Public Financial Management

Public Financial Management
Name	Public Financial Management
Jurisdiction	National and subnational administrations

Public Financial Management Public Financial Management coordinates fiscal policies, budgetary processes, and resource allocation across national and subnational administrations to align financial resources with policy priorities. It integrates legal frameworks, institutional roles, revenue systems, and expenditure controls to manage public funds, inform macroeconomic choices, and support service delivery in contexts such as International Monetary Fund, World Bank, Organisation for Economic Co-operation and Development, European Commission, and African Development Bank-supported programs. Historical examples of system redesign include reforms influenced by events like the Washington Consensus, the Asian financial crisis, and initiatives from the United Nations Development Programme.

Definition and Scope

Public Financial Management encompasses the full cycle from resource mobilization through allocation, execution, reporting, and audit, as practiced by bodies including the Ministry of Finance (United Kingdom), Treasury Board of Canada Secretariat, Department of the Treasury (United States), Bundesministerium der Finanzen, and Ministry of Finance (Japan). Its scope covers fiscal policy coordination with institutions such as the European Central Bank, debt management offices like the U.S. Treasury Department's Bureau of the Fiscal Service, and public investment units modeled after the Asian Development Bank guidance. Major instruments include multi-year budget frameworks used by countries such as Sweden, Chile, New Zealand, and South Korea.

Institutional Framework and Legal Basis

Legal foundations are rooted in statutes like the Consolidated Fund Act 1816, constitutions such as the Constitution of India, fiscal responsibility laws exemplified by the Fiscal Responsibility and Budget Management Act, 2003 (India), and parliamentary procedures in assemblies like the House of Commons (United Kingdom), Lok Sabha, and United States Congress. Institutions involved include supreme audit institutions such as the Court of Audit (France), Government Accountability Office, and Comptroller and Auditor General (India), central banks like the Bank of England, and oversight bodies including the European Court of Auditors and regional entities like the Inter-American Development Bank.

Budget Preparation and Execution

Budget preparation follows cycles used by legislatures such as the United States Congress appropriations process, the Estonian medium-term expenditure frameworks, and the program-budgeting approaches of New Zealand. Execution employs cash management techniques practiced by the U.S. Bureau of the Fiscal Service, commitment controls inspired by the Government of Australia reforms, and treasury single account arrangements promoted by the International Monetary Fund and World Bank. Crisis responses have drawn on mechanisms from the European Stability Mechanism and emergency budgets implemented during the Global Financial Crisis of 2007–2008.

Revenue Management and Taxation

Revenue management integrates tax policy and administration as in the Internal Revenue Service, Her Majesty's Revenue and Customs, Central Board of Direct Taxes (India), and regional tax agencies like Revenue Scotland. Instruments include value-added tax regimes modeled on the European Union VAT system, customs tariff schedules coordinated via the World Trade Organization, and tax expenditure assessments used by the Organisation for Economic Co-operation and Development. Debt and donor financing coordination often references frameworks from the Paris Club, Heavily Indebted Poor Countries Initiative, and the International Finance Corporation.

Expenditure Control and Public Investment Management

Expenditure control uses tools such as program budgeting piloted in United States Office of Management and Budget practices, performance-based budgeting seen in Canada, and public investment appraisal frameworks recommended by the World Bank and Asian Development Bank. Infrastructure financing models look to examples from European Investment Bank projects, sovereign wealth funds like the Government Pension Fund of Norway, and public–private partnership frameworks used in United Kingdom projects such as Private Finance Initiative. Anti-corruption and procurement reforms cite instruments from Transparency International and the World Customs Organization.

Fiscal Transparency, Accountability, and Auditing

Transparency and accountability draw on standards from the International Organization of Supreme Audit Institutions, International Monetary Fund fiscal transparency code, and disclosure practices advocated by the Open Government Partnership. Audit cycles reference case studies from the European Court of Auditors, the Government Accountability Office performance audits, and anti-money-laundering coordination through the Financial Action Task Force. Parliamentary scrutiny examples include hearings in the United Kingdom Parliament and budget oversight committees in the European Parliament.

Reforms, Performance Measurement, and International Standards

Reform agendas are driven by policy dialogues involving the World Bank, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations, and regional development banks such as the Asian Development Bank and African Development Bank. Performance measurement employs indicators from the Open Budget Survey by International Budget Partnership, public expenditure and financial accountability assessments used by the World Bank and International Monetary Fund, and benchmarking exercises referencing Doing Business-era metrics and Sustainable Development Goals reporting. Innovative practices draw on experiences from fiscal councils like the Swedish Fiscal Policy Council, independent institutions such as the Fiscal Council (Portugal), and model laws promoted by entities like the United Nations Commission on International Trade Law.

Category:Public administration