The golden rule of public finance is a time-honored fiscal policy principle that says that governments should only use debt for capital expenditure and not to fund current operations. I’ve always been a supporter of the rule. This makes me concerned to see that – with governments under intense budgetary pressure – there are increasing […]
Reimagining Public Finance (RPF) is an initiative by a committed group within the World Bank to address a significant problem that affects public financial management (PFM) and public finance reform practice. The problem is that too much PFM technical work is driven by a best practice mentality. When operating in best practice mode, analysts don’t […]
Many governments have invested large sums of money in the development of accrual accounting. Unfortunately, for most of these governments this has to date been a poor investment. Why? Because many are making little or no use of all the information that has been produced. This is a regrettable situation, to say the least. This […]
Performance information is crucial for high-performance government. Performance budgeting is part of that: budget decision-making needs to be informed by good information about the effectiveness and efficiency of government spending. The approach to performance information must, however, be highly strategic. To succeed, it needs to be built on a recognition of two fundamental realities. Firstly, […]
Evaluation should be a key source of information for budget decision-makers. In practice, however, it has had surprisingly little impact on decisions about what to fund and by how much. This raises the question: what can be done to realize the true potential of evaluation to improve budgeting? The failure of evaluation to contribute much […]
France’s budgetary position is disastrous, and the country appears to be moving inexorably towards a fiscal crisis like that which brought Greece to its knees over a decade ago. The land of Molière presents one of the extreme cases of failure to implement fiscal consolidation after the large-scale fiscal stimulus during the COVID-19 pandemic. But […]
Contemporary public financial management (PFM) is, according to an emerging school of thought, in a parlous condition and needs a complete rebuild. I disagree. An influential recent formulation of the views of this school of thought can be found in the 2020 report Advice, Money, Results (AMR). This report issues a challenge to contemporary PFM […]
Yet another call for governments to abandon debt limits and focus instead on net worth! This time it’s in the United Kingdom, where an influential think tank, the Resolution Foundation, has proposed the replacement of the country’s debt rules with “a target to see net worth improving.” This is a bad idea that must be […]
Expenditure ceilings are a key instrument for achieving the objectives of medium-term budgeting. This is why the question of how to set appropriate and workable expenditure ceilings has been a major focus of public financial management over the past two decades. Erroneous notions as to what constitutes best practice in ceiling-setting have, however, been a […]
Knowing the budget baseline is an essential part of good budgeting, which makes the methodology for estimating the baseline important. What follows focuses on the need, in many countries, to include within the baseline estimation methodology a wage bill model that is capable of quantifying the budgetary impact of public employment policies. The budget baseline […]