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 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.
Public Financial Management
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
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
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.
Also available in: Español
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.
Also available in: French
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.
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.
In response to such situations, development specialists typically call for sector-wide reforms. And the design of such reforms draws on sector policy analysis and on the assessment of service delivery arrangements and capacity. Increasingly, since the 2004 World Development Report, sector reforms also seek to make teachers, health professionals and other service providers accountable to citizens and communities.
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.
A recently released Open Budget Survey conducted by the International Budget Partnership (IBP) ranked the Republic of Korea as the top performer in public participation in the budget process. With a score of 92, Korea rose to the top as the only country “that provides extensive opportunities for public participation” (IBP 2012). Of 100 countries surveyed, the average score for public participation in the budget process was 19 out of 100. IBP found that in many countries there are limited, if any, opportunities provided to the public for engagement in the budget process. So what is it about Korea that makes it an exception?
- public participation
- budget process
- medium-term expenditure framework
- public financial reporting
- Public Financial Management
- Public Sector and Governance
- East Asia and Pacific
- Korea, Republic of
- Fiscal transparency
- open government & transparency
- performance drivers
- Governance & Public Sector Management
There is probably no area of 'governance reform' work that is as technocratic and as ubiquitous as public financial management reform. It is where experts of different kinds - economists, accountants, auditors or all the above - work on improving the plumbing of governments, how revenues are collected and managed with efficiency and a minimum of leakage. Because the technical skills involved are deep and carefully honed over years of specialist training it is also an area where experts often seek to work in a politics- free zone by trying to ignore taking on the realities of each political context and just work on the plumbing. There is no doubt that a lot of good work is going on here, but there is also no doubt that a lot of the work is less effective than it might have been because interventions don't seek to work the politics of the initiative.
Last week and this, the Institute for Democracy in Africa (IDASA) piloted the new World Bank Institute's (WBI) new Core Learning Program "Introduction to Social Accountability" near Johannesburg, South Africa. CommGAP was invited to present a module on "Communication and Strategies for Constructive Engagement" - introducing our core concepts and messages on mobilizing public opinion to create genuine demand for social accountability. Here's a comment from the evaluations of our module: "The mobilization of public opinion is vital for social accountability. I have to admit that I was not aware of the importance of public opinion for social accountability before this course!"