How to Account for Europe’s Debt

Posted by Marc Robinson 

The financial pages have over recent weeks been full of stories about the accounting “innovations” used by Greece and other European countries to artificially lower their reported deficits. However, the accounting strategies in question – in particular swaps and securitization – were banned by the EU years ago, and can no longer be used to push deficit numbers down. The real story is the continuing scope for creative accounting around Maastricht debt figures – that is, the debt measure used by the Europeans to measure national debt against the (now greatly exceeded) limit of sixty percent of GDP under the Stability and Growth Pact (SGP).

Colombia: A Success Story in Implementing Accrual Accounting in the Public Sector

Posted by Mario Pessoa and Maria Eugenia Benavides 

While many countries are still struggling to adopt accrual accounting standards, Colombia has had considerable success with this reform. The main motivation to adopt the international accrual accounting standards was the desire to meet the information needs arising from economic globalization. The Colombian public sector accounting standards (PSAS) are now broadly in line with the International accrual-basis Public Sector Accounting Standards (IPSAS - International Public Sector Accounting Standards). It is the most advanced practice in Latin America. In the case of Colombia, this process did not involve a traumatic change throughout the public sector because the PSAS was already significantly aligned with accrual-based standards particularly in the state-owned enterprise sector. The changes consisted mainly of conceptual redefinitions, accuracy, capacity building, dissemination, and development of detailed written instructions.

The greatest challenge for the Colombian National Accounting Office (Contaduría General de la Nación orCGN[1]) was implementing the accounting standards. In 1995, the first General Chart of Accounts for the Public Sector (GCoAPS) entered into force. It was developed with the participation of a large number of accountants of different government entities in order to encompass all of the operations of the public sector. One of the most difficult tasks was to determine the value of assets and liabilities, especially for some local authorities that did not have all the supporting documentation. Initially this situation impacted the quality of the information and consequently the reliability of the consolidated financial statements. Hence, CGN proposed legislation under the name "Accounting Improvement Law" (Ley de Saneamiento Contable) which required public entities to standardize, reconcile, streamline, and improve accounting procedures.

Reforming Budget System Laws

Posted by Ian Lienert 

A new Technical Note and Manual (TNM) entitled Reforming Budget System Laws has been issued. TNM/10/01 is mostly unchanged from the Guidance Note on this issue, authored by Israel Fainboim and myself and published on the PFM blog on October 22, 2007. The TNM explores the variations and provides principles to guide countries seeking to draft new budget laws or to amend existing laws.

The TNM points to the opposite positions that OECD countries have regarding the need to adopt a law – or laws – for providing a framework or rules for government budget processes. At the one extreme, Denmark and Norway have never adopted a formal law to govern the budget system. At the other extreme, the United States has adopted many laws relating to the federal budget system (not to mention State level laws). Most countries lie between the extremes of these two countries.

Learn from History......or Change Will Not Happen! Musings on the Effectiveness of Technical Assistance

Posted by David Gentry 

As a schoolboy I learned about "foot pounds": work is measured by means of a weight (a pound) moved some distance (a foot). If I work up a sweat pushing against a brick wall that I move not an inch, then I was not working. Conversely, I can't claim transporting a feather long distances as a major accomplishment. The trick is to come up with a considerable weight that I can carry reasonably far.

Effectiveness of PFM technical assistance in the developing world might be described as making progress in solving important PFM problems. Maximizing the effectiveness of technical assistance, if we could all agree on the measures, might be the degree of importance of a problem times the degree of progress made. Even though we don't have consensus on such measures the logic seems compelling.

The Pole on Development Strategies and Pubic Finance (UNDP) Looking for a Well-Qualified Expert on Results-Based Public Financial Management

Posted by The Pole on Development Strategies and Public Finance (UNDP) 

The Pole on Development Strategies and Pubic Finance (UNDP) is looking for a well-qualified expert on results based Public Financial Management for a one-month period.

To achieve its objectives in the field of regional integration, the Council of Ministers of the West African Economic and Monetary Union (WAEMU) passed a new bill (directive) on National budget Law to improve public finance management within the WAEMU region. It changes the WAEMU legal framework with which the eight Member States of the zone had to comply until now.

The expert will draft the appendix related to results based management of the methodological guide that WAEMU plans to provide to its Member States to explain the new rules.

 

To apply please go to the undp.org web site or click on the following link: http://jobs.undp.org/cj_view_job.cfm?job_id=14894

IMF's Fiscal Affairs Department Publishes January 2010 "FAD e-Newletter"

Posted by Michel Lazare

 
 
 

The IMF's Fiscal Affairs Department (FAD) published the third issue of its "FAD e-newsletter" at the end of January 2020.

The full text of the FAD e-newsletter can be accessed by clicking here.

Among many others, this January 2010 includes links to the following publications, resources, announcements, and topics:

•  The "Fiscal Monitor" which examines fiscal developments in a variety of country groups, with emphasis on G-20 countries; the latest issue of the Monitor contains updated estimates of medium-term fiscal adjustment requirements in advanced countries; takes a fresh look at previous large adjustment episodes; and presents new research on debt, deficits, and interest rates.
• “A Strategy for Renormalizing Fiscal and Monetary Policies in Advanced Economies”, an IMF Staff Position Note in which FAD Director Carlo Cottarelli and Monetary and Capital Markets Director Jose Viñals explore the magnitude of the fiscal and monetary interventions in the past eighteen months and present elements of a strategy to bring back fiscal and monetary policy to normalcy in the aftermath of the crisis.
•  "Fiscal Rules—Anchoring Expectations for Sustainable Public Finances."  In this study that was discussed by the IMF Executive Board, FAD staff shows that fiscal rules can help countries strengthen public finances and ensure debt sustainability. The study is based on a unique database encompassing virtually all fiscal rules existing in IMF member countries at both national and supra-national level. It also provides a detailed discussion of the design and implementation of fiscal rules around the world.
• First "Fiscal Forum." On April 22-23, 2010,  FAD will host the first Fiscal Forum at the IMF Washington, D.C. headquarters. The Fiscal Forum is a network of senior government officials from over 30 major economies in the world which provides an opportunity for senior officials from participating countries to learn from each other’s experience in tackling the key macro-fiscal policy challenges of the day and to discuss policy coordination. The focus of the first Fiscal Forum, participation in which is by invitation only, will be the fiscal strategy after the crisis.

The FAD e-newsletter also presents the Fiscal Issues at the IMF website and the FAD series "Technical Notes and Manuals"

To subscribe to the FAD e-newsletter, please contact: FADsubscribe@imf.org.

Another Highly Regarded Master’s Program in Public Finance in the U.S.

Posted by John L. Mikesell, Chancellor’s Professor of Public and Environmental Affairs, Indiana University 

Duke University’s new Master’s Program in public financial management joins a long-standing program at Indiana University’s School of Public and Environmental Affairs (SPEA) in providing graduate professional education in the field in the U.S.

SPEA’s public financial administration concentration, in its highly-ranked and internationally respected Master of Public Affairs degree, forms a strong base for development and acceleration of careers in government finance and budgeting, applied program and policy analysis, fiscal consulting, and management in public, private, and nonprofit organizations throughout the world. The professional distinction and practical experience of our faculty, the great success of our alumni, and the hands-on nature of our professional degree programs ensure a high demand for our graduates.

Compiling Government Finance Statistics (GFS) -- an IMF Fact Sheet

Posted by Sagé de Clerck, IMF Statistics Department

The IMF has prepared a Fact Sheet describing what is involved in compiling government finance statistics (GFS), and how these data relate to the fiscal cycle, source data, and accounting systems. GFS are key to economic analysis and also a major input for national accounts statistics. GFS facilitate consistency with other macroeconomic datasets and enhance international comparability.

Data users are often faced with a myriad of fiscal data: from the budget process, from various specialized budget reports, or from audit reports, and users can easily get lost in the data labyrinth. The Fact Sheet will help users of fiscal data better understand these differences. Compilers of GFS will also find it helpful to understand differences among these various datasets and how they relate to each other. Where necessary, GFS compilers should publish reconciliations of the data to instill confidence in the reliability of the data.

Frequently asked questions from users suggest a need to clarify the different types of data and their applications. For example, “central government budget data” are used in policy decisions at a national level while “budget execution reports” are useful to monitor progress with implementing these decisions. In contrast, to capture governments' involvement in the production and growth of the economy, as measured in the national accounts, a more comprehensive measure covering the "general government" is required.

World Bank Job Posting -- 2 Senior Financial Management Specialist Positions

Posted by T.K. Balakrishnan, Manager, Financial Management, Latin America and Caribbean Region, World Bank 

The World Bank has openings for 2 Senior Financial Management Specialist (Sr. FMS) positions -- one based in Washington, DC and the other in Buenos Aires, Argentina.   Both are international hire positions.  

Job descriptions and qualifications needed are detailed in the job announcements, posted on the World Bank's website. To access the job announcements click on this link and then on the links to the job numbers 100143 and 100144.  

The Closing Date is February 14, 2010.

How to Initiate a Performance Framework in Budgeting

Posted by Pokar Khemani 

A large number of countries over the last decade have reformed their budgeting process to enhance its performance orientation. Virtually all  countries have found enhancing the performance orientation of their budgeting process quite challenging, but lessons can be drawn from the now vast body of experience accumulated.
 
My presentation (copy attached) at the ICGFM Annual Winter Conference held at Inter-American Development Bank, Washington D.C. on December 4 focused on “How to Initiate a Performance Framework in Budgeting”; it lays out my views and shares my practical experience with public finance professionals from over 30 countries on how best to approach the introduction of a performance framework in budgeting. 

New IMF Job Offer: Public Financial Management Resident Advisor Based in Mali (Job Number: 1000045)

Posted by Michel Lazare 

The vacancy is open until March 8, 2010. To apply please go to the imf.org web site or click on the following link: http://www.imf.org/external/np/adm/rec/job/howtoap.htm

Description
 
The Fiscal Affairs Department (FAD) is looking for a well-qualified expert to fill a Public Financial Management (PFM) Resident Advisor position at the West African Regional Technical Assistance Center (West AFRITAC), based in Bamako, Mali. The Advisor's appointment term would be for a period of one year, on a renewable basis, subject to satisfactory performance.
 
The Advisor will provide technical assistance (TA) on a range of PFM areas to the ten (10) countries covered by West AFRITAC, namely Benin, Burkina Faso, Côte d'Ivoire, Guinea, Guinea Bissau, Mali, Mauritania, Niger, Senegal, and Togo. The Advisor's work program will cover all PFM areas: legal and regulatory framework; budget preparation (including budget classification, medium-term budgetary frameworks, performance-oriented budgeting); budget execution (including expenditure control, treasury operations, cash management, accounting, fiscal reporting, and financial management information system), internal control and internal audit.
 
The Advisor will work under the general direction of the Coordinator of West AFRITAC while, on substantive issues, he/she will report to FAD staff in Washington D.C. Extensive travel within the West AFRITAC region should be expected. The successful candidate will work closely with the existing PFM advisor.

 

New IMF Job Offer: Public Financial Management Resident Advisor Based in Gabon (Job Number: 1000044)

Posted by Michel Lazare 

The vacancy is open until March 8, 2010. To apply, please go to www.imf.org or click on the following link: http://www.imf.org/external/np/adm/rec/job/howtoap.htm

Description
 
The Fiscal Affairs Department (FAD) is looking for a well-qualified expert to fill a Public Financial Management (PFM) Resident Advisor position at the Central African Regional Technical Assistance Center (Central AFRITAC), based in Libreville, Gabon. The Advisor's appointment term would be for a period of one year, on a renewable basis, subject to satisfactory performance.
 
The Advisor will provide technical assistance (TA) on a range of PFM areas to the eight countries (8) covered by Central AFRITAC, namely Burundi, Cameroon, Central African Republic, Chad, Democratic Republic of Congo, Equatorial Guinea, Gabon, and Republic of Congo. The Advisor's work program will cover all PFM areas with a particular emphasis on budget execution (including expenditure control, treasury operations, cash management, accounting, fiscal reporting, and financial management information system).
 
The Advisor will work under the general direction of the Coordinator of  Central AFRITAC while, on substantive issues, he/she will report to FAD staff in Washington D.C. Extensive travel within the Central AFRITAC region should be expected. The successful candidate will work closely with the existing PFM advisor.

Improvements to the PFM Blog

Posted by Dimitar Vlahov and Sasha Pitrof 

The PFM Blog is in the process of undergoing some “cosmetic surgery”. The changes are intended to support the authors’ continued efforts to share their PFM expertise and experience. In addition, we aim at presenting the growing amount of information contained here in ever more user-friendly ways. Below is a brief description of two note-worthy improvements introduced lately, as well as a heads-up with respect to expected near-future changes.

A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates – A New IMF Technical Note

PFM Blog has recently interviewed Julio Escolano, Deputy Division Chief of the IMF Fiscal Affairs Department’s Fiscal Policy and Surveillance Division and author of a new IMF Technical Note. 

PFM Blog: You have recently published a note in the IMF Technical Notes and Manuals (TNM) series. What is this note about?

Julio Escolano: The title of the note is “A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates.” It can be downloaded from the IMF webpage at http://www.imf.org/external/pubs/ft/tnm/2010/tnm1002.pdf. The note discusses the methodology that is used to analyze the dynamics of public debt and common indicators of fiscal sustainability as well as of the underlying budgetary position of a country. It is meant to be used by fiscal economists as a small manual or “vade mecum” of formulas and relationships among fiscal variables. These are tools and methodologies are often not found in standard economics manuals, rather they are scattered throughout different papers, manuals, articles, and in some cases, only in the “lore” or “folk wisdom” of specialized economists or public finance practitioners. Thus, it can be useful to have them compiled in a compact presentation and with consistent notation and formulas. In fact, the idea and encouragement to write this note come from Carlo Cottarelli, Director of the IMF’s Fiscal Affairs Department, one evening that we were working in the office until late. We found that Carlo, other colleagues, and I had been independently deriving the same formulas for some note we were working on—nobody remembered these formulas off the top of our head. (Felicitously, we all came out with the same results.) I guess we would have gone home earlier that evening if we had had this note then.

The coverage of topics is, of course, far from exhaustive. At this point, as its title indicates, the note focuses on debt dynamics and budget indicators to correct budget aggregates for the business cycle and inflation. However, I plan to update it from time to time to cover additional topics that may prove useful, based on our evolving experience.

“Choosing the Nation’s Fiscal Future,” Videos on the U.S. Long-Term Fiscal Policy

Our readers interested in the U.S. fiscal future (see our post of February 1) may also be interested in the following YouTube videos:

"Choosing the Nation’s Fiscal Future," A New Report on the U.S. Long-Term Fiscal Policy

Posted by Steve Redburn, elected National Academy of Public Administration (NAPA) fellow 

A new report suggests that if the federal budget were a big ship it would be headed for the rocks. That is its bad news. Its good news is that there is ample time for the ship to turn away, and there are many routes out of danger. That judgment was reached by a joint committee of 21 budget and policy experts assembled by the National Research Council and the National Academy of Public Administration. The Committee was co-chaired by John Palmer, university professor and dean emeritus of the Maxwell School of Citizenship and Public Affairs, Syracuse University, and Rudolph Penner, fellow at the Urban Institute and former director of the U.S. Congressional Budget Office.

The resulting report, funded by the John D. and Catherine T. MacArthur Foundation, was released January 13, 2010.  It is titled Choosing the Nation's Fiscal Future, and available from the National Academies Press or online at www.ourfiscalfuture.org . The report urges that future budgets include proposals to limit spending growth and/or raise additional revenues starting in 2012. The committee’s judgment is that these policy changes should be large enough to stabilize the debt at no more than 60 percent of GDP within a decade.