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December 2018

December 28, 2018

Strengthening the Macro-Fiscal Function in Ministries of Finance

Posted by Israel Fainboim and Ian Lienert[1]

Conducting sound fiscal policy requires a strategic vision that anchors the annual budget in a medium-term perspective. Whatever the level of a country’s development, the ministry of finance (MoF) needs a department or unit with strong macro-fiscal analytical capacity. A new IMF Technical Note and Manual (TNM) provides guidance for strengthening this critically important function which underpins good fiscal policy and budget systems.

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December 26, 2018

Fiscal Rules and PFM in Resource-Rich Developing Countries

Posted by Fazeer Sheik Rahim and Richard Allen[1]

Several low-income countries in Africa are gearing up to become significant resource exporters in coming years. These include Liberia, Mozambique, Sierra Leone, Tanzania, and Uganda. Many are taking steps to enhance their fiscal framework to better manage their resource wealth. Uganda, for example, has set up a Petroleum Fund to finance infrastructure and development, and is considering a fiscal rule based on a nonoil fiscal balance. Similarly, Tanzania envisages the creation of an Oil and Gas Fund, and setting its fiscal objectives based on a non-resource balance target.

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December 21, 2018

Making Public Investment in Brazil More Efficient

By Teresa Curristine1 and Joana Pereira2

Brazil continues to face massive infrastructure needs, notwithstanding decades of government-led national, regional, and local investment initiatives. With a large and growing economy of over 200 million people and a vast territory of 27 diverse states, infrastructure needs to help Brazil achieve its economic growth potential are particularly critical in the transport sector (including ports, rail, and roads). At the same time, Brazil also continues to face large social infrastructure investment needs, including, for example, in health.

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December 13, 2018

More on the Sequencing of PFM Reform


Posted by Richard Allen[1]

Two kinds of PFM reform sequencing can be identified in the literature. First, horizontal sequencing refers to the steps taken over time to modernize one specific type or area of PFM. Allen Schick in his famous 1990s presentation on “Look Before You Leapfrog” discussed this type of sequencing which emphasized the importance of doing the basics first. For example, a country should focus on putting in place an effective system of internal control before it implements internal audit (which is only useful once a credible set of controls has been established). A similarly progression would move from basic cash accounting to accrual accounting, or from the preparation of an annual budget to a medium-term budget framework. This type of sequencing is simple, logical and straightforward, though frequently not observed by developing countries (or their advisors) who leap directly into more advanced forms of budgeting (program budgeting and accrual accounting are common examples) before the basic elements are in place.

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December 10, 2018

Ten Lessons from Spending Reviews in Eastern Europe

Posted by Suzanne Flynn, Fazeer Rahim, and Natalia Zbirciog-Vandenberghe[1]

A recent workshop organized by the Center of Excellence in Finance (CEF) in Ljubljana, Slovenia[2] discussed the benefits, approaches, and lessons learned in developing spending review processes in South-East European. The workshop was facilitated by experts from the IMF’s Fiscal Affairs Department, the Structural Reform Support Service (SRSS) of the European Commission (EC), and the Ministries of Finance and Justice of the Slovak Republic.

Participating countries (Albania, Greece, Lithuania, FYR Macedonia, Moldova, Montenegro, Malta, and Ukraine) are all at an early stage of using spending reviews as a tool to generate efficiency gains in public spending. Some countries have undertaken one-off sectoral spending reviews, while others are setting up the necessary structures to undertake such reviews. The event provided an opportunity for these countries to learn from the experience of EU Member States in implementing spending reviews, and to share their own experience.

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December 07, 2018

Digital Innovation in Public Finance in South America

Posted by Katherine Baer and Gerardo Uña[1]  

A seminar on Digital Innovation in Public Finance was organized by the IMF’s Fiscal Affairs Department and the Inter-American Development Bank (IDB), with the support of the Ministry of Finance of Peru and the Peruvian Tax Agency (SUNAT). The seminar took place in Lima, Peru on September 26-27.

The event covered topics relating to digital innovation in tax policy, tax administration, and public financial management (PFM). It provided an opportunity for senior tax and budget/treasury officials from most of the South American countries (Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru and Uruguay) to share their recent experiences in introducing digital innovations. An opening session highlighted some of the main themes of the FAD publication Digital Revolutions in Public Finance and set the stage for further discussions.[2]  Participants from other countries, including the U.S. Internal Revenue Service, the Mexican tax administration, and the French Treasury also discussed their experiences.

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December 06, 2018

Adoption of Accrual Accounting Accelerates

Posted by John Stanford[1], Ross Smith[2] and Amon Dhliwayo[3]

Governments by nature are resistant to change, and when change occurs it normally is a slow, gradual process. Following this pattern, the uptake of accrual financial accounting and reporting initially moved slowly, after the drive to accrual began in New Zealand and Australia in the late 1980s.

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