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March 2012

March 30, 2012

Disappearing Deficits

Posted by Tim Irwin and previously published on iMFdirect

Suppose a government must reduce its budget deficit. Perhaps it made a commitment to do so; perhaps investors are beginning to doubt its ability to repay debt. It could cut spending or raise taxes, but that is painful and unpopular. What can it do?

In our work at the IMF, we sometimes discover that governments choose to employ accounting devices that make the deficit smaller without actually causing any pain, and without actually improving public finances.

In ideal accounting, this would not be possible. In real accounting, it sometimes is.

Continue reading "Disappearing Deficits" »

March 28, 2012

PEFA NewsFlash: Clarifications to the PEFA Framework have been updated…

Posted by the PEFA Secretariat

Pefa logo
The Secretariat has just completed an update of the "Clarifications to the PFM Performance Measurement Framework", last issued in September 2008. This update takes account of changes to the three revised indicators (PIs 2, 3 and 19) as well as numerous responses to queries raised by assessors, all of which have been considered and approved for release by the Public Expenditure Working Group. The document (dated March 2012) can be found on the Secretariat's website: www.pefa.org.

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.

PEFA NewsFlash: Última actualización de las aclaraciones sobre el Marco PEFA…

Por La Secretaría del PEFA

Pefa logo
La Secretaría del PEFA acabo de completar la actualización de la última versión de las “aclaraciones sobre el Marco de referencia para la medición del desempeño de la GFP ", publicado en septiembre de 2008. Esta actualización refleja la revisión de los tres indicadores revisados ​​(ID 2, 3 y 19) y proporciona respuestas a muchas preguntas planteadas por los evaluadores, que han sido todas estudiadas y cuya publicación ha sido aprobada por el Grupo de Trabajo sobre el gasto público (PEWG). El documento (con fecha de marzo de 2012) está disponible en el sitio web de la Secretaría: www.pefa.org.

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.

March 27, 2012

Harmonization of the CEMAC PFM Framework: Starting Over on More Solid Ground

Posted by Bacari Koné and Abdoulahi Mfombouot

On December 19, 2011, the Council of Ministers of the Central African Economic and Monetary Community (CEMAC)[1] adopted six revised directives that seek to harmonize the legal framework for fiscal management in its Member States.

A few years ago, CEMAC embarked on the path of harmonizing the fiscal management systems of its Member States through the adoption of directives that cover the key areas of the public financial management (PFM) system. This initiative, based on WAEMU experience,[2] aims to modernize PFM systems, to make them more transparent and improve the comparability of financial data to better monitor the economic, fiscal, and financial policies of the Member States. 

The WAEMU took the lead because it adopted its first directives in 1997 and 1998. Subsequently, based on internationally accepted best practices and standards, it revised and upgraded them in 2009 with support from the IMF.

Continue reading "Harmonization of the CEMAC PFM Framework: Starting Over on More Solid Ground" »

March 26, 2012

L’harmonisation du cadre de gestion des finances publiques dans l’espace CEMAC : repartir sur les bases plus rassurantes

Posté par Bacari Koné et Abdoulahi Mfombouot

Le Conseil des Ministres  de la Communauté Economique et Monétaire de l’Afrique Centrale (CEMAC)[1] a adopté le 19 Décembre 2011, six directives rénovées visant à  harmoniser le cadre juridique de la gestion des finances publiques dans ses Etats membres.

Depuis quelques années la CEMAC s’est engagée dans une dynamique d’harmonisation des systèmes de gestion des finances publiques de ses Etats membres à travers l’adoption de directives couvrant les domaines-clés du système de gestion des finances publiques (GFP). Cette initiative, qui s’inspire de l’expérience de l’UEMOA,[2] vise à moderniser et rendre plus transparents les systèmes de gestion des finances publiques et à assurer une plus grande comparabilité des données financières publiques et donc un meilleur suivi des politiques économiques, budgétaires et financières des Etats membres. 

L’UEMOA a pris de l’avance car elle a adopté ses premières directives en 1997 et 1998 puis, au regard des bonnes pratiques et des normes internationalement admises, les a révisées et modernisées en 2009 avec l’appui du Fonds Monétaire International (FMI).

Continue reading "L’harmonisation du cadre de gestion des finances publiques dans l’espace CEMAC : repartir sur les bases plus rassurantes" »

March 23, 2012

Accountability and the Effectiveness of Development Cooperation

Posted by Dr. Stephan Klingebiel, German Development Institute/Deutsches Institut für Entwicklungspolitik (DIE), Head of Department “Bi- and Multilateral Development Policy” (stephan.klingebiel@die-gdi.de)

Accountability is of considerable interest in the context of the debate on more effective development cooperation. In general terms, accountability is an obligation on a person, group or institution to justify decisions or actions taken. It is associated with sanctions in the event of compliance / non-complianceand is therefore based on incentives.

Accountability is relevant in three respects:

  • accountability on the part of the donor;
  • accountability in partner countries (domestic accountability);
  • mutual accountability between partner and donor. 

Accountability on the part of the donor (in the case of a bilateral donor; in the case of multilateral donors, the structure of accountability is sometimes arranged differently) and in partner countries concerns in particular parliaments, the electorate, civil society and national audit offices.

In the debate on effective development cooperation (i.e. the Paris Declaration, the Accra Agenda for Action and the Busan Partnership document) mutual accountability and accountability to the actual target groups in partner countries play a particularly vital role.

Continue reading "Accountability and the Effectiveness of Development Cooperation" »

March 21, 2012

PFM Reform in Tropical Paradise – A Case Study of Dominica

Posted by Mark Silins

Where is Dominica?

The Republic of Dominica is a small island economy located in the Eastern Caribbean. It has a population approaching 80,000 people.

Background

In 2010 Dominica undertook its second PEFA exercise. Following on from completing the assessment, the authorities, with the support of the Caribbean Regional Technical Assistance Centre (CARTAC), developed a Public Financial Management Reform Action Plan to prioritise its reform agenda, and to assist in the coordination of support with development partners.

In fact, 15 countries in the Caribbean have undertaken a PEFA (a number twice) and most have also developed a PFM reform action plan.

Dominica stands apart because it has taken ownership of the reforms to the next level. On completing the plan the Financial Secretary wrote to Development Partners seeking their support in implementing the plan. The FS has also regularly reviewed progress against the plan.

Continue reading "PFM Reform in Tropical Paradise – A Case Study of Dominica" »

March 19, 2012

Whole of Government Accounts – There Aren’t Any, Batman!

Posted by Andy Wynne

The stated objective of UK’s Whole of Government Accounts (WGA) was to provide consolidated financial statements covering the entire public sector, encompassing central government, local authorities, public corporations and all other bodies that exercise public functions or are funded entirely or substantially by public money (HM Treasury 2011, 49). The consolidated financial statements were expected to provide a measure of the financial health of the entire public sector in the UK. The publication of the UK’s first audited WGA at the end of November and their consideration by the Public Accounts Committee in early December provides an opportunity to consider what has actually been achieved, at what cost, and whether there are more efficient alternatives to meeting these objectives.

Coverage

The UK WGA are indeed more comprehensive than those for other governments that have attempted a similar exercise (Australia, Canada, France, New Zealand and USA), as they include sub-national governments.  However, despite consolidating around 1,500 organizations, the WGA still exclude more than 1,800 more. The entities not covered include:

Continue reading "Whole of Government Accounts – There Aren’t Any, Batman!" »

March 16, 2012

PEFA Quality Assurance – Will the Check Bounce?

Posted by Richard Allen

The PEFA Program has recently announced a new “PEFA Check” (see the March 12 PFM blog post) mechanism to enhance the quality of PEFA assessment reports.  This initiative was approved by the Steering Committee at its meeting in Brussels last December and is outlined in a note available on the PEFA website.  PEFA Check is in part a response to the recent independent evaluation of the PEFA program, which found that the PEFA brand “remains vulnerable until a more systematic method to guarantee quality can be established”.

“PEFA Check” focuses on the process of preparing the assessment reports, not the actual quality of the information itself.  First, a panel of at least four reviewers, three of which must be independent of the lead agency undertaking the assessment, would be established. Second, the reviewers would make comments on the concept note or terms of reference used in preparing the assessment, and their comments would be recorded. Third, the independent reviewers would comment on the draft assessment report, and their comments would similarly be recorded. Fourth, a template would be attached to the final assessment report certifying that the various processes had been followed and completed, and on what dates, together with the names of the independent reviewers. The comments of the reviewers, however, would not be disclosed.

The proposed new mechanism, which will come into effect with the start of Phase V of the PEFA Program in July 2012, can be welcomed as a step in the right direction, but does it do enough to deal with the quality issue?  There are several reasons for being skeptical on this issue.

Continue reading "PEFA Quality Assurance – Will the Check Bounce?" »

March 14, 2012

How Much Butter Are Those Guns Costing?

Posted by Benoit Taiclet and Greg Horman

We have read—and appreciated—a recent publication under the program, “The Transparency of National Defense Budgets,” by Mariya Gorbanova and Leah Wawro, on budget transparency around defense expenditures.

Defense and security establishments have traditionally been among the organizations least open to public or intra-governmental scrutiny. The secrecy that veils some defense activities often extends far beyond what is justified on security grounds, making the sector particularly vulnerable to corruption, anti-competitive behavior, and other illegal practices. Facilitated by excessively secretive budgets, corruption reduces the operational effectiveness of the armed forces and security services and reduces public trust in them. Corruption in defense and security establishments also wastes scarce resources that could be spent on other public services. International companies are less inclined to invest in countries where government or private-sector corruption is significant, impeding economic development. Thus, corruption not only harms defense institutions themselves, but also hinders a country’s economic and social development, undermines the integrity of the government, and reduces public trust in the authorities.

Continue reading "How Much Butter Are Those Guns Costing?" »

Job Offer: Technical Assistance Advisor Based in Washington, DC (IMF Job Number 1200234)

Description

The International Monetary Fund (IMF) seeks to hire a headquarters-based consultant with expertise in public expenditure policy issues for the Expenditure Policy Division (EPD) of its Fiscal Affairs Department (FAD). EPD undertakes analytical work and carries out technical assistance to member countries on selected public expenditure policy issues and their macroeconomic implications. Topics covered by the division include subsidies; pensions; health care; public investment and public-private partnerships; fiscal policy and labor markets; and public wages and employment. The selected candidate is expected to participate in technical assistance to IMF member countries on expenditure policy issues, other IMF country (operational) work, and EPD's analytical work. This is a contractual position with an initial duration of two years (extendable to a total of four years, given satisfactory performance).

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March 12, 2012

PEFA Newsflash: PEFACHECK: Improving Trust in PEFA Assessments Through a New Process Endorsement Mechanism

PEFAlogo
As previously announced, Phase IV of the PEFA Program (2012-2017) will start on 1, July 2012. Among the initiatives that will be introduced progressively is a new “Process Quality Endorsement” called PEFACHECK: this will come into effect on May 1st, 2012 (with a transition period for ongoing PEFA evaluations until 31, December 2012).

PEFA assessments have been undertaken in more than 126 countries worldwide and the Framework is accepted both as a global public good and as the standard PFM performance evaluation tool. A growing community of PFM practitioners and researchers use PEFA data, which means that it is essential for the PEFA program to maintain confidence in the quality of the reports. Hence the PEFA Steering Committee has introduced “PEFACHECK”: this will be an endorsement issued to indicate compliance with good practices in the process of undertaking an assessment, as a proxy for the quality of the content of the report.

The PEFA Secretariat will issue the PEFACHECK logo to the manager or lead agency of the assessment (which can then be included in the report), provided that a report submitted for review fulfills all the formal requirements of the six criteria relating to the quality assurance process.

Continue reading "PEFA Newsflash: PEFACHECK: Improving Trust in PEFA Assessments Through a New Process Endorsement Mechanism" »

March 09, 2012

PEFA Newsflash: Revising the Performance Measurement Framework - Request for Comments

Pefa
Introduction

PEFA Partners agreed at their November 2011 Steering Committee meeting that a key element of Phase IV of the program (2012-2017) will be a comprehensive review of the Framework, the first since it was launched in 2005.

Why

There have been more than 250 applications of the methodology since 2005, and, as those involved in assessments will be aware, the Secretariat has issued numerous ‘clarifications’ to address issues identified during these practical experiences. In order to use this experience to improve both the credibility – by addressing acknowledged deficiencies – and relevance (by recognizing developments in accepted ‘good practice’) for users at the country level, the PEFA Partners believe the time is right to undertake a comprehensive review and subsequently issue a ‘new release’ of the Framework.

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March 07, 2012

Improving the Quality of Governance in Poland Through Performance Based Budgeting

Posted by Lukasz Hardt1 and Maarten de Jong2

An interesting report on Performance Based Budgeting (PBB) in Poland was recently published by Lukasz Hardt (University of Warsaw) and Maarten de Jong (Erasmus University Rotterdam). The authors put emphasis on analyzing de facto mechanisms of PBB implementation rather than focusing only on de jure ones. In other words, they use sociological and politological approaches combined with some insights from recent studies on good governance. Therefore, instead of only studying the legal basis for PBB, they interviewed many key actors responsible for PBB implementation in-depth and sent web based questionnaires to civil servants in the Polish central government. The research was done not only in Poland but also in the Netherlands, since the authors claim that many lessons from the process of PBB utilization in that country can be used in Poland.

The authors make use also of many insights from institutional economics literature where there is a widespread consensus that institutions do matter for the efficient functioning of the socioeconomic system. Therefore, numerous authors claim that the fundamental factors for long-run economic growth are: a democratic and transparent state, an accountable public administration, inclusive society, and an efficient government. These principles form the basic premise of good governance. In the post-transition countries, like Poland, an efficient market system has been created together with the main elements of the civil society. Various state institutions are, however, still lacking or underdeveloped. One of the missing parts is efficient, result-oriented public management. This is confirmed by the meager position of Poland in governance quality rankings. Therefore, Polish public management should be geared towards fundamental change.

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March 06, 2012

Job Offer: Position in the INTOSAI-Donor Secretariat, INTOSAI Development Initiative (IDI)

The IDI announces a new position in the Secretariat for the INTOSAI-Donor Cooperation. The position is temporary until end of 2015 with the possibility of an extension. 

Background

The INTOSAI-Donor Cooperation was established in 2009 by INTOSAI (the International Organization of Supreme Audit Institutions) and 15 Donors to intensify and strengthen work to support to Supreme Audit Institutions (SAIs) in developing countries. This entails a more strategic approach to capacity building of SAIs, improving the coordination and increasing the levels of support to SAIs from development partners.

The INTOSAI-Donor Cooperation is governed by a Steering Committee comprising representatives of INTOSAI and the Donor community. The Steering Committee decided in February 2010 that the IDI, located in Oslo, Norway, should host the INTOSAI-Donor Secretariat. The INTOSAI-Donor Secretariat is funded by Austria, Ireland and Norway and currently staffed with four positions/3,5 full time equivalents (one of whom is provided through a rolling secondment arrangement with the Office of the Auditor General of Norway). In February 2012 the IDI, in collaboration with its funding donors, decided to recruit one additional full time international staff member.

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March 05, 2012

“Give time some time”: A Proposed Strategy for Implementing Financial Accounting in the WAEMU Member Countries

Posted by Guilhem Blondy and Xavier Rame

The directives establishing the harmonized fiscal framework in the West African Economic and Monetary Union (WAEMU) in 2009 state that “the government shall keep budgetary accounts and financial accounts” and that implementation of the latter must be completed by January 1, 2019 at the latest.[1]

To attain that objective, this post proposes a sequenced strategy aimed at gradually, over the course of seven years (2012-2018), improving the financial information generated by financial accounting.

To understand the necessity of choosing a gradual approach, it will be helpful to recall the three basic innovations associated with the introduction of financial accounting:

Continue reading "“Give time some time”: A Proposed Strategy for Implementing Financial Accounting in the WAEMU Member Countries" »

« Donner du temps au temps » : une proposition de stratégie pour la mise en œuvre de la comptabilité générale dans les Etats-membres de l’UEMOA

Posté par Guilhem Blondy et Xavier Rame

Les directives portant cadre harmonisé des finances publiques au sein de l’Union Economique et Monétaire Ouest-Africaine (UEMOA) de 2009 prévoient que « l’Etat tient une comptabilité budgétaire et une une comptabilité générale » et que la mise en oeuvre de cette dernière doit être effective au 1er janvier 2019 au plus tard.[1]

Pour atteindre cet objectif, ce post propose une stratégie séquencée selon une logique d’enrichissement progressif sur 7 ans (2012–2018) de l’information financière produite par la comptabilité générale.

Pour comprendre la nécessité de privilégier une approche progressive, il est nécessaire de rappeler les trois innovations fondamentales associées à l’introduction de la comptabilité générale :

Continue reading "« Donner du temps au temps » : une proposition de stratégie pour la mise en œuvre de la comptabilité générale dans les Etats-membres de l’UEMOA" »

March 02, 2012

Job Offer: Campaign Coordinator, Global Movement for Budget Transparency and Accountability

The government’s budget affects the life of every citizen, especially those that are poor or marginalized. Yet, in many countries citizens have very little access to information about how the government plans to raise and spend public resources, let alone how effectively they have been used. For this reason, civil society organizations from over 50 countries recently came together to launch an international advocacy initiative and sign a Declaration of Principles to secure greater access to information and accountability for public funds (see www.Makebudgetspublic.org).

The Steering Committee of this nascent global movement, currently based at the International Budget Partnership, is looking to recruit a Campaign Coordinator to shape and lead a global campaign to secure greater public access to budget information and accountability for public funds.  This is an exciting opportunity for an experienced civil society advocate to play a formative role in developing and leading a global campaign to open budgets to public scrutiny and transform the lives of citizens throughout the world.

Continue reading "Job Offer: Campaign Coordinator, Global Movement for Budget Transparency and Accountability" »

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