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PFM Architecture: Concept and Processes: Handling of Public Purse For Better Results

This document discusses public financial management (PFM) concepts and processes. It defines PFM as the process of handling public money for better results, achieving results, managing risks, and prudent behavior. The key aspects of PFM include planning, budgeting, accounting, recording, reporting, and scrutiny/auditing. PFM aims to maximize public interest through aggregate fiscal discipline, efficient resource allocation, and operational effectiveness. Challenges to effective PFM in Nepal include political encroachment, a culture of misusing public funds, strong laws but weak implementation, large amounts of money outside the budget, and compromising results. The document outlines PFM reform initiatives and gaps in Nepal and recommends simultaneous interventions in technical systems and human

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63 views

PFM Architecture: Concept and Processes: Handling of Public Purse For Better Results

This document discusses public financial management (PFM) concepts and processes. It defines PFM as the process of handling public money for better results, achieving results, managing risks, and prudent behavior. The key aspects of PFM include planning, budgeting, accounting, recording, reporting, and scrutiny/auditing. PFM aims to maximize public interest through aggregate fiscal discipline, efficient resource allocation, and operational effectiveness. Challenges to effective PFM in Nepal include political encroachment, a culture of misusing public funds, strong laws but weak implementation, large amounts of money outside the budget, and compromising results. The document outlines PFM reform initiatives and gaps in Nepal and recommends simultaneous interventions in technical systems and human

Uploaded by

mukesh chaurasiya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PFM Architecture: Concept and Processes

Handling of Public Purse for Better Results

Babu Ram Subedi


Essence of PFM
.
What is Public Financial Management ?
The Concept:
 Financial management is all about money
PFM is concerned with handling of public purse
It should serve the interest of the people at large
 It consist of public accountability
 Process is crucial in PFM
PFM in Definition
" Public management is a process
relating to handling of the public
money for better results".
 Achieving results
 Managing risks
Prudence behavior
The PFM Cycle
Planning /Policy

Optimum Budgeting
Scrutiny and Audit utilization

Accounting,
recording and
reporting
Characteristics of PFM
Handling of public purse
Public Expenditure is the key
 Public interest maximization
Due Process of law :creature of law
Public control and Scrutiny: parliamentary control
Public accountability: answer to the people
 A quest for fiscal sustainability
 Fiduciary risk management
Objectives
Aggregate fiscal discipline
 Efficiency in resource allocation
 Operational efficiency :
Economy
Efficiency
Effectiveness
Due process of law
Principles
Public value maximization
Parliamentary approval
Due process of law
Public accountability
Prudence
Due care: public trustee
Principle of fiscal sustainability
Independent audit
Nepalese PFM System
 Constitutional back up
 Objective of value for money
Results orientation
Strong parliamentary control provisions
 Personal responsibility
 constitutional audit provisions
 Due process of law
Challenges
 Political encroachment
A culture of sharing public money for personal use
Strong legal provisions vs weak implementation
Large amount of money outside the budget
A compromise over results
weak humanbase
PFM Reforms Initiatives

Budgetary reforms: MTEF and MTBF


Planning reforms :MfDR
Treasury Reforms: TSA
Accounting System reform :NPSAS
Tax reforms: VAT and use of IT in tax administration
Donor harmonization practices
IT dominance : FMIS/IFMIS
PEFA framework
Audit reforms
Gaps

Gap between institutions and practices


Discontinuity of parliament
High focus on hardware
 Growing practice of financial responsibility for dishonests:
Distortion of ethical values
 Severe human resource capacity gap
Cosmetic touch of foreign aid ; inefficiency and out drain
Results neglected
Severe revenue leakage
 Results and process also overruled in local the bodies/GOEs
Way Forward

Simultaneous intervention both in hardware and software


Invest in human resources
Adherence to the institutions and results
Promotion of the ethical standards
Scrutiny based on the results
C/B analysis of foreign aid
Internal capacity enhancement( revenue gen.)
Constructive role of parliament
Implementation of Second Phase PFM reform Action plan
A Glimpse of PFM Performance in Nepal
THANK YOU
by
Babu Ram Subedi
Under Secretary
MoI, Nepal

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