PEFA Newsflash June 2023

Publication

New GIFT Guide on Advancing Fiscal Transparency for Development

All you need to know about fiscal transparency is now in one place!

Following the success of the Advancing Fiscal Transparency for Development online course, funded by the U.S. Department of State, this latest GIFT Guide offers information on all the key elements of fiscal transparency for development under a single cover—from the overarching international norms and standards unpacked by expert institutions, to practical case studies and individual perspectives that have not been documented before.

It is a perfect key point of reference for public financial management and fiscal system reform advocates and practitioners looking for practical, sound information on how to enhance fiscal transparency for development.

Of interest to those working on:

Pillar 2: Transparency of Public Finances

UN Economic and Social Council: Public Financial Management in Times of Emergency and Implications for the Credibility of Budgets

Public financial management in times of emergency should ensure that countries continue to make progress towards achieving the Sustainable Development Goals and should guarantee that the core principles of public financial management, in particular fiscal discipline, legitimacy, predictability, credibility, participation, transparency and accountability, are respected as much as possible.

The authors of this paper argue that achieving greater budget credibility, particularly in developing countries, is a critical aspect of effective public financial management in the light of the uneven and turbulent budgetary situation in many countries.

Of interest to those working on:

Pillar 1: Budget reliability

The Green Budgeting Transition: Greening Fiscal Policies and Public Financial Management

This AFD report by the emphasizes that implementing a transition to a green economy requires significant financial resources, both public and private, to make the necessary investments. It also requires States to realign their public policies on a trajectory compatible with the Paris Agreement on climate change. Finance ministries have a central role to play, through fiscal policy and public financial management, to drive the transition to a green economy. The green fiscal transition aims to align revenue collection and public expenditure processes with environmental and climate objectives.

Of interest to those working on:

PEFA Climate

IMF Working Paper: The Effects of Inflation on Public Finances

Does inflation help improve public finances? This paper documents the dynamic responses of fiscal variables to an inflation shock, using both quarterly and annual panel data for a broad set of economies. Inflation shocks are estimated to improve fiscal balances temporarily, as nominal revenues track inflation closely, while nominal primary expenditures take longer to catch up. Inflation spikes may also lead to a persistent reduction in debt to GDP ratios, both due to the primary balance improvement and the nominal GDP denominator channel. However, debt only falls with inflation surprises—rises in inflation expectations do not improve debt dynamics, suggesting limits to debt debasement strategies. The results are robust where using various inflation measures and instrumental variables.

Of interest to those working on:

Pillar 5: Predictability and control in budget execution

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