Front Matter

Front Matter

Author(s):
Jack Diamond
Published Date:
April 2006
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    © 2006 International Monetary Fund

    Production: IMF Multimedia Services Division

    Cataloging-in-Publication Data

    Diamond, Jack, 1946–

    Budget system reform in emerging economies : the challenges and the reform agenda / by Jack Diamond — Washington, D.C. : International Monetary Fund, 2006.

    • p. cm. — (Occasional paper ; 245)

    • ISBN 1-58906-474-7

    1. Program budgeting. 2. Accrual basis accounting. 3. Expenditures, Public. 4. International Monetary Fund. I. Title. II. Series : Occasional paper (International Monetary Fund) ; no. 245

    HJ2031.D43 2006

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    Contents

    Abbreviations and AcronymsABC

    Activity-based costing

    BO

    Budget office

    BOP

    Balance of payments

    B-O-T

    Build-Operate-Transfer

    CBO

    Congressional Budget Office (U.S.)

    CE

    Chief executive

    CoA

    Chart of accounts

    COFOG

    Classification of the functions of government

    CRM

    Constituent/customer relationship management

    ECOFIN

    Council of Economics and Finance Ministers of the European Union

    EU

    European Union

    FAD

    Fiscal Affairs Department (of the International Monetary Fund)

    FRL

    Fiscal responsibility law

    GAO

    Government Accountability Office (U.S.), formerly General Accounting Office

    GFMIS

    Government financial management information system

    GFS

    Government finance statistics

    GFSM

    Government Finance Statistics Manual

    GPRA

    Government Performance and Results Act (U.S.)

    IMF

    International Monetary Fund

    IRA

    Independent revenue authority

    IT

    Information technology

    LM

    Line ministry

    MoF

    Ministry of finance

    MBS

    Modified Budgeting System

    MTBF

    Medium-term budget framework

    MTEF

    Medium-term expenditure framework

    OECD

    Organization for Economic Cooperation and Development

    OMB

    Office of Management and Budget (U.S.)

    PART

    Program assessment rating tool

    PBC

    People’s Bank of China

    PEFA

    Public Expenditure and Financial Accountability Program (World Bank, European Commission, IMF, and others)

    PEM

    Public expenditure management

    PFM

    Public financial management

    PPBS

    Planning, programming, and budgeting system

    PPP

    Private-public partnership

    PSA

    Public service agreement

    SDA

    Service delivery agreement

    SGP

    Stability and Growth Pact (EU)

    SMART

    Specific, measurable, achievable, relevant, and timed

    SNA

    System of national accounts

    SPO

    State planning office

    SUNAT

    State revenue authority of Peru

    TA

    Technical assistance

    TSA

    Treasury single account

    UN

    United Nations

    Preface

    Over the past two decades, many countries in the Organization for Economic Cooperation and Development (OECD) have introduced fundamental changes in budget management involving increased emphasis on performance and results achieved from the use of public resources. With increasing frequency over the past decade, the Fiscal Affairs Department (FAD) of the IMF has been called upon to assist middle-income countries, especially emerging economies, in adopting these types of budget reforms. Repeatedly, technical assistance (TA) missions have been required to offer advice on how to introduce or sustain such reforms. In doing so, missions typically have addressed a number of recurring questions. What has been the experience of OECD countries? Are there any general lessons to be learned? Can, or should, the same general reform strategy be applied to non-OECD countries? Just how universal is this reform paradigm? How should countries first begin these reforms, and how should they be subsequently sequenced? Do all countries have the management capabilities within their governments to implement such reforms?

    Given that the same questions are raised in many countries, it was considered useful to attempt to provide the answers, perhaps more comprehensively, based on a review of our experience providing TA to middle-income countries. Not surprisingly, this comprehensive view revealed the basic underlying strategy that was being recommended for budget system reform, and this is reported in this study. Not only is this an important input to FAD’s ongoing efforts to review and improve its TA advice, but it is hoped that it also will be useful to policymakers and administrators in emerging economies who are contemplating such reforms.

    Given the nature of the study, based on a review of TA advice, this is very much a product of the numerous FAD TA teams that have worked on a wide range of related issues. The fundamental contribution from all these colleagues, especially in the two public finance management divisions of FAD, is gratefully acknowledged here. The author is particularly appreciative of the opportunity to work with and to learn from Piyush Desai, Geoff Dixon, Ole Hovland, Tony Olliffe, and Vijay Ramachandran, whose contributions to this study are significant. Special thanks are due to Jim Brumby, Marc Robinson, and Holger van Eden who commented on—and considerably improved—previous drafts. As always, the author bears responsibility for any remaining errors. Special mention should be made to Miriam Villarroel, Raquel Malamud, and Victoria Macchi, who labored with such good humor on a number of previous drafts of this study. Linda Griffin Kean edited the manuscript and coordinated production of the publication.

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