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Winter 2008 Conference, Washington Country Perspectives on Advancing Public Financial Management Reform-What Really Works PFM REFORM LANDSCAPE Anita Angelovska-Be ž oska National Bank of Republic of Macedonia Content Objectives of the PFM reforms; Budget Planning Reforms: main features; and

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anita angelovska be oska national bank of republic of macedonia

Winter 2008 Conference, WashingtonCountry Perspectives on Advancing Public Financial Management Reform-What Really WorksPFM REFORM LANDSCAPE

Anita Angelovska-Bežoska

National Bank of Republic of Macedonia

content
Content
  • Objectives of the PFM reforms;
  • Budget Planning Reforms:
          • main features; and
          • implementation problems.
  • Budget Execution Reforms:
        • main features; and
      • implementation problems.
  • Requirements for successful reforms;
  • Conclusion.
objectives of the pfm reforms
Objectives of the PFM reforms
  • Three main objectives of the PFM system:
    • fiscal control;
    • strategic allocation of resources; and
    • efficient and effective use of public resources.
is there a trade off among the objectives
Is there a trade off among the objectives?
  • Short-run against long-run perspective;
  • Priorities at different stages of development;
  • Gradual approach:
    • fiscal control;
    • fiscal control + strategic allocation of resources;
    • fiscal control + strategic allocation of resources + efficient and effective use of resources.
budget preparation reforms
Budget preparation reforms

Main features:

  • focus on results (output /outcome) rather than inputs;
  • higher degree of flexibility for budget managers in line ministries (consolidation of line items, reallocations, end-of-the-year flexibility);
  • higher responsibility focused on results (performance measurement);
  • medium-term perspective(greater certainty about the availability of funds and longer-term view on fiscal position);
  • transparency and accountability.
budget preparation reforms6
Budget preparation reforms

Implementation problems:

  • weak political support by the government;
  • absorption capacity at the spending units level limited;
  • ˝big-bang˝ approach;
  • reluctance for broadening the coverage of the budget document (off-budget funds);
  • pro-forma program budgeting;
  • unclear definition of strategic priorities;
budget execution reforms
Budget Execution Reforms
  • Main features:
    • improving cash management (min. borrow. cost and maximize return);
    • introducing comprehensive TSA in order to:
        • improve cash management;
        • enhance control and monitoring; and
        • improve reporting and transparency;
    • improving financial planning and forecasting;
budget execution reforms8
Budget Execution Reforms
  • Main features (cont.):
    • controlling all stages of expenditures (commitment control) in order to:
        • prevent arrears;
        • support budget planning; and
        • support cash management.
    • introducing higher flexibility in the use of resources on a line-item level;
    • improving payment system infrastructure.
budget execution reforms9
Budget Execution Reforms

Implementation problems:

  • reluctance of spending units to give up own accounts for introduction of TSA;
  • reluctance of executing expenditures financed by special revenues through the TSA;
  • specific requirements by donor institutions (managing foreign aid);
  • weak coordination of budget preparation and budget execution reforms, as well as accounting and reporting reforms;
budget execution reforms10
Budget Execution Reforms

Implementation problems (cont.):

  • weak coordination with monetary policy;
  • limited cash management operations due to macroeconomic constraints;
  • difficulties in keeping up with the increased workload ;
  • lack of training of the spending units.
requirements for successful reforms
Requirements for successful reforms
  • capacity of administration to manage reform:
    • improved capacity at the central level;
    • strengthened capacity of the spending units
  • political support by government;
  • sufficient internal control mechanisms;
  • appropriate legal framework;
requirements for successful reforms cont
Requirements for successful reforms (cont.)
  • appropriately sequenced reforms;
  • strong coordination of foreign donors;
  • external TA if internal capacity is insufficient

is also helpful;

  • structural conditionality in IMF programs.
slide13

Thank you for your attention.

AngelovskaBA@nbrm.gov.mk