Working group on Public financial management

Recent work

Improving public financial management: In support of the 2024 ECOSOC cycle of work, the CEPA working group provided policy advice on accelerating public financial management reform to reinforce the 2030 Agenda for Sustainable Development and eradicate poverty in times of multiple crises.

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.

CEPA observations and insights

Accelerating public financial management reform to reinforce the 2030 Agenda and eradicate poverty in times of multiple crises

Given the trend of declining public trust, increased efficiency and effectiveness of fiscal management could have a substantial bearing on improving public perceptions of government. An integrated strategic approach to fiscal institution building and financial processes should be employed for the greatest impact. To advance the Goals at a time of multiple crises, there is a need for improvements in strategic public procurement, financial oversight, budget credibility, digitalization of public financial management and management of emergency funding to increase efficiency, transparency and public trust in many countries. (CEPA 23^rd session report, 2024)

Public financial management in times of emergency and implications for the credibility of budgets

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 are needed to improve budget credibility and reduce excessive budget deviations to prevent a negative impact on SDG achievement and ensure that no one is being left behind. (CEPA 22^nd session, 2023)

Transparent and participatory budgeting for the SDGs

Open and inclusive public financial management is essential to ensuring government accountability and legitimacy. The crucial factor is political will, paired with sufficient public sector capacities, resources and incentives. Embedding the SDGs in national and subnational budgets, for example through budget tagging, can accelerate their achievement. Fiscal sustainability, oversight, and budget credibility are to be enhanced, and off-budget spending reduced. These matters call for closer study. 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. (CEPA 21^st session, 2022)

Integrating the SDGs into national and subnational budgeting and financial management

National budgets should be aligned with the Sustainable Development Goals, which in most cases requires that the budgets are being reorganized around programmes and activities. Implementing the Goals by incorporating them into national budgeting systems requires a strategic decision by political leaders, as well as technical efforts. Reorganization of budgets from a traditional format to activity-based budgeting and programme budgeting is a key step that will enable the government to allocate funds toward the achievement of the Goals, and to monitor outcomes. Better budgeting in the context of the Goals entails participation, such as by informing and engaging legislatures, supreme audit institutions, civil society and the public. Budget transparency and literacy are enablers for public participation throughout the budget process. (CEPA 20^th session, 2021)

Promoting sustainable public procurement in the decade of action and delivery for sustainable development

The potential of sustainable public procurement is underutilized. Public procurement represents, on average, 13 to 20 per cent of GDP. By leveraging public expenditure, Governments could lead by example, stimulating markets for sustainable products and services and helping steer society towards more sustainable consumption and production patterns. Market mechanisms can be used to expand procurement options but require inspection and enforcement along with the capacity in the public sector to support them. Supreme audit institutions can play a crucial role in monitoring progress at the national level and adequate legislation should be in place to do so effectively. (CEPA 20^th session, 2021)

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)