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October 2011

October 31, 2011

The PFM Board Video Sessions – A Spin-off of the PFM Board

By Simon Groom, PFM Board partner

Pfm board1
The PFM Board partners are always looking for new applications to improve knowledge sharing among the community. The PFM Board video sessions are the first spin-off from our efforts, taking advantage of IT tools already available, in this case, the functionality of the YouTube channels.

Videos are grouped in playlists and are meant for public sector managers in developing and emerging countries, as well as PFM practitioners at large. As we live in a fast moving world, videos are less than 10 minutes long and often much shorter. Each video focuses closely on a single PFM topic or concept: it presents a specific angle on the topic - a snapshot that viewers can then explore in more depth. Links to PFM Board posts and/or web resources are provided for viewers to do their own follow-up research. 

All PFM practitioners are welcome to upload their own videos for others to share (how-to guide is here and here). Choose the playlist and shoot your video. You can also create your own playlist, with multiple video uploads.

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PEMPAL Treasury Community of Practice Workshop on Use of Information Technologies in Treasury Systems

Posted by Deanna Aubrey, PEMPAL Community Facilitator

On September 27-29, 2011, PEMPAL[1] Treasury Community of Practice (TCOP) held a workshop in Astana, Kazakhstan. Astana provided a spectacular backdrop for the meeting with the modern capital, only established some 14 years ago, preparing for events to celebrate Kazakhstan’s 20 years of independence.

Most countries participating in the TCOP from the Europe and Central Asia (ECA) region are in the process of modernizing or developing their Treasury information systems and many of them are either considering or already moving towards expanding system functionality and creating integrated Financial Management Information Systems (FMIS).  Given the importance of this theme to TCOP PEMPAL members, PEMPAL already organized previous meetings, including on the use of digital signatures in treasury operations, and more are planned for the future. The Astana meeting focused on the development and application of FMIS solutions, as well as the effective utilization of such web-based platforms for the public financial management needs of decentralized budget institutions and their spending units, in support of various reforms such as improvements in accounting and reporting and strengthening internal control frameworks.

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October 28, 2011

République Démocratique du Congo: Conférence sur les Reformes Budgétaires

Affiché par Ian Lienert

Une conférence sur les réformes budgétaires en République Démocratique du Congo (RDC) a été organisée les 3 et 4 octobre 2011 à Kinshasa, par le Comité d’Orientation de la Réforme des Finances Publiques (COREF).[1]  Plus de 150 personnes étaient présentes, avec une participation importante des ministres provinciaux du budget et des finances, ainsi qu’une représentation des ministères centraux (Plan, Budget et Finances) et sectoriels et de l’Assemblée nationale et du Sénat. Le Ministre du Budget a ouvert la conférence.

A l’issue des discussions, les participants ont validé l’idée d’une approche priorisée des  réformes des finances publiques. La première priorité est de restaurer la crédibilité de la loi des finances. Pour les représentants des provinces, une grande importance est attachée à la mise en œuvre de la Constitution de 2006, notamment en ce qui concerne l’allocation aux provinces de 40 % des recettes à caractère national.

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Democratic Republic of the Congo: Conference on Fiscal Reform

Posted by Ian Lienert

A conference on budget reforms in the Democratic Republic of the Congo (DRC) was organized in Kinshasa on October 3 and 4, 2011 by the Committee for Public Finance Reform(COREF).[1] Over 150 persons took part, including provincial ministers of budget or finance, and representatives of the central ministries (Planning, Budget and Finance) and sectoral ministries, as well as the National Assembly and the Senate. The (national) Minister of Budget opened the conference.

At the conclusion of the discussions, the participants validated a prioritized approach to public finance reform. The first priority is to restore the credibility of the annual budget law. The provincial representatives emphasized the need to implement the 2006 Constitution, particularly the provisions on the allocation of 40 percent of national revenues to the provinces.

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October 26, 2011

Whole of Government Accounts – What’s the Big Deal, Robin!

Posted by Andy Wynne

In a recent blog post (Whole of Government Accounts, Batman!), Richard Hughes declares that the  publication of what are called Whole of Government Accounts “represents a major milestone in UK fiscal reporting and public sector accounting practice in general”. The article suggests that this is the Olympics of accounting and the UK has just set new world records in the consolidation and accrual events. The UK seems to have “leapfrogged from the bottom to the top of the government accounting class”.

There is, however, no reason for the UK to be self-congratulatory. In my view government accountants should provide useful information on government finances to facilitate the budget process and provide accountability for the use of public resources; this information needs to be produced as efficiently as possible and presented in line with the budget presentation. On both counts the Whole of Government Accounts exercise scores rather badly. What useful additional information is really provided by this consolidation exercise and from the accrual accounting approach itself? Importantly, what are the costs involved of this “whole of government” operation.

Continue reading "Whole of Government Accounts – What’s the Big Deal, Robin!" »

October 24, 2011

Beyond History and Numbers -- IPSASB Promotes Reporting on Long-term Fiscal Sustainability and Service Performance

Posted by Abdul Khan, IMF Fiscal Affairs Department

Public sector financial statements have traditionally been about reporting historical information, usually in financial terms e.g., showing how much tax revenue was received or what subsidy was paid out during a (past) reporting period. Although advanced countries preparing financial statements on an accrual basis provide more information in their financial statements (e.g., about assets and liabilities), the focus is still on the past and the information is still predominantly financial.

The International Public Sector Accounting Standards Board (IPSASB) would like to change all that. IPSASB is of the view that the taxpayers and other users of the financial statements need information that go beyond history and numbers. In particular, the IPSASB argues that:

  • governments need to report information about its future service delivery objectives, the likely future resource needs and the likely sources of funding. Such reporting is necessary for accountability and will facilitate decision making. In particular, this information will facilitate the assessment of the capacity of the government to meet its service delivery and financial commitments in the future; and
  • governments need to report information—financial and non-financial— about service delivery activities and achievements or outcomes. Such reporting is necessary for governments to discharge its obligation to be accountable and will facilitate the assessment of the economy, efficiency, and effectiveness of government operations.

Continue reading "Beyond History and Numbers -- IPSASB Promotes Reporting on Long-term Fiscal Sustainability and Service Performance" »

October 21, 2011

IMF Opens Center to Help Capacity-Building in Southern Africa, AFRITAC South

Aiming to further help African countries build capacity to design and implement reforms that support poverty reduction, the Fund has opened a new southern African technical assistance center in Mauritius.

Previously published on the IMF Digest Newsletter

The IMF’s Africa Regional Technical Assistance Center South, which formally opened October 17, is the eighth center set up by the IMF around the world to transfer economic skills and best practices and to train officials—thereby building countries’ policymaking capacity.

IMF Deputy Managing Director Min Zhu, speaking in Port Louis at the opening of the center, stressed the importance of capacity building on a growing continent such as Africa. “Capacity building is critical for effective fiscal institutions, sound financial sectors, and robust macroeconomic statistics, which eventually all contribute to economic performance,” Zhu said.

Zhu stated that strong institutions are critical for sound macroeconomic management and ultimately for economic development and inclusive growth. “Strong institutions are run by well trained individuals with the right skills and appropriate authority. Adequate capacity building thus promotes strong institutions with capable human resources, empowered with relevant know-how,” Zhu said.

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October 19, 2011

The Chart of Accounts is a Critical Element of the Public Financial Management Framework – A New FAD Technical Note and Manual

Posted by Sailendra Pattanayak and Julie Cooper

The term “chart of accounts” is one of those references commonly used when one talks about accounting and reporting systems. Although the term is well known in the private sector, governments have only relatively recently started to comprehensively define it, particularly in the context of developing and implementing financial management information systems.

The concept of “chart of accounts” is still considered—in particular, by non-accountants—obscure, if not esoteric. Searching dictionaries or even accounting texts does not yield meaningful information. A search on the Internet for its definition results in thousands of matches and leaves the reader confused. The results from an internet search mostly include samples of charts of accounts from various industries, companies or organizations and accounting systems, but not much information on a chart of accounts for government purposes. These sample charts of accounts usually only provide information on the economic classification which is only one of the many classifications needed for effective financial management in government.

In a recent Technical Note and Manual of the IMF Fiscal Affairs Department (FAD), we have attempted to demystify the chart of accounts for government systems. We define the concept of chart of accounts and shed light on its role in the public financial management framework, including budget preparation, execution and reporting, and the key principles and factors that need to be taken into consideration in designing a chart of accounts for government. The note also discusses the specific issues associated with budgetary and financial accounting in governments and their impact on the chart of accounts. The note stresses that the chart of accounts, although it appears to be just concerned with classifying and recording financial transactions, is critical for effective budget management. The note concludes by drawing some considerations on developing and implementing a chart of accounts and its relations with a government financial management information system.

Given its critical role, the development of a chart of accounts should receive adequate attention and be a central element of any public financial management reform agenda. At the same time, it should address the specificities and various stakeholder needs in a given public financial management framework.

Download TNM_2011-03_web

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.

October 17, 2011

Empowering Local Government in the Philippines Through Fiscal Decentralization

Posted by Chita Marzan

Today, some countries are still hesitant about implementing fiscal decentralization. This may be due to limited resources and inadequate PFM capacity at the local government level. Decentralization is not easy and the gestation period is indeed quite long. However, as developed countries have proven, the long wait and patience eventually pays off. What is required to make fiscal decentralization a success in developing countries?  I hope that this article will provide some insights in how low and lower middle income countries like the Philippines can implement fiscal decentralization.

It was a milestone in the history of governance in the Philippines when the first Local Government Code was passed in 1991. This law recognized that the essence of decentralization is to support local government units (LGUs)[1] in becoming more self-reliant, by giving them more powers and full autonomy in the delivery of basic services such as health, education, agriculture, environment and natural resources, local public works, etc. This Code also provided a new scheme of revenue and expenditure assignments which made the decentralization process possible.

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October 14, 2011

A Spotlight on the IMF’s Technical Assistance

By Nemat Shafik and previously published on iMFdirect

Of the three main pillars of the IMF’s work, technical assistance has been a sort of middle child; it doesn’t get the attention of the oldest and youngest children, yet in many ways is the glue that holds the family together.

The other two pillars are well known: we lend money to countries in times of need and crisis, and conduct annual check-ups of their economies and financial systems, known as surveillance. 

As countries around the world cope with the global economic crisis, the IMF’s technical assistance is a vital part of the work that we do to help countries prevent, prepare for and resolve crises.  Technical assistance also helps countries master the form and details to govern themselves in an effective and legitimate way.

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October 13, 2011

IFAC Urges G-20 to Pursue Coordinated, Long-Term Approaches to Global Economic Stability and Fiscal Sustainability

International Federation of Accountants Calls for Institutional Change in Public Sector Financial Management, Adoption and Implementation of Global Standards, Support for Integrated Reporting

(New York/October 11, 2011) – In a letter submitted this week, the International Federation of Accountants (IFAC), the global organization for the accountancy profession with members and associates in 125 countries, urged the G-20 leaders at their November 3-4, 2011 meeting in Cannes, France, to focus on three long-term initiatives aimed at promoting global economic stability and greater fiscal sustainability: 1) public sector financial reporting and management reforms; 2) global regulatory convergence; and 3) development of integrated reporting.

Address Public Sector Debt Problems: Encourage Review of Institutional Changes in Public Sector Financial Management and Adoption of Accrual-Based Accounting

In order to address the sovereign debt crisis, IFAC recommends that the G-20 commission the Financial Stability Board (FSB) to consider the institutional changes that are needed in public sector financial management to protect investors in government bonds, as well as the public. Further, the G-20 should actively encourage the adoption of accrual-based accounting and budgeting by governments and public sector institutions, which will promote greater transparency and accountability in public sector finances and allow for monitoring of government debt and liabilities for their true economic implications. IFAC also encourages the adoption and implementation of International Public Sector Accounting Standards (IPSASs).

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Job Offer: IDI Seeking Consultants for SAI Capacity Development (Framework Agreement)

The IDI is looking for several consultants experienced in providing capacity development to Supreme Audit Institutions. Candidates should have experience of working with and for SAIs, and implementing SAI capacity development initiatives in a variety of developing countries. A number of consultants will be awarded a place on the framework agreement, to provide IDI with access to consultants with working level proficiency across the INTOSAI languages (Arabic, English, French, German and Spanish) as well as Russian and Portuguese. Applications, based on the terms of reference below, should be received by October 31, 2011.

The opportunity is also advertised on the IDI website

The IDI is a non-profit organisation that aims to enhance the institutional capacity of Supreme Audit Institutions in developing countries through needs-based, collaborative and sustainable development programmes in INTOSAI regions and groups of SAIs to meet the existing and emerging needs of stakeholders.

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October 12, 2011

Transparency and Participation in Public Financial Management: What Do Budget Laws Say?

Posted by Paolo de Renzio, International Budget Partnership, and Verena Kroth, London School of Economics

An increasing number of governments, as well as international and civil society organizations, are promoting the public disclosure of budgetary information, and calling for greater citizen involvement in budget processes. Most agree that fiscal transparency generates significant benefits, as it is an important precondition for better governance, improved economic performance and prudent fiscal policy, resulting in lower deficits and debt accumulation. Moreover, transparency functions as a political expression of democratic governance, giving citizens and taxpayers information that they are entitled to, and that they can use to hold their governments accountable.

Given its increasing importance, how can transparency and participation in public financial management be promoted or improved? As a possible avenue, it is interesting to look at the role of legislation in promoting both disclosure of budgetary information and opportunities for citizen engagement in the budget process. Key questions then are: (a) to what extent does budget legislation in different countries cover issues related to budget transparency and participation, and in what level of detail? and (b) does the degree to which legislation covers issues related to public disclosure of budget information seem to affect the actual level of budget transparency in different countries?

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October 10, 2011

OECD’s Government at a Glance: An Evidence Base for Policymaking

Posted by Zsuzsanna Lonti and Natalia Nolan

Back in October of last year, we previewed some of the key findings from the upcoming release of Government at a Glance 2011, and made our case about the importance of measuring and benchmarking government performance in order to improve governments’ capacities in tough times. This continues to ring true as countries embark on major fiscal consolidation efforts. Indeed, the OECD’s Government at a Glance 2011 is released amid concern about debt levels and even fears of sovereign default; data from the new publication for example show that average public debt among OECD countries was 74.2% of GDP in 2010, up from 55.6% in 2007. 

These high levels of debt will impede long-term economic growth and divert resources from important sectors such as education, healthcare and other vital investments. OECD estimates show that simply stabilising the debt-to-GDP ratio by 2026 would demand an average total improvement in underlying balances of nearly 4% of potential GDP from the 2010 fiscal positions. Ageing societies will further add to spending pressures in the form of healthcare and pensions. And the problem has become too serious to rely on automatic stabilisers that usually kick in during economic recovery.

Policymakers now face the unenviable task of restructuring the state and restoring public finances without excessively eliminating public services, much needed amidst a stormy economic climate. By the end of 2010 about half of OECD member countries had announced detailed medium-term plans for fiscal consolidation, and, as reported in Government at a Glance, the majority are leaning more heavily on spending cuts, rather than raising revenues. In some countries, social and economic programmes are being slashed, wages cut and the size of the public service workforce is being shrunk.  For instance, survey results featured in this new publication reveal that several OECD countries are not filling all the vacancies created by retiring staff – Spain is planning to replace only 1 in 10 central government workers.

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October 07, 2011

For the First Time Brazil Publishes Consolidated General Government Financial Statements!

Posted by Paulo Henrique Feijó e Selene Peres Peres Nunes[1]

The Brazilian Government published for the first time the consolidated general government financial statements (consolidation of central government, states and municipalities’ accounts) according to an adapted model of the International Public Sector Accounting Standards – IPSAS, published by the International Federation of Accountants – IFAC. This is part of a strategy to place Brazil among the countries with advanced accounting practices.

The general government financial statements adapted to international accounting standards refer to the years 2009 and 2010 and include:

- Balance Sheet;

-  Statement of Financial Performance; and

-  Notes.

This is a very significant achievement considering the size of the public sector in Brazil that includes the central government, 26 States, one Federal District, and more than 5,000 municipalities. The consolidation represented a huge challenge to convert each balance sheet to the international accounting standards. This result was possible due to an innovative strategy to improve communication, and through an open dialogue and debate with representatives of each Government and respective branches (executive, legislative, and judiciary), in order to gradually institutionalize the convergence to the international accounting standards.

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Pela Primeira Vez Brasil Publica Balanço Consolidado do Setor Público!

Postado por Paulo Henrique Feijó e Selene Peres Peres Nunes[1]

Em continuidade às ações estratégicas de posicionar o Brasil entre os países que apresentam estágio mais avançado de práticas contábeis, o Governo Brasileiro publica, pela primeira vez, o Balanço do Setor Público Nacional -BSPN com demonstrativos e notas explicativas segundo modelo adaptado aos padrões internacionais de Contabilidade do Setor Público.

As demonstrações contábeis do setor público adaptadas aos padrões internacionais referem-se ao exercício de 2009 e 2010 e incluem:

- Balanço Patrimonial;

- Demonstração das Variações Patrimoniais; e

- Notas Explicativas.

A complexa e abrangente tarefa de convergência às melhores práticas internacionais e sua internalização por todo o Setor Público Brasileiro na União e Entes Subnacionais, bem como nos Poderes Executivo, Legislativo e Judiciário, apresenta avanços significativos em função da estratégia inovadora de construir canal para o diálogo e debate permanente com os representantes da Sociedade, construindo de forma gradativa e sustentável a governança e institucionalização necessárias para a implantação da Nova Contabilidade Pública.

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October 05, 2011

PEFA NewsFlash - External Evaluation Report and Executive Summary

The PFM Blog is reproducing the following newsflash issued by the PEFA Secretariat

The evaluation report of the PEFA program 2004-2010 together with the management response have just been published...

Almost 10 years after it was launched by its seven partner agencies1 and as its third phase is coming to an end, the PEFA Program was evaluated by a team of independent consultants. The purpose was to assess the PEFA performance against its objectives and to present options for the possible continuation and scope of the Program beyond the completion of phase III.

Commissioned by the PEFA Steering Committee and based on document analysis, interviews with key stakeholders and country visits, this evaluation concludes that: “the performance of the PEFA programme is a resoundingly positive one”. It welcomes the establishment of a credible Performance Measurement Framework that has now been applied for over 220 assessments of PFM systems in more than 125 countries.

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NewsFlash - Le rapport d'évaluation du programme PEFA

Le rapport d'évaluation du programme PEFA pour la période 2004-2010 vient d'être publié avec la réponse de l’encadrement...

Presque 10 ans après son lancement par ses sept agences partenaires1 et alors que sa troisième phase touche à sa fin, le programme PEFA a fait l’objet d’une évaluation externe menée par une équipe de consultants indépendants. Le but était d'évaluer la performance du PEFA par rapport à ses objectifs et de présenter des options pour éventuellement poursuivre le programme et définir son champ au-delà de la phase III.

Fondée sur l'analyse de documents, des entretiens avec des intervenants clés et des visites de pays, cette évaluation conclut en général que: "la performance du programme PEFA est éminemment positive". L’évaluation souligne en particulier la crédibilité acquise par le cadre PEFA qui a désormais été utilisé dans plus de 220 évaluations des systèmes de Gestion des Finances Publiques et dans plus de 125 pays.

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NewsFlash - El informe de evaluación del programa PEFA

PEFAlogo 
El informe de evaluación del programa PEFA para el periodo 2004-2010 se acaba de publicar con la respuesta de su Comité Directivo...

Casi 10 años después de su lanzamiento por sus organismos asociados1, y ahora que su tercera fase llega a su fin, el programa PEFA fue objeto de una evaluación independiente encargada por el Comité Directivo del PEFA. El objetivo fue de evaluar el desempeño del PEFA en relación con sus objetivos y de presentar opciones para la posible continuación y el alcance del programa más allá de la fecha de finalización de la Fase III.

Realizado sobre la base de análisis de documentos, entrevistas con los principales interesados y visitas a los países donde PEFA estuve conducido, la evaluación concluye en general que "el desempeño de PEFA es muy positivo." La evaluación destaca, en particular, la credibilidad del marco PEFA que se ha aplicado en más de 220 evaluaciones de los sistemas de gestión de las finanzas públicas (GFP) e en más de 125 países.

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October 03, 2011

Budget Institutions Supporting Fiscal Consolidation

Posted by David Nummy

Countries around the world are struggling to devise the policies that will best address the challenges resulting from the financial crisis. In a book to be issued by the Fiscal Affairs Department of the International Monetary Fund, the case is made that key budget institutions will be necessary to both devise and execute those policies.

Previewing the book that will be issued later this year, Marco Cangiano kicked off the International Consortium on Governmental Financial Management (ICGFM) fall season by presenting on Budget Institutions for the 21st Century at the monthly DC Forum held at the Carnegie Endowment for Peace in Washington, DC on September 7, 2011. Mr. Cangiano, an Assistant Director of the IMF Fiscal Affairs Department, outlined ten budget institutions that will be key to countries around the world in addressing the challenges of dealing with the post-financial crisis environment in the three typical phases of a fiscal consolidation (but the same would apply in designing a stimulus package): understanding the fiscal challenge; developing a strategy; and implementation of the strategy though the budget process.

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