Budget Execution

December 23, 2013

Strengthening the Capacity of Parliaments in the Budget Process

Posted by Carlos Santiso and Marco Varea*

In the past decade, parliaments in many parts of the world have flexed their muscles by demanding more information about the government’s performance in managing public resources. In the Latin America and the Caribbean region, however, the capacity of the parliament to influence budgetary matters—and more generally fiscal policy and public financial management— is hindered not only by the centralized nature of the budget process, but also by the legislature’s lack of technical and institutional capacity.

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September 11, 2012

Timing is Everything: Why Delays in Budget Approval are Undermining Fiscal Policy in Africa…And What Can Be Done About It

Posted by Camille Karamaga

A number of serious public financial management (PFM) problems in Africa can be traced back to a single, simple issue – late submission to and approval of the budget by the legislature. Limited legislative scrutiny of fiscal and budgetary policies undermines transparency and accountability in resource allocation and utilization which form the cornerstone of a good PFM system. Failure to provide the legislature with adequate time to scrutinize the budget reduces their ability to undertake critical analysis of fiscal policies and service delivery objectives. Late approval of the budget also prevents government entities from initiating procurement processes at the start of the financial year based on the approved budget, especially where special warrants or pro forma rules rather than systematic cash plans prepared by spending agencies are used to release funds.

The need to provide adequate time for parliament to scrutinize the budget and for line ministries to plan for the year ahead is recognized in both international standards and national laws. International experience recommends that the annual budget estimates be tabled in the legislature at least three months before the beginning of the new financial year in order to allow meaningful scrutiny. Guidelines on good practice in this area are provided in documents such as the IMF’s Code of Fiscal Transparency, the OECD’s Guidelines on Transparency, and the PEFA Performance Measurement Framework.

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October 03, 2011

Budget Institutions Supporting Fiscal Consolidation

Posted by David Nummy

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

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

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October 20, 2010

Legislatures and the Budget Process – New Book Published

Posted by Ian Lienert

Are legislatures in control of budget processes?  Or is fiscal control a myth?  Professor Joachim Wehner of London School of Economics addresses these and other questions in a new book on the role of the legislature in annual budget decision-making. The book’s recent publication is very timely, given the need for many advanced countries to implement credible fiscal plans, which may be proposed by governments but rejected by parliaments.

There is a dearth of theory-based studies that explain the observed wide variation in the legislature’s role in budget processes in different institutional settings. Most studies focus on the well known polar cases of very strong legislatures (notably the United States) and those where fiscal control is largely a myth (notably the United Kingdom). In contrast, the new book’s empirical work is based on a large sample of countries and provides strong evidence for the importance of legislatures’ budget amendment powers in determining fiscal outcomes.

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September 29, 2010

Fiscal Transparency in Cameroon: a Top Concern for the Government

Posted by Manal Fouad and Edouard Martin (IMF's Fiscal Affairs Department)

Cameroon's dialogue with the Fund on fiscal transparency issues goes far back. Hence, Cameroon was one of the two pilot countries to experiment with the fiscal module of Reports on the Observance of Standards and Codes (ROSC), when the Fund launched the initiative in 1999.

Eleven years later, a ROSC reassessment shows that Cameroon has made important strides to comply with the principles of the IMF Code of Good Practices on Fiscal Transparency. Such progress is the result of an active government engagement towards improving public financial management and transparency, which is now set as one of the objectives of the budgetary process. Consistent with this engagement, numerous reforms have been implemented to improve transparency, some with the help of development partners and with technical assistance from the IMF. For instance, Cameroon joined the Extractive Industries Transparency Initiative (EITI) in March 2005, creating in the process a platform for dialogue on public finance involving representatives of government, donors and lenders, and civil society. Also, a new budget system law, encompassing modern PFM techniques and generally in line with international good practices was promulgated in 2007; its provisions are expected to be fully in place by 2012. During its discussions in Yaoundé, the authors of the report met with the community of NGOs, journalists, and other stakeholders, who were outspoken and keenly interested in transparency issues and in working toward high standards for their country.

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August 11, 2010

A Stock-Take on African PFM

Posted by Matt Andrews

How strong has African PFM become? How do African public financial management (PFM) systems in place now facilitate effective public financial management? Where are the next challenges and how can they be met? A recent paper of mine addresses these questions, using PEFA analyses to identify central themes of the continent’s recent PFM story. The themes emerge from quantitative and qualitative data in 31 central government PEFAs completed prior to mid-2008 and tell a story in two parts: (i) across PFM processes, and (ii) across countries.

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December 12, 2007

Automating Public Financial Management Systems for Results

Posted by Bill Dorotinsky

Over the past few decades, governments and development agencies alike have invested enormous financial and human resources into automating public financial management (PFM) systems, and often the results have been less than hoped. Governments have had difficulty implementing systems, and not achieved desired functionality. And development partners have invested large sums of money, only to find systems delayed in implementation, having limited impact, and often with real challenges to the sustainability of the systems. On December 2-4, 2007, the International Consortium of Governmental Financial Management (ICGFM) held a two-day workshop entitled "Use of Financial Management Information Systems (FMIS) to Improve Financial Management and Accountability in the Public Sector".  While the conference title and topic might cause eyes to glaze over with visions of technical issues, the conference was a useful glimpse into current thinking on PFM system automation, and full of practical advice to those concerned with PFM system automation.

Conference presentations from government authorities, international organizations, and consultants covered topics such as how FMIS fits within the over-all PFM reform agenda, planning for FMIS development, FMIS design components, IT alternatives, project management, procurement, and capacity building. The conference program and all the presentations made are available on-line at the ICGFM website under Winter Conference.

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December 05, 2007

Germany: Ministry of Finance's Task Force Recommends Introduction of Performance Budgeting and Accrual Accounting

Posted by Michel Lazare

A few days ago, our FAD colleague and PFM Blog author Marc Robinson published a short article in IMFSurvey Magazine titled "Major Reforms for German Budget System." Here is a summary of the key points; the full text of the article is accessible by clicking here.

The German Ministry of Finance's Budget and Accounting Reform Task Force, who was assisted by staff of FAD, recently recommended "the introduction of product budgets--often known elsewhere as programs. The intention is to focus greater attention in the budget formulation stage on choices about how much money is allocated to" various outputs.

"Under the task force's proposals, the product budgets would not in the first instance be used for parliamentary budget appropriations. The idea is that they would initially be used [...] in formulating the budget. The logical next step would, however, be to shift the annual budget law also onto programmatic basis."

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November 26, 2007

PFM Reforms and Public Expenditure Efficiency: Key PFM Reforms Playing a Role in Effectively Controlling Public Expenditure

Posted by Michel Lazare

There are seven key institutional arrangements for budgeting that play a key role in effectively controlling public expenditures in OECD countries.

This is at least the view presented in 2005 by Jon Blondal (the then Acting Head of the Budgeting and Management Division of the OECD) on the occasion of the 7th Banca d'Italia Workshop on Public Finance. In Jon Blöndal's view, there are three major determinants of the fiscal outcomes of OECD member countries: (1) the general performance of the economy (which is the main driver), (2) the political commitment to fiscal discipline, and (3) the institutional arrangements for budgeting. The presence of the two first factors being insufficient to experience a successful fiscal outcome.

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November 05, 2007

France's National Audit Office ("Cour des Comptes"): 200 years and counting!

Posted by Michel Lazare and Dominique Bouley

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On November 5, 2007, the French National Audit Office (La Cour des Comptes) celebrates its 200th anniversary with a re-enactment of its 1807 inaugural session. The current Cour des Comptes was created by Emperor Napoleon I (in a September 16, 1807 law).

Its historical roots are even much older: a royal ordinance in 1256 prescribed that mayors in Normandy had to report their financial accounts to a royal commission once a year; and an institution called chambre des comptes was created in 1303.

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October 29, 2007

Expenditure Commitment Controls, the essence of fiscal discipline – IMF Technical Guidance Note

Posted by Dimitar Radev and Pokar Khemani

Fiscal discipline, one of the key objectives of good public financial management (PFM), requires a well developed expenditure control framework, including at the commitment level, to prevent accumulation of payment arrears. A July 2006 IMF FAD Technical Guidance Note, "Commitment Controls," by FAD staff members Dimitar Radev and Pokar Khemani, provides technical advice on a number of areas related to commitment controls, including objectives, preconditions for successful implementation, and institutional design. These guidelines are intended to apply primarily to IMF operational work and technical assistance but have also implications for the relevant government departments and agencies within national, provincial/state and local jurisdictions.

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October 23, 2007

Budget practices and procedures — everything you'd want to know about OECD countries

Posted by Bill Dorotinsky

Ever lay sleepless at night, wondering how far in advance of the new fiscal year OECD country legislatures receive the budget from the executive? Or if ministers in OECD countries are allowed to reallocate/vire funds between line items within their responsibility? For PFM specialists and country PFM officials, these can be important guideposts for reform directions.

Well, wonder no more, and sleep peacefully. The OECD just released publicly their Budget Process and Procedures database for 2007, featuring 30 OECD and 8 non-OECD countries. As the OECD web page itself says: "The purpose ... is to provide budget practitioners and academics the opportunity to compare and contrast national budgeting and financial management practices with a view to share experiences and best practices. It is a unique, comprehensive and free resource that covers the entire budget cycle: preparation, approval, execution, accounting and audit, and performance information."

October 11, 2007

Public Investment: Good Project Management is an Issue of ...Capital Importance

"Unexpected changes to payment schedules related to capital projects can create significant difficulties for finance officers responsible for cash management" remarks Steven R. Kreklow (*) in his short article ("Capital Project Cash Flow Management") of the August 2007 issue of the Government Finance Review, the membership magazine of the US-based Government Finance Officers Association.

This adverse impact on cash management and more generally budget execution can be mitigated by good budget and project management techniques described in Steven R. Krelow's article.

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