PFM Blog

July 21, 2014

Philippines: A Competency Model for PFM Professionals

PHL

Posted by Gordon Ferrier1

Human resource aspects of public financial management (PFM) reform strategies are given less than their due in the literature. Yet they are fundamental to the success of such strategies, as a recent initiative by the Government of the Philippines (GOP) to develop a Competency Framework for some 60,000 government employees exemplifies.

In March 2013, the GOP embarked on an ambitious new strategy for reforming PFM systems. Its PFM Reform Roadmap aimed to “clarify, simplify, improve and harmonize the financial management processes and information systems of the entire government machinery for improved public service delivery”.

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January 02, 2014

Top Ten Posts for 2013

Posted by Richard Allen, Holger van Eden, and Sasha Pitrof

Fireworks
The Top Ten posts for 2013 listed below display the continued diversity and versatility of the blog. The number of “hits” passed the one million mark during the year, and readership has maintained its high level. Readers clearly value the blog for keeping them up to date with new publications and events, as well as challenging them with original ideas and perspectives on PFM. Half of the Top Ten features reviews of two important new handbooks on PFM published in 2013, new technical notes on cash management and treasury issues, and the results of the Open Budget Survey for 2013. Other articles focus on keynote topics such as fiscal transparency, budget documentation, performance budgeting, and the challenges of reforming PFM in developing countries. Top author is Maarten de Jong of the Netherlands Ministry of Finance. Congratulations to him and all others who contributed excellent material to the blog in 2013! Looking forward to the New Year, the editors would welcome contributions from authors old and new, on topics both familiar and off-beat.

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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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December 02, 2013

Is There a “New Consensus” on PFM Reform?

Posted by Richard Allen

Odi logo
The Overseas Development Institute’s annual CAPE Conference (the eighth in the series) on Budgeting in the Real World took place in London from November 13–14, 2013. The Conference attracted an impressive group of 110 national and international public servants, consultants and academics who work on budget institutions. For many practitioners, CAPE is the definitive PFM event of the year. The keynote speech, which was featured in a recent blog post, was given by Antoinette Sayeh, Director of the IMF’s Africa Department. Other notable presentations were made by Matt Andrews of the Harvard Kennedy School, and Allen Schick of the Brookings Institution and University of Maryland.

The Conference included sessions on the form and functionality of budget systems, what constitutes a capable ministry of finance, how reform can deliver change in the budget process, and how improved budget systems impact on development outcomes. Much of this is familiar ground and there was a sense of déjà vu in some of the presentations. One participant asked rhetorically why there were no feedback loops in our profession, why the same messages kept on being repeated from one year to the next, and why PFM practitioners appeared to learn so little and did not change their attitudes or behavior. Nevertheless, while the agenda had a familiar look on the surface, there were encouraging signs that an important if uncomfortable truth about the nature of budget reform is beginning to sink in to the collective mind of the PFM community. Indeed, the Conference may prove to be a watershed in the development of thinking on PFM reform, though much work remains to be done to flesh out the details of the new approach—an emerging “New PFM Consensus”—and put it into practice.

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November 26, 2013

New Blood for FAD

Torben Hansen (below left), formerly the Deputy Permanent Secretary responsible for the budget at the Ministry of Finance in Denmark, has recently joined the Fiscal Affairs Department of the IMF as a Deputy Division Chief responsible for public financial management. Torben was interviewed by the PFM Blog about his career and what he expects to bring to the new position.

  Torben 2  Richard 2

Q: Why did you decide to join FAD? You have had a varied career working in the Danish finance ministry and elsewhere. What skills, experience and ideas do you expect to bring to the new job?

After working more than 20 years in the Danish finance ministry, the decision to join FAD is a unique opportunity to move my career forward in an international setting. I felt the time was right to seek new challenges, and the new position is a perfect match in terms of both my competencies and professional interests. What I can bring to the new job is first and foremost the practical experience of working with politicians and senior officials in a finance ministry and being at the core of the decision-making processes of government. Setting up the right procedures, institutions and incentives are crucial elements in maintaining a well functioning PFM system. I also hope to bring some knowledge and understanding of change management processes, and not least how difficult these are. At the end of the day, change is about people. And governmental organizations are world champions in avoiding, even opposing, change. Finance ministries have to learn how to work around these obstacles.

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November 20, 2013

Crowd Sourcing Request: A List of All International Comparative PFM Data!

Posted by David Gentry

Database
Public Financial Management (PFM) data sources are rapidly increasing in number and quality. In the last dozen years several new major data sets have been established, such as the PEFA (Public Expenditure and Financial Accountability) Secretariat’s listing of country assessments, the Open Budget Initiative’s Open Budget Survey results, and the IMF’s Fiscal Rules Dataset. Data sets increasingly are well defined, standardized, updated regularly, and often aligned with key analytical issues. They cover at least a large subset of countries worldwide.

An initial list of PFM data sources is shown below. Readers of the PFM Blog are invited to suggest additions, keeping in mind the criteria of useful data described in the opening paragraph above. An updated list, based on reader submissions, will appear in the Blog in the near future.  

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November 08, 2013

Update on Sukuk Financing

Posted by Yasemin Hurcan

In a speech in the World Islamic Economic Forum on October 29, 2013, UK Prime Minister David Cameron announced that the UK would like to become the first country outside of the Islamic world to issue an Islamic bond. He stated that the Treasury was working on the practicalities of issuing a bond-like sukuk instrument worth around £200 million, which it is hoped to launch as early as next year.

In addition, the London Stock Exchange is creating a new way of identifying Islamic finance opportunities by launching a world-leading Islamic Market Index. As was discussed in the blog posted on May 30, 2013, this development suggests that the use of sukuk instruments for sovereign borrowing is likely to increase in coming years. It supports the case for developing international norms on the accounting and reporting of sukuk-related transactions in PFM.

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June 03, 2013

Kenya’s Bold Course in PFM Reform

Posted by Ragnar Gudmundsson[1]

Note: This is the first in a new series of articles on the blog about PFM reforms in selected countries. Each article will be written by the IMF’s mission chief or resident representative in the country concerned, thus casting a fresh light on the reforms and their relationship to the Fund’s surveillance work.

Gudmundsson
Kenya is going through a huge set of political reforms, including a new Constitution.  What issues in public finance and PFM has this created? 

Kenya’s ambitious new Constitution was promulgated in August 2010, and one of its eighteen chapters is devoted to Public Finance. Key provisions in this chapter relate to devolution and the process of fiscal decentralization to the 47 newly created counties. Devolution was considered by the drafters of the Constitution as a way to promote political stability by ensuring adequate representation and the participation of all Kenyans in the running of the country. In this context, fiscal decentralization was perceived as a mechanism to enhance the delivery of social services on the ground and to promote enhanced accountability from State Officers. Moreover, a central objective of the Constitution is to promote good governance in PFM through the establishment of a sound institutional and regulatory environment at both national and county level.

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April 11, 2013

Austria – From an Incremental Improver to a Comprehensive Reformer

Posted by Johann Seiwald[1]

From the mid 1990s on, Austria has steadily improved its framework for fiscal policy and budgeting. With Austria’s accession to the European Union and the corresponding need to meet the Maastricht debt and deficit requirements, in 1996 a top-down approach replaced a “demand-driven” budgeting model in which fiscal discipline was not enforced and line ministries had little incentives for structural changes. Since 2000, the use of lump-sum budgets and performance budgeting has been piloted in more than 20 government agencies, including prisons, a printing office and the police academy. The implementation of a new cost accounting system for all federal ministries, as well as projects aimed at improving performance management, and introducing product definitions for public services and performance indicators in several line ministries, has steadily enriched the financial management framework.

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November 28, 2012

Two Richards Talk Fiscal Transparency

Posted by Rachel F. Wang

Richards2
On November 1, 2012, the IMF’s Fiscal Affairs Department (FAD) published a policy paper entitled, “
Fiscal Transparency, Accountability, and Risk”. The paper reviews the progress made in improving fiscal reporting since the late 1990s; considers what the global financial crisis has taught us about the adequacy of prevailing fiscal transparency standards, practices, and monitoring; and makes a series of recommendations for revitalizing the global fiscal transparency effort in the wake of the crisis. Richard Allen, a seasoned advisor on public financial management issues and former deputy division chief in FAD, sat down with Richard Hughes, the new head of FAD’s Public Financial Management Division I and co-author of the paper, to talk about its key insights and implications.

Richard Allen (RA): Can you tell me why it was decided to prepare a new IMF policy paper on fiscal transparency?

Richard Hughes (RH): There were really two motivations.

The first motivation was that the IMF has been in the fiscal transparency business for about 15 years. We started work in earnest in the wake of the Asian Financial Crisis with the development of the Fiscal Transparency Code (Code of Good Practices on Fiscal Transparency) and Manual (Manual on Fiscal Transparency) and the Fiscal ROSC (Reports on the Observance of Standards and Codes). So, 15 years on, we wanted to take stock of how much progress we have made in promoting greater fiscal transparency, review how these fiscal transparency instruments were performing, and look at how much work was left to be done.

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November 15, 2012

Views from the Field No. 8 – West Bank and Gaza

Posted by Pierre Messali

In the latest in the series “Views from the Field”, Richard Allen interviewed Pierre Messali, the World Bank’s Public Sector Expert in West Bank and Gaza, Jerusalem.

RA:  Please describe your new position in Jerusalem and your work priorities in the coming year.

PM:  As the World Bank’s Senior Public Sector Specialist in West Bank and Gaza (WB&G), Jerusalem, I am in charge of supporting the Palestinian Authority (PA) with its Public Financial Management (PFM) and Civil Service Reform (CSR) agendas, as well as broader governance reform issues. A series of major initiatives was launched in these areas during 2008-2011 by my predecessor, Mark Ahern. My primary objective is to keep these multiple agendas alive and to support the PA in their implementation. On the PFM side, the main focus is on strengthening cash forecasting and accounting in order to address the current challenging fiscal/cash situation, and to issue financial statements in line with IPSAS.  Regarding CSR, we plan to help the PA define principles, methodology and modalities for managing human resources, taking account of the constraining fiscal environment. Other important areas of work include support for the implementation of the new public procurement law, especially setting up the High Council for Public Procurement; and testing the PA’s appetite for developing the newly established Anticorruption Commission.

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November 13, 2012

Views from the Field No. 7 – East Asia

Posted by Suhas Joshi

In the latest in the series “Views from the Field”, Richard Alen interviewed Suhas Joshi, FAD’s PFM Advisor in East Asia, who is based in Cambodia.

RA:  What is your experience of working as a PFM advisor around the world?

SJ: Tolstoy starts Anna Karenina with the sentence “Happy families are all alike, unhappy families are unhappy in their own way”. In the same way countries are all alike in their basic PFM requirements and issues but each is unique in its own problems and issues. I have had the privilege of having sat on both sides of the donor table - in India I used to deal with bilateral aid to India and now, for 13 years with the Fund, I have delivered aid to Russia, West African states such as Ghana, Liberia, Sierra Leone and Gambia, then 15 Pacific Island countries, and now to Cambodia, Laos, Vietnam, Nepal, Bangladesh, Bhutan, Indonesia, Sri Lanka, Myanmar and Maldives.

In his Theban plays Sophocles says “There is nothing new under the sun”. In the same vein, I see in all the countries where I have worked certain fundamental PFM issues that remain the same. Yet diversity in location, size and capacity makes each country and its problems different. This creates a challenge for practitioners at the implementation stage - indeed a philosophical one. Often we tend to believe that we, as TA providers, are guiding the reform process. But, as the Gita tells us, we are not the “doers” – we are at best catalysts in the reform process. As I saw from my experience in India, the main “doers” of reform are the ministers and government officials in any country. They are busy performing the routine functions of government about 90% of their time, failing which they will lose their jobs. This leaves about 10% of their time to engage in the reform process. If government officials have to implement several reforms at the same time, their resources are further stretched, resulting in slow implementation. Factor in a bureaucracy that is often either de-motivated or ambivalent, then none of our efforts will bear fruit!

In sum, we need to be realistic in our hopes and recognize that unless we have a high level champion to provide motivation and guidance, the reform process will be slower than expected, if indeed it will be implemented at all. Reform needs to be combined with sustainable capacity development so that the “doers” can do things themselves, and correctly, while we support them in meaningful ways.

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September 27, 2007

Welcome to the New IMF Public Financial Management Blog

Welcome to the Public Financial Management Blog of the IMF Fiscal Affairs Department (FAD).

As the first IMF external blog and, to the best of our knowledge, the first PFM blog ever, my FAD colleagues and myself are thrilled to be breaking new ground.

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