Public Financial Management Reform

1
Public Financial Management Reform
Reform priorities and business opportunities in
SEE countries
2
Overview

• Significant achievements in the last 15 years
• Status of PFM reforms in SEE countries
• Remaining basic reforms
• Advanced PFM reforms
• Capital budgeting, medium-term budgeting,
  performance budgeting
• Public-private partnerships

3
PFM achievements in SEE countries

• Improved budget coverage
• More realistic budgets
• Better financial planning
• Establishment of treasuries
• Debt and cash management
• Internal control and audit
• Greater fiscal transparency

4
Status of PFM reforms in SEE countries
5
Remaining basic reforms

• Further strengthen internal control, eliminate
  arrears
• Health, local government
• Capital budget more difficult than expected
• EU funds adds complexity
• More substantial reform needs in a few countries

6
Capital budgeting

• Substantial demand for public investments
• Traditionally focus on fundraising
• Limited emphasis on project quality
• Fragmented, one-year projects
• Capital budgets under-executed in most SEE
  countries
• Mainly due to bad planning
• Actual implementation times are usually not
  excessive
• Need to improve project preparation and analysis

7
Medium-term budgeting

• Comprehensive macrofiscal frameworks
• Multi-year ceilings usually indicative
• No comprehensive forward estimates
• Little impact on annual budgets
• Australian MTB model may not be the
  appropriate for SEE countries
• Need to develop approaches suited for SEE
  countries

8
Performance-oriented budgeting

• SEE countries at an early stage
• Budget programs in most countries
• Often linked to organization
• Some input and activity indicators
• Very little output and efficiency information
• Few examples that budget decisions are related
  to performance
• Direct performance budget links only in one
  country
• Need to focus on decision-making

9
Public-private partnership experiences

• Significant interest in PPP, but few PPP projects
• Some local government projects
• Mainly concessions?
• Usually no explicit risk-sharing
• No value-for money assessments
• Limited legal and institutional frameworks
• Considerable work is required