Public Financial Management

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.

Continue reading "Budget Institutions Matter" »

April 18, 2014

 Posted by Benoit Taiclet 

Lagarde blog (8)

 

 

 

 

 

 

 

 

 

 

 

IMF Managing Director Christine Lagarde’s visit to Bamako in January took place while Mali is still healing its historical wounds. In 2012, the defeat of the army against insurgents led to a coup d’état which was met with condemnation by the international community and sanctions by the Economic Community of West African States (ECOWAS). Faced with the withdrawal of external funding, Mali downsized budget appropriations by one-third and fended off challenges to budget discipline. In spite of these efforts, Mali’s total debt rose by 2 percentage points to 35 percent of GDP.

Continue reading "" »

January 14, 2014

Barcelona Promotes Fiscal Health and Strong Economic Performance

Posted by Jordi Baños-Rovira[1]

Euro
Barcelona City Council has shown what can be done in turning around a huge fiscal imbalances in 2009-11 into a moderate level of debt and a fiscal surplus in 2013. The budget for the fiscal year 2014 shows an 11% increase in expenditures (22% for capital expenditures), prioritizing programs that contribute to the protection of the most vulnerable people and reinforce economic growth, while maintaining a fiscal surplus, freezing tax rates and maintaining a moderate level of debt.

Continue reading "Barcelona Promotes Fiscal Health and Strong Economic Performance" »

December 27, 2013

PEFA Newsflash: Revising the PEFA Performance Measurement Framework

Posted by the PEFA Secretariat

Pefa
The PEFA Program, launched in 2001, has succeeded in creating a credible and comprehensive Framework for the assessment of PFM functionality, which has been successfully applied in a large number of countries: countries with different income levels; different administrative traditions; and in different geographical regions.

The current Framework, although continuing to be relevant and applicable in a wide range of contexts, is being revised with the twin objectives of enhancing its relevance (by recognizing the developments in accepted good practice” which have taken place since it was launched) while preserving comparability over time, to the extent possible.

At their meeting in Paris in early December, the PEFA Partners made significant progress towards finalizing the revision of the Framework, including adding new indicators and modifying several existing dimensions in the light of the evolution in what constitutes “generally accepted good practice”.

The Partners also agreed on a process to test and consult Stakeholders on the revised Framework. The testing will have two distinct phases, the first of which will be restricted to a small number of volunteer countries where the Secretariat will support the assessment team to gather the data required to rate the indicators. Following this initial testing, the draft will be released for a period for Stakeholders to offer comments, in addition to which, opportunities will be sought to link with international and regional events in the area of public financial management and accountability, and the PEFA Partners will also arrange dedicated events where detailed discussions can take place.

Following the consultation period, the draft Framework will be modified as necessary before the second, more substantial testing phase is undertaken, which will be designed to ensure that the Framework is applicable across a wide range of countries contexts and different heritages. The revised Framework is expected to be released in 2015.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy. 

December 16, 2013

ICGFM Winter Conference 2013

Posted by Carla Sateriale

Icgfm
The IMF’s Fiscal Affairs Department (FAD) hosted this year’s Winter Conference of the International Consortium on Governmental Financial Management (ICGFM) from December 9-11, 2013. Despite the snowfall in Washington, the attendees’ enthusiasm for PFM innovations, which was the theme of the conference, was not dampened. Dozens of officials and PFM professionals from various development organizations, governments and NGOs convened for discussions on a variety of topics related to PFM, from accrual accounting to climate change.

IMF Division Chief Richard Hughes’s opening remarks highlighted worldwide innovations in financial management, including the trend of independent fiscal councils being established, the increasing number of sovereign wealth funds around the world, and the growing adoption of accrual accounting. Major events during the conference included a presentation by Harvard’s Matt Andrews on the role of governance in development, Xavier Debrun’s exposition of FAD research of the efficacy of fiscal councils, and a discussion panel on PFM innovations headed by Richard Hughes and the World Bank’s William Dorotinsky.

The next ICGFM event will be its annual training course, from May 18-23, 2014 in Miami, Florida. The theme of it will be “Good Public Financial Management Practices in a Period of Global Adjustment.”

Download ICGFM Winter Conference 2013 Program

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy. 

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.

Continue reading "New Blood for FAD" »

November 21, 2013

Budgeting in the Real World - What Do We Know? What Should We Do?

This is the keynote speech given last week, November 13th, by Antoinette Sayeh, Director of the IMF’s African Department at the UK’s Overseas Development Institute’s annual CAPE Conference in London on why PFM matters, why reforms are difficult, and what we know to make them successful…..

Sayeh

I am delighted to have the opportunity to deliver this keynote address and would like to thank Messrs. Ed Hedger, Kevin Watkins, and Philip Krause for inviting me to this important conference and for that generous introduction.

Let me start by saying that from the IMF’s perspective, good governance is important for countries at all stages of development. Transparent government accounts and effective public resource management are preconditions for sustained economic growth and prosperity. Indeed, budget formulation, implementation, and oversight lie at the core of good economic governance. Strong budget institutions are essential for countries to achieve sound fiscal policies and effective expenditure programs. Budgets can only be spent once. Getting the priorities right all the way from formulation to execution, and being efficient at it, is all the more important. Transparency and fairness are most important in ensuring that expenditures are aligned with broadly agreed priorities, and in securing society’s buy-in. While most can agree to the underlying principles, the hard part is to have systems and capacity in place that actually ensure that they are respected all along the process chain. As so often, the devil is in the detail. 

Continue reading "Budgeting in the Real World - What Do We Know? What Should We Do?" »

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.  

Continue reading "Crowd Sourcing Request: A List of All International Comparative PFM Data!" »

November 11, 2013

Online PFM Conference: ODI Event Being Streamed Live this Week

Posted by Ryan Flynn

ODI-CAPE
The Overseas Development Institute (ODI) is one of the UK's leading independent think tanks on international development and humanitarian issues. It is organizing a major conference this week: the 2013 CAPE Conference: budgeting in the real world. CAPE stands for Centre for Aid and Public Expenditure, which is hosted by ODI. It aims to shape and drive the agenda for international development assistance, as well as efficient and effective public spending for development at the country level.

The conference will focus on PFM and budgeting in developing countries. The whole two-days (13 & 14 November) will be streamed live online, and questions fielded through social media (#CAPE2013) will be answered by speakers and panellist. You can register to attend here.

Continue reading "Online PFM Conference: ODI Event Being Streamed Live this Week " »

November 06, 2013

Book Review: The International Handbook of Public Financial Management[1]

Posted by Philip Joyce and Juan Pablo Martinez Guzman[2]

PFM handbook
Over the last two decades, public financial management (PFM) has been at the core of many government reforms around the world.  As a subject with many moving parts, the field has become distinctively broad and diverse, with a great array of topics that are strongly linked with each other. For that reason, creating a comprehensive book that covers most, if not all, of the PFM related topics, is a daunting (some might say impossible) task. Richard Allen, Richard Hemming and Barry Potter, three former staff members of the Fiscal Affairs Department of the IMF, however, have managed to accomplish such an objective with the publication of the new International Handbook of Public Financial Management.  The book’s length (more than 900 pages) is itself a testament to the breadth of the field.

In addition to the broad range of topics that make this book almost inarguably the most comprehensive PFM publication to date, it is important to describe two overarching characteristics that make it unique. First, it provides an extraordinary combination of academic knowledge and empirical evidence. Thus, every topic covered is analyzed both through the lens of how ideal PFM systems should be designed and how they are to be implemented given specific country scenarios. Each chapter of the book combines evidence from developed and developing countries; emphasizing institutional arrangements, political economy constraints, and the interrelations between systems. This makes this book an excellent guide for policymakers, practitioners, and academics. Second, this book benefits from the views of the different authors, many of whom are the leading experts on the topics covered by the many chapters. Readers will benefit greatly not just from learning about the topics, but by learning about them from these world-reckoned experts.

Continue reading "Book Review: The International Handbook of Public Financial Management[1]" »

October 10, 2013

Annual Meetings Kicks Off with Talks on Fiscal Transparency

Posted by Rachel F. Wang

Many of the key players committed to promoting greater fiscal transparency met on Tuesday for one of the first events of the 2013 IMF-World Bank Annual Meetings.

The Joint IMF-World Bank Seminar entitled “Strengthening Fiscal Transparency and Government Accounting” brought together representatives from international organizations, national governments, think tanks, professional organizations, and civil society to discuss how to promote greater fiscal openness and improve the information base for fiscal decision-making.

The event was kicked off with a welcome address from Bertrand Badré, Managing Director and World Bank Group Chief Financial Officer, and included two panel discussions on

  • Strengthening fiscal transparency standards and practices chaired by Richard Hughes, Division Chief in the IMF’s Fiscal Affairs Department), and
  • Improving government accounting chaired by Chuck McDonough, Vice President and Controller at the World Bank). 

Panelists included Moritz Kramer from Standard & Poor’s, Phil Sinnett from the PEFA Secretariat, Vivek Ramkumar from the International Budget Partnership, Jo Marie Griesgraber from New Rules for Global Finance Coalition, Devantri Kaur Santa Sigh from the Malaysian Ministry of Finance, Gerhard Steger from the Austrian Ministry of Finance, Fayez Choudhury from IFAC, and Ron Salole from IPSAS board.

Discussions ranged over a variety of areas, including the revision of the IMF’s fiscal transparency code and new fiscal transparency assessment; how fiscal transparency feeds into credit ratings and vice versa; the harmonization of different transparency-related norms and standards; the role that civil society has played in promoting greater fiscal openness by governments; and the opportunities and challenges in moving from cash to accrual accounting.

The keynote address, given by Gerd Schwartz, Deputy Director of the IMF Fiscal Affairs Department set the tone for the morning’s discussion.  The text of his speech is provided below:

I would like to use this opportunity to talk about the importance of fiscal transparency for fiscal sustainability and discuss the work underway to improve both standards and practices.  More specifically, there are four issues I would like to cover:

  • First, I would like to highlight the progress made in promoting greater fiscal transparency over the past decade, thanks to collective efforts of many of the organizations represented in this room.
  • Second, I would like to discuss some of the lessons of the economic crisis regarding the adequacy of existing fiscal transparency standards and practices.
  • Third,  I would like to provide you with an update of the IMF’s ongoing work on strengthening its evaluation tools in the fiscal transparency area; and
  • Finally, I would like to review the broader agenda on fiscal transparency and government financial disclosure.

Continue reading "Annual Meetings Kicks Off with Talks on Fiscal Transparency" »

August 15, 2013

The Long and Winding……..Fight Against Corruption

Posted by Chris Iles

Corruption is a global scourge.  In the public sector it can be defined as the diversion of public resources or the misuse of public authority for personal gain. It threatens political, social and economic stability, and undermines economic growth and development by distorting the delivery of public goods and services. Transparency International calls it one of the major threats facing society and has worked hard to focus international attention on reducing corruption in the public sphere. Preventing corruption has become a key policy priority for donors, especially in fragile or conflict-affected countries.

A recent paper[1] by Norway’s U4 Anti-corruption Resource Centre reviews how much we know about the effectiveness of different anti-corruption interventions.  The answer seems to be “not much”.  The paper reviews the fairly scant literature on the impact on corruption of various reforms such as direct budgetary support, PFM technical assistance, using donor systems and applying international norms. Evidence presented by the reviewed literature suggests that most anti-corruption measures are of disputable benefit.

The notable outlier seems to be PFM reform; there is, according to the study, (relatively) strong evidence that PFM reforms have a substantial anti-corruption impact. This is gratifying for PFM practitioners but also somewhat surprising since reducing corruption is not the explicit goal of PFM reform.

Continue reading "The Long and Winding……..Fight Against Corruption" »

July 23, 2013

Now You See It, Now You Don’t...

Posted by Cem Dener and Saw Young (Sandy) Min [1]

Cem dener
The World Bank Study “Financial Management Information Systems and Open Budget Data: Do governments report on where the money goes?” (completed in June 2013) and new data set are now publicly available from the FMIS Community of Practice or the World Bank PRMPS Public Finance web site.

Within the last decade, FMIS has become a critical part of improving budget transparency. Disclosure of public finance information to citizens through FMIS platforms can improve transparency, if the published budget data are accurate, easily accessible and meaningful. Fiscal transparency can in turn improve trust in government, if the public interpret the motives for publishing the information positively, and an open budget data policy is sustained for long periods. Despite all efforts, designing robust FMIS solutions to capture all financial activities and publish open budget data, and measuring the effects of FMIS on budget transparency continue to be major challenges.

Continue reading "Now You See It, Now You Don’t..." »

June 05, 2013

Japan Approves Continued Funding for IMF Technical Assistance to South Eastern Europe

Posted by Rocio Sarmiento[1]

JSA
Since 2009, the Fiscal Affairs Department (FAD) of the IMF has been providing considerable technical assistance (TA) to South East European (SEE) countries through a Regional Program that is sponsored by the Japanese Government, and is implemented in close cooperation with the Center for Excellence in Finance (CEF), based in Ljubljana, Slovenia. The overarching objective of the Program is to strengthen fiscal management capacity to ensure that all SEE countries—EU member and non-EU member countries alike—have the necessary capacity to design and implement measures to support fiscal consolidation and long-term fiscal sustainability.

The fiscal consolidation efforts of SEE governments have been supported by strengthening fiscal controls, improving the allocation of budgetary resources and more cost-effective service delivery, while efforts to protect revenue through more efficient revenue administration have focused on facilitating reform efforts that over time should bring the region’s tax administrations on par with modern European counterparts, and achieve consistency in the application of tax administration practices throughout the region.

Continue reading "Japan Approves Continued Funding for IMF Technical Assistance to South Eastern Europe" »

May 30, 2013

Who Never Talks about Money and Religion...?

Posted by Yasemin Hurcan and Gregory Horman

Sukuk[1] is an Arabic word that is used to define borrowing instruments issued in line with Islamic norms, the sharia. Sukuk are not limited to private sector borrowers. Increasingly, these instruments are being issued by governments to finance the public sector. Although there is already a sizeable body of literature on the capital market aspects of sovereign sukuk issuance, the public financial management (PFM) dimension of sukuk has not been widely discussed. The implications for areas such as budgeting, reporting, and accounting are not insignificant.

Malaysia is recognized as one of the pioneers of sovereign sukuk issuance, and these instruments make up a significant share of the total public sector debt. Qatar and Bahrain are also notable issuers of sukuk, and in recent years Pakistan has added sukuk to its borrowing mix. In October 2012, Turkey, too, joined the group of countries issuing sovereign sukuk. Although sovereign sukuk issuances have so far been made only by countries where sharia is the governing law, or the population is predominantly Muslim, other countries have investigated sukuk as an opportunity to broaden their sources of financing. In 2008, for example, the UK Debt Management Office consulted with the market to find out the possibility of issuing sukuk as an additional borrowing instrument. These developments suggest that the use of sukuk instruments for sovereign borrowing is likely to increase in the coming years.  

Continue reading "Who Never Talks about Money and Religion...?" »

April 18, 2013

Managing Public Finances Is Vital to Economic Prosperity

As posted on IMF Survey Online

PFM_Book_Cover
Across the world many countries are now grappling with restoring sound and sustainable public finances: the way governments manage their budgets today will have profound economic effects in the years ahead. A new book by the IMF looks at reforms introduced by governments over the past two decades to improve management of public finances. These innovative ideas and reforms are changing the landscape of public finances and eventually aim to fundamentally change the way governments manage the public’s money.

The global financial and economic crisis highlighted the importance of sound public financial management in ensuring that well-designed fiscal policies are implemented effectively. Sound management of public finances means maintaining a sustainable fiscal position, allocating resources efficiently, and delivering public goods and services effectively.

The book looks at how reforms to public financial management make use of new information, processes, and rules to change the behavior of politicians and public servants to counter the ongoing challenges of managing government’s money. As identified in the book, too often the tendency for policy makers is to spend rather than save in good times; to focus on the short term; and to ignore the future costs of new policies, underlying fiscal risk, and the true state of public finances.

“The global crisis has highlighted that reforming governments’ management of public finances is no longer an option but a necessity. There is no ‘one-size-fits-all’ solution—reforms need to be tailored to countries’ individual circumstances,” said IMF Deputy Managing Director, Min Zhu, who addressed officials, journalists, and academics gathered at a special seminar to discuss the findings in the book.

Continue reading "Managing Public Finances Is Vital to Economic Prosperity" »

December 27, 2012

ICGFM 2012 Winter Conference

Logo ICGFM
Posted by Sailendra Pattanayak

The International Consortium on Governmental Financial Management (ICGFM) held its Winter Conference on Good Public Financial Management Practices in a Period of Global Adjustment in Washington, DC during December 10–12, 2012. This was co-hosted by the Fiscal Affairs Department (FAD) of the IMF. The Global Initiative for Fiscal Transparency (GIFT) also partnered with the ICGFM for this conference.

The conference was attended by high-level officials from ministries of finance, state audit institutions and other government ministries/agencies, and members of parliament of more than 25 countries, as well as representatives from international organizations, rating agencies, think tanks, the donor community, civil society groups, and academia. The welcome address was delivered by Ms. Linda Fealing, President, ICGFM, followed by opening remarks from Mr. Sanjeev Gupta, FAD Deputy Director. (Download ICGFM conference agenda Dec 2012.)

Continue reading "ICGFM 2012 Winter Conference" »

November 05, 2012

The Importance of Strengthening PFM at the Sub-National Level in Sub-Saharan Africa

Posted by Stephan Klingebiel and Timo Mahn[1]

The ongoing trend of decentralizing governance responsibilities to the sub-national level in many countries in sub-Saharan Africa (SSA) is likely to continue in the near future. In order to achieve its objectives, it will be crucial that this transfer of responsibilities will be matched by equal efforts to increase sub-national Public Financial Management (PFM) capacity.

As a cross-cutting issue of domestic accountability systems and of development policy, PFM lies at the heart of countries’ governance systems. It therefore comes as no surprise that PFM systems at the level of the central state have become one of the key reform areas in developing countries in SSA. At the same time, however, the capacity of, and the conditions for PFM at the sub-national tiers of government to date have received much less attention. While there are signs of a growing demand for sub-national PFM approaches, development partners so far have not fully come to terms with the implications of this trend in designing their technical and financial support programs.

Continue reading "The Importance of Strengthening PFM at the Sub-National Level in Sub-Saharan Africa" »

November 02, 2012

Views from the Field No. 6 – The Caribbean

Posted by Eileen Browne

Richard Allen interviewed Eileen Browne, FAD’s PFM Advisor in the Caribbean Regional Technical Assistance Center (CARTAC) for the latest in the series “Views from the Field”.

RA:  What makes the technical assistance CARTAC offers different?

EZB:  Two things:  the people, culture and institutions of the Caribbean region and CARTAC’s focus on member-driven TA efforts.

The Caribbean is a constellation of small islands and coastal nations and CARTAC serves 20 English-speaking ones, many of which celebrated their 50th anniversary of independence this year.  Jamaica is the largest island with 3 million inhabitants; Trinidad and Tobago is the second in size with 1.2 million; Barbados is the third with 0.25 million and the rest of the nations are smaller.  Eight of them have formed a currency union. The Caribbean enjoys middle-income status yet shares many institutional deficits with much poorer countries. 

Continue reading "Views from the Field No. 6 – The Caribbean" »

November 01, 2012

Seeing Our Way Through The Crisis: Why We Need Fiscal Transparency

Posted by Carlo Cottarelli and previously published on iMFdirect

Carlo1
Without good fiscal information, governments can’t understand the fiscal risks they face or make good budget decisions. And unless that information is made public, citizens and their legislatures can’t hold governments accountable for those decisions.

Fiscal transparency—the public availability of timely, reliable, and relevant data on the past, present, and future state of the public finances—is thus to the foundation of effective fiscal management.

A new paper from the IMF on fiscal transparency, accountability, and risk considers the progress we have made in opening up the “black box” of fiscal policymaking over the past decade, the lessons of the recent crisis for current fiscal reporting standards and practices, and the steps we need to take to revitalize the global fiscal transparency effort.

Continue reading "Seeing Our Way Through The Crisis: Why We Need Fiscal Transparency" »

October 25, 2012

Views from the Field No. 5 – Nepal

Posted by Udaya Pant

Richard Allen interviewed Udaya Pant, FAD’s PFM Advisor in Nepal for the latest in the series “Views from the Field”.  For the first time on the Blog, the interview includes a Poem on PFM, written by Udaya Pant!

RA:  What have been the challenges you experienced in moving to Nepal? How have you dealt with these challenges?

UP:  I first came to Nepal in August 2009, primarily to implement the treasury single account (TSA), using a TSA implementation study report by FAD.  I took a break of about six months from December 2011 and rejoined in June 2012 with a broadened mandate covering almost all aspects of PFM.

Nepal suffers from political uncertainty and turmoil much of the time.  This creates a problem of continuity.  The present Government (in a caretaker role for the past six months) is the fourth one in the last three years. The budget cycle is not respected.  Civil servants have to rotate after every two years. The capacity to implement reforms is low and fiduciary risk in the country very high. I have seen four Prime Ministers, no regular Auditor General, and eight Financial Comptroller Generals (FCGs).  Another problem is that all government business is conducted in the Nepali language and few officials speak English.

Continue reading "Views from the Field No. 5 – Nepal" »

October 11, 2012

Views from the Field No. 3 – Liberia

Posted by Kubai Khasiani

For the third in our series of “Views from the Field” Richard Allen interviewed Kubai Khasiani, FAD’s PFM Advisor at the Ministry of Finance in Liberia. Kubai was formerly a senior budget official in the Kenyan government.

RA: What have been the challenges you experienced in moving to the new position? How have you dealt with these challenges?

KK: I took over in 2011 from a PFM Advisor who had been in the position for three years, so there were already established channels of communication with the Minister and senior management which I inherited.  Many important changes in PFM had already taken place, or were in process. The country achieved the post-HIPC completion point in 2010; a Poverty Reduction Strategy (PRS) and a PFM Act were being implemented; and a PFM Strategy and Action Plan had recently been approved by the government. Development partners already in post were very accommodating, making it easy for me to adapt.

Continue reading "Views from the Field No. 3 – Liberia" »

October 03, 2012

New Harvard Course – Getting the Most from PFM Reform

Posted by Matt Andrews, Harvard Kennedy School

The posts on this blog are a continuous reminder that the PFM reform community has come a long way. We have a lot of great ideas and potential interventions that could have significant and lasting impact on governments across the globe. The posts are also a reminder of how limited many reforms are, and how difficult it is to get the functionality we so desire from PFM systems we are working to improve. 

In working through some of these difficulties, posts on this blog have referenced many common problems, raising questions about sequencing, fitting solutions to context, working around and within political constraints, managing capacity challenges, and the like. We are launching a new PFM course at the Harvard Kennedy School to tackle these kinds of questions. It runs from January 6–11, 2013 and will focus explicitly on how to do PFM reforms. 

The course will tackle the thorny issue of how PFM reforms can be most effectively introduced. These include: Who needs to be involved? How should the reforms be packaged? What should the sequence look like? Where lessons can be learned, and how?

Continue reading "New Harvard Course – Getting the Most from PFM Reform" »

September 28, 2012

Public Prominence and “Muscle” — the Role of the French Court of Accounts

Posted by Maximilien Queyranne and Delphine Moretti

Supreme Audit Institutions (SAIs) are the national bodies, found in many countries around the globe, responsible for reviewing public expenditure and providing an independent opinion on government financial reporting. The Court of Accounts (Cour des Comptes) in France is one of these bodies but has a wider range of responsibilities, and a more prominent place in public life and political debates than in other countries.

The Court is part of the judicial system and consequently operates independently of the executive and legislative branches of government. Since a ruling by the Supreme Court (Conseil Constitutionnel) in 2001, the Court’s independence as well as its institutional relationship with the executive and legislative branches has been protected by the Constitution. A revision of the Constitution in July 2008 incorporated these important principles (article 47-2).

Continue reading "Public Prominence and “Muscle” — the Role of the French Court of Accounts" »

September 26, 2012

New FAD Brochure Explains It All

Posted by the Fiscal Affairs Department of the IMF

The casual reader of the PFM Blog may have wondered what part of the IMF is actually responsible for the posts on this website. The website is maintained by the two PFM Divisions in the Fiscal Affairs Department (FAD), one of the functional (in contrast to geographic) departments of the IMF. For the upcoming Annual Meetings of IMF and World Bank Group in Tokyo from October 9-14 the attached brochure has been produced. It should be clear that FAD is much more than PFM alone! 

Download FAD Brochure 2012

Continue reading "New FAD Brochure Explains It All" »

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

Continue reading "Recent Meetings of the PEMPAL Network in Europe and Central Asia" »

August 30, 2012

Fiscal Rules and Councils: Most Effective When Used Together

Posted by Elif C. Arbatli [1]

Adopting numerical fiscal rules has been an integral part of the policy response to the medium-term fiscal consolidation challenge posed by the global financial crisis. According to Schaechter et. al. (2012), since 2009, at least 16 countries have adopted new national fiscal rules and many others are in the pipeline. The crisis has also revealed the need for reforming supranational rules, such as the Stability and Growth Pact of the EU and as a result new structural budget balance rules will be adopted in almost all of the EU member states as part of the “fiscal compact.” A recent paper by Charles Wyplosz titled “Fiscal Rules: Theoretical Issues and Historical Experiences,” is a timely review of the theoretical underpinnings of fiscal indiscipline and how numerical fiscal rules can help. Wyplosz argues that fiscal rules are neither necessary nor sufficient to achieve fiscal discipline; but that thoughtfully designed fiscal rules can be effective when supplemented with fiscal institutions (and in particular fiscal councils) that are tailored to the political institutions of the country.[2]

The paper first looks at the theoretical underpinnings of fiscal indiscipline, known as the “common pool problem”. The common pool problem arises when the beneficiaries of public spending or tax policies do not take into account the externalities that these policies impose on other groups (within a population, across different generations, among different levels of government or different states within a monetary union). Fiscal rules can in principle reduce these externalities by imposing explicit principles for fiscal behavior and thereby lowering the scope for deficit bias. According to Wyplosz, there are two key challenges: 1) fiscal rules cannot be fully contingent and hence they are subject to the “time-inconsistency problem” and 2) fiscal rules cannot be fully binding since they can be manipulated, changed or simply ignored. He argues that fiscal institutions (in particular, fiscal councils or other arrangements that give authority to an independent body to interpret rules) can help overcome these challenges.

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October 17, 2007

Program and Performance Budgeting Enthusiasm in India -- IMF Training Course

Pune_2_4  An IMF training course in Pune for senior civil servants from India and around the region went into the varied experiences with this “second generation” budget reform. Making program and performance budgeting (PPB) work in the context of capacity constraints and politicians familiar only with traditional line item budgeting led to lively discussions with the 29 participants from India’s central and state governments, and invited representatives of other countries' ministries of finance.

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October 15, 2007

Transition to Accrual Accounting -- IMF Technical Guidance Note

TNM cover
Accrual accounting is a hot topic these days, with many countries expressing interest in adopting accruals. A July 2006 IMF FAD Technical Guidance Note by FAD staff members Abdul Khan and Stephen Mayes provides advice on the design, planning, and implementation of an accrual-based accounting regime. The guidelines address a number of issues associated with the implementation of accrual-based accounting, and are intended to provide broad guidance on the preconditions necessary for the successful transition to accrual accounting, the appropriate sequencing of the reform steps, and the milestones which could serve as yardsticks of progress.

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October 12, 2007

Sweden’s New Fiscal Council – helping assure credible fiscal policy

Swedenflag_3 A lively debate about the government’s fiscal policies and the state of public finances puts pressure on transparency and the credibility of budget documents. On August 1, 2007, the Swedish Government set up a Fiscal Council (Finanspolitiska rådet) to provide an independent scrutiny of fiscal policy, promote active public debate, and strengthen the credibility of fiscal policy. The case for strengthening independent review of economic forecasts and fiscal policy has received increasing attention in the past years, and the Swedish initiative may with time provide valuable insight to the effectiveness of such institutions.

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October 10, 2007

Global Public Goods (and PFM?) ---- August International Institute of Public Finance Conference

The International Institute of Public Finance's 63rd annual congress, held Aug 27-30, 2007 in Warwick, UK, was themed “Global Public Goods and Commons: Theoretical and Policy Challenges for a Changing World.” A number of sessions at the conference focused on expenditure policy and management-related issues, including corruption and global public goods.

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October 05, 2007

Good Financial Governance in Africa - Insights into G-8 GTZ Effort

The G-8 Action Plan for Good Financial Governance in Africa was adopted by the G-8 earlier this year in Potsdam (Germany), and was one of the signature German efforts during their G-8 presidency.  GTZ, one of the German Development Agencies, in their latest Newsletter (September 2007, No. 9), focuses on the origins of the Action Plan concept.

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October 03, 2007

Low-Income Countries' Public Financial Management Systems Need Upgrading to Enhance the Benefits of Scaled-Up Aid

A September 2007, IMF Survey article, and associated staff working paper, examines the challenges facing low-income countries in upgrading their public financial management (PFM) systems, and their implications for international development assistance. The article notes that PFM systems in most low-income countries (LICs) need strengthening if these countries are to fully benefit from scaled-up aid. Weaknesses in PFM can undermine budgetary planning, execution and reporting, reduce fiscal transparency, and result in leakage of scarce resources.

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September 27, 2007

Public Financial Management and Anti-corruption: prevention through stronger PFM systems

New Picture (10)
Corruption is a hot  topic in international circles these days, and particularly with respect to country public finance systems. The IMF Fiscal Affairs Department has made a contribution to understanding how improvements in  public financial management systems can help fight corruption.

While  not an 'idiots guide to corruption',  a recent FAD staff paper (Dorotinsky,  William and Shilpa Pradhan), published in "The  Many Faces of Corruption: Tracking Vulnerabilities in the Sectors" (World Bank, 2007), explores the conditions of PFM systems that enable corruption to flourish, the ways corruption commonly manifests itself, and  develops a model for assessing the vulnerability of country PFM systems to  corruption.

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