoring PFM system performance over time. From 2001-2005, the IMF and World Bank developed and applied a new instrument for assessing country PFM systems and monitoring their development over time. The work was undertaken in the context of Highly-Indebted Poor Country (HIPC) debt relief, and covered 26 countries in Africa and Latin America.

The work is worth highlighting  for many reasons, not least of which are the approach used, the tool itself, and the lessons that emerged for PFM reform. This post summarizes the instrument and results of this work, especially important lessons for PFM reform, and subsequent posts will summarize more recent developments in this field.

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December 07, 2007

African Parliamentarians Discuss Ways to Promote Good Governance in the Management of Public Finance

2535901 Posted by Lubin Doe

The training center known as the Joint Africa Institute (JAI), created by the World Bank, the IMF and the African Development Bank (ADB), organized a five-day seminar in Tunis on the “Role of Parliamentarians in Promoting Good Public Financial Management (PFM) and Accountability.”

The seminar regrouped 26 legislators and officials from 8 English-speaking African countries (Ethiopia, Ghana, Liberia, Malawi, Mauritius, Rwanda, Sudan, Tanzania and Uganda). The team of presenters included Messrs Mitchell O’Brien (World Bank), Lubin Doe (IMF), Per Eldar Sovik (ADB), Augustine Ruzindana (African Parliamentarians Network Against Corruption), Adams Fusheni (Canada Parliamentary Center) and Niall Johnston (parliamentary consultant).

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December 05, 2007

Germany: Ministry of Finance's Task Force Recommends Introduction of Performance Budgeting and Accrual Accounting

Posted by Michel Lazare

A few days ago, our FAD colleague and PFM Blog author Marc Robinson published a short article in IMFSurvey Magazine titled "Major Reforms for German Budget System." Here is a summary of the key points; the full text of the article is accessible by clicking here.

The German Ministry of Finance's Budget and Accounting Reform Task Force, who was assisted by staff of FAD, recently recommended "the introduction of product budgets--often known elsewhere as programs. The intention is to focus greater attention in the budget formulation stage on choices about how much money is allocated to" various outputs.

"Under the task force's proposals, the product budgets would not in the first instance be used for parliamentary budget appropriations. The idea is that they would initially be used [...] in formulating the budget. The logical next step would, however, be to shift the annual budget law also onto programmatic basis."

Continue reading "Germany: Ministry of Finance's Task Force Recommends Introduction of Performance Budgeting and Accrual Accounting" »

December 04, 2007

OECD Celebrates 10th Anniversary of its Anti-Bribery Convention

Posted by Luc Leruth

On November 21, 2007 in Rome, the OECD celebrated the 10th anniversary of its "Convention on Combating Bribery of Foreign Public Officials in International Business Transactions."

The meeting was chaired by Secretary General Angel Gurria and opened by Mr. Romano Prodi, the Italian Prime Minister. It ended with the unanimous adoption by all 37 states party to the convention of a statement reaffirming their commitment to fight bribery of foreign public officials in international business transactions.  Download Statement.pdf

For details on the 10th Anniversary Convention, please click here.

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December 03, 2007

Tales of the Unexpected: Public Financial Management Reform in Difficult Environments – CAPE conference, ODI, London

Snap2 Posted by Ian Lienert

The 4th annual conference of the Centre for Aid and Public Expenditure (CAPE) was held at the Overseas Development Institute (ODI) London during November 14-15. The conference theme was “Tales of the Unexpected: Public Financial Management Reform in Difficult Environments” in which participants explored the interface between the technical dimensions of public financial management (PFM) reform and the wider research and policy agenda on governance and the political economy of reform.

Continue reading "Tales of the Unexpected: Public Financial Management Reform in Difficult Environments – CAPE conference, ODI, London" »

December 02, 2007

Motherhood, Apple Pie, and Good Governance

Posted by Michel Lazare

Like motherhood and apple pie, we all love good governance. Right?

Indeed, finding somebody --or an institution-- who does not claim to support good governance might be challenging. But defining good governance is equally challenging.

An illustration of this difficulty was given in a December 3, 2007 PFM Blog post, where our colleague Ian Lienert wrote:

A framework for relating the stages of PFM reform with governance categories, ranging from States that are “failing or collapsed” through to “institutionalized and competitive”, was presented. However, it was difficult to pin down the links between PFM reform frameworks and governance, in part because the concepts of “governance” and “political economy” are multi-dimensional and ill-defined.

Continue reading "Motherhood, Apple Pie, and Good Governance" »

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