Public Financial Management (PFMx)

Transcription

1 Public Financial Management (PFMx) Module 03 PFM and Fiscal Policy Design This training material is the property of the International Monetary Fund (IMF) and is intended for use in IMF Fiscal Affairs Department (FAD) courses. Any reuse requires the permission of the IMF and FAD.

2 A Tool to Deliver Fiscal Policy Objectives and Outcomes

3 Role of the International Monetary Fund (IMF) Share of activities by cost. (Fiscal year 2016) Capacity Development 29% Surveillance and Oversight 56% Lending 15% Surveillance and Oversight Lending Capacity Development Source: IMF Office of Budget and Planning. Note. The IMF s financial year is May 1 through April 30.

4 IMF Public Financial Management Technical Assistance

5 PFM Technical Assistance in Article IV Reports Nigeria

6 Role of the International Monetary Fund (IMF) Share of activities by cost. (Fiscal year 2016) Capacity Development 29% Surveillance and Oversight 56% Lending 15% Surveillance and Oversight Lending Capacity Development Source: IMF Office of Budget and Planning. Note. The IMF s financial year is May 1 through April 30.

7 An Example Jordan External Shock Impact Result Increase in fuel prices Imports of fuel cost more Increase in losses of state-owned electricity company (NEPCO) More government guaranteed debt and transfers to NEPCO Public debt increases

8 Fiscal Policy Public Financial Management What to do How to do High capacity in the MoF How policies should be designed How policies should be implemented

9 Coverage of the Public Sector

10 Coverage of the Public Sector Finland (2013) Guatemala (2014) Budgetary Central Government Budgetary Central Government Public Sector General Government Central Government State Governments Local Governments Social Security Extrabudgetary Central Government Social Security Extrabudgetary Central Government Public Corporations Public Non-financial Corporations Public Financial Corporations Subnational Government General Government Source: IMF Fiscal Transparency Evaluations. Public Corporations

11 Coverage of the Public Sector FINLAND (2013) GUATEMALA (2014) Reported Not Reported Source: IMF Fiscal Transparency Evaluations.

12 An Example Jordan External Shock Impact Result Increase in fuel prices Imports of fuel cost more Increase in losses of state-owned electricity company (NEPCO) More government guaranteed debt and transfers to NEPCO Public debt increases Coverage

13 Coverage Important because: Fiscal policy is carried out by different levels of government Budget allocations need to be made in a comprehensive manner Partial coverage is a source of fiscal risk

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16 Anticipating Fiscal Risks Advanced Economies: Public Debt, (Percent of GDP) Spring % of GDP Spring Source: IMF.

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20 Fiscal Costs of Contingent Liabilities 60 Fiscal Costs (Percent of GDP) Year Legal Natural Disaster(s) Other SOEs + PPPs Subnational Government Source: IMF Fiscal Monitor Database; and IMF estimates

21 Fiscal Costs of Contingent Liabilities 60 Indonesia Fiscal Costs (Percent of GDP) Algeria Thailand Korea Turkey Iceland Ireland Greece Year Financial Sector Legal Natural Disaster(s) Other SOEs + PPPs Subnational Government Source: IMF Fiscal Monitor Database; and IMF estimates

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23 An Example Jordan External Shock Impact Result Increase in fuel prices Imports of fuel cost more Increase in losses of state-owned electricity company (NEPCO) More government guaranteed debt and transfers to NEPCO Public debt increases

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25 Identifying and Analyzing Source: Where does the source of the risk reside? Incidence: What is the probablity of risk?

26 Identifying and Analyzing Source: Where does the source of the risk reside? Incidence: What is the probablity of risk? Endogenous Exogenous Continuous: regular events Discrete: occurring irregularly

27 Identifying and Analyzing Source: Where does the source of the risk reside? Incidence: What is the probablity of risk? Endogenous Exogenous Continuous: regular events Discrete: occurring irregularly

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34 An Example Jordan External Shock Impact Result Increase in fuel prices Imports of fuel cost more Increase in losses of state-owned electricity company (NEPCO) More government guaranteed debt and transfers to NEPCO Public debt increases Diversification of fuel supply Tariff adjustments Efficiency gains Risk Mitigation

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36 Big screen shot.

37 I am not sure we can open the fiscal risk statement

38 Definition of Public Corporations

39 Public Corporations Classified as: A separate entity by law Generate profit or other financial gain Set up for market production Controlled by government

40 Scope of Public Corporations Transport Utilities Other Airlines Electricity Postal services Ports Water Natural Resource companies Railways Telecommunications

41 Monitoring Public Corporations is important Public Corporations: Market value (Percent of GNI) 50% 40% 30% 20% 10% 0% China Russia Norway India Brazil Poland Czech Republic Indonesia Finland Sweden France Switzerland Source: Kowalski, P.; M. Büge; M. Sztajerowska; M. Egeland OECD Trade Policy Paper 147. Note: Data from Forbes Global 2000 are year 2011; and data for GNI are year Korea Greece United Kingdom Austria Belgium South Africa Japan Turkey United States Ireland Germany Italy

42 Public Corporations account for large share of the economy Number of State-owned enterprises (Average ) Poland Sweden Bulgaria Romania Croatia Slovenia Latvia Czech Republic Hungary Estonia Lithuania Slovakia Source: U. Böwer, IMF Working Paper.

43 Public Corporations account for large share of the economy Share of State-owned enterprises in the economy (Percent of total; annual average ) Output Bulgaria Croatia Czech Republic Employment Source: U. Böwer, IMF Working Paper. Note. Healthcare sector is excluded Estonia Hungary Latvia Lithuania Poland Romania Slovakia Slovenia Sweden

44 Public corporations impose economic and fiscal costs Average cost per energy sector employee, (Cost per state-owned enterprise employee in percent of cost in private firms.) Estonia Latvia Bulgaria Slovenia Czech Republic Slovakia Croatia Hungary Sweden Romania Poland Source: U. Böwer, IMF Working Paper.

45 Public Corporations can increase Public Debt Contingent liabilities (outside General Government) (Percent of GDP) Slovakia Lithuania Estonia Romania Croatia Czech Republic Source: Eurostat Bulgaria Hungary Latvia Poland Sweden Slovenia

46 Monitoring Public Corporations Ensures that Public Corporations are not a mechanism: for circumventing traditional fiscal controls; and a conduit for financial misconduct.

47 Effective Oversight of Public Corporations

48 Effective Oversight of Public Corporations

49 Effective Oversight of Public Corporations

50 Effective Oversight of Public Corporations

51 Effective Oversight of Public Corporations

52 Fiscal Policy Public Financial Management What to do How to do High capacity in the MoF How policies should be designed How policies should be implemented

53 An Example Jordan External Shock Impact Result Increase in fuel prices Imports of fuel cost more Increase in losses of state-owned electricity company (NEPCO) More government guaranteed debt and transfers to NEPCO Public debt increases Diversification of fuel supply Tariff adjustments Efficiency gains Risk Mitigation