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Version 7 section
• brief discussion
Role of Public Financial Management in
Government Risk Management
Doug Hadden
Version 7 section
• brief discussion
Risk Management is complex, requiring the coordination of many
government entities, b...
Version 7 section
• brief discussion
National budgets are typically coordinated, involve all government
entities and desig...
Version 7 section
• brief discussion
…goals – including risk management goals
Version 7 section
• brief discussion
Public Financial Management (PFM) refers to legislation, practices and
technology to ...
Version 7 section
• brief discussion
Effective PFM can reduce government risks, act as early warning
Version 7 section
• brief discussion
Paris Declaration and the Accra Agenda for Action has goals of increased
use of count...
Version 7 section
• brief discussion
THE ROLE OF BUDGET PLANNING IN RISK MANAGEMENT
Version 7 section
• brief discussion
Budget planning is about the future and should include risk mitigation
and monitoring...
Version 7 section
• brief discussion
Scenario planning can run expenditure and revenue models based on
risks such as natur...
Version 7 section
• brief discussion
The classification of risks and objectives within the chart of accounts
shows spendin...
Version 7 section
• brief discussion
Multiple year public investment planning tied to critical infrastructure is
supported...
Version 7 section
• brief discussion
Counter-cyclical mechanisms can be triggered in budget planning that
creates appropri...
Version 7 section
• brief discussion
Sustainability has increasingly become mainstream in government
budgeting to reduce l...
Version 7 section
• brief discussion
Effective incentives for public servants and the private sector to better
manage risk...
Version 7 section
• brief discussion
ROLE OF BUDGET EXECUTION IN RISK MANAGEMENT
Version 7 section
• brief discussion
Automated internal controls reduces corruption and fiduciary risks while
ensuring com...
Version 7 section
• brief discussion
The use of PFM standards like Government Financial Statistics (GFS)
provides governme...
Version 7 section
• brief discussion
The move to accrual accounting by governments provides a better
method to determine l...
Version 7 section
• brief discussion
Debt and liquidity management and the use of the Treasury Single
Account (TSA) enable...
Version 7 section
• brief discussion
Financial information from revenue and expenditures provides early
warning for decisi...
Version 7 section
• brief discussion
… for example, monitoring public
finances enables predicting crisis
related to revenu...
Version 7 section
• brief discussion
Physical execution of infrastructure and other critical risk mitigation
investments c...
Version 7 section
• brief discussion
Internal and external audit can include financial risk assessment to
enable improving...
Version 7 section
• brief discussion
CONCLUSION: ROLE OF PUBLIC FINANCIAL MANAGEMENT IN RISK
MANAGEMENT FOR DEVELOPING COU...
Version 7 section
• brief discussion
Risk: it comes down the money properly invested
Version 7 section
• brief discussion
Budget planning and execution enables governments to invest in
innovation and track r...
Version 7 section
• brief discussion
2828
Planning and monitoring reduces risk
and enables investing in risk mitigation
me...
Version 7 section
• brief discussion
Good PFM overcomes donor risks of using country systems – increasing
development assi...
Version 7 section
• brief discussion
3030
PFM systems are used to increase transparency of government plans,
procurement, ...
Version 7 section
• brief discussion
Therefore, PFM has a critical risk management role for developing
country governments...
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Role of Public Financial Management for Risk Management in Developing Country Governments

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Describes how good budget planning and execution practices can help with risk management for developing countries

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Role of Public Financial Management for Risk Management in Developing Country Governments

  1. 1. Version 7 section • brief discussion Role of Public Financial Management in Government Risk Management Doug Hadden
  2. 2. Version 7 section • brief discussion Risk Management is complex, requiring the coordination of many government entities, but is rarely coordinated in developing country governments
  3. 3. Version 7 section • brief discussion National budgets are typically coordinated, involve all government entities and designed to follow policy and …
  4. 4. Version 7 section • brief discussion …goals – including risk management goals
  5. 5. Version 7 section • brief discussion Public Financial Management (PFM) refers to legislation, practices and technology to support the budget cycle of planning, and execution (revenue & expenditures) 55 Government Budget Cycle
  6. 6. Version 7 section • brief discussion Effective PFM can reduce government risks, act as early warning
  7. 7. Version 7 section • brief discussion Paris Declaration and the Accra Agenda for Action has goals of increased use of country systems by donors to reduce transaction costs and increase country-led reform Paris Declaration and Accra Agenda for Action Foreign Aid Transaction Costs
  8. 8. Version 7 section • brief discussion THE ROLE OF BUDGET PLANNING IN RISK MANAGEMENT
  9. 9. Version 7 section • brief discussion Budget planning is about the future and should include risk mitigation and monitoring mechanisms
  10. 10. Version 7 section • brief discussion Scenario planning can run expenditure and revenue models based on risks such as natural disasters, financial crisis, pandemics Scenario Planning
  11. 11. Version 7 section • brief discussion The classification of risks and objectives within the chart of accounts shows spending on risks linked to macroeconomic analysis and probabilities Government Chart of Accounts
  12. 12. Version 7 section • brief discussion Multiple year public investment planning tied to critical infrastructure is supported through the Medium Term Expenditure Frameworks (MTEF) practice in PFM Medium-Term Expenditure Frameworks
  13. 13. Version 7 section • brief discussion Counter-cyclical mechanisms can be triggered in budget planning that creates appropriate budget controls in execution Counter-cyclical and pro-cyclical
  14. 14. Version 7 section • brief discussion Sustainability has increasingly become mainstream in government budgeting to reduce likelihood & impact of environmental crises Uganda and environmental budgeting
  15. 15. Version 7 section • brief discussion Effective incentives for public servants and the private sector to better manage risk can be funded through the budget
  16. 16. Version 7 section • brief discussion ROLE OF BUDGET EXECUTION IN RISK MANAGEMENT
  17. 17. Version 7 section • brief discussion Automated internal controls reduces corruption and fiduciary risks while ensuring compliance to fiscal rules Controls and automating governance
  18. 18. Version 7 section • brief discussion The use of PFM standards like Government Financial Statistics (GFS) provides governments with critical risk-related information that can be compared with other countries to help decision-making 1818 Accrual accounting in government
  19. 19. Version 7 section • brief discussion The move to accrual accounting by governments provides a better method to determine long-term value for risk investments Accrual accounting in government
  20. 20. Version 7 section • brief discussion Debt and liquidity management and the use of the Treasury Single Account (TSA) enables reducing debt and taking advantage of reserves to increase fiscal space to respond to crises Treasury Single Account
  21. 21. Version 7 section • brief discussion Financial information from revenue and expenditures provides early warning for decision-makers to make adjustments…
  22. 22. Version 7 section • brief discussion … for example, monitoring public finances enables predicting crisis related to revenue reductions well in advance
  23. 23. Version 7 section • brief discussion Physical execution of infrastructure and other critical risk mitigation investments can be tracked
  24. 24. Version 7 section • brief discussion Internal and external audit can include financial risk assessment to enable improving financial resilience 2424
  25. 25. Version 7 section • brief discussion CONCLUSION: ROLE OF PUBLIC FINANCIAL MANAGEMENT IN RISK MANAGEMENT FOR DEVELOPING COUNTRY GOVERNMENTS
  26. 26. Version 7 section • brief discussion Risk: it comes down the money properly invested
  27. 27. Version 7 section • brief discussion Budget planning and execution enables governments to invest in innovation and track results
  28. 28. Version 7 section • brief discussion 2828 Planning and monitoring reduces risk and enables investing in risk mitigation mechanisms
  29. 29. Version 7 section • brief discussion Good PFM overcomes donor risks of using country systems – increasing development assistance effectiveness, increasing the fiscal space Fiscal Space
  30. 30. Version 7 section • brief discussion 3030 PFM systems are used to increase transparency of government plans, procurement, execution and audit - to reduce the perception of risk by businesses and credit agencies Fiscal transparency in Timor-Leste
  31. 31. Version 7 section • brief discussion Therefore, PFM has a critical risk management role for developing country governments Government Risk Management Return on Investment

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