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June 01, 2012

National Budgets that Meet the Needs of Development and Poverty Reduction

Posted by Mohamed Moindze

With its resolutely pragmatic focus on the latest developments in public finance, Les budgets nationaux au service du développement et de la réduction de la pauvreté [National budgets that meet the needs of development and poverty reduction] (published in January 2012) addresses the budgeting of development and poverty-reduction policies in developing Francophone countries.

This publication also provides a comprehensive overview of issues relevant to preparing national budgets based on public policies. The text comes in two parts. The first part deals with the various aspects of global and sectoral strategies (diagnostic assessment, preparation, costing, and monitoring), predicated on the growth and poverty-reduction strategies formulated by developing countries.

The second part analyzes public policy budgeting. This section comprises five chapters:

  • Chapter 1 examines sound principles of public policy budgeting, relying for the most part on the experiences of several countries. This chapter presents the budget as an economic policy tool. Transparency in public financial management (PFM) is also treated with the importance that the subject warrants.
  • Chapter 2 outlines the main issues involved in establishing the macroeconomic framework for the budget and their role in achieving budget discipline, without which effective policy implementation is impossible.
  • Chapter 3 examines the development of a multiyear (and particularly, a medium-term) budget approach, which is an essential element of public policy budgeting. After presenting a medium-term expenditure framework (MTEF), this chapter reviews the main features of MTEFs, as well as the procedures and content of MTEF documents. The difficulties encountered in implementing MTEFs in developing countries, as are the prospects for keeping unsuccessful outcomes to a minimum.
  • Chapter 5 addresses the theory and importance of sound intra-year cash management as well as its basic ingredients (cash-flow plans, procurement and expenditure commitment plans, and the Single Treasury Account).

This publication includes a variety of text boxes, diagrams, and tables prepared on the basis of work performed in various countries and illustrating proper budgeting methods. In addition, it offers a variety of examples with a view to demonstrating the procedures. The following annexes are also included:

  • Annex 1 summarizes sector-based approaches;
  • Annex 2 describes the relationships between macroeconomic accounts;
  • Annex 3 addresses the concept of fiscal space, including a number of approaches to the subject;
  • Annex 4 provides questionnaires with the aim of identifying a country’s strengths and weaknesses in the area of budget preparation;
  • Finally, Annex 5 provides a glossary of key concepts and terms.

Given the latest developments in PFM, the need for training is becoming especially urgent in developing countries. This publication is accordingly designed to provide new training instruments reflecting this new environment. The text is thus intended for a very wide audience: MOF staff in charge of budget reforms, sectoral ministry staff in charge of the design and implementation of sectoral strategies and the preparation of ministerial budgets; staff of supervisory agencies, members of parliament who vote on budgets, students of public management, and civil society. With a clear educational focus, this publication is intended for all policymakers, including those who have no specialized training in public finance.

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.

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