12 Principles to Empower Government COVID-19 Pandemic Responses Through Public Financial Management

Posted on July 15, 2020 in PFM

Unpack PFM Recommendations from the International Monetary Fund, PEFA Secretariat, and the World Bank Group.

Are you overwhelmed by so many organizations talking COVID-19 response in government? Faced with:

• Information overload 
• Little to do with your reality 
• More about selling stuff than helping you 
• Far more noise than signal 

What’s going on for public finance among experts? Valued advice for us comes from these sources:

• 2020-03-31 PEFA Use of PEFA reports to assess the readiness of PFM Systems to respond to COVID-19 challenge
• 2020-04-09 IMF Preparing Public Financial Management Systems for Emergency Response Challenges, Sandeep Saxena and Michelle Stone
• 2020-04-20 IMF Keeping the Receipts Transparency, Accountability, and Legitimacy in Emergency Responses, Claude Wendling, Virginia Alonso, Sandeep Saxena, Vincent Tang, and Concepcion Verdugo, with inputs from Racheeda Boukezia, Laura Doherty, and Gwenaelle Suc
• 2020-04-16 World Bank Agile Treasury Operations during COVID-19, overseen by Nicola Smithers and Jim Brumby; team was led by Khuram Farooq, comprised: Srinivas Gurazada, Leah April, Jiwanka Wickramasinghe
• 2020-06-08 IMF Enhancing Digital Solutions to Implement Emergency Responses, Gerardo Una, Holger van Eden, Ashni Singh, Felipe Bardella, and Alok Verma  
• 2020-06-29 IMF Budgeting in a Crisis: Guidance for Preparing the 2021 Budget, Teresa Curristine, Laura Doherty, Bruno Imbert, Fazeer Sheik Rahim, Vincent Tang, and Claude Wendling

Background

• GRP systems are primarily configured to support reform changes and adapting to economic shocks
• Economic crises encourage governance and PFM reform, supported by GRP configuration  or “progressive activation“
• Sustainable Development Goals (SDGs) and other national development plans can be tracked with good GRP configurations

Takeaways : 12 main PFM and policy themes. These align with my previous post:

1. Controls: adjust, loosen, tighten controls
2. Liquidity: manage cash, debt, support the Treasury Single Account
3. Social Spending: reallocate spending for health, income & business support
4. Transparency: fiscal transparency for spending, procurement, revenue, debt
5. Speed: improve efficiency & timeliness
6. Technology: adopt technology to achieve government objectives
7. Audit: leverage internal & external audit
8. Business Continuity: keep government working, support for working at home
9. Government Decision-Making: improved quality, timeliness, comprehensiveness
10. Policy: policy & legal reform
11. Scenario Management: trends & scenarios to predict spending needs
12. Communications: improve communications to citizens, civil society, business

In a relatively top-down view, the papers focused on:

1. Government Problem: fiscal problems faced by governments
2. Fiscal Policy Objectives: evaluate whether fiscal policy effective
3. PFM Objectives: evaluate whether PFM actions effective
4. PEFA Measurement: specific PEFA elements critical for the fiscal response
5. Finance Ministry Actions: recommendations for finance ministry interventions and changes
6. Treasury Operations: recommendations for treasury interventions and changes
7. Budget Preparation: changes to 2021 budget formulation processes
8. GRP Enhancements: adapt government financial management systems support Covid-19 response

By the numbers: speed at which these organizations provided insight requires a little unpacking to see the 12 patterns. Here’s my unpacking:
A. Government Problem 

• Numbers -3,4,5,8,11
• Highlight – “transparency of  tracking,  accounting, reporting for deployed resources” 
• Source – 2020-04-09 IMF Preparing Public Financial Management Systems for Emergency Response Challenges

B. Fiscal Policy Objectives

• Numbers – 4,8,9,11
• Highlight – “enabling citizens and economic actors to understand the objective, size and cost of the policy package and how it will affect them” 
• Source – 2020-04-20 IMF Keeping the Receipts Transparency, Accountability, and Legitimacy in Emergency Responses

C. PFM Objectives

• Numbers -3,4,8, 11
• Highlight -”Support preparing and delivering fiscal response packages to support economic activity” 
• Source –  2020-04-09 IMF Preparing Public Financial Management Systems for Emergency Response Challenges

D. PEFA Measurement

• Numbers -1,2,4,5,6,7,9
• Highlight – “Funding COVID response should be quick and clear 
• Source – 2020-03-31 PEFA Use of PEFA reports to assess the readiness of PFM Systems to respond to COVID-19 challenge

E. Finance Ministry Actions

• Numbers – 1,2,5,8,10,12
• Highlight – “Ensure Liquidity, Recalibrate Debt and Cash Requirements” 
• Source – 2020-04-09 IMF Preparing Public Financial Management Systems for Emergency Response Challenges & 2020-04-20 IMF Keeping the Receipts Transparency, Accountability, and Legitimacy in Emergency Responses

F. Treasury Operations

• Numbers -1,2,4,6,8,11
• Highlight – ‘Operationalize emergency arrangements: Enhance fiduciary oversight and reporting mechanisms to maintain transparency and trust in the government’s disbursements and payments related to COVID-19”
• Source – 2020-04-16 World Bank Agile Treasury Operations during COVID-19

G. Budget Preparation  

• Numbers -1,4,5,9,11,12
• Highlight – Use budget documentation to bring clarity to a very complex picture and bolster confidence in the government’s fiscal, economic, and social strategies
• Source – 2020-06-29 IMF Budgeting in a Crisis: Guidance for Preparing the 2021 Budget

H. GRP Enhancements

• Numbers -1,2,4,6
• Highlight – Digital solutions should be leveraged to enhance the transparency of COVID-19 related procurement activities
• Source – 2020-06-08 IMF Enhancing Digital Solutions to Implement Emergency Responses

What’s important for public finance? The consistency among recommendations. Your actions depends on country context and capabilities.  In the short term, the focus in many countries should be:

• Controls 
• Liquidity 
• Social Spending 
• Transparency 
• Speed