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PUBLIC FINANCIAL MANAGEMENT AND THE ECONOMY

Profile image of FELEX Niwagaba

This publication is to introduce the reader to the relationship between public financial management, government and the economy.

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Public Financial Management (PFM) is concerned with aspects of resource mobilisation and expenditure management in the public sector (for definition of public sector please read ACCA's policy document 'Setting high professional standards for public services around the world' (2012) Since the private sector lacks the moral sentiment and incentives of a responsible government to provide for various segments of the economy, including the underprivileged, the public sector's role is significant. Expenditure on public services accounts for more than one third of GDP in most countries, hence interest and expectations of these services are high and management of public funds needs to be able to withstand scrutiny from all quarters. Objectives of public financial management: In a business enterprise, effective management of finances aids the achievement of business objectives. Similarly, sound public financial management is critical to the achievement of the aims of the public sector through its role in improving the quality of public service outcomes; operational and strategic decision-making; long term sustainability of public services; building public trust in the performance of the sector; and ensuring the efficient and effective use of public funds. Optimal public financial management would additionally display flexibility that allows the targeted sectors to adjust easily and in the desired manner with the public sector induced changes. ACCA has identified four key objectives that effective public financial management should cover:  aggregate financial management-fiscal sustainability, resource mobilisation and allocation  operational management-performance, value for money and strategic financial planning and management  governance-transparency and accountability  Fiduciary risk management-controls, compliance and oversight (Parry 2010).

thesis on public financial management pdf

Sustainable Development

Liudmila Tkachenko

The chapter justifies the increased interest in public sector financial management (PFM) through its scaling up in the economy. The paper reveals the essence of the PFM system, through an analysis of the definitions of the PFM, the role of the public sector in the economy, the key elements of the PFM system, and a comparative analysis of financial management systems in the public and the private sectors of the economy. The problematic issues of the functioning of the PFM system, which include the issues of assessing the quality of the PFM, are analyzed. The quality of the PFM is understood as its effectiveness, efficiency, and achievement of the goals of the PFM, the main of which is the growth of the well-being of society. The statement proved that the amount of public spending is not evidence of the effectiveness of the PFM system. The factors influencing the efficiency of the PFM system functioning are revealed. The importance of financial information formed in the system of stat...

Marco Cangiano

Athens Journal of Business & Economics

Central European Journal of Public Policy

Frantisek Ochrana

Attila Gyorgy

Rebecca Simson

Finanţe: Provocările viitorului

Irina Alexandru

The paper provides a perspective on the public institution as an organization, its financial management including principles and funding mechanisms helping to form a picture from the point of view of the person involved in its management. From the scientific perspective, the paper has an economic approach. This means that the public organization is valued in terms of efficiency, effectiveness and cost. In view of the entity of interest, as well as the adopted scientific perspective, a description of the functional elements of the public organization in a manner similar to that of the management studies resulted, always being analyzed from the perspective of comparisons with private organizations.

Václav Rybáček

The aim of this paper is to bring a contribution to the clarification of the terms such as public finance, public sector or government which are widely used in economic analysis or in public finance management. In the Czech environment, those terms are understood differently across statistical, legislative or accounting domains. The paper illustrates a nuanced understanding currently existing. Apart from the illustrations of varying use, the content of terms in question and their mutual relation are explained and analysed from the point of view of a relevant statistical methodology. The paper concludes offering a more robust content of the term "public finance" in relation to the statistical data which are generally used as an illustration of public finance development.

James A McAllister

Book review for the journal Canadian Public Administration.

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COMMENTS

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