Public Expenditure Management: The Essentials for a PER

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Public Expenditure ManagementThe Essentials for
a PER
Bill Dorotinsky, PREM public sector group
PEAM Course March 21, 2005
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Outline

• What is Public Expenditure Management?
• Three- objectives
• Process Expenditure Management Cycle
• What institutions to review?
• Functions
• Organizations, Systems
• Applications
• Rules
• Roles
• Information

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Three Objectives of Public Expenditure Management
Systems

• Macrofiscal discipline and stability
• Support economic growth and stability (and reduce
  poverty)
• Avoid public finance crises
• Strategic allocation of resources
• Match government policy with programs, objectives
• And assure social safety nets, and promote growth
• And make room for new investment
• Technical efficiency
• Getting the most from each zloty spent
• And just delivering core services

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Expenditure Management Cycle
Source Adapted from Integrated Financial
Management. Michael Parry, International
Management Consultants Limited. Training Workshop
on Government Budgeting in Developing Countries.
THE UNITED NATIONS. December 1997.
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What institutions to review?

• Formal and Informal Rules
• Laws and regulations
• Constitutions , fiscal, budget, procurement,
  civil service, special funds, sector laws, public
  enterprises, mandatory spending
• Process
• Policy
• Planning
• Financial/resource management
• Organizations and their roles
• Information

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Ministry of Finance Functions
Core Functions
Budget Execution
Macroeconomic Forecasting
Budget Formulation
Fiscal Policy
Revenue Administration
Treasury
Debt Management
Procurement Policy
Internal Audit
Non-core Functions
Lottery Gambling
Financial Asset Management
Financial Market Regulation
Financial Investigations
Procurement Administration
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Line Ministry PFM Functions
Sector Strategy, Policy
Operations, Administration
Planning, Budget Formulation
Budget Execution
Procurement Administration
Revenue Administration
Personnel Mngmnt, Payroll
Accounting, recording
Internal Audit
Asset Management
Reporting Spending, Performance
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Budget and Policy Execution System in Hungary
(1999)
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Exploring Rules and Incentives

• Budget Impasse
• Executive-legislative relations
• What rules might govern a budget impasse?
• How might they effect incentives between the
  legislature and executive?
• What might be important considerations for
  designing a rule?

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Rules and Outcomes
Application
Source World Bank OECD budget procedures
database at http//ocde/dyndns.org/