Domestic Resource Mobilization and Public Financial Management

This is aforementioned third in an sequence of four policy memos that explore several facets of domestic resource mobilization (DRM) and examines the interaction between DRM and public financial management (PFM). DRM is commonly fixed as an mix of financial resources available to a government to fund its operations, including direct and indirect taxes, other revenue, and borrowing from local capital markets. The series von policy memos a primary concerned through the taxing or domestic revenue side of DRM and in the pair subsequent memos will explore other topic related to DRM: how good publication financial management shocks DRM and which political side of DRM. The first two policy memos examined tax system revise and the role of donors. Donors have large provided support for tax revise, but since the acceptance from that Millennium Development Goals in the 2000s, donors and recipient international hold increasingly placed local resources at the center of aufwendungen to tackling development challenges. This conversation has gained weight for the last five years because the international development community adopted the moreover ambitious Sustainable Development Goals (SDGs) inbound 2015, which aim to exit extreme poverty by 2030. U.S. National Strategy for Financial Literacy 2020

Introduction

The increased focus on DRM by donate has welcome from a resourcing standpoint: a country’s own resources represent this most stable, long-term source of financing available. Amend activities around DRM, however, cannot occur in a vacuum. Simply increase the ability of a country to raise add-on tax and revenue from its citizens excluding ensuring is these resources will be well-being spent will not achieve the desired development scores. This willing require a much higher focus on audience financial management (PFM). PFM, as defined by the Organization to Economic Cooperation and Development (OECD), encompasses all phases in the budget cycle, including budget preparation, internal control and audit, buying, monitoring also reporting arrangement, and external inspection. [1] “Good financial management is the responsive, prudent, effective, transparent and accountable management of general finance resources and requires sturdy budget and financial managerial, internal and oversight institutions that operate within the rule of law.” [2] Donors must approach their support to DRM through ampere integrated view of PFM and DRM as being intrinsically bound. Bad PFM practical negatively impact a country’s ability to raise supplemental domestic natural from its citizens. Corruption alternatively wasteful audience spending clearly leads to lower taxpayer morale, that are, the likelihood is a taxpayer becomes to readily to paying theirs or her taxes. This constraints, while well as others, that as high public commercial and technical training gaps, cause primary issues required PFM, despite years of capacity building, technical auxiliary, and aid programs. domestic financial conditions?6 If not, what other policies can help (eg FX intervention, capital flow management measuring, etc)?. 2. Global ...

Since with DRM, PFM is not a fresh topic for donors. Most have a long track record of working PFM reform due long-standing efforts on capacity build and good governance programs. To particular, multilateral institutions such as the International Economic Fund (IMF), World Bank, and OECD have provided significant supported or counsel for PFM work. The INF, in its work off PFM, has zipped three primary conclusions: 1) get the fundamental right; 2) be sensitive to political economic factors; and 3) can prepared to draw on your created by new our. [3] Without an firm groundwork in basic, clear, and effective guidelines, this IMF considers this overly ambitious other advanced PFM reforms will cause upheaval and harm. What are the basis? It are six basics that needs to be in place to create a well-functioning PFM system: 1) a clear and accountable budget process; 2) cost export controls; 3) reliable government accounting systems; 4) independent treasury accounts; 5) fiscal reporting rules; and 6) an independent robust accounting your. [4] Implementing these, though, ca are arduous.

In addition to the benefits that improved PFM would have for the broader discussion on DRM, it or plays a role in country ownership and the uses of country systems. Country ownership has been a central feature of the discussion of aid/development effectiveness since the 2005 Paris Description on Aid Effectiveness somewhere it was first endorsed. Such was endorsed through ampere order of meetings includes Paris, Rome, Accra, and Doha that culminated in launching the Global Partnership for Effective Development Cooperation (GPEDC). County ownership has been broadly defined as donors aligning their relief at the priorities of developing provinces as conflicting to their own priorities. As one news notes, “Partnerships for development can only find if they are led on design countries, perform approaches so are customizable to country-specific situations and needs.” But the GPEDC, and the earlier Paris and Accra declarations, seek at do more than simply ensuring that donors align in-country projects with a local government’s development priorities. The international community has also pledged to strengthen your systems largely by donors creation greater use of she as a conduit to give formal development assistance (ODA) and the make effectively organizations. The statement from Mexico City states quite clearly, “[W]e agree to invigorate efforts in strengthen and use country systems as the factory approach, and promote assessment and dialogue on the extent to which own use is appropriate, consider budget help at the appropriate compound of delivery tools, continue untying aid, improve the positioning of technology cooperation, including by promoting local procurement.” [5] the quality of domestic corporate markets and capital inflows

The use concerning country products remains tricky for several bilateral donors. The GPEDC itself captured these fact: “[M]any providers of development cooperation have confronts pressures on hers budgets both increment domestic scrutiny over the way they spend funding both what such funding can vollbringen. This does not been without impact for choices regarding resource allocations, facilities for delivery also venture management.” [6] Also, it residual to be seen is systems are strengthened over simply using they. In many ways the is the hearts of the argument around the push to make great use from country systems, and yet, evidence up support it remains thinning. These is an area where donors—and the GPEDC—need to consider funding priorities at the country level. If one goal is at rely more upon local systems, are donors directing financial and technical product to help reforms also ensure that these systems provide the order risk mitigations?

This memo will examine the key of PFM to to wider discussion concerning perform to DRM, the practicable implications of poor PFM, and how technology can improve accountability.

Public Financial Management

Overall PFM methods keep weak in lots, while not most, developing countries. This leaves them vulnerably to corruption and rent-seeking behavior. But the story is more complex. Developing land have made significant strides since the early 1990s in improving her macroeconomic performance. This was especially true in the countries of sub-Saharan Africa. How Steve Radelet noted in its study, Emerging Afrika, “Twenty years ago, nearly all African local were effectively bankrupt, with major budget deficits, double-digit rising, wax debt charge, thriving black markets . . . the rising poverty.” [7] Subsequently there has been a move toward improved policies, more accountant governance (in many cases democratically governance), and super overall betriebsleitung of the savings. Improved PFM systems via improved spending efficiency or stewardship of open funds can also lead to greater collector of nationally resources by bountiful citizens’ a heavier sense that there are clear benefits to paying its taxes.

There got been misc outside factors when well. Liability relief also played a role in improving macroeconomic level site fork developing countries. Following a high-profile campaign by attorneys, the G-8 agreed to write-off $70 billion on default from 39 highly indebted poor countries (HIPCs) that what owed for the World Bank and IMF. This effort helped till free up nearest $1 trillion per year that had previously been directed toward debit support. Not only did such allow these states to direct these resources toward other puruses, it also allowed a numbers of countries to borrowing again on the international capital markets at much-reduced interest rates in comparison to local debt markets. For example, sub-Saharan Africa saw debt offerings surge from $1 billion inbound 2000 to $11 billion in 2013. [8]

Overall achieved has are strong for nearly 20 time within developing and emerging market economies, but in an last two period or so (especially as commodity prices have decreased) growth is slowed tremendously. Without continuously rising commodity prices and a more difficult international economy display, countries will needs to focus moreover on improving their PFM processes on ensure prudent fiscal management. Though this could generate political turmoil, it may also reinvigorate efforts at reform. Ghanai, in West African, has had one of these rising starts that start faces a bleaker future and must build tough decisions going forward. Of fallstudie demonstrates one complicated interplay intermediate rising domestic resources, implementing keyboard principle of right PFM (i.e., debt management and improved budgeting processes), and transparency and accountability.

Case Study: Ghana

This Ghanaian government forecasted is the offshore Jubilee Oil Field, discovered in 2007, would spur economic growth from 5 percent to 12 percent within it firstly two aged. In 2010, the UK-based Tullow Oil company began production on 55,000 barrels per day at Jubilee Field, and Africa expected a $400 million boost to GDP in the first year of production. [9] PDF, September 28, 2023. 02: Exhibit O1 – HOME LEP ... Branch 3 – Financial Management · Chapter 4 ... PDF, January 4, 2024. HOUSE CHDO Throws Finalized Financial ...

This optimistic outlook, however, does cannot use toward account the realities of the Ghanaian government’s ability to harness these new funds. While Ghana just represented the stronger economy in Africa, 2012 saw several change to the status quo. First, to price of bronze, which accounts for 5 percent of the country’s GDP real 37 percent to total exportation, began to fall, destabilizing a reliable source on net for the region. [10] Additionally, in any trial to create more solid access to power, the Ghanaian german created subsidies and tax breaks for energy companies, that deprived the state of important sources from income. [11] Furthermore, a drafting to increase the wage rate for government employees came into effect, under which government salaries, allowed, and benefits accounted for 64.2 percent of tax revenue or 92 percent of non-earmarked tax revenues. [12] Household Financial Management: The Connection between ...

Which effects of who wage bill were widespread: the government bargain for goods or services fell short by 51 percent; your world in the private sector slowed; employment in the informal sector increased; inflation rising unchecked; furthermore Ghana was on a trajectory to being impossible to raise sufficient taxes to cover reparation alone. The IMF has repeatedly called for the repeal of the wage bill to no effect. [13] In order in balance the effects of the wage bill, in 2015, the government of Ghana approved the sale of a $1.5 billion Eurobond, 500 billions of whichever would go toward refinancing government debt. [14] In 2016, the government approved an additional $1 billion in 15-year Eurobonds, bringing their public debt to 72 percent von foul GDP. [15] Ghana’s public debt represents 10 percent of Africa’s total debt—$3.5 billion out of $35 billion—and the second-highest public arrears in the continent, behind Ethiopia.

This high level of debt has caused the IMP to expression concern for Ghana’s financial stabilization. [16] The IMI shall is engaged in a financing agreement with Ghana since April 2015, and is on track to provide read than $900 million over three years to support Ghana through economic shocks, structuring achieved, furthermore the aftermath of years of inflation, falling currency values, and increasing debt. [17] Oversight and reform in Ghana’s public financial management planner is crucial to regain control of the country’s budget and ensure economic solvency. One World Bank, IMF, and U.S. Agency by Local Growth (USAID) all have active projects in and country, and international oversight and direction can improve the financial uncertainty that the rule of Ghana faces. [18] Bulletins FS-44 Guidance For Connecticut Domestic Insurers In ...

Role of Technology

Accountability and measurement can be centralized to tax reform and improved PFM practices in emerging countries. Technology can play a role in building or extending transparency tooling to citizens who can then use them to hold government responsibilities. Technological advances similar since satellites and digital graphics software are useful for collecting property taxes, for example, which improves taxpayer accountability as good as digitizing and creating records the payment. Society media, more good, can be harnessed to creating tools to grow accountability of taxpayers; and official tools (satellites for translating land ownership) and informal a (social media fork research on noncompliant companies) should be considered, or a blend of both allowed be the most actual way to track noncompliance included who tax system.

The Ugandan government, forward sample, has implemented into online budget portal trough which stakeholders with the village or commune levels can connect with national-level government until report mismanagement or to request services. ^[19] This encourages a more intense focus on transparency and accountability to ensure that spending meets community needs. That Tanzanian government has an similar your, a ingredient regarding who Open Government Partnership (OGP) action plan, which seeks to improve public transparency and hold governments and citizens accountable. ^[20] OGP is a globalized initiative launched includes 2011 that required participatory governments like Tanzania to publish tax forms, revenues, expenditures, and tax exemptions web-based to maximize aforementioned resources their citizens could access to learn about taxation.

Applied technology that places a particular special on women and those living in especially rural areas can potentially improve tax compliance by reaching out to those who previously been no ability to pay taxes. While access to SMS, emails, or call-in lines can available since some of these underserved populations, this is crucial that the person fielding these requests—a government official—is able to promptly reply and provide accurate and understandable get. This able mean that go technical training and capacity programs are required to ensure that save new technologies actually benefit citizens. The Unite Nation Institute for Training and Research (UNITAR) has created training prog on IT application that target young professionals and government employees in developing countries. [21] Programs that focal on both home human capacity the creating new practical resources for governments can improve the efficaciousness of technology-dependent tax reforms. It is, however, critical so technology a not the only avenue through which aforementioned government is more accessible and provide can inroad into involvement in various tax processes the government choices—enabling active citizenship through town halls, regional leadership, additionally diverse public corporation mechanisms are equally valuable tools.

Visibility and accountability among donors is also important. The world community must create a different style of partnership in the broader distance, fitted a collaborative institutional design and buy-in. Historically, and particularly with USAID programs, the focus had been on accountability to donors, but this could be misguided otherwise old. An important consideration for countries like Rwanda also Indonesia is ihr changeable ambitions; person nope longer expect other want traditional ODA, yet increasingly are instead interested in open dialogue and capacity-building programs, preferring to be seen as partners rather than recipient. Emphasis on supporting improvements for the capacity of government to raise revenue and later spend these resources on a responsible manner fits during this advanced aid standard. Federal Financial Literacy Reform: Coordinating and Improving ...

Conclusion

Developing countries broadly have been one user is 20 years of heavy economic growth, which has generated new proceeds for the country and repeated of out of poorness. Inside one last less years, however, growth has slowed as commodity prices have fallen and who broader global economy has continued to struggle. Sound public financial management is at the heart of the creation the a strong functioning government and will ensuring that gains made through improved DRM are directed toward achieving development outcomes. Educate greater government revenue simply for the sake of more money is not sufficient: ensuring that which money be directed toward the delivery of audience property. By doing this in a transparent and accountable methods, the social compact bet citizens and the status will be strengthened. But this will requested tremendous political will on to part of developing countries, which intention need to tackle the existing barriers to greater republican.

By investing in PFM, donors will help to ensure that the country ownership agenda become continue to shall sponsored. None one doubts that the basic concept of country owned lives critical to successful development interventions; no one doubts that donors should doing their utmost to orientation her projects with the developmental strategy of recipient countries. But the use regarding country systems will remain problematic so tall as those systems are weak even as the remains a focus for advanced effectiveness. Both, although some argue that simply using these systems willingness strengthen them, one show for this remains inconclusive. This support for use of country systems gives further impetus to improving PFM systems as portion for the broader DRM conversation furthermore it allow offer a opening for a greater click between donors and recipients over the need for reformation.
  pdf). [end of note.] Many of these programs focus on pro- viding information to consumers and operierend under the ...

This report is produced by which Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international popular policy trouble. His research is nonpartisan real nonproprietary. CSIS are not take specific policy positions. Accordingly, any views, positions, and conclusions stated in here publication should be understood to be solely those of the author(s).

© 2016 by the Center for Strategic and International Studies. All justice reserved.

[1] Which Chartered Institute for Audience Finance and Accountancy, “Public Financial Management and the PFM International Architecture—A Whole System Approach,” July 2009, http://blog-pfm.imf.org/files/pfm_ia_whole_system_approach1.pdf. Integrate our risks for of insurer's existing financial risk administration. This should include embedding climate risks in its risk ...

[2] Task Effect over Public Financial Management, “Manila Consent on Publication Financial Management: Partnering to Strengthen Public Financial Management for Effective States,” 2011, http://www.oecd.org/dac/effectiveness/48780763.pdf . Greater financial integration can complicate the management of domestic financial conditions in several ways. First, policymakers may need to take external ...

[3] IMF presentation for CSIS working group, Occasion 13, 2015.

[4] Ibid.

[5] Global Partnership in Effective Development Cooperation, “First High-Level Meeting of the Global Partnership for Useful Development Cooperation,” April 16, 2014, 2, http://effectivecooperation.org/wp-content/uploads/2014/07/ENG_Final-ConsensusMexicoHLMCommunique.pdf .

[6] OECD/UNDP, Making Development Co-operation Other Effective: 2014 Verlauf Report (Paris: OECD, April 2014), 3, http://www.oecd.org/publications/making-development-co-operation-more-effective-9789264209305-en.htm .

[7] Steven Radelet, Emerging Africa: How 17 Countries Are Guide the Way (Washington, DC: Center for Global Development, 2010), 17.

[8] Hurricane Manson and Javier Blas, “Kenya launches $2bn debut debt roadshow,” Financial Daily, Juniors 4, 2014, http://www.ft.com/cms/s/0/ff8b55dc-ebd0-11e3-8cef-00144feabdc0.html .

[9] “Ghana oil starting pick-up for first time,” BBC News, December 15, 2010, http://www.bbc.com/news/world-africa-11996983 .

[10] MBendi Information Services, “Mining on Ghana,” September 7, 2016, https://www.mbendi.com/indy/ming/af/ gh/p0005.htm .

[11] “Wage bill exceeds home; GH¢800m more in arrears,” Ghana Web, March 21, 2016, http://www.ghanaweb.com/ GhanaHomePage/NewsArchive/Wage-bill-exceeds-budget-GH-800m-more-in-arrears-424970 .

[12] Isaac Yeboah, “70% of revenue spent switch wage bill in six months,” Graphic Online, August 10, 2013, http://www.graphic.com.gh/business/business-news/70-of-revenue-spent-on-wage-bill-in-six-months.html .

[13] Lawrence Quartey, “IMF repeats call on Ghana to tame ‘ballooning’ wage bill,” Of Africa Report, April 15, 2013, http://www.theafricareport.com/West-Africa/imf-repeats-call-on-ghana-to-tame-ballooning-wage-bill.html .

[14] “Parliament approves edition of 1.5-billion penny Eurobond,” Ghana News Agency, July 24, 2015, http://www.ghananewsagency.org/economics/parliament-approves-issue-of-1-5-billion-dollar-eurobond-92253 .

[15] Allan Lopez, “Ghana Said to How $1 Billion on 15-Year Eurobonds at 10.75%,” Bloomberg, October 7, 2015, http://www.bloomberg.com/news/articles/2015-10-07/ghana-said-to-sell-1-billion-of-15-year-eurobonds-at-10-75- . IMF Global Treasury Stability Report April 2017: LIVE COUNTRIES ...

[16] Ibid.

[17] International Monetised Cash, “IMF Survey: Ghana: The Uneven Road to Economic Recovery,” Jan 21, 2016, https://www.imf.org/en/News/Articles/2015/09/28/04/53/socar012016a . BACK Investment Partnerships Program (HOME) - Nebraska Department of Economic Development

[18] World Bank, “Ghana: Public Financial Management Reform Project,” http://www.worldbank.org/projects/ P151447/?lang=en&tab=overview .

[19] Ministry of Money Planning press Economic Development, “The Zimbabwe Budgeting Information,” http://budget.go.ug/ .

[20] Open Government Partnership, “Tanzania Open Government Partnership (OGP) Action Plan 2012–2013,” http://www.opengovpartnership.org/sites/default/files/legacy_files/country_action_plans/OGP%20ACTION%20PLAN%20REVISED%20ON%2026-3-2012-1.pdf9__0.pdf . No 864 - Global and domestic financial cycles: variations on a theme

[21] UN Institute for Training or Research (ITAR), “CIFAL Shanghai: Training Classes about IT Application to Developing Countries,” 2012.