Innovative Approaches to Improving Fiscal Risks Management

 
Posted by Esther Palacio[1]

The main objective of the IMF’s capacity building programs is to help countries overcome new challenges in economic and fiscal policy. However, standard two-week technical assistance (TA) missions composed of international experts are not always an effective solution, even when they deliver policy analysis and recommendations that are well-informed by the experiences and practices of other countries. In many cases, a deep understanding of the underlying challenges facing the recipient country, combined with a well-balanced mixture of assistance, can prove to be more effective.

How did Fiscal Rules Hold Up in the Commodity Price Crash?

Posted by David Mihalyi¹

Fiscal rules—permanent quantitative constraints on government finances—are an important tool to help mitigate the macroeconomic challenges associated with managing natural resource revenues. They can act as a commitment mechanism, binding successive governments to a long-term budgetary ceiling and helping politicians fight the urge to overspend during elections. They can also help prevent fiscal crises and encourage governments to save or pay down debt in good times so that they have fiscal space to spend during recessions.

In NRGI’s new study, we reviewed the characteristics of fiscal rules in countries assessed in the Resource Governance Index (RGI). Out of the 79 countries covered by the index, 34 have at least one fiscal rule in place.  The most common types of rule are debt ceilings and various types of budget balance targets. We also analyzed the levels of compliance with these rules in 2015 and 2016, the years directly following the commodity price crash, when oil prices fell by half and mineral prices by one-third. As such, it provides new insight into how these fiscal rules performed during serious economic shocks. We found that in these two years governments adhered fully to the rules in only six countries (Figure 1). In 25 cases, governments suspended, modified or disregarded their rules. Governments breached rules in a wide range of countries, rich and poor.

IPSASB Widens its Strategic Consultation

Posted by Ross Smith, John Stanford, and Sagé de Clerckٞ[1]

During 2014, the International Public Sector Accounting Standards Board (IPSASB) launched their first-ever Strategy and Work Plan consultation. That, together with the completion of the Conceptual Framework for public sector accounting in the second half of 2014 were landmark achievements that attracted wide public interest. Since 2014, the IPSASB has also established a new governance structure that includes the Public Interest Committee (PIC) and a Consultative Advisory Group (CAG).

Book Review: Governing PFM reforms

Posted by Jean Pierre Nguenang

There is an ongoing debate in public financial management (PFM) circles about how to design and implement PFM reforms in low-income countries (LICs). Critics argue that two decades of reforms have failed to produce the intended changes and that the institutional frameworks for implementing PFM reforms have been inadequate. Contributing to this ongoing debate, Mr. Ephrem Makiadi, recently published a book in French entitled “Gouverner les réformes de la gestion des finances publiques” or “Governing PFM reforms.”

Poor Countries Face a Climate Change Double Whammy

Posted by Delaine McCullough¹

Climate change is arguably the world’s greatest development challenge—and it will also be one of the most significant public finance challenges countries will face for decades to come.