December 13, 2010Doug Hadden
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.
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