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May 2012

May 31, 2012

Job Offer: Regional Public Financial Management Advisor Based in Accra, Ghana (IMF Job Number: 1200459)

The Fiscal Affairs Department (FAD) of the International Monetary Fund is looking for a Public Financial Management (PFM) regional advisor for West Africa based in Accra, Ghana, as part of a broader technical assistance program funded by the Japanese Government targeting 11 selected ECOWAS[1] countries. The overall objective and expected outcomes of the PFM component under this program are to improve the credibility and transparency of the budget within a medium term framework, to enhance the predictability of the budget, and to raise the level of fiscal reporting to international standards.

This advisor position, to cover Anglophone countries within the group (The Gambia, Ghana, Liberia, Nigeria and Sierra Leone), will be for a period of one year starting August 2012, renewable by mutual agreement subject to satisfactory performance.

Continue reading "Job Offer: Regional Public Financial Management Advisor Based in Accra, Ghana (IMF Job Number: 1200459)" »

The US Fiscal and Generational Gap

Posted by Nicoletta Batini, IMF Senior Economist

The day-to-day functions of the U.S. federal government—from running national parks to sending out tax refunds—risked paralysis on April 8 as both chambers of Congress and the White House struggled to hammer out an elusive budget deal before funding run out on Friday, triggering a partial government shutdown.

Yet a partial government shutdown this spring may not be the biggest and hardest-to-fix fiscal headache awaiting the U.S. fiscal authorities. Looking beyond the next few years, the United States is facing a most challenging fiscal situation due to the perfect storm created by high fiscal deficits, an ageing population and rapid growth in government-provided healthcare benefits. IMF and Congressional Budget Office forecasts imply that by the end of this century a repayment of U.S. debt stock could absorb up to 10 times or more today’s entire yearly U.S. gross domestic product.

How large is the U.S. fiscal problem? Clearly the answer depends on many factors: the natural ageing of the US population; the evolution of the cost of medical care relative to the general level of prices and wages; the growth rate of the economy.

Continue reading "The US Fiscal and Generational Gap" »

May 30, 2012

What Accounting Standards for Governments of the Global South?

Posted by Andy Wynne, andywynne@lineone.net

Timely, clear and open annual financial statements play an essential role in the accountability of governments to parliament and their citizens. However, there are no widely adopted international standards that reflect existing good practice. Virtually all developing countries currently use the modified cash basis. But there is no internationally accepted guidance that details the standards and good practices which should be adopted for this approach.

The only available international standard is the Cash Basis International Public Sector Accounting Standard (IPSAS). This was first issued in January 2003, but although it has been widely promoted by the donor community, PEFA and IFAC, not a single government in the world has actually been able to adopt this standard. This is not from want of trying, many governments have looked at the standard, but recognised that it is not practical to implement its key requirements. It is estimated, for example, that at least 31 governments in Africa have tried to adopt this standard. One international consultant recently estimated that he had worked in around 30 countries trying to adopt the standard, but that its key requirements had not proved practical.

Continue reading "What Accounting Standards for Governments of the Global South?" »

May 29, 2012

What Role for Sovereign Credit Ratings in Public Financial Management?

Posted by Tim Irwin

Working paper logo
Though intended for other purposes, sovereign credit ratings arguably have a role to play in public financial management. In particular, they provide an independent assessment of the strength of public finances that quickly allows citizens, journalists, members of parliament, and others to judge the financial risks being run by their government. Unlike many other sources of information on public finances, credit ratings are summarized in a grade, which makes them easy to understand. And, partly because grades allow countries to be ranked, they attract much more attention than, say, a fiscal ROSC.

They are controversial, because they not only inform investors but are deeply embedded in rules and regulations. A government’s credit rating can now determine whether its bonds can be bought by some investors, whether they are included in indices that other investors track, and whether they are accepted as collateral by central banks. It can determine how much capital banks have to set aside to cover possible losses on the government’s debt and whether investment banks will contract with the government or keep credit lines and derivative contracts open. So a downgrade can limit the government’s funding options, increase the interest rates it must pay, prevent it from hedging risks, and trigger sudden payment demands.

They are also controversial because their accuracy is sometimes questionable. At the onset of the global financial crisis, credit-rating rating agencies were rightly criticized for having underestimated the risks presented by securitized mortgages. Problems in sovereign ratings are less stark, but the Greek government had good ratings not long before it got into trouble, and the Japanese government has paid extremely low interest rates for years—suggesting that investors consider it very creditworthy—even though its ratings are not the highest.

Continue reading "What Role for Sovereign Credit Ratings in Public Financial Management?" »

May 21, 2012

Beyond the Austerity Debate: The Deficit Bias in the post-Bretton Woods Era

Posted by Carlo Cottarelli and originally published on iMFdirect

The austerity vs. growth debate has raged in recent months, pitting those who argue that fiscal policy should be tightened more aggressively now to bring down high levels of debt, even though economic growth remains weak, against those who want to postpone the adjustment to better times. This is a critical issue for policymakers, perhaps the most important one in the short run.

And yet, this debate—which, mea culpa, I have myself contributed to―is attracting too much attention.

This is bad for two reasons:

  • The debate is driven, to some degree, by ideology and is therefore more focused on the relatively limited areas of disagreement than on the far broader areas of agreement. Most economists would agree that fiscal consolidation is needed in advanced economies, and that the average annual pace of adjustment during 2011-12―about 1 percentage point―is neither too aggressive nor excessively slow. Most economists would also agree that countries under pressure from markets have to adjust at a faster pace, while those that do not face such constraints have more time. Of course, there is disagreement on some aspects of the fiscal strategy, but it relates to specific country cases.
  • The debate is detracting attention from policy issues that may seem less urgent, but which are nevertheless critical in the medium term. I am referring to what I would call the institutional gaps in fiscal policymaking that still exist in most advanced and emerging economies. These gaps have contributed to a bias in the conduct of fiscal policy in favor of deficits that is behind many of the current problems. 

Continue reading "Beyond the Austerity Debate: The Deficit Bias in the post-Bretton Woods Era" »

May 18, 2012

Program Budgeting Is on the Reform Agenda Across Europe and Central Asia

Posted by Deanna Aubrey, PEMPAL PFM Adviser

Ministries of Finance from 18 Europe and Central Asia (ECA) countries met from March 27-29, 2012 at Lake Bohinj, in Slovenia, [1] to exchange experiences in program budgeting. The meeting was attended by 57 members of the Budget Community of Practice (BCOP) of the Public Expenditure Management Peer Assisted Learning (PEMPAL) network.[2] Presentations were delivered by the World Bank, IMF, and GIZ with reforms showcased from guest speakers from France, Australia, Slovenia, and Poland.

The World Bank clarified the terminology given the wide variety of terms in use (e.g., program budgeting, performance budgeting, results-based budgeting). Program budgeting applies to cases where expenditure is classified in the budget by objectives (outcomes and outputs) rather than solely by economic categories (i.e., inputs such as salaries) and organizational category. Performance budgeting (or performance-informed budgeting) refers to a wider set of initiatives intended to strengthen the links between the funds provided and the results achieved through ensuring performance information is used in resource allocation decision making. Program and performance budgeting reforms should, therefore, provide information in a way that informs choices about spending alternatives and should improve transparency and accountability of government.[3]

Continue reading "Program Budgeting Is on the Reform Agenda Across Europe and Central Asia" »

May 17, 2012

New Opportunity to Finance PEFA-related Research Through SAFE Grants

Posted by the PEFA Secretariat

The PEFA Secretariat is pleased to inform that applications are invited for grants to support eligible public financial management reform projects in countries that are intended beneficiaries under the SAFE Trust Fund. The deadline for proposals is 31 July 2012.

The SAFE trust fund group seeks to improve the status of PFM across countries in the Europe and Central Asia region and includes two pools of funds to provide support for activities led by governments under 3 pillars: 1) to assess public financial management (PFM) performance; 2) to identify and implement actions to achieve improvements in public financial management; and 3) to share knowledge and good practices. The selection criteria for SAFE funded projects emphasize the links to the PEFA performance measurement framework as a diagnostic and analytical tool for PFM reform.

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May 16, 2012

IMF Weighs in on Health Care Reform

Previously published on IMF Survey

Health care book

Economies the world over will be hit with rising health care costs at a time when many of them need to undertake large fiscal adjustments to reduce deficits and debt.

According to IMF analysis released earlier this week, reforming health care systems should be high on the list of priorities of governments as they continue to work on cutting deficits and debt.

Health care costs have skyrocketed over the past few decades with the introduction of new and very expensive technologies to treat patients. Aging populations are also contributing to cost increases.

Faced with uncertainty regarding longer-term recovery prospects for the global economy, governments may soon be in a difficult spot if they fail to make the necessary reforms to health care systems.

“We enjoy a higher quality of health care today, but we have to find a way to finance it,” said IMF Deputy Managing Director Min Zhu. Zhu addressed officials, journalists, and academics gathered at a special seminar to discuss the findings in a new book The Economics of Public Health Care Reform in Advanced and Emerging Economies.

“This new book brings forward a lot of the challenges we face today. Across the world, countries are seeing aging populations, rising costs of health care, or both. We have to take action today in a clear, strong, determined way on a global basis to address these issues,” said Zhu.

Continue reading "IMF Weighs in on Health Care Reform" »

May 14, 2012

New Zealand to Legislate an Expenditure Rule

Posted by Ian Lienert

Euro-zone countries are being admonished by the EU to strengthen their fiscal frameworks, including by introducing a legislated budget balance rule in national legislation. On the other side of the globe, the New Zealand Government has announced that its fiscal framework will be strengthened, by introducing a spending fiscal rule in amended legislation. The similarity of the EU and New Zealand actions is striking, given the large differences in fiscal consolidation needs. For example, Euro area gross general government debt was nearly 90 percent of GDP in 2011, in contrast to New Zealand’s relatively low ratio of 44 percent. [1]

The New Zealand Government’s announcement was preceded by considerable analysis and strong criticism by some commentators. The Government’s advisor, the Treasury (New Zealand’s “ministry of finance”), while supporting self-imposed limits on new spending as a means of controlling growth in expenses, does not support a legislatively embedded formula-based spending limit.[2] However, because of the Government’s agreement with a minor political party there is a proposal to amend the Public Finance Act, which, if enacted, would make the new fiscal rule permanent, unless a future government initiates its repeal.

Continue reading "New Zealand to Legislate an Expenditure Rule" »

May 11, 2012

NewsFlash: Una nueva herramienta para los evaluadores PEFA: la guía práctica o “PEFA Fieldguide”

9 Mayo 2012

La Secretaría del PEFA se complace en lanzar su nuevo Fieldguide para evaluadores. Concebido como un e-documento que se puede imprimir como un documento de hojas sueltas y que se puede actualizar de forma regular, el Fieldguide es el resultado de la recopilación de toda la orientación y notas técnicas existentes, actualizadas y elaboradas por la Secretaría del PEFA para facilitar el trabajo técnico de los evaluadores del PEFA. Esa guía incluye todos los consejos obtenidos a partir de los siguientes documentos (disponibles en nuestra página web: www.pefa.org ) y organizados por cada dimensión:

-  El Marco de medición del desempeño de las gestiones de finanzas públicas (junio de 2005)

-  Buenas prácticas en la aplicación del marco de medición del desempeño de la GFP (marzo de 2009)

-  Aclaraciones sobre el Marco de medición del desempeño de la GFP de junio de 2005 (actualizadas a marzo de 2012 en ingles)

- Orientación sobre las pruebas y las fuentes de información para respaldar el puntaje de los indicadores (actualizada en febrero de 2007)

- Cuestionario para la aplicación sobre el terreno del marco de referencia para la medición del desempeño en materia de GFP del Programa PEFA (diciembre de 2007)

-  Preguntas más frecuentes en la página Web del PEFA.

Ese documento es actualmente ingles. Las traducciones al francés y en español estarán disponibles en breve.

Envíenos sus comentarios a: services@pefa.org

La Secretaría del PEFA.


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.

NewsFlash: Un nouvel outil pour les évaluateurs du PEFA: le guide pratique ou « Fieldguide »

9 Mai 2012

Le Secrétariat du Programme d’examen  des dépenses  publiques et d’évaluation de la responsabilité financière (PEFA) a le plaisir d’annoncer le lancement de son nouveau guide de terrain (« Fieldguide ») pour évaluateurs PEFA. Conçu comme un e-document à imprimer ou un document à feuillets mobiles pouvant être mis à jour, ce guide est le résultat de la compilation de toutes les orientations et notes techniques existantes et mises à jour, produites par le Secrétariat du PEFA afin de faciliter le travail technique des évaluateurs PEFA. Cette information couvre tous les conseils extraits des documents suivants (tous disponibles sur notre site Web: www.pefa.org ) et organisés par dimension:

- Le Cadre de mesure du rendement de gestion des finances publiques (Juin 2005)

- Bonnes pratiques dans l’application du Cadre de mesure de la performance de la GFP   (Mars 2009)

- Clarifications sur le Cadre de mesure de la performance de la GFP de Juin 2005 (mise à jour en anglais de Mars 2012)

- Lignes directrices et sources d’information pour faciliter la notation des indicateurs (mise à jour Février 2007)

- Questions pratiques pour l’application du Cadre de mesure de la performance PEFA (Décembre 2007)

- Questions et réponses sur le site Web du PEFA.

Ce document est actuellement seulement disponible en anglais. Les traductions en français et espagnol seront disponibles sous peu.

Envoyez-nous vos commentaires à: services@pefa.org

Le Secrétariat du PEFA.


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.

NewsFLash: A new tool for PEFA assessors: the Fieldguide

9th May 2012

The PEFA Secretariat is pleased to launch its new Fieldguide for assessors. Conceived as an e-document or to be printed as a loose- leaf document that can be updated on a regular basis, the Fieldguide is the result of the compilation of all existing and updated guidance and technical notes produced by the PEFA Secretariat to support the technical work of the assessors in the field. The Fieldguide includes information and advice drawn from the following documents (all available on our website: www.pefa.org) and is organized dimension-by-dimension:

- The Public Financial Management Performance Measurement Framework (June 2005)

- Good Practices in Applying the PFM Performance Measurement Framework (March 2009)

- Updated Clarifications to the PFM Performance Measurement Framework of June 2005 (updated as of March 2012)

- Guidance on evidence and sources of information to support the scoring of the indicators (updated February 2007)

- Queries for the field implementation of the PEFA Framework (December 2007)

- Frequently Asked Questions on PEFA website.


This document is currently available in English. Translations in French and Spanish will be available shortly.

We welcome your feedback: services@pefa.org

A new tool for PEFA assessors: the Fieldguide

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.

May 10, 2012

Learning from Crisis Key to Restoring Economic Growth

Previously published on IMF Survey Magazine

  • Crisis lessons offer insight for future policy
  • Budget cuts work alongside growth-oriented policies
  • Growth challenged in light of spending cuts

With many countries still experiencing an uncertain economic outlook, charting a course back to economic prosperity might prove to be difficult, but not impossible, delegates at a conference said.

With economic uncertainty still lingering over many economies, policymakers, academics, and senior IMF officials gathered for the 3rd Annual Fiscal Forum to discuss global fiscal issues.

Continue reading "Learning from Crisis Key to Restoring Economic Growth" »

May 04, 2012

Budgetary Reforms in South Asia

Extracts from a Project Report by Author on ‘Budgetary Reforms in South Asia’ Sponsored by the Indian Council of Social Science Research

Posted by Udaya Pant


As a result of the Making Budget Work (MBW) and Making Budget and Air Work (MBAW) projects, budgets are now prepared on time and increasingly reflect the priorities of the Afghan National Development Strategy (ANDS) and the provincial needs. Budget officers from the project assist the line ministries in formulating and submitting the budget proposals on time and in accordance with national and ministerial policies and priorities.

Program and provincial budgeting were introduced in Afghanistan from fiscal year 2007. Progress on these has been slow, yet steady. The provincial budgeting pilot was to cover all 34 provinces by 2011. The program budgeting pilot covered 17 ministries by 2011. Each Ministry has formed a Program Budget Implementation Team, and training sessions on program budgeting have been delivered to all of these teams. The program and provincial budgeting pilots have improved budget formulation processes, increased transparency in government expenditures and ensured the foundation for increased inclusion of the provinces in the national budget formulation and implementation process, increasing equity in the distribution of resources across the country.

Continue reading "Budgetary Reforms in South Asia" »

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