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May 2010

May 31, 2010

Job Offers: The World Bank Has Openings for Two Financial Management (FM) Positions

Posted by T.K. Balakrishnan, Manager, Financial Management, Latin America and Caribbean Region, World Bank 

 The World Bank has openings for the following Financial Management (FM) positions:
(i) Senior Financial Management Specialist based in Washington DC; and
(ii) Financial Management Specialist based in Port-au-Prince, Haiti.  

Job descriptions and qualifications needed are detailed in the job announcements, posted on the World Bank's website (click on these links):

1. Senior Financial Management Specialist based in Washington DC (Job #101168)

2. Financial Management Specialist based in Port-au-Prince, Haiti (Job #101172)

The Closing Date is June 13, 2010.


For convenience, we provide the PFM Blog readers with two excerpts from the Job Announcement for Job # 101168 (Senior Financial Management Specialist).

Continue reading "Job Offers: The World Bank Has Openings for Two Financial Management (FM) Positions" »

May 28, 2010

Webpage Provides Country Profile Based on Financial Codes and Standards

Posted by Mario Pessoa 

Finding well-focused analytical information on countries’ finances in one single place has been a permanent challenge. To address this weakness the Financial Standards Foundation (FSF) created the eStandardsForum webpage. On this webpage you can access a well-organized country profile encompassing country-specific standard compliance index on twelve relevant international financial standards and codes (see list below). Each country page provides not only a summary of the assessments but also a standardized assessment index summarizing the results. [1]

Despite the potential shortcomings resulting from the conversion of qualitative assessments to quantitative ones, the FSF’s efforts to extract key information and to summarize it in a reader-friendly and appealing presentation, particularly for the user not well familiarized with public financial and banking jargon, are commendable.

According to the FSF composite index, the countries with better financial systems would be: The Netherlands, Italy, Denmark, Australia, UK, France, Norway, Portugal, Estonia, and Germany. Some of these countries are often recognized as leaders in these areas, but others may come as a surprise to our readers. A closer look at the profiles shows that higher ranking countries are the ones that embarked on a wide range of reforms over the last decade.

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May 26, 2010

Prioritizing PFM Reforms: A Robust and Functioning Accounting and Reporting System is a Prerequisite

Posted by Sanjay Vani, Lead Financial Management Specialist, World Bank 

Much has been written about prioritizing and sequencing PFM Reforms, including Allen Schick’s often-quoted 1998 article, Why Most Developing Countries Should Not Try New Zealand's Reforms.  While working on the OECD-DAC Report on the Use of Country Systems in PFM a year or two ago, I was struck by how much more we know about what does not work than about what does work. For example, almost all PFM professionals would agree that introducing a medium-term budget formulation or performance budgeting in an environment of poor budget execution is not likely to be effective; and attempting performance audit without agreed performance benchmarks and proper systems to record and track performance is equally unlikely to be effective.

Here I would like to develop a hypothesis that, I am convinced, deserves serious attention from the community of PFM professionals. The hypothesis is this:  NO significant PFM reforms are likely to succeed unless a robust and functioning accounting and reporting system is in place.  In other words, a robust and functioning accounting and reporting system is a prerequisite to other PFM reforms.

Continue reading "Prioritizing PFM Reforms: A Robust and Functioning Accounting and Reporting System is a Prerequisite " »

May 24, 2010

Revenue and Spending Policies for Fiscal Consolidation

Posted by Anita Tuladhar 

The past year has required extraordinary global effort by fiscal and monetary policies to support economic activity in the wake of the financial crisis. A key challenge now facing the world economy is to ensure that economic growth resumes in a strong, sustained, and balanced way. As the recovery becomes entrenched, policymakers will need to start reducing public debt ratios to more prudent levels. This is a daunting challenge: in the advanced economies, restoring debt from post-crisis levels to an indicative 60 percent of GDP by 2030 would require on average an adjustment of almost 9 percent of GDP over the next ten years and this does not include measures needed to offset higher spending on health and pensions, which is projected at about 4-5 percentage points of GDP over the next 20 years. A recent policy paper from the Fiscal Affairs Department (FAD) examined options for revenue and spending measures that could be considered in the advanced and emerging economies to achieve this fiscal adjustment. This paper complements earlier efforts from FAD that provided assessments of the size and composition of the needed fiscal adjustment.

Fiscal consolidations of this magnitude are not unprecedented, but are obviously not common, and not easy. This will, however, be the first time that most advanced economies will have to undertake a simultaneous adjustment of such a large magnitude. Moreover, while past adjustments have benefited from the favorable evolution of interest and exchange rates and strong export growth, these conditions may not prevail now. It is thus imperative that consolidation is achieved in a way that does not penalize growth potential: spending cuts should be consistent with the provision of efficient public services; tax measures should improve economic incentives.

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May 21, 2010

Taxpayer Audits: Development of Effective Audit Plans & Use of Indirect Methods

 

Posted by Edmund Biber 1/

Tnm1005[1]  Tnm1003[1] 
 
 

The IMF 's Fiscal Affairs Department has recently published two issues in the Technical Notes and Manuals (TNM) series, both on taxpayer audits: the first one on the Development of Effective Audit Plans and the second on the Use of Indirect Methods.

The key points in these two TNMs are as follows:

 

Taxpayer Audit – Development of Effective Audit Plans

Can audits encourage taxpayer compliance, or do they merely verify compliance and provide a means of correcting tax assessments?


TNM/10/03 provides guidance on how tax administrations can plan their audit programs to have a significant impact across the community rather than only affecting the taxpayers subjected to audit. Developing audit plans at strategic, operational, and case levels can provide administrations with valuable opportunities to go beyond detecting and correcting non-compliance, to actually improving the overall management of the tax system, including addressing deficiencies in the law and influencing future compliance.


The technical note provides a description of what factors need to be considered in planning an effective audit program as well as a “how to” guide using a step by step explanation of the processes involved in developing tiered and cascading strategic, operational, and case plans.

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May 19, 2010

Maldives: Public Expenditure and Financial Accountability (PEFA) Assessment Report Published

Posted by Tej Prakash 

The PEFA assessment report for the Maldivesthe first PEFA assessment led by the IMFhas just been published, together with a PFM reform action plan.

In late 2008, the government of Maldives asked FAD to help carry out a PEFA assessment. This request should be seen in the overall economic and financial context of the Maldives’ economy at that time. While the economy continued to grow after the 2004 Tsunami, so did domestically financed expenditure, but at a much more rapid pace. By 2008, spending growth had resulted in a significant fiscal imbalance. To continue accommodating the desirable developmental and investment expenditure, there was a need not only to scale back current spending, but also to make overall spending more efficient. At this time, FAD was already providing technical assistance to the Maldives on integrated financial information systems. Other donors such as the World Bank (WB) and Asian Development Bank (ADB)were providing assistance in different areas. Through the PEFA assessment, and a reform action plan based on its findings, the authorities expected to move over time to a more robust PFM system.  

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May 17, 2010

Crisis – An Opportunity for PFM Reforms?

Posted by Duncan Last 

The current crisis has exposed PFM weaknesses in both advanced and developing countries, and has put even the strongest budget system to test. The tighter fiscal environment forces Ministries of Finance (MoFs) to look more closely at, on the one hand, how efficiently revenues are collected, and, on the other hand, how well those resources are prioritized, allocated, and spent. The MoF’s ability to respond to these pressures depends on the quality and timeliness of information at their disposal and responsiveness of the underlying PFM systems. However, particularly (though not exclusively) in low-income countries, all too often the information needed to analyze current spending is neither timely nor adequate, frustrating the MoF’s ability to make critical fiscal decisions in a crisis. Its ability to control and tighten spending, even if the information is available, may be further hampered by ineffective processes and procedures, bureaucratic rigidities, and bad practices. The consequence is often loss of macro-fiscal control, deterioration of budget credibility, recourse to unsustainable borrowing, and build-up of arrears.

For many low-income countries, the current crisis is a largely external event that buffeted their fragile, open economies through second-round effects associated with contraction in advanced country demand for their raw materials, be they natural resources or agricultural products. Many of these countries had been counting on the revenues generated as a result of the strong demand from the global economy over the last decade to fund much needed development spending. Now, a growing number are faced with serious fiscal challenges and a need to cut back spending. While political pressure may assure countries of some compensatory funding from donors and multi-lateral institutions, the fiscal impact of the crisis on OECD countries (where debt ratios are set to rise to record levels as a result of stimulus spending) may see domestic or regional pressures take precedence over a further increase in development assistance.

Continue reading "Crisis – An Opportunity for PFM Reforms?" »

May 14, 2010

IMF Fiscal Monitor: Navigating the Fiscal Challenges Ahead

Posted by Michel Lazare  

Fm1001[1]_Page_01

Today, the IMF's Fiscal Affairs Department published the third issue of the "Fiscal Monitor" -- a twice yearly publication launched in July 2009.

The Fiscal Monitor's goal is to provide enhanced coverage of critical fiscal issues from a global and cross-country perspective. It is aimed at government and central bank policymakers, opinion leaders in business and economics journalism, researchers, and financial sector analysts and decision makers.

The format of this current issue has been changed to provide a more comprehensive analysis of fiscal developments and policies in advanced, emerging, and low-income economies.  From now on, the Fiscal Monitor will be part of the IMF's series of World Economic and Financial Surveys, along with the World Economic Outlook and the Global Financial Stability Report. This change signals the importance that the Fund gives to timely, comprehensive, and high-quality cross-country analysis of fiscal trends and issues.

Continue reading "IMF Fiscal Monitor: Navigating the Fiscal Challenges Ahead" »

May 12, 2010

In Another Important Milestone on the Road to Recovery, Liberia Enacts a New Legal Framework for Public Financial Management

by Duncan Last 

In August 2009 the Fifty-Second Legislature of the Republic of Liberia took the important step of enacting a new Public Finance Management (PFM) Act, filling a long-standing legal framework vacuum. The new PFM Act, developed with assistance from the IMF’s Fiscal Affairs Department funded through the Japan Trust Fund, sets out the foundations for credibility, accountability and transparency in budgetary management to guide and regulate public finances in Liberia in the years ahead. The drafting of the new legal framework carefully balances Liberia’s budgetary management traditions (which broadly follows the USA model), as well as its existing institutions and public service constraints, with the PFM reforms that the Liberian Ministry of Finance is introducing or planning to introduce over the next decade. The new legal framework allows the Government to progress at a pace commensurate with its staff capacities, yet sets out key requirements around which capacity building efforts and PFM reform efforts can be effectively mobilized.

Continue reading "In Another Important Milestone on the Road to Recovery, Liberia Enacts a New Legal Framework for Public Financial Management" »

May 10, 2010

IMF Fiscal Affairs e-Newsletter: April 2010

Click here to view the latest FAD e-newsletter!

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.

UK Election Special

by Richard Hughes

Last Thursday’s general election in the UK took place against the background of the UK’s largest fiscal deficit since the Second World War. The result was a “hung Parliament” in which none of the country’s three major political parties won a majority of seats in the House of Commons. The weekend has seen marathon meetings between the David Cameron’s Conservatives (or “Tories”) , Nick Clegg’s Liberal Democrats (or “Lib Dems”), and Gordon Brown’s Labour Party, but there are no decisions as yet about who will be forming a government. So what do the various political combinations and permutations mean for how the UK will go about reducing what is forecast to be largest fiscal deficit in the EU this year?

Continue reading "UK Election Special" »

May 07, 2010

Daniel Kaufmann (Brookings): Can Corruption Adversely Affect Public Finances in Industrialized Countries?

Posted by Michel Lazare

Kaufmannd_portrait

PFM Blog readers will remember that we published two previous posts on Daniel Kaufmann's blogs. The first one when Daniel created his own blog (Warm Welcome to "The Kaufmann Governance Post") and the second when he started posting on the Work Bank's blog Governance Matters (Another Warm Welcome to Daniel Kaufmann Who Does It Again).

Nowadays, while keeping his personal blog quite active, Daniel is a Senior Fellow at the Brookings where he does research and publishes on governance and anticorruption.

One of latest articles is a well-crafted piece titled: Can Corruption Adversely Affect Public Finances in Industrialized Countries? in which Daniel "departing from traditional “developing country” focused studies of corruption, [asks] whether corruption may adversely affect public finances in industrialized countries. With recent data, [he explores] the link between corruption (and other governance variables) and the public budget deficit of industrialized countries.

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Consultant Job Offer: UNDP Looking for Advisor to the Ministry of Finance of Moldova

Undp_logo 

Background

The overall objective of the project is to provide high level policy advice to the Republic of Moldova in the overall implementation of the Government Programme “European Integration: Freedom, Democracy, Welfare” 2009-2013, with particular focus on the EU integration agenda, economic recovery and reforms. The support will be given through to the main institutions including the Prime Minister’s Office (focusing on Public Administration Reform & Decentralization and Communications), the Ministries of Justice, Economy, Interior, Agriculture, Finance, the Tax Inspectorate and the Public Procurement Agency, and support them in their efforts of designing, implementing and monitoring relevant policies and measures. For this purpose the mission will deploy 9 advisers in order to realize the project’s main objectives.

Duties and Responsibilities

General scope of work

The Adviser to the Ministry of Finance will act within the Mission’s overall framework to support the Ministry’s leadership to develop the public budget management system according to the EU standards. The adviser will advice and guide the leadership of the Ministry in the negotiation of Moldova’s Association Agreement with EU, modernization of the budget processes and management based on EU standards and principles.

The Adviser will review relevant strategic policy documents, conduct needs assessments and produce recommendations at the initial stage. Guidance, policy papers, and recommendations will be provided to the Ministry of Finance for the purpose of designing, implementing and monitoring proper policies for the implementation of the Government Program, its Stabilization and Economic Recovery Plan, negotiation of Moldova’ Association Agreement with EU. The Adviser will report primarily to the Minister of Finance, with reporting line to UNDP, and will coordinate plans and activities with the Chief Technical Adviser (CTA). The Adviser will be the lead sector expert and coordinate short term and local experts’ work with the CTA and the Team in each particular component. The Adviser will also provide strategic recommendations on ad-hoc basis, participate in policy debates, keep abreast of developments and inform Chief Technical Adviser on trends, problems and needs, as well as response strategies.

Continue reading "Consultant Job Offer: UNDP Looking for Advisor to the Ministry of Finance of Moldova" »

May 05, 2010

A Sound Conceptual Design is Critical to the Success of a GFMIS – A New FAD Technical Note and Manual

Posted by Abdul Khan

TNM1007_Page_01
Projects to implement government financial management information systems (GFMIS) often involve significant resources. However, international experience suggests that these projects are not always regarded as great success stories.

In a recent Technical Note and Manual[1] of the IMF Fiscal Affairs Department (FAD), Mario Pessoa and I suggest that the lack of a common and clear understanding of the conceptual parameters of the desired system is one of the main reasons why GFMIS projects are not always successful. We argue that a well-crafted conceptual design is an essential element of a successful GFMIS project, regardless of whether an off-the-shelf or a custom-made software solution is to be implemented. The paper stresses, however, that a conceptual design alone cannot guarantee the success of a GFMIS project—other important factors include sound project and change management, integration of relevant PFM reforms, and adequate resources.

Continue reading "A Sound Conceptual Design is Critical to the Success of a GFMIS – A New FAD Technical Note and Manual" »

May 03, 2010

Au Revoir Monsieur Lienert!

Posted by Holger van Eden 

One of the PFM Blog’s most prolific writers and one of the Fiscal Affairs Department’s (FAD) most-seasoned PFM experts, Ian Lienert, is taking early retirement and leaving the IMF today. Ian has had a long and fruitful career at the Fund, having worked earlier at the New Zealand Treasury and the OECD, before joining the Fund in 1989. He joined the Public Expenditure Management Division, as it was known then, in 1998. Ian has been a source of knowledge, advice, review and mentoring for his colleagues on a wide variety of PFM issues. His edits to draft papers were often dreaded for their detailed and intense scrutiny! Ian took no prisoners irrespective of whose work he was commenting on, but always ended on a constructive note for the author in question. Externally he is probably most well-known for his many publications on budget law and the role of the legislature in the budget process, including his reference work The Legal Framework for Budget Systems – An International Comparison, written with Moo-Kyung Jung.

As most of his colleagues know, Ian is quite the Francophile – much more than most Frenchmen – thanks to his eight years at the OECD in Paris. He will be refocusing his life on living in the South-West of France (near Toulouse) and working there with his wife Annie for Christian charities. Maybe, and only maybe, he will have time for some consultancy down the road. From the PFM Blog and all the colleagues here in the PFM divisions we wish Ian and his family all the very best, and we hope to continue to receive postings from him from time to time. For those who have missed them, we publish below Ian’s top ten, best read blog posts over the past few years.

Continue reading "Au Revoir Monsieur Lienert!" »

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