Introduction to Public Finance Management

1
Introduction to Public Finance Management

• Introduction and overview

2
Outline of presentation

• Introduction of students
• Name, organization and position
• Experience and expectations
• Changing role of public finance management
• Transition economy
• Traditional OECD function
• Modern public finance
• Course overview

3
Introductions

• Your name
• Organization and position
• PFM experience
• Years
• Areas
• Course expectations
• What do you want to achieve by Friday
• 1 3 concrete issues of concern

4
The changing role of public finance management

• Significant developments in budget management in
  recent decades
• Subject to different, sometimes contradictory
  influences
• The role of the modern public finance function is
  still emerging
• Changes very visible in Finance Ministries
• Similar developments in other ministries and
  agencies

5
Public finance objectives
6
Transition economy

• Yugoslav and Soviet influences are still visible
• Budget department often seen as secondary
  (back-office) function
• Policies decided through planning process
• National strategies, sector strategies, etc
• Strong role for planning ministries
• Budget process focuses on costing and financing
  of approved policies

7
Traditional OECD function

• MOF has key role in budget process
• Focus on control and compliance
• Less on effectiveness and efficiency
• Little transparency
• Strategic games and manipulation
• Fragmented, undisciplined budget process
• No clear distinction between technical and policy
  decisions

8
Modern public finance

• Medium-term, program-focused budget
• Integrated planning and budget process
• Annual budget focuses on new programs
• High degree of transparency
• Focus on effectiveness and efficiency as well as
  control and compliance
• Many interfaces with competitive markets

9
Public finance in SEE countries

• Combines aspects of the three models
• Often inconsistency and ambiguities
• Performance budgets combined with
  non-transparent process and micro-controls
• Medium-term budgeting based on incremental,
  fragmented negotiations
• Need to clearly define role and objectives
• Must be related to country needs and priorities
• Will choose different balance and development
  path
• Avoid premature pursuit of advanced objectives

10
Course overview Issues

• Revenues
• Macrofiscal basis, projections, impact analysis
• Institutions
• Objectives, budget coverage, roles
• Budget preparation
• Time-frame, calendar, rules, decisions,
  transparency
• Budget execution
• Predictability, control, fiscal risks
• Accounting and reporting
• Cash vs. accruals, GFS and ESA 95 reporting

11
Course overview - Issues

• Auditing
• Internal control vs. internal audit, external
  audit
• Intergovernmental fiscal relations
• Revenue shares, spending responsibilities,
  transfers
• Management of EU funded projects
• Integration with budget, compliance EU rules
• Debt management
• Debt strategy, risk management, operations
• Treasury management
• Integration cash and debt management, budget
  execution and accounting

12
Outline of wrap up

• Friday June 22, 13.30 16.00
• What did you learn?
• Were your expectations met?
• How will you use your new skills? (1 3 concrete
  steps)
• Some recommendations on how to manage public
  finances