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Public Financial Management

Addressing challenges in public financial management and public sector reform in East Asia

Jim Brumby's picture


Reforming the public sector is a constant process to address emerging challenges stemming from an increase in economic sophistication and expanded citizens’ expectation. However, reforming public sector organizations – their structures, policies, processes and practices – is notoriously difficult, in rich and poor countries alike.
 

Strong Public Financial Management systems as the nuts and bolts for Universal Health Coverage 2030

Srinivas Gurazada's picture



Global partners have committed to Universal Health Coverage (UHC) by 2030 as part of the Sustainable Development Goals. UHC is a main driver of all World Bank’s investment in areas related to health, nutrition and population. I had the opportunity to participate as a member of the UHC 2030 core team representing Public Financial Management in health along with other experts and health leaders from the World Bank at a UHC 2030 Steering Committee meeting at the United Nations Headquarters last month.

The question before us moving forward is simple. How do we make UHC a reality by 2030?

Political economy drivers of PFM reforms: a systematic look at what we all know somehow

Verena Fritz's picture



Over the past two decades, almost every developing country has adopted some form of public finance management (PFM) reform plan, with many currently pursuing second or third generation plans. Over the same period, development partners have provided substantial support – a total of over $20 billion since 2002. However, some countries have seen strong progress, while others have seen little, or have even experienced backsliding (see Graph 1 a and b).

Joining forces to maximize resources for Bhutan’s citizens

Savinay Grover's picture
Public financial management signing
The Multi-Donor fund for Bhutan's Public Financial Management was launched September 21st in Thimphu

Several years ago, a newspaper cartoon in a neighboring country caught everyone’s attention when it depicted the government machinery as a big pipe in which lots of water was being poured from one side as taxpayer’s money and only a drop reached the poor on the other end. The water, representing the funds were being lost due to holes in the pipe. The holes were depicted as inefficiency, wastage, corruption etc. Globally, governments lose trillions of dollars due to various inefficiencies, and lack of proper controls and oversight. Citizens suffer as they do not receive the services that they are promised.

Bhutan provides lots of attention to good governance, which is also one of the pillars of Gross National Happiness. Public Financial Management (PFM) is an important element of good governance and delivering high quality of services to citizens as it’s comprised of budgeting, revenue, procurement, accounting and reporting, internal controls and institutional oversight. Sound PFM systems play an important role in strengthening the efficiency, accountability and transparency of the Government systems. Every dollar, every Ngultrum saved through sound PFM systems mean that more resources are available for better schools, hospitals, roads, and other services.

Toward next-generation performance budgeting

Donald Moynihan's picture
 Photo © Dominic Chavez/World Bank


Performance budgeting (PB) has a deep and enduring appeal. What government would not want to allocate resources in a way that fosters efficiency, effectiveness, transparency, and accountability? However, such aspirations have proven poor predictors of how performance data are actually used.

The potential benefits of identifying and tracking the goals of public spending are undeniable, but have often justified a default adoption of overly complex systems of questionable use. Faith in PB is sustained by a willingness to forget past negative experiences and assume that this time it will be different. Without a significant re-evaluation, PB’s history of disappointment seems likely also to be its future.

How to manage revenues from extractives? There’s a book for that!

Rolando Ossowski's picture
 
Offshore oil and rig platform. Photo: © curraheeshutter / Shutterstock.


Countries with large nonrenewable resources can benefit significantly from them, but reliance on revenues from these sources poses major challenges for policy makers. If you are a senior ministry of finance official in a resource-rich country, what are the challenges that you would face and how can you strengthen the fiscal management of your country’s oil and mineral revenues? Consider some of the issues that you would likely encounter:

For many resource abundant countries, large and unpredictable fluctuations in fiscal revenues are a fact of life. Resource revenues are highly volatile and subject to uncertainty. Fiscal policies will need to be framed to support macroeconomic stability and sustainable growth, while sensibly managing fiscal risks. Also, there is a question of how to decouple public spending (which should be relatively stable) from the short-run volatility of resource prices.

Weekly wire: The global forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.

A Lesson from Latin America: Media Reform Needs People Power
CIMA

Policy reform in favor of more plural and independent media is possible when global networks collaborate with national activists. This is the important lesson gleaned from a series of examples in Latin America that are the subject of a new book that I co-authored with Maria Soledad Segura titled Media Movements: Civil Society and Policy Reform in Latin America (Zed/U of Chicago Press). Washington, DC, is home to many global actors committed to supporting freedom of information, fighting oppressive libel laws and promoting plural media ownership—among other key elements to a vibrant and free media. The key lesson for them is that they are unlikely to succeed alone. In fact, we did not find any examples of rapid and sustainable changes single-handedly driven by global programs. Instead, we found success stories where global actors worked patiently and diligently with local activities, building awareness and strong coalitions on the ground that could act when opportune conditions or political junctures arose.

Why Cities Are the Future for Farming
National Geographic

The landscape of our food future appears bleak, if not apocalyptic. Humanity’s impact on the environment has become undeniable and will continue to manifest itself in ways already familiar to us, except on a grander scale. In a warmer world, heavier floods, more intense droughts, and unpredictable, violent, and increasingly frequent storms could become a new normal. Little wonder that the theme for this year's World Food Day, which happens on Sunday, is “Climate is changing. Food and agriculture must too.” The need for an agricultural sea change was also tackled at the recent South by South Lawn, President Obama’s festival of art, ideas, and action (inspired by the innovative drive of Austin’s SXSW), where I was honored to present.
 

Enhancing government accountability can improve service delivery in Buenos Aires

Daniel Nogueira-Budny's picture

Also available in: Español

Young students in rural areas of Argentina. Photo: Nahuel Berger / World Bank


Public schools in the Province of Buenos Aires generally provide school books and other learning materials to students free of charge. This is important, as the poorest 40 percent of Argentina’s population relies disproportionately upon public services such as education. But, what happens when schools cannot purchase books for students?
 
Fixed expenditures, including personnel costs, generally leave limited space for other quality-enhancing education expenditures, such as school books and training materials. Faced with an unexpected pressure on such fixed expenditures in 2013, some schools were suddenly forced to cut down significantly on teacher training materials and other educational resources generally provided free of charge. As a result, a number of parents were suddenly forced to decide between purchasing learning materials for their children’s education, or paying bills.

A conference to improve public finance management in Francophone Africa

Samia Msadek's picture

Also available in: French

Photo © Dominic Chavez/World Bank.


This week, officials from finance ministries and leaders of the accounting profession from across Francophone Africa will gather in Dakar, Senegal from Oct 28 to 30 to chart a path forward in their countries’ development. They will focus on an area that is often ignored, but is vital to national success and prosperity: public financial management. They will focus on financial reporting, which is also known as “the way governments keep track of your money.”

This topic is important to you, citizens of the world, of the African continent. How governments manage their taxes, their borrowing, their spending, and the ways they account for these forms of transactions – income, borrowing and expenditure – are essential to economic growth, to poverty-reduction, and to ensuring that the region’s poorest can improve their lives.

In many parts of Francophone Africa, accounting practices have a lot of room to improve. In particular, financial reporting and auditing need reforms, according to ongoing research by the World Bank and others. Policy-makers do not always have accurate information about the money available to provide vital and quality public services, such as school-teachers or the construction of health clinics or roads.

Reinvigorating Health Services: An Agenda for Public Finance Management

Matthew Jowett's picture



At the recent “New Directions in Governance” meeting it was suggested that future meetings should bring governance advisors together with sector-specific colleagues. The different language we use in our respective disciplines is a serious barrier to taking forward an agenda of real importance and  hence this message seemed particularly pertinent. I came to the meeting with a number of thoughts on how public finance management (PFM) rules often hinder health system performance, some of which I outline below.

Over the past three decades a major focus in low- and middle-income countries has been to seek new revenue sources for health services to overcome strict controls over the use of budget funds which were seen as inefficient but difficult to address. Community-based health insurance schemes have been widely introduced, as were patient user charges and payroll tax-funded social health insurance schemes. These various developments reflected a belief that governments were unlikely to increase funding to health, or to introduce the flexibility in budget funds required to incentivize improvements in service delivery.


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