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December 17, 2012

Towards Better Public Expenditure Management: Experience Across Asia

Posted by Suhas Joshi  and Greg Smith

Despite heavy snowfall, government officials from mostly warm countries landed in Seoul for a high-level conference on how to improve public expenditure management (PEM) in the region. The event convened member nations of the Public Expenditure Management Network in Asia (PEMNA). The network, launched in June 2012 in Bangkok, provides opportunities for practitioners across the region to share knowledge and experiences in implementing PEM reforms. PEMNA is modeled on the PEMPAL network that has been operating successfully in central and eastern Europe for several years.

PEMNA comprises two communities of practice (CoPs). The budget CoP is managed by the World Bank, and the Treasury CoP by the IMF. PEMNA’s Steering Committee provides strategic oversight and governance. The Korea Institute of Public Finance (KIPF), a research and training institute associated with the Korean Ministry of Strategy and Finance, provides the secretariat for PEMNA and the two CoPs, and is supported in its work by development partners including the World Bank, AusAID, the IMF, and the OECD.

The demand-driven nature of the network allows members to focus dialogue on solving practical implementation issues.  By sharing common experiences and benchmarking performance with peers, members are able to deepen their understanding of the reform process. Across the budget and treasury areas members recognize that they cannot rely on theory alone and that the cross-fertilization of ideas is essential for the successful design and implementation of reform.

Over 200 delegates gathered for the conference in Seoul from countries including: Brunei Darussalam, Cambodia, China, Indonesia, Japan, Korea, Lao PDR, Malaysia, Mongolia, Myanmar, Philippines, Thailand, and Vietnam. After a warm welcome from their Korean hosts, Ministers and Vice Ministers of Finance kick-started the Seoul conference by setting out their countries’ perspective on managing fiscal reforms in a tough global economic environment.  Members argued that good management of public resources will support growth and help translate government policy into positive development outcomes, especially when countries throughout the region face many common challenges such as managing the impact of ageing populations on the public finances.   

The budget CoP focused its discussion on how to carry out reforms in challenging areas such as medium-term expenditure frameworks (MTEFs) and performance-related budgeting. Participants made presentations from their country perspective. The discussion covered both the challenges facing reformers and potential solutions, such as the use of peer-to-peer partnerships, knowledge sharing, and on-the-job training.

Meanwhile treasury officials presented and exchanged insights to improve the execution of the budget and share lessons on core issues such as introducing a treasury single account and strengthening control and reporting systems. They also discussed issues relating to the concepts of modern accounting standards (both cash and accrual) and the challenges of implementing such standards. Members highlighted that understanding of incentives, power dynamics, and constraints on human and financial resources were vital for the design of effective reform programs.

For further information on PEMNA please contact Miki Matsuura at the World Bank (mmatsuura@worldbank.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. 

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