Partnering with Local Communities to Create Public Infrastructure

Posted by Priya Goel[1]

This is the story of the greening of the Alwar district in Rajasthan through “Shramdaan” or the use of local, free or donated labor for the creation of infrastructure assets. Rajasthan is India’s driest state. Alwar is an important agricultural district in the State, but only 12 percent of the land area is irrigated. Until 1985, Alwar was declared a ‘dark zone’ with no ground water. It had once been green. In 1985, a local doctor, Dr Rajendra Singh, discovered that the villagers needed water more than his medicines. He found that the drying up of groundwater had resulted from indiscriminate deforestation, mining, poor agricultural practices, and the abandonment of traditional techniques of rainwater harvesting.

Top 10 PFM Blog Posts of 2018

Posted by Thibault Vermeulen, Richard Allen, and Teresa Curristine[1]

2018 was another bumper year for the PFM blog, with 70 articles being published. Readership levels remained high, as did the rich diversity of our articles, authors and readers. Forty percent of the articles, and a similar proportion of the top 10 (including our number one), were written by external contributors from international organizations, the public sector, academia, and the private sector; which is higher than last year. Topics ranged widely, from digital innovations in public finance, to the usefulness of perception indicators of corruption, to fiscal rules and PFM in resource-rich countries, to why countries adopt accrual budgeting, to gender budgeting, to making public infrastructure more efficient, and more. Some of these topics are old perennials, others were breaking new ground and stretching the envelope of knowledge.

Promoting Integrity in the Public Sector – How Can New Technologies Help?

Posted by Benoit Wiest[1]

Financial Management Information Systems (FMIS) have been a feature of the PFM landscape for several decades. Recently, many countries have also adopted sophisticated e-procurement, payroll, and public investment management systems linked to their FMIS. These systems reduce the need for human intervention, allow automated controls and keep records of financial transactions for public dissemination and analysis. The data produced can be stored and archived almost indefinitely. Providing they are sufficiently comprehensive with appropriate and segregated users rights, FMISs and other PFM systems can be of major help in securing, controlling and better analyzing financial transactions. They can also help fight corruption in the public sector as most corrupt activities leave a digital trace at some point.

Strengthening the Macro-Fiscal Function in Ministries of Finance

Posted by Israel Fainboim and Ian Lienert[1]

Conducting sound fiscal policy requires a strategic vision that anchors the annual budget in a medium-term perspective. Whatever the level of a country’s development, the ministry of finance (MoF) needs a department or unit with strong macro-fiscal analytical capacity. A new IMF Technical Note and Manual (TNM) provides guidance for strengthening this critically important function which underpins good fiscal policy and budget systems.

Fiscal Rules and PFM in Resource-Rich Developing Countries

Posted by Fazeer Sheik Rahim and Richard Allen[1]

Several low-income countries in Africa are gearing up to become significant resource exporters in coming years. These include Liberia, Mozambique, Sierra Leone, Tanzania, and Uganda. Many are taking steps to enhance their fiscal framework to better manage their resource wealth. Uganda, for example, has set up a Petroleum Fund to finance infrastructure and development, and is considering a fiscal rule based on a nonoil fiscal balance. Similarly, Tanzania envisages the creation of an Oil and Gas Fund, and setting its fiscal objectives based on a non-resource balance target.

Making Public Investment in Brazil More Efficient

By Teresa Curristine¹ and Joana Pereira²

Brazil continues to face massive infrastructure needs, notwithstanding decades of government-led national, regional, and local investment initiatives. With a large and growing economy of over 200 million people and a vast territory of 27 diverse states, infrastructure needs to help Brazil achieve its economic growth potential are particularly critical in the transport sector (including ports, rail, and roads). At the same time, Brazil also continues to face large social infrastructure investment needs, including, for example, in health.

More on the Sequencing of PFM Reform

Posted by Richard Allen[1]

Two kinds of PFM reform sequencing can be identified in the literature. First, horizontal sequencing refers to the steps taken over time to modernize one specific type or area of PFM. Allen Schick in his famous 1990s presentation on “Look Before You Leapfrog” discussed this type of sequencing which emphasized the importance of doing the basics first. For example, a country should focus on putting in place an effective system of internal control before it implements internal audit (which is only useful once a credible set of controls has been established). A similarly progression would move from basic cash accounting to accrual accounting, or from the preparation of an annual budget to a medium-term budget framework. This type of sequencing is simple, logical and straightforward, though frequently not observed by developing countries (or their advisors) who leap directly into more advanced forms of budgeting (program budgeting and accrual accounting are common examples) before the basic elements are in place.

Ten Lessons from Spending Reviews in Eastern Europe

Posted by Suzanne Flynn, Fazeer Rahim, and Natalia Zbirciog-Vandenberghe[1]

A recent workshop organized by the Center of Excellence in Finance (CEF) in Ljubljana, Slovenia[2] discussed the benefits, approaches, and lessons learned in developing spending review processes in South-East European. The workshop was facilitated by experts from the IMF’s Fiscal Affairs Department, the Structural Reform Support Service (SRSS) of the European Commission (EC), and the Ministries of Finance and Justice of the Slovak Republic.

Participating countries (Albania, Greece, Lithuania, FYR Macedonia, Moldova, Montenegro, Malta, and Ukraine) are all at an early stage of using spending reviews as a tool to generate efficiency gains in public spending. Some countries have undertaken one-off sectoral spending reviews, while others are setting up the necessary structures to undertake such reviews. The event provided an opportunity for these countries to learn from the experience of EU Member States in implementing spending reviews, and to share their own experience.

Digital Innovation in Public Finance in South America

Posted by Katherine Baer and Gerardo Uña[1]  

A seminar on Digital Innovation in Public Finance was organized by the IMF’s Fiscal Affairs Department and the Inter-American Development Bank (IDB), with the support of the Ministry of Finance of Peru and the Peruvian Tax Agency (SUNAT). The seminar took place in Lima, Peru on September 26-27.

The event covered topics relating to digital innovation in tax policy, tax administration, and public financial management (PFM). It provided an opportunity for senior tax and budget/treasury officials from most of the South American countries (Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru and Uruguay) to share their recent experiences in introducing digital innovations. An opening session highlighted some of the main themes of the FAD publication Digital Revolutions in Public Finance and set the stage for further discussions.[2]  Participants from other countries, including the U.S. Internal Revenue Service, the Mexican tax administration, and the French Treasury also discussed their experiences.

Adoption of Accrual Accounting Accelerates

Posted by John Stanford[1], Ross Smith[2] and Amon Dhliwayo[3]

Governments by nature are resistant to change, and when change occurs it normally is a slow, gradual process. Following this pattern, the uptake of accrual financial accounting and reporting initially moved slowly, after the drive to accrual began in New Zealand and Australia in the late 1980s.