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Financial Crisis & “New Normal” Driving Public Financial Management Reform


December 13, 2010

Doug Hadden, VP Products

That’s the interesting conclusion from the 2010 International Consortium on Governmental Financial Management (ICGFM) and Grant Thornton annual survey: Public Financial Management Responses to an Economically Challenging World.  This appetite for reform was confirmed at the recent ICGFM Winter Conference [blog].

While developed country governments descend into melancholy, 76% of respondents indicated a commitment for Public Financial Management reform. 80% of governments are adopting international standards.

The financial crisis was cited as a motivation for reform. Transparency and PFM reform were part of many stimulus packages. Transparency was considered infrastructure by many.

The report concludes:

Public financial managers face some of the most challenging times in decades in meeting their responsibilties, but they have faced them not only with a variety of policy measures but with an unprecedented commitment to transparency.

Why is there such an appetite for reform?

  • Good public financial management lessons learned in previous crisis have made many developing countries more resilient to the current crisis
  • Aid dependent countries recognize that standard assessments such as Public Expenditure and Financial Accountability, World Bank Governance Indicators and Millennium Challenge Corporation measurements are being used for donor fund decisions – PFM represents a key element of these assessments
  •  Globalization and trade liberalization gives business choices. Businesses would rather set up in countries that represent low risk.
  • Transparency increases public participation in government and creates more stable countries.
  • Governments recognize that good governance, enabled by PFM reform, improves development results.

Public Financial Management Responses to an Economically Challenging World 2011 ICGFM Survey

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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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