How should governments evolve their PFM systems to be better prepared for future crises?
Public financial management (PFM) is the way governments manage public resources, including collecting revenue and controlling expenditure, and the impact such resources have on the economy and society. How good a government is at PFM made a real difference to citizens and businesses during the Covid-19 pandemic. Quite literally, it could be the difference between living and dying, survival or bankruptcy.
We used a global survey of 1,500 respondents, discussions with 45 practitioners, and desk research to answer two research questions:
- How well have governments responded to the pandemic?
- What are the future challenges for PFM arrangements?
Our report, Rethinking Public Financial Management (PDF, 3.8 MB), captures and discusses answers to these questions. There are noticeable differences between regions and there are some areas of concern, such as whether there is sufficient transparency and accountability about the extra money spent to tackle the pandemic. (The IMF reported global spending of $16 trillion in the year to April 2021, which is more than the annual gross domestic product of China.)
The report has 21 actionable recommendations. The key recommendation is governments must invest in their PFM systems now so that they are flexible and resilient enough to deal with crises in the future.
Whether and when crises arise in the future, improving PFM will help governments in the delivery of all their services and achieving the UN's Sustainable Development Goals.
