Working group on Public financial management

Current work

Improving public financial management: In support of the 2023 ECOSOC cycle of work, the CEPA working group provided policy advice on public financial management in times of emergency and implications for the credibility of budgets.

Background

Effective financing and budgeting processes are crucial preconditions for implementing the SDGs, especially now in the difficult time of worldwide crisis caused by the COVID-19 pandemic and other challenges. In the 2030 Agenda, Member States acknowledged the essential role of national parliaments through their enactment of legislation and adoption of budgets and their role in ensuring accountability for the effective implementation of their commitments. In the Addis Ababa Action Agenda of the Third International Conference on Financing for Development Member States committed to increasing transparency and equal participation in the budgeting process.

Over the years, the Committee has explored different aspects of public financial management, including ways to prevent, expose and deal with corruption; building capacities and effectively mobilizing, allocating and managing budgetary resources for the implementation of the 2030 Agenda; strengthening fiscal management at national and subnational levels; emerging issues in public financial management and transparent and participatory budgeting. At its 20^th session (2021), the Committee discussed ways to integrate the SDGs into national and subnational budgeting and financial management and sustainable public procurement in the decade of action and delivery for sustainable development.

At its 21^st session (2022), the Committee reiterated that open and inclusive public financial management was essential to ensuring government accountability and legitimacy. Political will was a crucial factor, paired with sufficient public sector capacities, resources and incentives. Embedding the SDGs in budgets, for example through budget tagging, could accelerate their achievement. Fiscal sustainability, oversight and budget credibility should be enhanced, and off-budget spending reduced. Those matters should be studied more closely. Expanded efforts to develop and adopt international norms and standards on managing fiscal stimulus packages and fiscal policy in times of crisis could also be valuable.

At its 22^nd session (2023), the Committee emphasized that to better face multiple crises, revenue forecasting and planning, and public financial management should be strengthened, while ensuring accountability, transparency and participation in budget processes. Importantly, efforts were needed to improve budget credibility and reduce excessive budget deviations to prevent a negative impact on SDG achievement and ensure that no one was left behind.

Recent CEPA observations and insights

The lack of progress in achieving the SDGs calls for a reprioritization of the integration of the SDGs in national budget processes, while making provisions for budget expenditure for emergency purposes. To better face the multiple ongoing crises, revenue forecasting and planning, and public financial management should be strengthened, while ensuring accountability, transparency, and public participation. In addition, digital innovations in government and the development of critical digital public infrastructure should be fostered. (CEPA 22^nd session, 2023)

Mechanisms to ensure budget coordination between different entities and across different levels of government should be established for emergency situations to help increase budgetary efficiency, respect of national fiscal rules and alignment with SDG implementation. Institutional flexibility in the budget architecture of countries should be improved, including through further integration of risk management capacity throughout the budget cycle. To improve public financial management, technical capacity as well as financial and budget literacy should be enhanced. (CEPA 22^nd session, 2023)

Budget credibility is related to the principles of effective governance. The lack of budget credibility already present in many countries has been further exacerbated due to recent crises. Budget deviations need to be analysed, using reliable, transparent and comprehensive data, to understand their causes and identify most deprived sectors as to prevent a negative impact on the achievement of the SDGs and ensure that no one was left behind. While crises can make unplanned spending and budget changes necessary, it is important for governments to openly provide legislative bodies and citizens with deviation explanations and information on planned measures to return to spending in line with approved budgets and rectify previous underspending. (CEPA 22^nd session, 2023)

TInternational donors and multilateral institutions are encouraged to deliver timely and transparently on their finance commitments, including by providing not only loans but also grants based on actual needs, and by considering the costs of operation and long-term maintenance. Recipient countries should assess their needs and plan realistically, strengthen their budget capacity and financial preparedness to manage the funds received in a transparent and accountable way, produce a consolidated centralised debt budget, and develop performance metrics. In times of crisis, they should strengthen their response planning before the crisis deepens. (CEPA 22^nd session, 2023)

What action does ECOSOC recommend?

ECOSOC also encourages Governments, especially in view of stronger budget pressures, to accelerate action to increase transparency and equal participation in and oversight of the budgeting process, establish transparent public procurement frameworks as a strategic tool to reinforce sustainable development and curb corrupt practices, to strengthen budget credibility and to embed commitments to the Sustainable Development Goals in budgetary and financial processes at the national and subnational levels by adopting practices to monitor and report on the use of public financial resources in support of the Goals, such as reorganizing budgets, based on programmes and activities, and mapping and tracking budgetary contributions to each Goal (ECOSOC resolution 2023/28, para. 17).

ECOSOC also encourages Governments to leverage public expenditure to stimulate markets for sustainable products and services and help steer society towards more sustainable consumption and production patterns and to enhance efforts to build the requisite capacity for the effective management of sustainable public procurement at all levels (ECOSOC resolution 2021/12, para. 11).

Technical guidance for government officials

MDREA Membership Application

CEPA strategy guidance note on fiscal and budget transparency

MDREA Membership Application

CEPA strategy guidance note on participatory budgeting

Expert papers on this topic (2016-present)

MDREA Membership Application

MDREA Membership Application

MDREA Membership Application

Collecting and spending money in such a manner as to best empower people and ensure inclusivity and equality (conference room paper, 8 April 2019)

The use of tax records for the achievement of the SDGs (conference room paper, 19 November 2018)

Public and parliamentary oversight of State bodies in the fight against corruption (conference room paper - Russian with summary in English, 27 January 2016)

The normalisation of corruption: why it occurs and what can be done to minimize it (conference room paper, December 2015)