Budget

May 20, 2014

Budget Institutions Matter

Posted by Holger van Eden
G20 pix blog post
Most economists would agree that institutions help shape economic and fiscal outcomes. But which institutions really matter, and to what extent, is less clear. A recent IMF Board Paper and annex featuring country evaluations produced by the Fiscal Affairs Department, which was presented today here in Washington, shines a light on the G-20 countries’ efforts to strengthen their budget institutions in the wake of the global financial crisis, and evaluates their impact on fiscal policy. In particular, it asks whether strong budget institutions helped these countries during the 2010–13 period to cope with the substantial fiscal consolidation needs that arose after the Great Recession. The evidence suggests that these institutions have indeed been important.

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April 15, 2014

PEMPAL Meeting on Results-Based Monitoring and Evaluation

New Picture (7)
 Posted by Gelardina Prodani and Hakan Ay1

Image1

From March 3-6, 2014, 20 countries representing the PEMPAL Budget Community of Practice (BCOP) in cooperation with the Ministry of Finance of Turkey gathered in Antalya, Turkey for BCOP’s annual plenary meeting.2 The agenda focused on country experiences with results-based monitoring and evaluation (RBME). David Shand, an international expert in this area, acted as the facilitator for the meeting.

The meeting was formally opened by Mr. Ilhan Hatipoglu, the Director General of Budget and Fiscal Control in the Ministry of Finance of Turkey, and Mr. Martin Raiser, Director of the World Bank in Turkey.

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October 21, 2013

How to Decide on the Budget: Set Menu or à la Carte?

Posted by Renaud Duplay

The recent debate over the United States federal budget, which led to a partial government shutdown, was at times hard to follow. Behind the debate over health care reform, lay also a more procedural struggle over the way to prepare the budget on Capitol Hill. Indeed, part of the butting of heads has resulted from a disagreement over what to negotiate on, in the first place. The US Constitution is relatively light on how the budget should be passed, so many legal options were considered in recent weeks, including: passing a continuing resolution to fund federal services and agencies; passing a continuing resolution linked with a defunding of the Affordable Care Act – Obamacare; funding individual federal agencies on a vote by vote basis; funding individual programs of federal agencies given expected adverse impacts of the shutdown, such as on cancer research trials. These options were, to make it even more complicated, linked to various stances on the federal government debt ceiling: separate decision-making, a linked agreed increase, or what resulted, a temporary suspension. In all this a new federal budget for the new budget year was not on the table. This is now on Congress’ to do list for the next three months.  

All of this is possible because the US federal budget works a little bit like ordering à la carte in a restaurant: you can skip the main course if you don’t feel like it and still end up enjoying the meal (or, more often, not really). Indeed, implementing a deal over the US federal budget requires selecting from a different menu of votes depending on the content of the deal. In addition, authority to spend can be given in various ways: either by appropriations bills – for federal agencies’ operating costs for instance – or by specific legislation that grants authority to spend on entitlement programs until this very legislation is modified or repealed. Those programs are called “mandatory” which by the way sets the tone for any future discussion on them.

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October 15, 2013

A PFM View of the New French “Loi Organique”

Posted by Benoit Chevauchez[1]

France is now equipped with a fiscal rule. The organic budget law adopted last December[2] was the French government’s response to the obligations set out in the European Treaty on Stability, Coordination and Governance (TSCG) signed in March 2012. The Treaty resulted from a process initiated in December 2011 by the European Council, in the wake of the euro crisis. The basic idea of the Treaty is that “Euro zone countries” should adopt national fiscal rules in order to integrate in their own legislation the Maastricht principles of fiscal discipline that are set out in the European treaties.

Before the new treaty was ratified, the French national budget law did not address issues of fiscal sustainability. The French Constitution of 1958 was silent in this regard, even if an amendment adopted in 2008 had introduced the concept of “budget balance over the medium term”, but only as a theoretical principle without any operational impact. Similarly, the 2001 LOLF (loi organique relative aux lois de finances), and its predecessor the 1959 Organic Ordinance, wholly ignored sustainability issues.

In practice, France has had a rather modest record in terms of fiscal sustainability: its EU stability programs have seldom been respected, its macroeconomic assumptions have been frequently optimistic, and its debt level has steadily increased up to 90 percent of GDP. Thus, for France, the adoption of the new organic law (OL) is an important initiative, that might also mark a turning point in its fiscal tradition.

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May 13, 2013

Twenty-one Countries Meet in Albania to Discuss Program Budgeting Reforms

Posted by Gelardina Prodani, Ministry of Finance, Albania and Konstantin Krityan, Ministry of Finance Armenia

Albania
As Chair and Deputy Chair of the Public Expenditure Management Peer Assisted Learning (PEMPAL)[1] Budget Community of Practice (BCOP), we would like to inform you about an exciting meeting that was held recently in Tirana, Albania on program budgeting.

From February 25th to 28th 2013, the Ministry of Finance of Albania hosted 81 participants from 21 PEMPAL member countries from across Europe and Central Asia (ECA). As suggested by our BCOP members from last year’s plenary meeting,[2] the agenda focused on technical aspects of program budgeting and performance measurement. The three main sessions of the meeting covered international approaches and country cases in (i) design of programs and performance measures, (ii) budget documentation, and (iii) performance monitoring and evaluation.

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Представители двадцати одной страны встретились в Албании, чтобы обсудить переход на программное бюджетирование

Авторы: Джеральдина Продани, Министерство финансов, Албания, и Константин Критян, Министерство финансов, Армения

Albania
В качестве председателя и заместителя председателя Практикующего сообщества по бюджету (В СоР) Сети по взаимному обучению и обмену опытом в управлении государственными финансами (PEMPAL)[1] мы хотели бы проинформировать вас о встрече, которая недавно состоялась в Тиране, (Албания), по теме программного бюджетирования.

С 25 по 28 февраля 2013 года Министерство финансов Албании приняло в общей сложности 81 участника из 21 страны-члена PEMPAL из Европы и Центральной Азии (ЕЦА).  Как и было предложено членами нашего Практикующего сообщества по бюджету (BCOP) на пленарном заседании в прошлом году,[2] повестка дня фокусировалась на технических аспектах бюджетного финансирования программ и на оценке эффективности работы.  Три основных сессии заседания были посвящены международным подходам и практическим примерам стран в следующих областях: (i) дизайн программ и критерии эффективности работы, (ii) бюджетная документация, и (iii) мониторинг и оценка эффективности программ.

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January 17, 2013

How Can the Pace of Budget Transparency Be Increased? Examining the Results of the Open Budget Survey 2012

Posted by Vivek Ramkumar

IBP WB medium


The International Budget Partnership (IBP) and the World Bank Institute (WBI) are pleased to invite you to join practitioners in the fields of development and fiscal management in a discussion on how to increase budget transparency and participation around the world. The discussion will include a presentation of the results of the IBP’s latest round of the Open Budget Survey and then focus on indentifying innovative and practical suggestions for rapidly improving country performance on the Survey.

Date: 5 February 2013
Time: 9.30-11 am (Breakfast will be served from 9 am)
Venue: IFC Auditorium, 2121 Pennsylvania Avenue, Washington D.C.

There is growing interest in the role of open budgeting systems in development. An increasing body of evidence shows that the best way to manage public funds efficiently and equitably is through budget systems that are transparent, inclusive, and monitored through independent oversight institutions. Recent research studies also show that transparency can help to attract easier and cheaper international credit and thereby increase public revenues. On the other hand, lack of fiscal transparency can undermine fiscal discipline,increase borrowing costs, and promote opportunities for corruption and other leakages.

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January 03, 2013

Simplifying Budget Documents – Time for an International Standard?

Posted by Camille Karamaga

Improving the quality of budget documentation lies at the heart of many reforms aimed at enhancing understanding of the content of the budget estimates as well as fostering transparency and accountability. Some budget laws prescribe a minimum set of documents to accompany the budget estimates. These may include, for example, reports on: (i) the medium-term macroeconomic forecast; (ii) fiscal policies and public expenditure trends; (ii) medium-term forecasts of government revenues, expenditures, debt, and the fiscal balance; (iii) medium-term resource ceilings; (iv) government guarantees, contingent liabilities and other fiscal risks; (v) spending on expenditure programs and projects by sector; and (vi) projections of donor aid flows. In countries with a Westminster tradition, the budget speech includes much of this information, but additional documents may be presented to the parliament.

Improving the content and quantity of fiscal information is not the same, however, as improving its quality or transparency. More does not always mean better or clearer. Indeed, it often means the reverse. Governments tend to respond to demands for information from the parliament, financial markets, NGOs and ordinary citizens by producing more and more data, often in unprocessed form. This may get them off the hook of public “accountability”, but places them squarely on another hook, accusations of information overload and obfuscation.

The design of a strategic planning framework, medium-term budget frameworks and program budgets has led to a proliferation of detailed information, performance indicators, and monitoring and evaluation reports. Mountains of annual budget books are produced with separate estimates volumes being prepared by each line ministry. The excessive detail contained in the budget estimates weakens their usefulness as raw material for discussion by parliamentary committees. Nor are they meaningful to the general public. In short, much of the  information produced by the government easily becomes a “data cemetery” which contributes little to the decision-making process or enlightened public debate.

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December 20, 2012

Following the Money: Examining the Evidence on Pro-poor Budgeting

Posted by Rebecca Simson[1]

ODI logo
ODI’s Centre for Aid and Public Expenditure has recently initiated a work stream on pro-poor budgeting to investigate how governments choose to spend public funds and what this tells us about allocative efficiency.  In 2001 Adrian Fozzard published a paper on this topic, which presented approaches to resource allocation in the public sector and their implications for pro-poor budgeting. A decade on, and after billions of dollars spent to further pro-poor priorities in developing countries, have we learnt anything new about how to allocate public funds?

Our first background paper, Following the money: examining the evidence on pro-poor budgeting, explores what we do know about the influence of the poverty reduction agenda on resource allocation in developing countries. The paper goes on to propose some possible research topics that could begin to evaluate whether spending patterns have in fact changed in systematic ways in response to the high growth and falling poverty experienced over the past 15 years.

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December 07, 2012

What if… Legislators Approve—and Execute—the Budget?

Posted by Greg Horman

A practice more or less universal across all legislative assemblies is to provide members—MPs, for short—with allowances to enable them to represent their constituents effectively. Typical allowances cover expenses associated with staying in close contact with voters, such as travel to MPs’ constituencies, operating local offices, and communicating through mailings and various media. Although they are the cause of the occasional scandal, debate about these allowances is more over the scope of costs that they cover and up to what ceiling, than over the principle that they are necessary in the first instance. Frequently, these allowances—representing spending by the legislature, not the executive—are outside the government’s budget.

What is uncommon, however, is the situation where MPs themselves administer and distribute funds from the government’s budget.

The Solomon Islands is a case in point and an example of this modality of budget execution taken to an extreme. Depending on the calculation, perhaps 30 percent to 50 percent of the development budget in the Solomon Islands is represented by “constituent development funds.” These are appropriated funds that are directly allocated to and held by MPs for distribution to their constituents. In practice, the funds are deposited into MPs’ own bank accounts, and there is little transparency or accountability for how MPs manage or distribute this money from the public purse. Nor is there any analysis of the impact or effectiveness of the use of the funds. Moreover, expenditure in the development-budget that was originally appropriated to ministries is occasionally re-programmed into constituent development funds. Staff of the Ministry of Finance and donors—grants account for around two fifths of total revenue—agree that this practice undermines sound public financial management.

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September 14, 2012

Recent Meetings of the PEMPAL Network in Europe and Central Asia

Posted by Deanna Aubrey, PEMPAL PFM Adviser

The three ‘communities of practice’ of budget, treasury, and internal audit of the Public Expenditure Management Peer Assisted Learning (PEMPAL) network had a series of meetings in the first six months of 2012. PEMPAL covers up to 22 governments in the Europe and Central Asia region and brings practitioners together regularly to discuss common priority issues in PFM reform. PEMPAL is supported by the World Bank, Switzerland’s State Secretariat for Economic Affairs (SECO), the Russian Federation, and OECD SIGMA.

Members of Treasury Community of Practice (TCoP) gathered in Tbilisi, Georgia from February 27-29. Treasury experts from 10 countries met to learn more about Georgia’s PFM reforms implemented by the State Treasury Service, who co-hosted the meeting. The workshop was an opportunity to exchange experiences in modernizing national treasury systems particularly related to issues of integration of external financing. Participants also had the opportunity to visit the customs clearance zone of the Ministry of Finance in Lilo district in Tbilisi as an example of modernization public services through information technology. More information can be found at http://www.pempal.org/event/read/55 and in IMF’s PFM blog at http://blog-pfm.imf.org/pfmblog/2012/04/georgian-state-treasury-hosts-workshop-on-treasury-and-external-financing-reforms.html

Fifty-seven participants from Ministries of Finance from 18 ECA countries from Budget Community of Practice (BCOP) met in Bohinj, Slovenia on March 27-29 to exchange experiences in program budgeting as part of the Budget Community of Practice (BCOP) work program. Country cases of France, Australia, Poland, and Slovenia were showcased and reform progress shared by Kazakhstan, Russian Federation, Armenia, Croatia, and Bosnia and Herzegovina. Most PEMPAL member countries have implemented elements of program budgeting including defining and identifying programs, formulating program objectives, and selecting performance information. However, the quality of performance information remains generally poor, is in many cases not systematically monitored, and has limited influence on budget decision making. Countries acknowledge that the reform process is long and ongoing and are planning on exchanging information and meeting more on this topic in the future. More information can be found at http://www.pempal.org/event/read/58 and in IMF’s PFM blog at http://blog-pfm.imf.org/pfmblog/2012/05/program-budgeting-is-on-the-reform-agenda-across-europe-and-central-asia.html

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July 26, 2012

Australia’s Changing Budgeting Framework – Accrual or Cash?

Posted by Tim Youngberry[i]

There have been a number of articles on this blog that pose a question on whether the Australian Government has a cash-based budgeting framework or an accrual-based budgeting framework, or some sort of hybrid mix.  Hopefully, this contribution will provide a degree of clarification.

In the 1999-2000 Budget, the Australian Government moved to a full accrual accounting and budgeting framework.  The key features of the framework when implemented included:

  • A shift to an outcomes/outputs framework;
  • Introducing accrual concepts into the Budget, often referred to as accrual budgeting;
  • Applying a capital use charge on line ministries to reflect the cost of the use of “capital assets” and to provide an incentive for improved asset management;
  • Introducing devolved banking arrangements so that each agency had its own transactional banker and paying interest to agencies on accumulated cash balances to encourage better cash flow management; and
  • Funding agencies on the basis of full accrual expenses (including depreciation) – otherwise known as accrual appropriations.

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July 04, 2012

Budget Reform: Borrowing a Leaf from the Accounting Profession’s Book

Posted by Florence Kuteesa

 Since the 19th century, there has been a sustained effort to develop and disseminate professional standards and qualifications in accounting. In stark contrast, there are currently no internationally accepted standards for budget preparation. Could this absence of a professional foundation for budget preparation  help explain the short lifespan of many reforms that have failed to take root in budget departments and bear fruit in the form of more credible and predictable budgets, especially in low income countries (LICs)? Is it time for the budget reformers to borrow a leaf from the accounting profession’s book?

It is of concern that national budget preparation reforms in many LICs have failed to deliver intended objectives. Budget practices continue to be based on a patchwork of traditions and procedures that have evolved slowly. There are marked disparities between the principles and practices of budgeting within countries, as well as large variations across countries. New ideas and techniques of planning and budgeting are tried but, all too frequently, are abandoned or overtaken by some other initiative making it even more difficult to build strong foundation for budgeting. Short-lived budget reforms have lead to poor outcomes and dissatisfaction among staff. The continuous search for more appropriate budgeting structures and procedures is demonstrated by recent debates among the senior budget officers’ networks, in Asia, Middle East and North Africa, and Africa.

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June 27, 2012

Burundi – L’expérience positive du nouveau dispositif de gestion des ressources extérieures

Posté par Jean Pierre Nguenang[1]

A la faveur de la rénovation récente du cadre juridique des finances publiques (FP), le pays a mis en place un nouveau dispositif de gestion des ressources extérieures, le budget d’affectation spéciale (BAS). S’inscrivant dans le cadre de la déclaration de Paris 2005 sur l’efficacité de l’aide, ce dispositif concilie l’utilisation des nouvelles procédures nationales, tant en budgétisation qu’en exécution, avec les besoins des bailleurs. Avec la mise en place d’un fonds commun de l’éducation (FCE) doté de financements de certains bailleurs de fond pour les budgets 2011 et 2012, une première expérience du BAS s’avère positive. Cette mise en œuvre du premier BAS préfigure l’introduction progressive pour le budget général des dispositions de modernisation adoptées dans le cadre rénové des FP.

Une budgétisation du BAS qui améliore l’exhaustivité et la transparence du budget de l’Etat

Les fonds des bailleurs accordés à l’Etat, à l’exception des appuis budgétaires directs, sont intégrés si les bailleurs le souhaitent en recettes et en dépenses au budget général de l’Etat. Une annexe aux lois de finances donne le détail de l’origine et de l’emploi de ces fonds. Toutefois, un BAS peut être créé par groupes de projet ou groupes de programmes d’investissement, réunissant les financements d’un ou de plusieurs bailleurs de fonds. Rattaché au ministère sectoriel principalement responsable de sa mise en œuvre, le BAS peut être abondé par un crédit budgétaire au titre de la contrepartie nationale.

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Burundi – Success with the New Mechanism for Managing External Resources

Posted by Jean Pierre Nguenang[1]

As part of the recent reform of the legal framework governing public finances, Burundi has introduced a new mechanism for managing external resources, a special earmarks budget (BAS). This mechanism, which is in line with the 2005 Paris Declaration on Aid Effectiveness, balances the use of the national procedures, both in budgeting and execution, with the needs of donors. The initial experience with a BAS - in the form of the establishment of an Education Funding Pool (FCE) financed by certain donors for the 2011 and 2012 budgets – has been encouraging and marks the first step in the gradual introduction for the general budget of the modernization measures included in the updated public finance framework.

Inclusion of the BAS in the budget improves the coverage and transparency of the government budget

The funds granted by donors to the government, with the exception of direct budgetary assistance, are included under revenue and expenditure in the general budget of the government if the donors so wish. An annex to the budget law provides a breakdown of the origin and use of the funds. However, a BAS may be created for a group of projects or group of investment programs, combining the financing from one or more donors. The BAS may be supplemented by a budgetary allocation, which constitutes the national counterpart. The BAS comes under the sectoral ministry, which has primary responsibility for its implementation.

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June 08, 2012

Accounting and the Budget Framework

Posted by Julie Cooper

For decades the debate has raged on about the applicability for government of what is often referred to as private sector accounting methodology.  Those who argue against its use in government offer up the differences in management focus between the private and public sectors to support their position. They argue that because the private sector is focused on profit generation the underlying concepts of accounting are not valid for government purposes. This argument is simplistic and fails to recognize the overarching purpose of all accounting systems.

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s activities. Providing information about how an organization performs is an important aim of accounting. This is true for both private and public sectors. Another similarity between the two sectors is that they both focus on the efficient allocation of resources to realize their goals. The difference between these two sectors lay in how that information is reported and used not the accounting per se.

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June 01, 2012

Les budgets nationaux au service du développement et de la réduction de la pauvreté

Posté par Mohamed Moindze

Se voulant résolument pragmatique et orienté vers les nouvelles finances publiques, l’ouvrage «Les budgets nationaux au service du développement et de la réduction de la pauvreté »  édité, en janvier 2012, est centré sur la budgétisation des politiques de développement et de réduction de la pauvreté dans les pays en développement de tradition francophone.

L’ouvrage se veut également exhaustif en proposant une vision d’ensemble des questions relatives à l’élaboration des budgets nationaux basés sur les politiques publiques. Il est composé de deux parties. La première traite des stratégies globales et sectorielles dans leurs différents aspects de diagnostic, d’élaboration, de costing et de suivi en se basant sur les stratégies de croissance et  de réduction de la pauvreté développées par les pays en développant.

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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.

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May 18, 2012

Program Budgeting Is on the Reform Agenda Across Europe and Central Asia

Posted by Deanna Aubrey, PEMPAL PFM Adviser

Ministries of Finance from 18 Europe and Central Asia (ECA) countries met from March 27-29, 2012 at Lake Bohinj, in Slovenia, [1] to exchange experiences in program budgeting. The meeting was attended by 57 members of the Budget Community of Practice (BCOP) of the Public Expenditure Management Peer Assisted Learning (PEMPAL) network.[2] Presentations were delivered by the World Bank, IMF, and GIZ with reforms showcased from guest speakers from France, Australia, Slovenia, and Poland.

The World Bank clarified the terminology given the wide variety of terms in use (e.g., program budgeting, performance budgeting, results-based budgeting). Program budgeting applies to cases where expenditure is classified in the budget by objectives (outcomes and outputs) rather than solely by economic categories (i.e., inputs such as salaries) and organizational category. Performance budgeting (or performance-informed budgeting) refers to a wider set of initiatives intended to strengthen the links between the funds provided and the results achieved through ensuring performance information is used in resource allocation decision making. Program and performance budgeting reforms should, therefore, provide information in a way that informs choices about spending alternatives and should improve transparency and accountability of government.[3]

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May 04, 2012

Budgetary Reforms in South Asia

Extracts from a Project Report by Author on ‘Budgetary Reforms in South Asia’ Sponsored by the Indian Council of Social Science Research

Posted by Udaya Pant

Afghanistan

As a result of the Making Budget Work (MBW) and Making Budget and Air Work (MBAW) projects, budgets are now prepared on time and increasingly reflect the priorities of the Afghan National Development Strategy (ANDS) and the provincial needs. Budget officers from the project assist the line ministries in formulating and submitting the budget proposals on time and in accordance with national and ministerial policies and priorities.

Program and provincial budgeting were introduced in Afghanistan from fiscal year 2007. Progress on these has been slow, yet steady. The provincial budgeting pilot was to cover all 34 provinces by 2011. The program budgeting pilot covered 17 ministries by 2011. Each Ministry has formed a Program Budget Implementation Team, and training sessions on program budgeting have been delivered to all of these teams. The program and provincial budgeting pilots have improved budget formulation processes, increased transparency in government expenditures and ensured the foundation for increased inclusion of the provinces in the national budget formulation and implementation process, increasing equity in the distribution of resources across the country.

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December 21, 2011

Designing “virementally”-friendly budgets

Posted by Sami Ylaoutinen

If you didn’t get the joke in the title, you’re probably part of the 99.99 percent of the population whose favorite topic is not public financial management. If you did, congratulations!, that’s why you’re reading this blog. Virements, the authority to reallocate budget appropriations, are important tools to introduce flexibility in government budgets. Why this flexibility is necessary, and why increasingly countries are moving to a situation where virements are less needed, I will discuss in this post.

A budget is a mechanism though which governments try to achieve several objectives simultaneously: spending the right amount of money (maintaining aggregate fiscal discipline), spending it where politicians want it to be spent (facilitating a strategic allocation of expenditure), and spending it to achieve maximum benefit for the population (using resources to most efficiently produce the desired outputs).

As has been painfully clear during the past few years, we live in a world filled with uncertainties. Budgets are clearly not isolated from the effects of this uncertainty, and therefore there is often a need to make adjustments to the budget approved by the parliament in order to achieve the objectives, or at least some of them, mentioned above.

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December 14, 2011

Ho, Ho, Ho……..Strategic Budgeting is here!

Posted by Martin Bowen

Straight from the North Pole a new, promising approach to budget planning is discussed by CARTAC advisor Martin Bowen that could help countries with limited resources and capacities get a grip on their public finances using elements of more advanced and complex reforms usually only seen in advanced economies.  

Caribbean countries have been hit particularly hard by the downturn in US economic activity following the global recession. The resulting decline in revenues has seen a dramatic deterioration in the fiscal balances of many of these countries leading to significant increases in borrowing and debt. Countries have recognised that the level of their fiscal deficits and borrowing is not sustainable in the longer term and that correcting fiscal imbalances requires strong measures both on the revenue and expenditure side. In support, the IMF’s regional technical assistance (TA) centre in the Caribbean (CARTAC) has been providing extensive TA to member countries across a range of PFM areas including macroeconomic analysis, revenue forecasting, budget planning and preparation and treasury management.  

In particular, over the last two years, CARTAC has assisted a number of countries to develop and implement revised budget planning processes that support both strengthened fiscal discipline and better value for money from the increasingly scarce budget resources available. The approach to reform has focused on getting the basics right first. Traditional approaches to budget reform – multiyear budgeting, output based and accrual budgeting – have been particularly difficult to implement in developing countries and the development landscape is littered with failed reform strategies. This post suggests that a major reason for this failure is that, too often, development partners have attempted to transplant developed countries’ sophisticated budget management processes and systems into countries with very limited resources and within unrealistic timeframes.  

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December 12, 2011

Liberia Budget Reflection Workshop: Laying the Foundation for a Medium-Term Budget Framework

Posted by Kubai Khasiani, Steve Gurr, and Florence Kuteesa

Liberia is set to introduce a medium-term budget framework starting July 2012. The government of Liberia—with support of a joint team of IMF staff and the UK ODI’s Budget Strengthening Initiative—conducted a workshop in August 2011 to discuss implementation issues and challenges, chart a way forward, and obtain commitment from the various government institutions and stakeholders. The workshop was attended by officials from a wide variety of government institutions and generated lively debates as participants came together and candidly shared their experience. A set of recommendations was agreed at the end of the workshop, which would enhance cooperation and political commitment from all parties and facilitate the consultative process.

The introduction of a medium-term budget framework (MTBF)[1] by the government of Liberia, starting in the fiscal year 2012/13 budget, is stipulated in the 2009 Public Financial Management Act. The provisions of the Act set new challenges for the Ministry of Finance (MoF), line ministries, and development partners. The reform implication(s)—such as mandates and responsibilities of the various actors, and coordination perspectives—formed the focus of a five-day budget process reflection workshop held in Monrovia during August 29 and September 2, 2011. The workshop, organised by the MoF and facilitated by a joint IMF /ODI[2] technical assistance team, allowed an exchange of views between representatives of the ministries responsible for finance and planning on the one hand, and spending agencies on the other, on the potential challenges and prerequisites for a sustained reform implementation. The workshop was attended by 175 officials from the MoF, the Ministry of Planning and Economic Affairs (MoPEA), as well as line ministries and agencies across the government of Liberia.

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November 23, 2011

The Political Economy of Budget Reforms in Aid-Dependent Countries: Domestic and External Factors Shaping Success

Posted by Paolo de Renzio, Senior Research Fellow, International Budget Partnership and Research Associate, Global Economic Governance Programme, University of Oxford

The quality of governance and institutions is increasingly seen as a fundamental factor in shaping the development prospects of poor countries. As a consequence, donor agencies have increasingly allocated resources to providing support for improving governance standards in such countries. Their interventions are based on the assumption that, through a combination of financial and technical assistance, they can provide better incentives for reform and affect the quality of institutions in positive ways. Despite this existing consensus, research on how institutions develop and change over time is still incipient, especially in developing countries. Research on how donors’ influence affects governance trajectories and processes of institutional change in aid-dependent countries is even more scarce.

A paper recently published by the Global Economic Governance Programme at the University of Oxford investigates the domestic and external factors affecting the outcomes of reforms aimed at improving the quality of government budget institutions across a group of 16 aid-dependent countries. Government budgets are a key area of government action, through which policy objectives are chosen and acted upon, and the necessary resources are collected, allocated and spent. They have also become a crucial area being promoted by donors, backed by an increase in funding for technical assistance from US$ 170 million in 1997 to US$ 1.6 billion in 2007), covering a range of initiatives aimed at strengthening the rules and procedures which underpin budget processes. How has such external assistance worked? Were donors able to ‘buy’ better governance? What other factors shaped the outcomes of budget reforms? These are the key questions that the paper seeks to answer.

Continue reading "The Political Economy of Budget Reforms in Aid-Dependent Countries: Domestic and External Factors Shaping Success" »

November 21, 2011

Parliamentary Powers and Capacities

Posted by Mohamed Moindze, international consultant

The budget is the instrument used to implement the most important public policies. It affects the lives of all citizens. However, the budgetary process has for many years been under the exclusive control of government. Yet there is no way to achieve good governance of public finances (needed to implement public policies) without effective external control of public finances. In the past, the public’s involvement in the budgetary process (as well as the involvement of parliaments) was not considered useful. Some suggested that such participation could be dangerous since it might undermine a country’s budgetary stability by sacrificing the macroeconomic equilibria.

Increasingly over the last twenty years or so, the developing countries have been undertaking courageous reforms to allow national parliaments to play the eminent role that constitutions grant them in the management of public affairs. This transition is occurring in the context of a general trend toward democratization and good governance. This increased role of parliaments consists of debating the broad outlines of the course that countries wish to take, thus helping to define them, to enact laws, to allocate resources to government for implementing policies, and to control their application.

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Note de présentation du document sur le contrôle parlementaire

Affiché par Mohamed Moindze, consultant international

Le budget est l’instrument de mise en œuvre des politiques publiques le plus important. Il affecte la vie de tous les citoyens. Pourtant, le processus budgétaire a été, pendant très longtemps, sous le contrôle exclusif du gouvernement. Or, il ne saurait y avoir de bonne gouvernance des finances publiques (qui est nécessaire pour la mise en œuvre des politiques publiques) sans contrôle externe efficace des finances publiques. L’implication du public dans le processus budgétaire (et même des parlements) n’était, dans le passé, pas considérée comme utile. Certains avançaient qu’une telle participation pouvait être dangereuse puisqu’elle pouvait saper la stabilité budgétaire d’un pays en sacrifiant les équilibres macroéconomiques.

Depuis près de vingt ans, et de façon croissante, les pays en voie de développement engagent des réformes courageuses pour permettre aux parlements nationaux de jouer le rôle éminent que les constitutions leur accordent dans la gestion des affaires publiques. Ce mouvement se place dans le cadre d’une tendance générale à la démocratisation et à la bonne gouvernance. Ce rôle accrû des parlements consiste à débattre des grandes orientations des pays et à contribuer ainsi à les définir, à adopter les lois, à allouer des ressources aux gouvernements pour la mise en œuvre des politiques, et en contrôler l’application.

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November 16, 2011

Burkina Faso and Mali: Developing Program Budgeting While Getting the Basics Right

Posted by Benoit Taiclet and Lewis Murara

Program-based budgeting (PBB) is considered an important tool for developing countries to channel more efficiently their resources to achieving their development goals. However, PBB is also a rather sophisticated PFM reform, especially when certain public finance management (PFM) basics still need to be improved. Burkina Faso and Mali offer interesting examples of low-income countries whose reforms started at different stages, but finally made good progress both in program budgeting and more general improvement of their respective PFM systems. This success –although it must be stressed that PPB is not yet fully functional - mostly relies on the countries’ own determined pursuit of reform. However it has been facilitated by the synergy built between several stakeholders, the IMF and its Regional Center AFRITAC West, the UNDP and its regional pole in Dakar, as well as bilateral partners such as the Belgian, German and Japanese governments.

Gradual reform or a more risky Big Bang approach?

Both countries chose at an early stage a similar, cautious multi-step scheme for reform. The first step was to ensure a strong state commitment and civil society backing, then to develop costing of policy expenditures and medium term expenditures frameworks. In this scheme PBB was planned to be developed alongside the usual input budget prior to its full implementation. So far Mali has - and Burkina Faso intends to - set up a comprehensive PBB budget as an appendix of the draft budget bill. But still this appendix remains an information tool and to some extent a planning tool only, for the Executive, Parliament and the donor community; it has, however, not yet been considered an appropriate tool to actually manage government financial resources and to monitor the performance of the services.

Continue reading "Burkina Faso and Mali: Developing Program Budgeting While Getting the Basics Right" »

November 11, 2011

Budget Oversight: The Challenges of Establishing an Independent Supreme Audit Institution in Developing Countries

Posted by Lewis Kabayiza Murara

What does it take to establish a Supreme Audit Institution (SAI) that is and is seen to be immune from the influence and interference by the executive branch of government that the SAI is supposed to audit? Are great laws and well articulated statements sufficient? What are the practical, day-to-day realities SAIs face in developing countries in exercising their budget oversight role?

The major feature for an independent SAI is to enjoy financial, administrative and operational autonomy (see the 1998 Lima Declaration issued by INTOSAI that has won international acceptance as best practice set of basic principles on SAI independence, powers of examination and enforcement of recommendations). In other words, the SAI’s ability to develop a robust human resource development system to attract and retain good auditors is as vital as its ability to stay away from interference in identifying audit priorities and executing them.

In practice many developing countries have established SAIs and have ensured that the constitution guaranties the SAI’s independence. Most have passed audit laws defining how the SAI’s autonomy would be exercised. In doing so, most developing countries have followed best practices in drafting these pieces of legislation. Despite relatively strong legal frameworks, a number of factors hamper the effective autonomy of SAIs in developing countries. This blog post discusses only four of these key factors: funding, appointing authority, tenure and the “civil servants trap”.

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November 02, 2011

Budget Oversight in the WAEMU Area: A Challenge for Parliaments?

Posted by El Hadji Fall and Rossella Albertini, both from the Pole “Development Strategies and Public Finance” based at the UNDP Regional Center for West and Central Africa (Dakar - Senegal)

Implementation of the 2009 West African Economic and Monetary Union (WAEMU) public financial management (PFM) directives presents new challenges for the Parliaments of the region. Their involvement in terms of budget oversight and the identification of their needs for future technical support where the subject of the three-day regional workshop held in Dakar on September 28-30: “Capacity development for Parliaments in the new harmonized public finance framework of WAEMU”.  

This event, organized by the Pole “Development Strategies and Public Finance” of the UNDP Dakar Regional Centre, gathered representatives from the eight WAEMU countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo) together with participants from neighboring Cape Verde and Guinea, and officials from the French Senate, the WAEMU and UNDP.

The workshop aimed at providing participants with detailed information on the implications of the new harmonized WAEMU framework and at promoting adoption of these reforms by the parliaments of the region. The new guidelines introduce profound changes in the development, implementation, monitoring and scrutiny of the central government budget; they intend to strengthen parliamentary control over public expenditures and to increase the flow of information to national representatives, through the introduction of key innovations and the evolution from a resources-based to a results-based budget. 

Over three days, representatives from ten countries exchanged on the main challenges for WAEMU member countries, highlighting the existing hindrances and analyzing options for a successful implementation of the reform. The workshop represented the onset for a wider discussion on the establishment of a control program in the Parliament and for a multifaceted reflection on the best strategies for an effective ownership of the reform.

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Le contrôle du budget par les parlements dans la région de l'UEMOA

Publié par El Hadji Fall et Rossella Albertini, du Pôle-Stratégies de développement et finances publiques intégré au Centre régional du PNUD pour l'Afrique de l'Ouest et du Centre (Dakar - Sénégal)

La mise en oeuvre des directives de 2009 de l'Union économique et monétaire ouest-africaine (UEMOA) en matière de gestion des finances publiques présente de nouveaux enjeux pour les parlements de la région. Leur participation au contrôle du budget et le recensement de leurs besoins d'assistance technique était le sujet de l'atelier régional qui s'est déroulé à Dakar du 28 au 30 septembre, autour du thème « Le renforcement des compétences du parlement dans le nouveau cadre harmonisé des finances publiques de l'UEMOA ».  

Cet atelier, organisé par le Pôle-Stratégie de développement et finances publiques intégré au Centre régional du PNUD à Dakar, a rassemblé des représentants des huit pays de l'UEMOA (Bénin, Burkina Faso, Côte d’Ivoire, Guinée-Bissau, Mali, Niger, Sénégal et Togo) et des pays voisins du Cap-Vert et de la Guinée, ainsi que du Sénat français, de l'UEMOA et du PNUD.

L'atelier avait pour objectif de fournir aux participants des informations détaillées sur les implications du nouveau cadre harmonisé de l'UEMOA et d'encourager l'adoption de ces réformes par les parlements de la région. Les nouvelles directives introduisent de profonds changements dans l'élaboration, l'exécution, le suivi et le contrôle du budget de l'État ; elles entendent renforcer le contrôle des dépenses publiques par les parlements et l'information des représentations nationales, en introduisant des innovations importantes et en passant de budgets de moyens à des budgets de résultats. 

Au cours des trois journées, les représentants des dix pays ont échangé leurs vues sur les principaux enjeux pour les pays de l'UEMOA, en soulignant les obstacles existants et en analysant les possibilités de mise en oeuvre de la réforme. L'atelier a lancé un débat plus large sur la mise en place d'un programme de contrôle au parlement et d'une réflexion globale sur les meilleures stratégies de prise en charge de la réforme.

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September 24, 2011

Carlo Cottarelli, Director of the International Monetary Fund's Fiscal Affairs Department, Speaks about U.S. Fiscal Policy and the European Sovereign-Debt Crisis.

Cottarelli2 

On Friday September 23, Carlo Cottarelli, the Director of the International Monetary Fund's Fiscal Affairs Department, spoke with Tom Keene on Bloomberg Television's "Surveillance Midday" about U.S. fiscal policy and the European sovereign-debt crisis.

To watch this 8-minute video, please click on this link.

September 09, 2011

Evaluation of Governance: A Study of the Government of India’s Outcome Budget

Posted by Anand P. Gupta, Director, Economic Management Institute, New Delhi, India. E-mail: anand@EconomicManagement.com

In 2005, the Government of India launched an apparently excellent initiative – the Outcome Budget – with the objective of changing the culture of measuring performance in terms of the amount of money spent against the budgeted allocations, to one of measuring performance in terms of the delivery of the outcomes that people are concerned with. This paper describes how the Outcome Budget was launched, articulates the theory of change underlying the Outcome Budget, presents a case study of the Outcome Budget of the Government of India’s Accelerated Power Development and Reforms Programme, and discusses the lessons that the Government of India may learn from its experience with the Outcome Budget.

The paper argues that the Outcome Budget has failed. This has happened because the assumptions of the theory of change underlying the Outcome Budget have not been satisfied. The failure of the Outcome Budget has extremely important lessons for the Independent Evaluation Office, which the Government of India has decided to set up. The paper articulates the theory of change underlying the Independent Evaluation Office. This theory assumes that policymakers in India currently demand rigorous impact evaluations of public interventions and will continue to demand such evaluations in future, not because they have to comply with any requirement but because they really want to know the answers to the impact evaluation questions of ‘what works, under what conditions does it work, for whom, what part of a given intervention works, and for how much?’, so that they may draw appropriate lessons from these answers and use these lessons while designing and implementing public interventions in future.  However, given Indian public officials’ current culture, the Independent Evaluation Office may not make any visible difference in development effectiveness in India.

Continue reading "Evaluation of Governance: A Study of the Government of India’s Outcome Budget" »

August 18, 2011

Certifying PFM Systems for Donor Budget Support to Fragile States – Professor Collier’s Proposal

Posted by Tej Prakash

In a recent op-ed (later also presented at an Overseas Development Institute (ODI) meeting), Prof. Paul Collier has put forward the argument that where donor aid is allowed to flow through the budget system of a fragile state, it has largely failed to deliver the results promised. The reasons given for this failure, range from incompetence to corruption. And, it is suggested that in the near future, there seems to be little chance of any meaningful improvement in these outcomes. He argues that the governance system in many of these countries is broken, and its focus is by no means primarily to provide services to the citizens. It is suggested that budget systems of these countries are extremely ‘leaky’ (‘looting of the public purse”) and that donors do not have, by and large, either the information or the technical expertise, to prevent misuse of aid money.

Collier makes a distinction between aid given for critical operations and for more general budget support operations. For critical operations he recommends using ‘imported administrative capacity’ to manage all spending, including donor funds through specific project support arrangements. His proposal relates only to donor budget support and does not address existing parallel project based arrangements operated by many donors. He does suggest that it is possible to improve the ‘technical’ aspects of donor flows. The focus of technical improvements would not be to introduce policy ‘conditionalities’ through a back door, but to enforce the country’s own laws. He cites the insight of Tinbergen that to implement any objective, there should be a distinct instrument with its distinct effect. Hence, the two main objectives: meeting the need for funds (how much) and ensuring their effective use (on what), should be managed by two different instruments.

Continue reading "Certifying PFM Systems for Donor Budget Support to Fragile States – Professor Collier’s Proposal" »

August 05, 2011

Forward Estimates: Rocking or Rolling?

Posted by Kris Kauffmann

In my view, it is now well established that using rolling forward estimates is a central element to the successful implementation of any Medium Term Expenditure Framework approach. By establishing the future costs of existing policies, for say 2-3 years after the budget, this provides a foundation for future budget planning processes, where the focus shifts to the costs verses benefits of changing those existing policies and their established costs. Multi-year estimates also support longer term macro fiscal as well as managerial planning. In recalling Australia’s MTEF reforms and describing the impact of rolling forward estimates, a senior official is quoted as telling the World Bank that “If you had to pick out the one thing that we have done above all others, this reform would be the most dramatic change.”

Yet we often see in developing and emerging market countries that while government may have adopted what appears to be forward estimates in their budget processes, they have not been able to achieve the dramatic changes in budgeting described above. It is a characteristic of these countries that the forward estimates, while published in the previous budget, are not accepted as being highly relevant for future budget processes.

Continue reading "Forward Estimates: Rocking or Rolling?" »

July 29, 2011

Creative Use of IT Systems in the Budget Office: Collaborative Budget Formulation Systems Show Promise

Posted by Sandeep Saxena

Automation of budget formulation processes has had limited success compared to the strides taken by many countries in computerization of budget execution and accounting functions. There have been fewer successful examples of computerized budget formulation. This anomaly may be partly attributed to the absence of standards in the budget formulation process. Unlike accounting systems that have rather well established processes and standards, the budget formulation process varies from country to country. The country-specific peculiarities mean that in order to succeed, a budget formulation system has to be much more flexible and adaptable to the local requirements.

 A recent study by the IMF’s regional technical assistance center in the Caribbean (CARTAC) explores the potential for use of a content management system (CMS) for operating the budget formulation process. The study, “A Collaborative Budget Formulation System: Concepts and Options,” John Moore, July 2011 (found here) concludes that information management products like Alfresco and MS SharePoint, among others, can offer rapid, flexible development of new business applications, including a budget formulation system, without having to depend on scarce ICT support resources.   

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June 08, 2011

Developing Program Budgeting AND Getting the Basics Right: Lessons from Mali

Posted by Guilhem Blondy  

Program budgeting is considered an important tool for developing countries to target more efficiently their resources towards the achievement of their development goals. However, limited public financial management (PFM) capacities are usually described as a strong constraint for the development of program budgeting in low-income countries. According to Allen (2009), the development of performance budgeting systems has resulted in many developing countries in “the accumulation by the finance ministry of vast databases of unused information”. The Fiscal Affairs Department (FAD) of the IMF has advocated for a long time a prudent approach, giving priority to basic requirements of PFM, like a realistic annual budget presented according a sound economic classification, effective budget execution controls, reliable fiscal reports, and strong cash management. The case of Mali tends to confirm the importance of “the basics first” (Schick, 1998) in the successful implementation of PFM reforms.

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June 03, 2011

PFM Lessons from the U.S. Congressional Budget Office

Posted by Phil Joyce[1]

Arguments in government occur as often over assumptions as they do over priorities. At a time when partisanship in the US seems at an all-time high, institutions that produce credible facts are particularly valuable. In this context, I have spent a lot of time thinking about a particularly influential and important national government institution—the U.S. Congressional Budget Office (CBO), an agency that is now 36 years old. Just last month, Georgetown University Press published my book on CBO, which is the first ever institutional history of this agency (The Congressional Budget Office: Honest Numbers, Power, and Policymaking).

CBO’s importance in US national debates, obvious to many observers for a long time, became apparent once again during the debates on the Obama health reform bill in 2009 and 2010. The President, who had insisted that any bill could “not add one dime to the deficit,” put CBO, as the official Congressional cost estimator, in the position of heavily influencing the content of the eventual health reform legislation. This was not the first time that CBO had been in such a position. History is chock full of instances where key initiatives of a majority party—the Carter energy policy in the 1970s, the Reagan program of the 1980s, the Clinton health reform of the 1990s—were called into question by CBO. It is nothing short of amazing that the United States Congress—as partisan an institution as it is possible to imagine—actually tolerates (and in fact, supports) such and inconvenient nonpartisan institution staffed by its own employees. 

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May 31, 2011

Conference on Fiscal Consolidation and Budget Institutions in South Asian Countries

Posted by Tej Prakash

The IMF’s Fiscal Affairs Department (FAD) and the Indian National Institute of Public Finance and Policy (NIPFP) recently hosted a joint conference on fiscal consolidation and strengthening of budget institutions in South Asian countries. The main “institutions” discussed were fiscal responsibility frameworks, fiscal councils, and medium term budget frameworks.

The conference took place in New Delhi from April 21-22, 2011. Apart from senior budget officials and policy makers from the central and state governments of India, representatives from Bangladesh, Sri Lanka, Nepal, Bhutan, Afghanistan and Maldives participated in the conference.

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May 20, 2011

The Australian Budget: Getting the Above-the-line Balance Back Above the Line

Posted by Jason Harris[1]

The latest Australian Budget, for the fiscal year beginning on July 1 was released last week amid much fanfare. As in the last couple of years, its focus was squarely on maintaining fiscal discipline, with the budget still on track to return to surplus in 2012 (Chart 1), net debt peaking at 7.2 percent of GDP and no new net spending decisions.

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April 11, 2011

Professor Allen Schick: "Government Shutdowns – Uniquely American"

 Posted by Michel Lazare

As you know, a last-minute agreement on this year's budget among the leaders of the US Congress avoided a partial shutdown of the US Federal Government. Failing this budget agreement, a partial shutdown would have occurred at midnight on April 8 when the time-bound resolutions that had funded the Federal Government so far in this fiscal year would have expired.

Such possible partial shutdowns are "uniquely American," as Professor Allen Schick explains in the interview he gave a few days ago to Marco Werman, the anchor of the National Public Radio show "The World."

Disclosure: as Marco Werman indicates during the interview, Allen Schick has worked for the IMF's Fiscal affairs Department as a consultant. Even better, he is a very good friend of many contributors to our PFM Blog!

April 06, 2011

Still Mostly Closed, but There’s Hope: Results from the Open Budget Survey 2010

Posted by Paolo de Renzio, International Budget Partnership

Transparency in public budgeting has been recognized as a principle of sound governance for a long time. But the systematic assessment and measurement of governments’ budget transparency is a recent phenomenon. One tool that has been developed for that purpose is the Open Budget Index (OBI), produced every two years since 2006 by the International Budget Partnership as part of its Open Budget Survey, to document the state of budget transparency across the world.

The OBI is based on an extensive questionnaire that draws on standards developed by a number of international organizations, including the IMF, the OECD, and the International Organization of Supreme Audit Institutions (INTOSAI). It ranks countries based on their scores on the OBI, which can range from 0 to 100, looking at the public availability, timeliness, and comprehensiveness of eight key budget documents that every country should publish.

Continue reading "Still Mostly Closed, but There’s Hope: Results from the Open Budget Survey 2010" »

March 23, 2011

Korea’s Experience with Medium-Term Expenditure Frameworks

Posted by Yang-Hyun Jin, IMF Fiscal Affairs Department

In the mid-2000s, the Korean authorities launched a comprehensive fiscal reform package aimed at fostering fiscal sustainability through strengthening the public financial management (PFM) system. This package contained four fiscal reform pillars: (1) the national fiscal management plan (NFMP); (2) top-down budgeting; (3) performance-based budgeting; and (4) digital budgeting and accounting system. Korea’s medium-term expenditure framework (MTEF) is covered by the first two pillars.

The budget process was one of the key aspects of the PFM system that needed to be strengthened. Focused on a single budget year, the previous budget process relied heavily on a bottom-up approach. This approach made it difficult to cope with upcoming fiscal challenges, such as trend increases in spending on pension and health care resulting from a rapidly aging population. In addition, the previous process was also characterized by a relatively weak linkage between budgeting and policy making, as well as by limited autonomy of the line ministries. All these weaknesses negatively raised risks in terms of fiscal sustainability.

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March 16, 2011

So What is this New EU Semester Anyway?

Posted by Jason Harris[1]

Not this year…

In Sweden, a semester translates into a holiday or vacation. Unfortunately for all those Swedish-speaking Finance ministry officials whose holiday hopes had been raised by the recent announcement of a new EU semester, in this case it means quite the opposite. Indeed, the new EU Semester is likely to mean a busier springtime for anyone working in budget departments across Europe.

Following the endorsement of the European Economic and Financial Affairs Council in September last year, the new EU Semester requires EU Member States to submit their economic and fiscal strategies for the next three years earlier in the year and at the start of their annual budget processes. This is in contrast to previous practices, where euro-zone countries prepared their Stability Programme documents (and aspiring members produced their Convergence Programme documents) after their annual budgets were completed.

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March 04, 2011

Budget Reforms After Conflicts: Insight From Southern Sudan

By Gregory Smith and Fiona Davies

The semi-autonomous Government of Southern Sudan (GoSS) was established in 2005 after a Comprehensive Peace Agreement (CPA) ended 22 years of conflict between the Government of Sudan and Sudan People’s Liberation Movement (SPLM).  The recent referendum has paved the way for independence on 9th July 2011 and efforts are being made to build and develop public financial management systems.

Perhaps uniquely for a post-conflict government, GoSS had immediate access to millions of dollars of domestic oil resources with which to fund its budget.  The Ministry of Finance faced the immediate challenge of introducing a budget system capable of managing the resource inflows in a context of limited capacity.  Details of how these systems were built and factors behind the success are provided in a new ODI Briefing Paper.  

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February 28, 2011

Budget Classification Design and Implementation: Tajikistan’s Administrative Segment

Tajikistan has embarked on a major reform of its budget classification. The main element of this reform is the inclusion of an adminsitrative segment in the budget classification. The attached article (Download TAJIKISTAN ADMINISTRATIVE CLASSIFICATION ) by John Zohrab, Robert Brudzynski, and George Gridilian provides a detailed description of the reason for this reform and of its key characteritics. 

The conclusions of the article are as follows:

"Although there is further work to be done to complete the implementation of the new administrative segment of Tajikistan’s budget classification, some preliminary conclusions can be drawn.

Conformity with Fiscal Transparency Code and Manual

The new administrative segment is internationally accepted in the sense that:

  • It conforms almost completely  with the principles set out in the relevant IMF technical manual and in specific technical assistance reports; and
  • Other donors and international experts funded by them working on PFM issues have explicitly or implicitly accepted it.

It is standardized in the sense that, subject to some clarification, its structure conforms consistently to its design principles. It has a uniform coding structure.

Continue reading "Budget Classification Design and Implementation: Tajikistan’s Administrative Segment" »

January 31, 2011

Planning and Budgeting in Developing Countries – “Shrinking the P”

Posted by Richard Allen[1]

In most advanced western countries, the use of a national development plan as the primary tool of policy-making died out two generations ago, as it largely did in countries of the former Soviet Union in the early 1990s. However, national development planning continues to be a dominant policy instrument in many low-income and emerging market economies. Similarly, public investment plans (PIPs), which were in vogue in the 1970s, then fell from grace as theories of economic development based on capital accumulation lost influence, are now fashionable once more. What explains these developments? Why is planning deemed useful and relevant for developing countries, but has become outmoded in more advanced countries?

It should be clarified that the planning functions and instruments have not truly disappeared in advanced countries; rather, they have been replaced by other processes and instruments of policy that are judged superior in terms of their flexibility and usefulness. In particular, in the last fifty years, developed countries have developed a broad-based approach to policy analysis and review that is based upon a medium-term expenditure framework (MTEF), program budgets, and performance evaluations. These tools are combined with regular discussion by ministers, often through the cabinet mechanism, of priorities for defense, education and health, social security, agriculture, and other key sector policies and programs.

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January 28, 2011

IMF's Fiscal Monitor Update: Strengthening Fiscal Credibility

Fmupcov 

 On January 27, 2011, the IMF released an update to its flagship publication on fiscal issues: The Fiscal Monitor. We are posting here the beginning of the text of this update titled "Strengthening Fiscal Credibility". We provide at the end of this post, a pdf copy of the full text (and corresponding data tables), as well as a link to the relevant IMF web page.

 

Despite the improving global outlook, the pace of fiscal consolidation this year is slowing in some key countries. The United States and Japan are adopting new stimulus measures and delaying consolidation relative to the pace envisaged in the November 2010 Fiscal Monitor. The underlying fiscal outlook has also weakened in some emerging markets—among them are several that need to build larger fiscal buffers, particularly in the face of surging capital inflows, overheating, and possible contagion from advanced countries. By contrast, advanced economies in Europe are projected to continue tightening policies amid heightened market scrutiny in several countries. Altogether, sovereign risks remain elevated and in some cases have increased since November, underlining the need for more robust and specific medium-term consolidation plans.

Fiscal outturns in 2010 were slightly better than projected, but some large emerging economies underperformed

 
While advanced economies maintained expansionary fiscal policies on average in 2010, outturns were generally slightly better than projected in the November 2010 Fiscal Monitor. Revenue collection exceeded expectations across most major economies—both output growth and, in some countries, the responsiveness of revenues to output were larger than expected—and spending was lower (Table 1). Overall, the average deficit of advanced economies fell compared with 2009 by about 1 percentage point, to about 8 percent of GDP (0.3 percent better than projected). Excluding the impact of growth and financial sector support, the cyclically adjusted balance widened slightly. Deficits in Germany and the United States were lower than in the November Monitor, reflecting good revenue performance and lower spending—due in Germany to the strong labor market and in the United States to some legislative delays in approving spending and lower financial sector support. Euro-area countries that had targeted large fiscal consolidations generally succeeded in posting marked deficit reductions. Meanwhile, advanced economy gross general government debt continued to rise rapidly in 2010, topping 96 percent of GDP.

Continue reading "IMF's Fiscal Monitor Update: Strengthening Fiscal Credibility" »

November 19, 2010

Un modelo básico de presupuestación por resultados

Juan Ramón Ruiz

TNM_2009-01-SPA_WEB 1 
¿Cuáles son las características de un modelo básico de presupuesto por resultados? ¿Cómo deben enfocar los países de bajos ingresos la presupuestación por resultados? ¿Cuáles son las condiciones previas para iniciar el proceso? ¿Qué tipos de presupuestación por resultados existen y cuales tipos deben evitar los países de bajos ingresos?

Estas son las preguntas que responde la Nota Técnica (NTM 1) elaborada por Marc Robinson y Duncan Last. Esta Nota describe la formulación de un modelo básico de presupuestación por resultados que sea apto para aquellos países interesados en adoptar un sistema con un mínimo de complejidad y costos, y con recursos humanos y capacidad técnica limitados, particularmente países de bajos ingresos.

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October 25, 2010

AFRITAC Centre (AFC) donne le coup d’envoi du Forum des Hauts Fonctionnaires du Budget

Posté par Abdoulahi Mfombouot, Conseiller Résident en gestion des dépenses publiques à AFRITAC Centre

Première initiative de ce genre dans la sous-région, le Forum des Hauts Fonctionnaires du Budget des pays membres de l’AFRITAC Centre s’est tenu à Brazzaville, capitale de la République du Congo, du 27 au 30 septembre.

Il a réuni deux délégués des plus hautes autorités budgétaires de chaque Etat-membre d’AFC pour des échanges théoriques et pratiques. Au cours de son discours d’ouverture, le représentant du Ministre des finances de la république du Congo a donné le ton en invitant les participants à profiter de cette rencontre pour asseoir une plate forme de coopération budgétaire pérenne, dynamique et mutuellement bénéfique. Il a insisté aussi sur la nécessité de partager avec franchise les réflexions sur les succès engrangés autant que sur les difficultés rencontrées.

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Central AFRITAC (AFC) Launches the Senior Budget Officers' Forum

Posted by Abdoulahi Mfombouot, Resident Adviser on Public Expenditure Management, Central AFRITAC

As the first initiative of this type in the subregion, the Forum of Senior Budget Officers of Central AFRITAC member States held its first meeting in Brazzaville, Republic of Congo, on September 27-30, 2010.

The event brought together two delegates from the top-level budgetary authorities in each AFC member country, to exchange theories and practices. The representative of the Minister of Finance of the Republic of Congo set the tone in his opening address, by inviting participants to use the meeting to lay the foundations for ongoing, dynamic, and mutually beneficial budgetary cooperation. He also highlighted the need for a frank exchange on the successes achieved and difficulties encountered.

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