Minister of Finance of Uganda, Dr. Ezra Suruma Honoured as Best Finance Minister in Africa in 2008

Posted by Davina Jacobs

In the February 11 edition of the Uganda newpaper Sunday Monitor online, Tom Magumba reports that Uganda's Finance Minister Dr Ezra Suruma has been honoured as the best finance minister in Africa for the year 2008 by The Banker magazine.

The Banker, established in 1926, is a monthly UK based global intelligence financial magazine that investigates, exposes and passes expert comment on critical developments in the global banking sector

The Banker's ninth Year of the Awards were sponsored by Qatar Financial Centre. The award results from detailed questionnaires sent to banks. This year 740 banks from about 150 countries were involved.

An article in the January edition of the Banker magazine described Dr Suruma as a minister who has overseen a year of strong growth in the face of a series of economic head winds. According to the Magazine, Uganda scored highly having kept inflation under 7 per cent from 6.8 per cent in 2007. Banks remained well capitalized with an average ratio of liquid assets to deposits of 51 per cent - which saw foreign banks flock into the market - and deposits increased by 26 per cent.

At the award ceremony, Dr Suruma described this award as a surprise recognition but also a vote of confidence in the future of the economy and a reward to his staff and the government for its hard work.

He is reported as saying "I am humbled by this award coming to a former peasant in the hills of Kabale now honored as Africa’s best finance minister."

Debt Brake for Germany--Could it be too Strict?

Posted by Christian Schiller

When the Federalism Reform Commission II presented its report to the general public on June 23, 2008, it was clear that a debt brake for the federal government and the governments of the Länder (the federal states) would come, but how tight remained open (see my posting Germany: Fiscal Reform Commission II presents report of June 30, 2008). Now, on February 12, 2009, the federal government and the governments of the Länder have agreed on the specifics. It is expected that the new debt brake will be incorporated into Germany’s basic law in June 2009 and become effective on January 2011.

Agreement has been reached on a zero limit on net borrowing for the Länder and a limit of 0,35 percent of GDP for the federal government budget deficit. These are the general rules. But there will a transition period and there will be exceptions.

The US Federal Audit Practices are updated...

Posted by Abdul Khan

The United States Government Accountability Office (GAO) and the President’s Council on Integrity and Efficiency (PCIE) issued in July 2008 the latest version of its financial audit manual (FAM). The FAM sets out a methodology for financial statement audits. The latest version updates the FAM for significant changes that have occurred in auditing financial statements in the federal government since 2004, when it was previously updated. The FAM is in three volumes. Volume 1 sets out audit methodologies, volume 2 contains audit tools, and volume 3 provides check lists for accounting, reporting and disclosures.

Regulatory System for Financial Institutions are “High Risk”

The GAO announced on January 22, 2009 that the regulatory system governing U.S. financial institutions and markets is considered at “high risk” for waste, fraud, abuse, and mismanagement or in need of broad-based transformation. Depending on your inclination to view glasses as half full or half empty, you may find this announcement either comforting that the GAO has identified the problem and therefore something might be done about it, or disconcerting that so much taxpapers’ money is being thrown at such institutions.

The revisions to the FAM are primarily due to changes in professional auditing and accounting standards and laws. These include the effects on financial audits of Federal Accounting Standards Advisory Board (FASAB) accounting concepts and standards issued through May 31, 2007, e.g., on social insurance, heritage assets, and earmarked funds. Major changes include:

• consistent with OMB audit guidance, performance measures are excluded from internal control definitions;

• identification of treasury processes and reports that are being substantially revised as a result of the implementation of the government wide accounting (GWA) system and other changes;

• a new section provides guidance on auditing the Statement of Social Insurance.

Accrual Budgeting and Fiscal Policy—The Swiss Model

Posted by Abdul Khan

The Federal Government adopted the accrual basis for budgeting and financial reporting with effect from the 2007 budget.  Known as the New Accounting Model, this framework emphasizes two main objectives, also referred to as the dual perspectives of NAM: fiscal policy management at the macro level and a focus on performance of government departments and offices. Enhancing transparency of the public finances through the adoption of internationally recognized accounting concepts and standards is also stated to be an objective of the NAM.

The fiscal policy objective is focused on controlling aggregate cash expenditure. It is expressed through the debt brake rule that requires revenue and expenditure to be balanced over the business cycle. This is essentially a cash concept and the financing and cash flow statement of the budgetary central government, derived from the income statement and balance sheet in accordance with internationally accepted accounting practice, is the reporting tool used to monitor compliance with the debt brake rule.

A Window on Budget Transparency

By Jon Shields.

Beware, shy governments. You’re being watched. The less you tell your citizens about your country’s affairs, the more the Open Budget Index (OBI) will reveal to the world just what it is that you are not telling. And the OBI’s list of missing budgetary information (http://www.openbudgetindex.org/.) is detailed and sometimes shaming.

The GSD RC's Gateway Guide to Public Financial Management and Accountability

 

Posted by Michel Lazare

The Governance and Social Development Resource (GSD RC) Center has created a Public and Financial Management and Accountability gateway guide.

In its own words, the GSD RC gateway guide is "designed to point readers to the most useful, credible and up-to-date resources available on the internet in relation to public financial management and accountability (PFMA) in a development context. It was prepared by Andrew McDevitt in October 2008." The PFMA gateway guide's content is organized along the following categories:

• PFMA guidance
• Academic resources
• Thematic resources
• Selected regional resources
• Blogs
• Journals

In all these categories, the PFMA gateway lists well-known and internationally-recognized documents or sources of information. The gateway should be particularly useful to the newcomers to public financial  management issues, as well as to the practioners who would like to keep him/herself informed of key new developments in this area (see in particular the sections on PFMA guidance, blogs, and journals in that respect).

Among the three blogs quoted by the blog section features our PFM Blog. Needless to say that our team is proud of being mentioned among the most useful, credible and up-to-date resources available on the internet in relation to public financial management and accountability (PFMA) in a development context.

According to its website, the Governance and Social Development Resource Centre (GSDRC) which is funded by the UK Department for International Development (DFID), aims to help reduce poverty by informing policymaking and enhancing professional knowledge in relation to governance, conflict and social development.

Accrual Budgeting: What Does it Mean for Fiscal Discipline?

Posted by Mr. Marc Robinson

 

Is accrual budgeting a good idea? This is an highly controversial question in budgeting circles today. Many budgeting experts agree that accrual accounting for fiscal reporting is a good idea, at least for those countries which can afford the costs of running a more sophisticated accounting system. But on the question of whether the budget itself should be moved onto an accrual basis, there is absolutely no consensus. On one side of the boxing ring, there are those who think that the real benefits of accruals can only be realized by putting the budget on an accrual basis. They believe for example, that unless the full costs of programs and inputs are charged to ministry budgets, decisions about program priorities, the input mix and investment vs. maintenance will always be seriously distorted because under cash budgeting they are always based on the wrong “price signals”. Opponents of accrual budgeting, on the other hand, argue that it is unduly complex, confusing, potentially risky to fiscal discipline. They also argue that the efficiency benefits of accrual budgeting have been greatly exaggerated, and point – for example – to the abandonment by countries like Australia and the UK of the “capital charging” regimes as a recent example of the failure of the much-heralded benefits of accrual budgeting systems to become reality.

Whither the Automatic Stabilizers?

 

Posted by Richard Hughes

Before the current economic crisis rewrote the fiscal rulebook, the conventional wisdom in macroeconomic circles was that fiscal policymakers should focus on ensuring medium-term sustainability and leave ironing out the business cycle to the automatic stabilizers.  The automatic stabilizers are tax or spending items which behave in a countercyclical manner (i.e. they dampen demand when the economy is booming  and they support demand when the economy slows).  Examples include unemployment benefits and other means-tested welfare payments on the spending side and personal and corporate income taxes on the receipts side.

With the world’s major economies currently debating or implementing large discretionary fiscal stimulus packages, one could be forgiven for asking, “Whatever happened to leaving it to the automatic stabilizers?”

Confounded by Language

Posted by Holger van Eden

As in many professions, PFM practitioners consider English their lingua franca. Conceptual thinking, development of methodology, reviews of country experience, they are all predominantly produced in English. One small problem: the majority of the world population does not count English as its mother tongue. While the managers in ministries of finance around the world, with which PFM professionals mostly interact, are highly-educated, and usually proficient in English, language issues do regularly pop up in the IMF’s field missions. To abate these issues – and to be fair, because their PFM systems differ in fundamental ways -, the Fund does send out French, Spanish and Portuguese speaking missions. Obviously the language expertise of PFM experts is much less than the diversity of languages spoken around the world. The only solution perhaps is using interpreters proficient in PFM-speak (who are in short supply), and asking (and being asked) often “what do you mean exactly?”.

Lessons from Successful Fiscal Consolidations

posted by Richard Hughes

With budget discussions in advanced countries focused on how much and how quickly governments can stimulate their ailing economies, there has been little talk of the long (or even medium) term in fiscal circles lately.  But when the dust eventually settles on this period of unprecedented economic turmoil, these countries will find themselves facing the same demographic pressures that dominated the fiscal agenda before the crisis – and many will be doing so from a much weaker fiscal position.

So the fiscal policy debate will eventually return to the subject of fiscal consolidation and how to go about returning the public finances to a position of long-term sustainability.  Fortunately this time around, countries seeking guidance on how to deliver a successful and durable fiscal consolidation can look to a number of rigorous studies on the subject that came out shortly before the onset of the current crisis.  Two of the more exhaustive examinations were the OECD’s 2007 Fiscal Consolidation: Lessons from Past Experience which became a chapter in their June 2007 Economic Outlook and the European Commission’s Lessons from Successful Fiscal Consolidations which formed a section of their 2007 Public Finances in EMU report.  This posting provides a summary of their findings.

Do you know AISCCUF?

Posted by Franck Bessette

AISCCUF, created in 1994, is an association of Supreme Audit Institutions (SAI) using French as their working language (Association des Institutions Superieures de controle ayant en commun l’usage du français). The Association has 43 members, most of them countries, but regional organizations like CEMAC [1] and UEMOA [2] are also members.

Canada and Quebec enjoy separate membership, as well as countries in which French is not the official language but maintain strong historical ties with the “francophonie”, like Vietnam, Sao Tome e Principe, Rumania, Mozambique, Moldova, Guinea Bissau, Cape Verde and Bulgaria. Switzerland and Belgium are also very active members. The French Cour des comptes holds the Secretariat of the association and the Cour des comptes of Belgium serves as Treasurer.