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March 2008

March 10, 2008

Extrabudgetary Funds -- Removing the 'Extra' and Minimizing the Risks

Posted by Bill Dorotinsky

Extra-budgetary funds (EBFs) are a large and persistent issue in developed and developing countries. An October 26, 2007, blog post highlighted the magnitude of such funds, offered a taxonomy of EBFs, and suggested some questions for evaluating them. This post offers a similar perspective, drawing on a draft World Bank policy note prepared for the Polish authorities in 2001.

Public finance professionals generally oppose creation or continuation of 'extra-budgetary funds' because they undermine comprehensive budgeting, fragment financial reporting and cash management, and frequently there are transparency, oversight, and accountability concerns for the EBF's directly. But there are principles that, if followed, can minimize the risks from EBF’s, effectively removing their ‘extra-budgetary’ character.

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March 07, 2008

Secrets of Public Accounting in Brazil are Revealed!!!

(unfortunately only in Portuguese)

Posted by Mario Pessoa

If you are interested in understanding how the public accounting system in Brazil works and what are the concepts behind the government financial information system (SIAFI), you have a good guide through the book Public Accounting in Brazilian Central Government (“Contabilidade Publica no Governo Federal” in Portuguese). (Click the link to access the book and the spreadsheet exercises.)

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March 05, 2008

The Pile of Books on the “Resource Curse” Just Keep Growing !!!

So, why we should read “Escaping the Resource Curse”?

Posted by Teresa Dabán

Resource_curse Devising policies and institutions for the prevention of the “resource curse”—a term used to describe the surprisingly negative outcomes of resource-rich countries—has been the object of an extensive literature. One of the most recent contributions is Escaping the Resource Curse, a book edited by Macartan Humphreys, Jeffrey D. Sachs, and Joseph E. Stiglitz under the auspices of the Initiative for Policy Dialogue at the University of Columbia. The book reviews the main challenges posed by the management of resource revenues and proposes some interesting ways to address them.

To strengthen resource revenue management, for instance, the book proposes creating innovative budgetary  bodies and management arrangements that would operate in “parallel” to the existing ones. This post definitely recommends reading Escaping the Resource Curse, but argues that the benefits of creating such additional bodies and arrangements need to be carefully weighed against the risk of undermining and alienating existing budgetary institutions and discouraging reform efforts, especially in low-income countries, weakening governance and fragmenting already weak public finance systems.

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March 04, 2008

The Citizen's Guide to the 2007 Financial Report of the United States Government

Frsummary20071_1 Posted by Michel Lazare

On February 14, 2008, the US Treasury Department and the Office of Management and Budget (OMB) released a short report called The Government’s Financial Health:  A Citizen’s Guide to the 2007 Financial Report of the United States Government. The Guide is a short and reader-friendly summary of the key messages contained in the 2007 Financial report of the United States Government, i.e., the annual report on the financial accounts as well as an analysis of fiscal sustainability in the absence of policy changes.

For readers who would not be familiar with the content of the Financial Report, the tone of the Citizen's Guide may be seen as surprisingly candid for an official document. For instance, the title of the reverse of the cover page reads: "The Government Is On An Unsustainable Fiscal Path." the same page indicates that, in the absence of policy changes, by 2080 "total government cost will be more than three times revenue." A good example of fiscal transparency at work.

Similar efforts to enhance transparency and create reader-friendly summary reports of key fiscal messages exist in a number of developed countries. Other undertakings by  Non-Governmental Organizations, like the Open Budget Initiative , also deserve to be noted in this area.

 

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March 03, 2008

Capital Budgeting and Public Financial Management -- Part II

A primer on systems and issues: Capital Budgeting Process

Posted by Bill Dorotinsky

The previous post of February 20,2008, discussed capital budgeting in the context of the over-all PFM system, and addressed defining capital and measuring some aspects of efficiency and effectiveness. This post focuses on the capital budgeting process itself, again drawing directly from a 2006 World Bank Public Expenditure Review for Ukraine.

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