Tackling Mismanagement and Corruption in Natural Resource Enterprises

Posted by Andrew Bauer and Ines Schjolberg Marques[1]

Oil, gas and mining state-owned enterprises (SOEs) are pervasive in resource-rich countries. Outside of China—which has dozens of SOEs at the national and provincial levels—there are at least 139 such companies. A third of them operate in the mineral sector.

Why Countries Adopt Accrual Budgeting

Posted by Gerhard Steger[1]

Accrual accounting and budgeting, which includes setting up a balance sheet, provides the most comprehensive picture of public wealth. It brings together all the accumulated assets and liabilities that the government controls and thus offers a broader fiscal picture beyond debt and deficits.[2] It is important to understand why governments in some countries have moved to accrual budgeting, while others stick to solely conducting budgeting on a cash basis, even if both groups of countries share an accruals-based financial reporting system. A recent study compares two countries that have opted to establish financial reporting on an accrual basis but keep cash budgeting (Belgium and Portugal) and two others (United Kingdom, Austria) that have adopted accrual budgeting.[3] The chart below outlines the framework used.

Advances in Treasury Management in Latin America

Posted by Gerardo Una[1]

The 9th Forum of Latin American General Treasurers (FOTEGAL) took place in Buenos Aires, Argentina from September 12-14, 2018. The event was organized by the Ministry of Finance of Argentina, together with the IMF, the Inter-American Development Bank (IDB), and the World Bank. A separate but parallel meeting of the Latin American General Accountants Forum (FOCAL) also took place.

Improving Public Budgeting after the Great Fiscal Crisis

Posted by Jordi Baños-Rovira and Daniel Montolio[1]

The global economic and fiscal crisis of 2008 elevated the importance of putting in place robust institutional and budgetary management procedures to deal with elevated levels of public debt, risks of medium-term fiscal sustainability, as well as the fiscal impact of an aging population. A recent report[2] (The Barcelona Institute of Economics (IEB) Report 3/2018) reviews these challenges and how the lessons of the crisis can be translated into more efficient and more transparent budgeting systems.

FAD’s Annual Retreat of PFM Advisors—Echoes from the Field

Posted by Bruno Imbert and Jacques Charaoui[1]

The IMF’s Fiscal Affairs Department (FAD) hosted the fifth annual retreat of its PFM advisors in Washington DC from October 15-19, 2018. The event gathered together more than 40 advisors located either in the IMF’s Regional Technical Assistance Centers (RTACs) around the world, or in country positions, together with Washington-based staff. It provided an opportunity to discuss progress in implementing a wide range of PFM tools and reforms in the field, and to share experiences and good practices.

Institutionalizing Pakistan’s Fiscal Policy Decisions

Posted by Muhammad Afnan Alam[1]

“A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.” (James Madison, 1788)

In a perfect world of fully-informed policymakers solely motivated by social welfare maximization, complete discretion would enable them to optimally respond to changing circumstances at any time. In the real world, however, information asymmetries are pervasive, time-inconsistency looms large, and policy behavior is shaped by considerations other than pure social welfare. Hence, even the best designed democratic systems require institutional constraints on policy discretion to complement democratic controls and prevent undesirable policy outcomes.