Managing Public Finances Is Vital to Economic Prosperity

As posted on IMF Survey Online

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.

ICGFM 2012 Winter Conference

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.)

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.

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 50^th 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. 

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

Posted by Carlo Cottarelli and previously published on iMFdirect

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.

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.

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.

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?

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).

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

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

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.

Latest Issue of the International Journal of Governmental Financial Management

Posted by Andy Wynne – andywynne@lineone.net

The latest issue of the International Journal of Governmental Financial Management is now available for free down load from: www.icgfm.org/journal

This issue of the Journal begins with An Overview of Accounting in the Nigerian Public Sector which is the first chapter of a recent book by two eminent Nigerian authors, Eddy O. Omolehinwa and J. K. Naiyeju. This paper reviews the differences between public sector accounting and that undertaken in the private sector. It then discusses the different types of public sector organisation and the approaches to public sector accounting which have been developed for each of these institutions. Finally the authors consider the research challenges in the area of public sector accounting. They note that the most important has been access to data, but that this has improved in recent years with the annual and even quarterly financial statements now being made available for the Nigerian public sector on the Internet.

PEFA NewsFlash No. 19 - PEFA Steering Committee launching Phase IV of the Program

PEFA Steering Committee launching Phase IV of the Program

The PEFA Steering Committee met for its ordinary six-monthly meeting on June 11-12, hosted and chaired by the World Bank. The meeting confirmed that all arrangements are in place for the transition to Phase IV of the Program, which will commence on July 1, including:

• Approval of the publication of the PEFA Phase IV Program Document;  click on the link to access the [program document]
• Confirmation of the establishment of the new trust fund to finance Phase IV;
• Signing of the first agreement for contribution to the trust fund with SECO Switzerland to the tune of USD 3,588,000 for the five years of Phase IV;
• Change of PEFA Secretariat management – Frans Ronsholt is leaving after more than six years as Head of Secretariat. Phil Sinnett has been appointed to succeed Frans as Head; he is well known to most PEFA Stakeholders, having joined the Secretariat in September 2009.  

The Steering Committee also took stock of the achievements during Phase III and discussed the work plan and budget for fiscal year FY13 (July-June) including a number of ongoing activities which will be carried over from Phase III.

The meeting ended with a toast of thanks to Frans for his vision for the Program, the tremendous contribution he has made to the success of Phases II and III, and his effective leadership of the Secretariat over the past six years: the Steering Committee also wished him every success in his future endeavors.

New IMF Job Offers: Regional Public Financial Management Advisors Based in Ljubljana, Slovenia (Job Number: 1200008)

The Fiscal Affairs Department (FAD) of the IMF is seeking highly-qualified experts to fill a Regional Public Financial Management (PFM) Advisor position at the Center of Excellence in Finance (CEF) based in Ljubljana, Slovenia as part of a regional program of technical assistance (TA) funded by the Japanese government. The Advisor's appointment term would be for an initial period of one year starting from May 2012, on a renewable basis, subject to satisfactory performance.

The CEF is a leading regional institution whose main aim is to promote capacity development in public financial management and central banking in South East Europe. The Supervisory Board of the CEF is comprised of ministers of finance and central bank governors of the member countries. The IMF has worked with the CEF since its inception and 2010 saw the institution celebrate its 10th anniversary. During this time the CEF has developed an extensive network and infrastructure that offers comprehensive support to a number of regional capacity development initiatives with a specific focus on institutional development. The CEF primarily focuses on design and delivery of tailor-made training programs for staff working in the public sector and central banks and, with the assistance of the IMF the delivery of technical assistance to the region.

Why a Reform-minded Minister of Finance Needs a Strategic PFM Advisor as Gatekeeper

Posted by Sailendra Pattanayak

Many countries that lack both capacity and infrastructure in the area of public financial management (PFM), particularly the post-conflict ones, have to undertake comprehensive  reforms to establish sound and robust fiscal institutions. Most of these countries usually embark on a multi-pronged reform strategy and receive support—both financial support and technical assistance (TA)—from various international institutions and development partners to build PFM institutional capacity. A key aspect of such support is the funding of a large number of advisors/consultants to assist the ministry of finance in specific PFM areas, e.g., budget planning and preparation, expenditure control and treasury management, accounting/fiscal reporting, auditing, and development and implementation of financial management information systems. These advisors play a crucial role in building the fiscal institutions as the authorities draw upon their specialized expertise in the respective PFM areas. However, as the scope and complexity of TA received from such advisors increase, the strategic coordination of TA and the integrity/coherence of the PFM reform process become all the more critical.

Effective coordination and strategic management of TA from various development partners is essential to identify, monitor and manage potential risks of overlap, inconsistent advice and sub-optimal allocation and use of TA. The TA strategy should also be guided by an overarching PFM reform plan. This process should be led by the authorities, with support, if necessary, from an advisor with skills to provide such strategic advice. This strategic PFM advisor should also act as a gatekeeper between top management (usually the minister or deputy minister of finance) leading the PFM reform agenda and other advisors assisting the ministry technical staff in respective areas to ensure, inter alia, alignment of reform priorities and TA inputs. This will also improve engagement with TA providers and alignment of their support with any future reform plan.

Enhancing the Role of the Accountant General’s Department in the Caribbean - A Challenge from the Sidelines!

Posted by Mark Silins

In the Caribbean, and in many English-speaking countries for that matter, the State Treasury is called the Accountant General’s Department (AGD). In this post I will explore what the main tasks and functions of the AGD should be, and what minimum functionality should be expected from them.

The AGD is, one could say, the engine room that supports effective public financial management, or at least it should be. Ensuring the completeness of all financial information in the accounting system each day ensures that key financial reports are available to support timely decision making. The AGD is also the processing centre for expenditures and receipts.  Its systems should support the proper classification of all financial stocks and flows of government and provide reports on these for all different stakeholders, including parliamanent.   

République Démocratique du Congo: Conférence sur les Reformes Budgétaires

Affiché par Ian Lienert

Une conférence sur les réformes budgétaires en République Démocratique du Congo (RDC) a été organisée les 3 et 4 octobre 2011 à Kinshasa, par le Comité d’Orientation de la Réforme des Finances Publiques (COREF).[1]  Plus de 150 personnes étaient présentes, avec une participation importante des ministres provinciaux du budget et des finances, ainsi qu’une représentation des ministères centraux (Plan, Budget et Finances) et sectoriels et de l’Assemblée nationale et du Sénat. Le Ministre du Budget a ouvert la conférence.

A l’issue des discussions, les participants ont validé l’idée d’une approche priorisée des  réformes des finances publiques. La première priorité est de restaurer la crédibilité de la loi des finances. Pour les représentants des provinces, une grande importance est attachée à la mise en œuvre de la Constitution de 2006, notamment en ce qui concerne l’allocation aux provinces de 40 % des recettes à caractère national.

Democratic Republic of the Congo: Conference on Fiscal Reform

Posted by Ian Lienert

 

A conference on budget reforms in the Democratic Republic of the Congo (DRC) was organized in Kinshasa on October 3 and 4, 2011 by the Committee for Public Finance Reform (COREF).[1] Over 150 persons took part, including provincial ministers of budget or finance, and representatives of the central ministries (Planning, Budget and Finance) and sectoral ministries, as well as the National Assembly and the Senate. The (national) Minister of Budget opened the conference.

At the conclusion of the discussions, the participants validated a prioritized approach to public finance reform. The first priority is to restore the credibility of the annual budget law. The provincial representatives emphasized the need to implement the 2006 Constitution, particularly the provisions on the allocation of 40 percent of national revenues to the provinces.

Whole of Government Accounts – What’s the Big Deal, Robin!

Posted by Andy Wynne

In a recent blog post (Whole of Government Accounts, Batman!), Richard Hughes declares that the  publication of what are called Whole of Government Accounts “represents a major milestone in UK fiscal reporting and public sector accounting practice in general”. The article suggests that this is the Olympics of accounting and the UK has just set new world records in the consolidation and accrual events. The UK seems to have “leapfrogged from the bottom to the top of the government accounting class”.

There is, however, no reason for the UK to be self-congratulatory. In my view government accountants should provide useful information on government finances to facilitate the budget process and provide accountability for the use of public resources; this information needs to be produced as efficiently as possible and presented in line with the budget presentation. On both counts the Whole of Government Accounts exercise scores rather badly. What useful additional information is really provided by this consolidation exercise and from the accrual accounting approach itself? Importantly, what are the costs involved of this “whole of government” operation.

Transparency and Participation in Public Financial Management: What Do Budget Laws Say?

Posted by Paolo de Renzio, International Budget Partnership, and Verena Kroth, London School of Economics

An increasing number of governments, as well as international and civil society organizations, are promoting the public disclosure of budgetary information, and calling for greater citizen involvement in budget processes. Most agree that fiscal transparency generates significant benefits, as it is an important precondition for better governance, improved economic performance and prudent fiscal policy, resulting in lower deficits and debt accumulation. Moreover, transparency functions as a political expression of democratic governance, giving citizens and taxpayers information that they are entitled to, and that they can use to hold their governments accountable.

Given its increasing importance, how can transparency and participation in public financial management be promoted or improved? As a possible avenue, it is interesting to look at the role of legislation in promoting both disclosure of budgetary information and opportunities for citizen engagement in the budget process. Key questions then are: (a) to what extent does budget legislation in different countries cover issues related to budget transparency and participation, and in what level of detail? and (b) does the degree to which legislation covers issues related to public disclosure of budget information seem to affect the actual level of budget transparency in different countries?

"The Overall Evaluation of the Performance of the PEFA Programme is a Resoundingly Positive One"

 

Posted by Michel Lazare

"The overall evaluation of the performance of the PEFA programme is a resoundingly positive one" is the first sentence in the main findings section of executive summary of the recently published independent evaluation report of the PEFA programme.

In November 2010, the Steering Committee launched an independent evaluation of the  PEFA Program, covering the period 2004 to 2010. The evaluation was undertaken by a team of consultants led by Andrew Lawson, and the final report has now been completed and is available on the PEFA website (www.pefa.org) or clicking on the following link: Download PEFAEvaluationRevisedFinalReportJuly2011[1].

The report notes a number of markedly positive achievements of the PEFA programme. Lets just mention the following three: (a) "Across the world 90 per cent of low income, 75 per cent of middle income and 8 per cent of high income countries had been assessed, were in the process of assessment or were going to be assessed by October 2010;" (b) "The PEFA Programme has succeeded in creating a credible framework for the assessment of PFM functionality, which manages to be comprehensive in its coverage and yet sufficiently simple for the non-technical user to understand;" and (c) "The PEFA assessment framework is now used by all major development agencies working with PFM systems, either as a tool to support the design and monitoring of PFM reforms or as a key element of fiduciary risk assessment processes."

IMF Publishes 2011 FAD Brochure

 
Since 1964, the Fiscal Affairs Department (FAD) of the International Monetary Fund has been a leading source of fiscal policy and management expertise worldwide. FAD monitors and analyzes global and regional fiscal trends; advises IMF member countries on fiscal issues directly or in close cooperation with the IMF area departments; and contributes to the design and implementation of IMF-supported programs. FAD’s analysis and research are at the forefront of fiscal policy debates. Its recent work has contributed to the discussion on fiscal policy options to address fiscal challenges in the aftermath of the global financial crisis. Each year, FAD staff and experts provide advisory services to about 130 IMF member countries covering advanced, emerging, and low-income economies.

FAD supports the IMF’s interactions with member countries by assigning some 50 fiscal economists to IMF surveillance and program teams. More countries are covered through ad hoc participation in area department missions. In addition to analyzing broad fiscal developments, these economists conduct in-depth analysis of macrofiscal and structural fiscal issues in the countries to which they are assigned. In carrying out their tasks, FAD economists draw on the extensive fiscal expertise of FAD as a whole. Their analysis forms part of the IMF staff’s reporting on the member countries concerned.

Canaries in a Coal Mine

Posted by David Gentry

 
It is well known that animals and other living things can be used to detect a problem before people become aware of it. These are called sentinel animals or indicator species. A dog barking at noises that people cannot hear is an obvious example. More interesting are certain species in a marine environment that are sensitive to low levels of pollution. For more than a century canaries were used in coal mines to detect toxic gases. They became sick before people became sick, and thus gave miners a chance to escape.

To be effective, indicator species must be sensitive to known dangers. They are used to easily, cheaply and accurately monitor the presence of that danger. It is plain to see if the canary is active and happily chirping or not. A reliable relationship must exist between the state of the canary and toxic gases.

But there are limits to what canaries can tell miners. Dead canaries won’t tell where the gas is coming from or even the specific toxic gas (canaries are sensitive to multiple gases injurious to humans, such as methane and carbon monoxide). Once the canary falls off its perch, the miners know they are facing a hazard but must investigate further to find the source, exact nature and severity of the problem, and then decide what to do about it.

IMF Technical Assistance: Positive Impact on the Ground

Posted by Camille Karamaga

Country leadership has been essential to the past and on-going success in implementing public financial management reforms in Liberia. But the IMF technical assistance seems to have played an important role, as acknowledged by the Liberian authorities in a video featured on the IMF external web.

Well coordinated assistance has been, and continues to be, provided by the IMF Fiscal Affairs department (FAD) and other development partners. FAD’s assistance, which is currently funded by the Swedish Development Agency (Sida) and the EU, relies on a resident advisor who provides intensive on-the-job capacity building and day-to-day guidance to support the ownership and sustainability of the reforms, in addition to regional activities funded by the Japanese government and routine visit from headquarters staff.

One of the lynchpins of the ongoing economic governance reforms has been the passage in 2009 of a new public financial management law, which along with its associated financial regulations, has re-established the legal basis for public financial transactions in Liberia, as portrayed in a recent blog post. As Minister Augustine Ngafuan stresses in the video, since 2007 FAD has assisted the authorities in designing and putting in place a modern legislative framework that will help Liberia manage its public finances for years to come.

“I just called TSA I love you” – Using Mobile Payment Systems to Support IFMIS

Posted by Kris Kauffmann

 
A major challenge in implementing an integrated FMIS in developing or post-conflict countries is in achieving connectivity and eliminating cash handling. However, the almost global coverage of mobile phone networks, and associated payments system now being implemented in some African countries, offers a potential solution to improving government treasury operations in many developing nations.

In places where there is widespread internet coverage and broad geographic coverage of the bank branch network, payments from a treasury can be simply channeled through the banking system. Compared to physical distribution of cash, this has significant benefits in terms of using available cash more efficiently, avoiding corruption, supporting electronic reconciliations, and improving the timeliness of payments. An integrated IFMIS and a Treasury Single Account at the central bank are integral parts of such a payment system.

Deux années d’assistance technique en gestion financière publique à l’AFRITAC de l’Ouest

Posté par Benoit Taiclet

 
Affecté comme Conseiller résident en gestion financière publique pendant deux années au centre régional d’assistance technique du FMI pour l’Afrique de l’ouest (AFW) à Bamako (Mali), j’ai ainsi eu le privilège d’intégrer une équipe tout entière dévouée à l’assistance aux pays « clients » membres de l’AFRITAC de l’Ouest. Ce billet pour décrire les activités conduites par le Centre au quotidien pour délivrer l’assistance technique la plus utile possible, en collaboration avec les équipes nationales volontaires et réactives. 

L’AFRITAC de l’Ouest en un clin d’œil [1]: AFW est l’un des deux centres régionaux d’assistance technique du FMI pour l’Afrique de l’Ouest assurant le renforcement des capacités et  des formations techniques pour une dizaine de pays d’Afrique de l’Ouest. Le coordonnateur du centre, son équipe et les huit Conseillers résidents apportent leur soutien sur différentes disciplines telles que : gestion publique, administration fiscale et douanière, statistiques, gestion de la dette et supervision bancaire.

Two years of PFM at AFRITAC-West

Posted by Benoit Taiclet

 
The past two years I was assigned to the West African Regional Technical Assistance Center—AFRITAC-West (AFW) in Bamako, Mali as an IMF resident PFM advisor. I had the privilege to give this assignment my best effort—and join a hard working team devoted to their job and customers, the member countries. This short post describes the daily business in AFW as it carries out relevant technical assistance (TA) with willing and responsive national teams.

AFRITAC-West at a glance[1]: AFW is one of the two IMF Regional Technical Assistance Centers (RTACs) for West African countries. It delivers capacity-building technical assistance and training to ten countries in Western Africa. Center coordinator, local staff and eight resident advisors (RAs), provide support on broad areas of TA, public financial management, tax and customs administration, statistics, debt management, banking supervision.

Cash Management: More Than Just Public Financial Management

 
Posted by Greg Horman

The overriding objective of cash management is to ensure that the government is able to fund its expenditure in a timely manner and meet its obligations as they fall due. Cost-effectiveness, risk reduction, and operational efficiency are also important. Cash management is a critical, albeit not so visible, dimension of effective public financial management, with important linkages to monetary policy implementation. More precisely, cash management encompasses two distinct but related activities: cash flow forecasting and cash balance management. The former is concerned with these questions: (i) Over a given time period (daily, weekly, monthly, and so on), what is the volume of the government’s aggregate cash inflows and outflows? (ii) At the end of each time period, what is the balance of cash at hand? The latter is concerned with this question: (iii) What actions does the government take to ensure that it has the “correct” amount of cash at hand at any point? This posting highlights some of the issues related to managing cash balances, which is not very well covered in the public financial management literature.

Changes in the daily cash balance of the treasury single account (TSA), domiciled at the central bank, are mirrored by changes in banking sector liquidity. Indeed, they may be the most significant autonomous influence on liquidity. The central bank takes these changes into account in its monetary policy operations. Effective cash management is characterized by agreement between the ministry of finance and the central bank on the flow of information from the ministry of finance to the central bank on the likely future size of the TSA. Ideally, this should be provided in real time, or at least before the start of each day. Insofar as the ministry of finance can manage its cash flows reasonably tightly around a target balance for the TSA, the government’s cash balance becomes largely neutral for monetary policy purposes.

An Interview with Vito Tanzi

 
 

Posted by Carla Sateriale

Vito Tanzi was director of the IMF Fiscal Affairs Department for 20 years, from 1981 to 2000. Since then he has served as Senior Associate at the Carnegie Endowment for International Peace, Undersecretary for Economy and Finance in the Italian government, and consultant and scholar to various international institutions and research institutes. Since his retirement from the Fund he has authored 11 books. Last week Mr. Tanzi’s latest book, Government versus Markets: The Changing Economic Role of the State, was presented at IMF headquarters in Washington. FAD research assistant Carla Sateriale interviewed Mr. Tanzi on his new publication.      

 

What inspired you to write this new book, Government versus Markets, at this point in your career?

I’ve had at least three, maybe four careers throughout my life, which have shaped my perspective. I started in academia—studying at Harvard, and then teaching at American University and George Washington University. I spent 27 years at the Fund, then two years as a minister in the Italian government, and then several more years as a researcher and scholar at the Carnegie Endowment and at the Inter-American Development Bank. Finally, I decided to do what I had always wanted—have a period of my life with no formal commitments. I wanted to allocate all my time to reading, research, and writing. In many ways it has been the most productive period of my life. I have been able to publish five books between last year and now. Two of them in particular, The Charm of Latin America and Russian Bears and Somali Sharks, allowed me to weave together my perspectives on economics with my concrete experiences. Government Versus Markets gave me the opportunity to combine my observations on fiscal policy and regulation with my interest in the historical evolution of the role of the state.

Rwanda: A Decade of Difficult but Sustained Public Financial Management Reforms

 

Posted by Lewis Kabayiza Murara

Only a decade ago Rwanda did not possess a properly articulated public financial management system, and there were few qualified staff to run the system, especially public accountants. Since then the government has put in place many of the elements required for a sound system of public financial management. Some weaknesses remain, in particular in relation to local accounting capacity, but the government of Rwanda appears firmly committed to establishing a modern, efficient, transparent and accountable PFM system. In 2006, the government put in place a Public Financial Management Action Plan aimed at strengthening several aspects of the existing public financial management system. In particular, the government sought to strengthen accounting capacity, improve the audit function, and put in place more robust financial controls and reporting procedures, new rules on fiscal and financial decentralization, and procurement reforms. Subsequently, and following the first-ever PEFA assessment on Rwanda in 2007, a comprehensive and ambitious five-year Public Financial Management strategy was prepared in 2008 and is now being implemented, with some degree of success as evidenced by a repeat PEFA assessment concluded in December 2010.

This blog post attempts to summarize salient features of Rwanda’s public financial management landscape, including a short paragraph on public procurement (which tends to be forgotten by IMF and other PFM specialists as a key area in public financial management and tends to be treated separately).

Call for Papers: Symposium on Sub-sovereign Debt

 
The journal of Public Finance and Management calls for submissions for a special issue on the topic of sub-sovereign debt.

Sub-sovereign debt refers to liabilities owed by different levels of sub-national governments and guarantees for quasi-public agencies and corporations controlled by sub-national governments. The past decade has seen a significant growth of sub-national debt in many countries. For instance, in the United States, total debt outstanding on the municipal bond market has almost doubled in the past ten years. In China, where sub-national governments are prohibited from borrowing by its Budget Law, the transmuted debts through various government controlled investment corporations have mounted to approximately $2.19 trillion (about 37% of GDP) at the end of 2010.

The purpose of this symposium is to help enhance our understanding of sub-sovereign debt, debt management, and financial markets for sub-national borrowing.

We invite submissions on a range of topics within the aforementioned scope. We are especially interested in studies examining national, international and comparative levels, as well as studies that focus on solely one country or one sub-national government. Methodology and geographical area are open.

Program or Performance: What Comes First?

Posted by Holger van Eden

 
Inspired by the success of the PEFA diagnostic tool, staff from the Fiscal Affairs Department (FAD) and their counterparts from World Bank and EC, have been having a creative debate/not seeing eye-to eye/duking it out (all depending on one’s perspective of course) on how PEFA indicator scores should impact PFM reform programs in countries. Is there a one on one relationship between PEFA score and design of reform programs? This interesting question is not the topic of this post, however. The answer on how best to integrate PEFA in reform design is still pending. Interesting work has been done recently by Jack Diamond, Daniel Tomassi, and Ron Quist on the issue, and there seems to be some consensus at least that PEFA scores can help identify which of the “basic” PFM capacities in a country need upgrading. But this still leaves questions on optimal strategy and sequencing unanswered.

PEFA in any case says very little about the sequencing of advanced budget reforms such as MTEF and performance budgeting, as the indicators deal mostly with the basic functionality of PFM systems. One of the interesting questions in sequencing of advanced reforms is how the introduction of performance oriented budgeting should be handled. In recent years, the standard answer by many in the profession has been that program budgeting, including a fully defined program classification, has to be introduced first. Once program budgeting has become the core of the budget management system, then gradually performance indicators, first output and then outcome indicators, can be attached to the program structure. At that point, voila, one has performance budgeting.  How effective the program is in achieving policy objectives can be measured by setting targets for outcomes, and the efficiency of programs can be assessed by measuring costs of outputs relative to, for example, some benchmark, or over time.

Center of Excellence in Finance in Ljubljana, Slovenia Celebrates its 10th Anniversary

Posted by Brian Olden and Tina Zagar ^1/

 
The Center of Excellence in Finance (CEF), the regional training center for public sector officials in South East Europe this year celebrated its 10th anniversary with a series of events that took place in Ljubljana between June 20 and 24, 2011. The CEF was established in January 2001 by the Slovenian Government in close cooperation with ministries of finance of other countries in South East Europe. The initiative to establish the CEF was framed in the context of the Stability Pact for South East Europe. The CEF’s main objective is to assist in development of public financial management and central banking capacity through provision of training and other capacity development initiatives for countries in the region.

In addition to its annual Advisory and Supervisory Board meetings, representing donor partner institutions and member countries respectively, other events celebrating CEF’s 10th anniversary included an IMF seminar on Building Fiscal Institutions to Meet Post Crisis Challenges sponsored by the Japanese government and a Roundtable Discussion on the Economic Outlook and the Role of Public Finances in the South East Europe (SEE).^2/ The celebrations culminated with the CEF’s 10th Anniversary Reception on June 23rd, followed by a Regional Policy Forum on ‘Growth Strategies after the Crisis’ the next day.

The First 2011 Issue of the International Journal of Governmental Financial Management Is Now Available for Free Download

Posted by Andy Wynne, Editor

 
In the first paper of this issue, David Hall makes the case for public spending. He notes the long-term steady rise in public spending in all countries and demonstrates a powerful link between public spending and economic and social development. Public spending, he argues is essential for financing infrastructure, including roads, electricity, and water. It provides the health and education services necessary for modern economies more efficiently and effectively than the market ever can. By redistributing money to those on low incomes, public spending redresses the inequality of income created by the market. Three-quarters of the global effort to counter climate change will come from public finance. As a result, David Hall argues, globally, public spending is virtually certain to continue rising, as the role of the state continues to grow in developing countries.

In the second paper, Harika Masud reviews the findings from the Open Budget Survey, 2010. This is the third biennial international survey undertaken by the Open Budget Partnership. The survey confirms that the overall state of budget transparency around the world is poor. However, it also finds that budget transparency is on a positive trajectory. To support this development, the Open Budget Partnership is developing global norms on budget transparency and participation to establish the following three guarantees:

• public access to information on budget processes, policies, and results;
• opportunities to participate meaningfully in the budget process; and
• domestic and international implementation mechanisms.

PEFA: Le Rapport de suivi 2010 et l’analyse des évaluations répétées

Affiché par Frans Ronsholt et Phil Sinnett

 
Le quatrième rapport de suivi du déploiement du Cadre PEFA a été préparé par le Secrétariat. Le Rapport de suivi 2010 analyse les évaluations répétées et notamment l’évolution de la performance des systèmes de GFP mesurée au moyen des indicateurs PEFA.

Le Rapport de suivi 2010 avait pour principal objectif de déterminer si le Cadre PEFA permet d'obtenir des mesures fiables de l'évolution de la performance depuis les évaluations précédentes ; une évaluation répétée examine les changements particuliers intervenus dans la performance d'un système en vérifiant ce qui a changé et dans quelle mesure. Le nombre d’évaluations répétées s’accroît nettement car beaucoup d’évaluations de référence ont été menées il y a trois à six ans. Entre le lancement du Cadre PEFA en juin 2005 et le bilan des évaluations effectué en octobre 2010, 45 évaluations répétées ont été menées dans 38 pays. 

Le Rapport de suivi 2010 cherche des réponses aux questions suivantes : i) quelle est la fréquence des évaluations répétées et pour quelles raisons sont-elles réalisées ? ii) le Cadre permet-il réellement de mesurer les changements intervenus et serait-il possible de mesurer ces changements par des méthodes plus valides et plus fiables ? et iii) quelles sont les évolutions de la performance de la GFP qui ressortent des évaluations répétées ?

PEFA: Monitoring Report 2010 on Repeat Assessments

Posted by Frans Ronsholt and Phil Sinnett

 
The fourth monitoring report on the roll-out of the PEFA Framework has been prepared by the Secretariat. The Monitoring Report 2010 (MR 10) analyzed repeat assessments including changes in PFM systems performance measured by means of PEFA indicators.

The main purpose of the MR10 was to assess if the PEFA framework is able to provide reliable measurement of performance changes over time. One of the objectives of a repeat assessment (RA) is to measure performance since the previous assessment (PA); a RA looks at the specific changes in system performance by verifying what has changed and by how much. RAs are emerging in significant numbers as many baseline assessments took place 3-6 years ago. Between the launch of the PEFA Framework in June 2005 and a stocktake in October 2010, forty five RAs have been carried out in 38 countries.

The MR10 seek answers to the following questions: (i) what are the frequency of and drivers behind the repeat assessments, (ii) does the Framework effectively enable measuring changes and could changes be measured with better validity and reliability and (iii) what trends in PFM Performance do repeat assessments reveal?

Can Internal Control of Public Finances Eliminate the Risk of Any Loss?

Posted by Mohamed Moindze

 
The proper control of public finances is essential to improve fiscal governance.  The aim is to ensure that public funds are used in conformity with parliamentary authority, applicable laws and regulations and with due regard to efficiency and effectiveness.  Such control may be internal, when it is undertaken by officials internal to the administration, or external, when it is undertaken by an organization which is operationally separate and independent of the administration.  This later body should review the whole of the administration and verify whether financial management conforms to the legal requirements and is appropriate.

It is becoming clearer and clearer that many Francophone African states do not adequately control their public expenditure.  This allows an increase in payment arrears and the loss of budgetary credibility, but also waste and irregular use of public resources.  Assessments of systems of public financial management in these states using the PEFA methodology indicate an alarming situation.  Most of these countries score only a C or D on a four-point scale from A to D, where A is the best score.  In addition, the assessments indicate insufficient systems of control or controls that are regularly violated. 

Le contrôle interne des finances publiques peut-il éliminer tous les risques de perte?

Affiché par Mohamed Moindze

 
Le contrôle des finances publiques est un élément fondamental pour l’amélioration de la gouvernance des finances publiques. Il vise à s’assurer que l’usage des deniers publics se fait conformément aux autorisations parlementaires, aux lois et réglementations nationales ainsi qu’avec efficience et efficacité.  Cette surveillance peut être interne, lorsqu’elle est mise en œuvre par des acteurs internes de l’administration, ou externe, lorsqu’elle relève d’un organisme opérationnellement séparé et indépendant de l’administration (dont les pouvoirs de contrôle couvrent l’administration dans son ensemble et qui vérifie si la gestion financière est conforme à la légalité et appropriée).

Or, l’on constate de plus en plus que de nombreux pays d’Afrique francophone ne contrôlent pas suffisamment les dépenses publiques; ce qui aboutit à l’accumulation d’arriérés, la perte de la crédibilité du budget, mais également aux gaspillages ou aux détournements des ressources publiques. Les évaluations des systèmes de gestion des finances publiques selon la méthodologie PEFA effectuées dans ces pays montrent une situation alarmante : la plupart de ces pays ont obtenu des scores qui oscillent entre C et D, sur la base d’une échelle ordinale à quatre points qui va de A à D, avec A le score le plus élevé. En outre, les diagnostics qui révèlent des systèmes de contrôle insuffisants ou systématiquement violés.

Transparency Versus Effectiveness in Public Financial Management

Posted by Sailendra Pattanayak

 
In recent years, there has been a resurgence of initiatives to promote transparency in fiscal policy decision making and implementation. Openness and clarity about the government’s policy intentions, policy formulation and implementation have been recognized as key elements of good governance. Comprehensive disclosure in a timely and systematic manner of all relevant information on management of public resources—their collection and use through a country’s public financial management (PFM) system to pursue policy goals—are seen as key to ensuring accountability.

Alongside transparency, the effectiveness of PFM systems and processes, including budget management methodologies and tools, is also important to manage public finances in a cost-effective manner. Budget reforms such as MTEF, program/performance budgeting, activity-based budgeting, cost accounting, etc. are primarily motivated to enhance the efficiency and effectiveness of allocating and managing public resources.

L’indépendance des inspections générales de l’État par rapport à celle des cours des comptes

Publié par Andy Wynne, www.idilmat.com

 
Dans sa déclaration de Mexico, l'Organisation internationale des Institutions supérieures de contrôle des finances publiques (INTOSAI) présente des bonnes pratiques en matière d’indépendance de ces institutions. Cependant, comme dans beaucoup de régions du monde, cet idéal n’est pas atteint dans bon nombre de pays d’Afrique subsaharienne, anglophones ou francophones.

En outre, les systèmes judiciaires et en fait les parlements des pays d’Afrique subsaharienne n’ont ni l’indépendance ni les capacités de ceux de bon nombre de pays de l’OCDE. Par exemple, le rapport du Mécanisme africain d'évaluation par les pairs (African Peer Review Mechanism) (2008: 120) sur le Burkina Faso conclut que :

Le pouvoir exécutif est dominant et n’est guère limité par le parlement et le pouvoir judiciaire, dont le rôle est déficient en ce qui concerne l’équilibre des pouvoirs.

How Does the Independence of General State Inspectorates Compare with that of Courts of Accounts?

Posted by Andy Wynne, www.idilmat.com

 
The INTOSAI Mexico Declaration provides a summary of good practice for the independence of government auditors.  However, as in many parts of the world, this ideal is not achieved in many Sub-Saharan African countries.  This includes both the English and the French speaking countries. 

In addition, the judiciary and indeed parliaments in Sub-Saharan Africa do not have the independence nor capacity achieved in many OECD countries, for example, the African Peer Review Mechanism (2008: 120) report on Burkina Faso concluded that:

the Executive is dominant and is hardly limited by the legislature and the judiciary, both of which are weak as regards checks and balances.

The World Bank and Public Sector Management: Where Do You Come Out?

Posted by Nick Manning

 
The World Bank is reviewing its approach to Public Sector Management. Please take a look at our thinking to date: http://go.worldbank.org/BQGJN2KA30

The purpose of the approach is to make the World Bank a more effective partner to client governments in improving their ability to deliver public sector results. By results we mean those that are needed by citizens' today in sectors such as health, education, agriculture and transport – as well as results such as fiscal stability which maximize the prospects that those sector improvements will still be delivered tomorrow. This is an opportunity to reflect on some broad themes concerning the field of “public management” or “public administration” - and the specific question of what the Bank can do, particularly in environments of generally weak governance, and how progress can be ascertained.

Gestion et Finances Publiques en Afrique Francophone

Affiché par Jean Mathis

 
Le site http://jean-mathis.pagesperso-orange.fr/ contient un manuel intitulé Gestion et Finances Publiques en Afrique Francophone. Il présente deux caractéristiques.

1. Il se veut résolument orienté vers les nouvelles finances publiques. Une large part est faite aux méthodologies des budgets de programmes, des cadres de dépenses à moyen terme et à la gestion par la performance.

2. Bien que les méthodologies des finances publiques soient toujours présentées de façon relativement universelle, le manuel cherche à être proche des contraintes institutionnelles de l'essentiel des pays d'Afrique francophone. En particulier, il analyse systématiquement les nouvelles directives de finances publiques de l'UEMOA et de la CEMAC. Plutôt que de présenter les textes des deux zones séparément, une mise en parallèle et une comparaison, à priori instructive comme toute comparaison internationale, a été recherchée.

The PFM Board at One Year

By John Short, PFM Board partner

 
On April 10, the PFM Board celebrates its first year of existence. In that year there have been almost 500 registered members with some 117,000 page views from nearly 3,000 people from 11,200 visits in 153 countries. There have also been 641 posts in 188 topics which are broadly organised around the PEFA framework.

Want to Learn Cool Acronyms? Let’s talk about ISSAI (and INTOSAI GOV)

Posted by Franck Bessette

 
As part of the Johannesburg Accords signed in November 2010, the XXth INCOSAI (500 delegates from 152 Supreme Audit Institutions), the Congress of INTOSAI, the International Organization of Supreme Audit Institutions, emphasized the importance of the ISSAIs (International Standards of Supreme Audit Institutions) and INTOSAI GOVs by issuing the “South African Declaration on International Standards for SAIs”. With the adoption of over 40 new ISSAIs and INTOSAI GOVs, INTOSAI now – for the first time – has a comprehensive framework of international auditing standards, which the individual SAIs can use as a reference point for their activities. INCOSAI also underlined the need to use and apply these standards and guidelines in a practical context.

Still here? Well, then, you might be happy to know that while the ISSAIs state the basic prerequisites for the proper functioning and professional conduct of Supreme Audit Institutions and the fundamental principles in auditing of public entities, the INTOSAI Guidance for Good Governance (INTOSAI GOV) are providing guidance to public authorities on the proper administration of public funds. More on this at www.issai.org

A Whole System Approach to Strengthening PFM (CIPFA Conference)

 

Posted by Alan Edwards, International Director, CIPFA

Imagine a UK without CIPFA (or a USA without CPA or Nigeria without ICAN or…) and the Permanent Secretary at the Treasury (or…) inviting an overseas institute of public finance to help create a new qualification for public sector finance staff. That is the analogy we have been using when examining the issues to address when asked to provide PFM and professionalization support in other countries. I find that helps illustrate the scale of challenge involved and the need to think through the whole system impacts of change.

CIPFA’s Whole System Approach to PFM is a more formal and comprehensive analysis of all the key players and processes. CIPFA with the support of DFID has produced this paper to assist with the design of holistic PFM improvement programmes.

Public Investment Management: Linking Global Trends to National Experiences

Posted by Pasquale Lucio Scandizzo and Mauro Napodano

 
Public Investment Management has become a cornerstone in the budget reform of many developing and transition countries. The emphasis on management is a consequence of the recent importance of fiscal space earmarked for public investments as engine of growth.

A new book ‘Public Investment Management: Linking Global Trends to National Experiences', by Pasquale Scandizzo and Mauro Napodano (*), analyzes general methodologies and best practices in this field both at the macro and the project level. The book originates from a study performed for the Ministry of Finance of the Government of Brazil, on behalf of the International Bank for Reconstruction and Development. The study, which lasted two years, was conducted both for Brazil and for a sample of advanced countries.

Brasil: Desafios Na Implantaçäo Do Sistema De Custos No Governo Federal

Por Victor Holanda e Mário Pessoa

 
Como parte da reforma da gestão pública no Brasil, o governo federal implantou de forma inovadora um sistema de informação de custo (SIC) na área pública. Um dos principais objetivos é melhorar a decisão alocativa dos recursos orçamentários, mas isso ainda não foi alcançado. A ênfase é na mudança do papel do setor público como agente de uma gestão pública mais eficiente. O governo federal, espelhado na experiência bem sucedida do sistema integrado de administração financeira (SIAFI), decidiu criar um grande sistema de informação que permite que todos os gestores públicos tenham as informações financeiras necessárias a produção de informações de custo nas dimensões institucional (unidades Administrativas) e programática (por programa de governo), porém com a flexibilidade para definir centros de custos e atividades em um nível mais detalhado de acordo com as especificidades e necessidades de cada entidade.

Brazil: Challenges in Implementing a Costing System for the Public Sector

By Victor Holanda and Mario Pessoa

 
As part of the public management reforms in Brazil, the federal government implemented in 2010 an innovative cost information system (SIC) in the public sector. A major goal is to improve budget allocation decisions but it is early days to see any tangible results. The emphasis of the system is on improving the efficiency of the public sector by changing the behavior of the public sector managers. The federal government, following the successful implementation of the integrated financial management information system (SIAFI) providing budgetary data, has created a large information system that allows all public sector managers to produce cost information according to two dimensions: institutional (administrative units); and programmatic (government programs), but with the flexibility to define cost centers and activities at a more detailed level according to the peculiarities and needs of each public entity.