Public Financial Management: Basic Concepts A process of effectively handling the public purse By Arjun P. Pokhrel Joint FCG

PFM is all about public money .

Presentation Outline PFM concept PFM Cycle Planning aspects of PFM Budgeting aspects Audit and scrutiny Nature of PFM PFM issues in Nepal Reform areas

PFM Concept Public financial management is a system , processes and institutions to handling public purse in a prudence manner

The PFM Cycle Optimum utilization Planning /Policy Budgeting Budget implementation. Accounting, recording and reporting Scrutiny and Audit

Planning Aspects of PFM Long term plan : guide Medium Term Plans Annual plan, policy and programs Line ministry programs

Budgeting Aspects .

Budgeting: Converting Programs into monetary term Budget Formulation: Deciding Budgetary ceiling Circulation of ceiling Preparation of budget by line agencies Negotiations Accumulation : expenditures and revenues Presentation before parliament Parliamentary Approval

Budgeting..................... 2. Budget Execution: authorization procurement revenue collection , loans and grants accounting , recording and and reporting internal control

Audit and Scrutiny Internal Audit: judging the sufficiency of internal control system and suggesting for ongoing corrections External Audit: overall financial judgment for future corrections and reforms Parliamentary Scrutiny: Audit over auditors and corrections over the policies External scrutiny: correction over the behaviors , for eg. CIAA Peoples' voice : overall correction

Nature of PFM PFM is a creature of law .Due process is always necessary Results should be targeted towards the people at large Public accountability is the heart of PFM It is the fundamental pillar of governance

Issues of PFM in Nepal Planned vs ad hoc Budget: incremental Due process breached? Results neglected Problems in procurement Weak accounting , recording and reporting Lack of performance audit Parliament missing : frequent Weak governance: utilization of resource Articulating peoples' voice

Reforms Areas MTEF/MTBF Timely budget: budget law? Treasury management : core TSA IFMIS Procurement practices reforms Accounting Reforms: NPSAS ,commitment acc. Internal Audit Reforms and focus on performance audit Parliament and people voice Greater Transparency

Discussion Session YOUR QUESTIONS?

. Thank You