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.

In this debate about transparency and effectiveness in PFM, a number of questions are usually raised:

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