Unlocking opportunities through better public finance management
OMFIF, in collaboration with EY, has released a timely report on the urgent need for global transformation in public finance management systems. With public spending reaching almost a third of global gross domestic product, the report underscores the critical importance of modernisation for efficient and effective allocation of funds, particularly in the aftermath of the Covid-19 pandemic.
- Deficiencies in traditional PFM systems: There are significant shortcomings in traditional PFM systems, emphasising the necessity of establishing a robust connection between the purpose, spending and impact of public funds.
- Transition to programme budgeting: There needs to be a higher standard of accountability to create a clear link between budget allocation and spending activities.
- Integrated information management systems: The disparate nature of information management systems makes tracking and reconciling spending across different government levels and service providers a costly and time-consuming exercise.
- Operational efficiency and transparency: Implementation of an integrated system is projected to yield operational efficiency savings, improve transparency and enhance allocative efficiency, ultimately benefitting policy formulation and execution.
- Unlocking sustainable finance opportunities: Transparent and impact-based finance management plays a pivotal role in opening up new avenues for sustainable finance. Transparent reporting is crucial for attracting funds from investors with green or social mandates.
- Call for action: Governments are urged to overhaul operational PFM systems, ensuring policy-makers have the information they need and redefining effective spending. This sets the stage for the next phase of research in collaboration with EY.