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.