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.”

Budget Classifications, GFS and Footnote 6

Posted by David Gentry.

Joseph Heller’s satirical novel, Catch-22, was published in 1961.  The novel is set during World War II and describes the efforts of military servicemen to survive war and the organizations established to wage it.  The title comes from a scheme by the novel’s characters to be discharged early from military duty.  According to a fictional military manual, a person could be discharged if he certifies that he is crazy, but a clause in the procedure, Catch-22, states that if he knows he is crazy then he isn’t crazy and thus is ineligible for discharge.  Catch-22 is a colorful reminder of how significant the fine print of a manual can be.

UNICEF Visits FAD to Discuss Collaboration and Best Practices in PFM and Expenditure Management

Posted by Mario Pessoa and Duncan Last.

A team from UNICEF spent a day with the Fiscal Affairs Department (FAD) of the IMF on October 8, 2009 to learn about FAD’s work in expenditure policy and public financial management and to discuss possible forms of collaboration.

Enhancing Fiscal Stabilizers -- an IMF Staff Position Note

Posted by Michel Lazare

 

The global financial crisis has, inter alia, resulted in renewed discussions on the merits of fiscal policy, be discretionary fiscal policy or automatic stabilizers. While fiscal policy can be useful, especially when the financial crisis hinders effectiveness of monetary policy, discretionary fiscal policy can present some shortcomings; it can presents implementation lags and is not automatically reversed when the economic cycle improves. In this context, letting automatic fiscal stabilizers play is tempting, but these stabilizers will only make a useful contribution to stabilizing demand, if they are sizable.

However as noted by our colleagues from the IMF's Fiscal Affairs Department, Thomas Baunsgaard and Steven A. Symansky, "stabilizers are by-products of choices regarding fiscal policy and institutions that are not focused on macroeconomic stabilization. The automatic stabilizers depend on the size of government and the cyclical responsiveness of the tax system—a rule of thumb is that the size of the stabilizers approximately equals the share of government in the economy times the output gap. In turn, the size of government and the design of the tax system reflect societal, philosophical, and political views on the role of the state, equity, and social safety nets. Increases in government size beyond a certain level may also weaken economic efficiency. An important policy question is, therefore, how the automatic stabilizers can be increased without raising the size of government."

The IMF has just published the result of their work in a new Staff Position Note (SPN) on Automatic Fiscal Stabilizers: How Can They Be Enhanced Without Increasing the Size of Government?. In this work, Baunsgaard and Symansky argue that automatic stabilizers can indeed be increased without raising the size of the government.

Incorporating Budget Programs in the Government Accounting System - The case of Namibia

Posted by Dimitar Radev [1].

Many countries do not fully benefit from all the possibilities of program budgeting in terms of budget credibility, expenditure control and public resource allocations. One common reason is that while they prepare the budget based on programs, they do not organize their accounting and expenditure control systems on a program basis. There is little value for these countries in further developing program budgeting if spending cannot be accounted for, reported, and controlled according to programs.

Namibia presents a good example of how such an issue can be successfully addressed.

Commitment Controls: IMF Fiscal Affairs Department Publishes "Technical Notes and Manuals" Number 4

Posted by Michel Lazare.

On October 6, 2009, the IMF's Fiscal Affairs Department (FAD) published the fourth issue in the new series Technical Notes and Manuals. This document, authored by our FAD colleagues Dimitar Radev and Pokar Khemani, adresses the following key issues:

• What are the objectives of commitment controls?
• What are the preconditions for successful implementation of commitment controls?
• What are the main institutional forms and operational arrangements of commitment controls?
• What are the implications for the IMF’s operational work and technical assistance?

The full text can be accessed by clicking here: Download Commitment controls_tnm0904[1] or by visiting the IMF.org website.

It is also accesible through our Technical Notes and Manuals tab above.

Do We Have Budget Credibility in Eastern Africa? Perhaps.

Posted by Davina Jacobs

 

Given the sheer number of PFM technical assistance providers in the East-African Countries (and the magnitude of related PFM reform projects), one can not help to ponder the success rate of these TA interventions—are the improvements in the PFM systems noticeable? In this short blog, I will aim to focus on an important question: “Is budget credibility (as measured by the PEFA assessment tool) improving in Uganda, Kenya and Tanzania? The short answer is mostly “YES”, but with some areas of remaining concern.

A quick comparison of recent assessments of budget credibility in Uganda, Kenya and Tanzania, based on the PEFA Performance Measurement Framework, points to largely satisfactory performance for Kenya and Tanzania, but somewhat less so in the case of Uganda.[1] The table below gives a summary of the findings of the credibility of the budget in these countries.

IMF's Fiscal Affairs Department Publishes September 2009 e-newsletter

Posted by Michel Lazare

A few days ago, in preparation for the on-going IMF-World Bank's Annual Meetings in Istanbul, the IMF's Fiscal Affairs Department published the second issue of its "FAD e-newsletter."  The full text of the FAD e-newsletter can be accessed by clicking here.

Among many others, this September 2009 issue focuses on the following key fiscal issues:

• The State of Public Finances -- Outlook and Medium-term Policies after the 2008 crisis;
• Fiscal Policy and the Crisis.

This issue also mentions the May 2009 meeting of the International Public Sector Accounting Standards Board (IPSASB) and the June 2009 meeting of the Steering Committee of the Public Expenditure Accountability (PEFA) both hosted by the IMF's Fiscal Affairs Department.

To subscribe to the FAD e-newsletter, please contact: FADsubscribe@imf.org.