PFM Reform Through PDIA: What Works and When it Works

Posted by Jamelia Harris and Andrew Lawson[1]

Building State Capability: Evidence, Analysis, Action by Matt Andrews, Lant Pritchett and Michael Woolcock sets out the Problem Driven Iterative Adaptation (PDIA) approach and how this can be implemented to tackle complex or “wicked hard” problems. It comprises four “principles of engagement” (Figure 1). Importantly, PDIA is locally driven and predicted to lead to better results compared to the importation of international best practices.

Pandemic Tests Resilience and Credibility of Fiscal Rules

By W. Raphael Lam and Paulo Medas

Article originally posted on the IMF Blog- Pandemic Tests Resilience and Credibility of Fiscal Rules

 

Record debt and deficits during the pandemic prompted many nations to suspend their fiscal rules.

Since 1990, a growing number of countries have adopted fiscal rules to strengthen budgetary discipline and enhance the credibility of public finances. These numerical limits on spending, deficits, or debt signal a government’s commitment to prudence. At the same time, fiscal councils are becoming more common to provide independent oversight and monitor the compliance of rules.

Reconciliation of Budgeting and Accounting - Budget Deficits Paint Too Rosy a Picture

Posted by Frans van Schaik[1]

 

Since the Covid-19 pandemic started, governments are running deficits greater than ever before. Yet, by publishing the budget deficit as the main fiscal headline, governments may understate the true deficit. Many governments report budget (mainly cash) deficits which look considerably better than accrual deficits, which better reflect economic reality. So, what makes up the difference between the budget deficit and its accrual counterpart?

A Very Effective Tool for Budgeting Capital Expenditure

Posted by Julien Dubertret[1]

 

Although investment projects often exceed their expected costs, when it comes to capital budgeting, there is a common bias towards overestimating payments. Two main reasons can explain this observation. The first one has to do with line ministries’ over-optimism on investment projects - a much more appealing type of expenditure than current spending - without acknowledging that capital expenditure is often complex and thus subject to delays. The second reason is that the collection and analysis of data on capital projects is often deficient. Simple questions such as how many projects are active, or what are the effective amounts contracted, may be difficult to answer. This can be attributed to a lack of rigorous bookkeeping of commitments.

Evaluating Pakistan’s Performance Based Budget

Posted by Muhammad Afnan Alam [1]

 

In Pakistan, performance budgeting has the potential to significantly improve the poor quality of public service delivery and the overall allocation of resources, in what has traditionally been viewed as a rigid and unresponsive budget system. To contribute to better budgeting, Pakistan's Ministry of Finance announced in June 2021 a Medium-Term Performance-Based Budget for the next three fiscal years.

UNDP Guidance Note on Budgeting for Climate Change

 

Posted by Asif Shah[1]

As countries recover from the COVID-19 pandemic shock, there are growing calls to build greener budgets that help accelerate the transition to net zero-carbon economies.

Government Accounting for Effective Decision Making

Posted by Julie Cooper[1]

 

Governments that adopt cash-basis reporting should not limit the recording of actual transactions to when only cash is received or paid. The International Public Sector Accounting Standards (IPSAS) cash-basis mandates all cash receipts and payments to be reported in General Purpose Financial Reports (GPFRs). It also encourages disclosures on payables, borrowings, receivables, and property plant and equipment as useful information for users of these reports. However, information on receipts and payment is insufficient for effective control and decision-making over the allocation and use of scarce resources.

Top 10 PFM Blog Posts of 2021

Posted by Richard Allen, Teresa Curristine, Holger van Eden, and Laura Torrent^[1]

The persistence of COVID-19 and its variants in 2021 has posed many challenges to PFM, many of which have been covered in the PFM blog.