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.
The last 10 years have seen turbulent economic times. The global economic crises was rooted, in part, in standards for guiding private sector behavior and setting economic policy that failed to meet emerging challenges and risks. One of the lower profile, but important, consequences has been to reexamine the fiscal standards that have guided fiscal policy and management practices.
On October 6, 2014 the International Monetary Fund, at a joint event with the World Bank, launched its new Fiscal Transparency Code (FTC) and Evaluation following two years of intensive analysis and consultation. I congratulate the IMF on creating a set of standards that capture the quality of fiscal reports and data, are graduated to reflect different levels of country capacity, and more comprehensively covers fiscal risks.
Use of digital money increasingly dominates the public financial management (PFM) reform priorities of most governments in the East Asia Pacific region, according to key findings of Public Expenditure Management Network in Asia – Treasury Community of Practice workshop held in Bangkok in March.
South Korea leads this trend, although China, Indonesia, Vietnam, Philippines, and Mongolia are at various stages of implementing and expanding the use of digital money to transform government payments, disbursements and receipt systems.
King James had it right early on. “All Treasurers, if they do good service to their masters, must be generally hated”, he remarked after he couldn’t protect his own treasurer Lionel Cranfield from being thrown into the Tower of London in chains. Cranfield had made too many powerful enemies by opposing an expensive war the treasury couldn’t afford. His many successors through the ages can probably relate without too much difficulty.
The discussions on budget transparency and open data have been gaining momentum over recent years. Not only is it important that governments publish budget data on web sites, but also that they disclose meaningful data and full picture of financial activities to the public. The question is, how much of the disclosed information and documents are reliable? What is the scope of disclosed information? Is there any reliable information about other important aspects of fiscal discipline and transparency?
A number of fiscal transparency instruments and guidelines have been developed by civil society groups and international organizations to evaluate the existence, regularity, and contents of certain key budget documents published in the public domain and whether the information comply with international standards. However, current instruments do not concentrate on the source and reliability of published information, as well as the integrity of underlying systems and databases from which governments extract data.
When it comes to confronting the issue of ill-gotten money (through corruption or tax evasion, for example) and its negative impact on development outcomes, we development professionals have often been guilty of tinkering at the edges of the problem, while avoiding confronting its root cause. Through recent work, we are attempting to rectify this dilemma.
By any account, the amount of money stolen by corrupt officials and bureaucrats in developing and transition economies each year is vast. It is estimated that the amount of stolen assets is as high as US$ 40 billion per year, but there are experts who put the figure even higher.
The recent upheavals in the Middle East, North Africa and elsewhere have put asset recovery in the spotlight. Indeed, as the citizens of these countries look towards the future, recovering wealth that former public officials are alleged to have acquired illegally remains a main concern.