(A)

In developing a public financial management system, referencing the PEFA framework, focus would be placed on the following seven pillars:

• Budget reliability. The government budget is realistic and is implemented as intended. This is measured by comparing actual revenues and expenditures (the immediate results of the PFM system) with the original approved budget.
• Transparency of public finances. Information on PFM is comprehensive, consistent, and accessible to users. This is achieved through comprehensive budget classification, transparency of all government revenue and expenditure including intergovernmental transfers, published information on service delivery performance and ready access to fiscal and budget documentation.
• Management of assets and liabilities. Effective management of assets and liabilities ensures that public investments provide value for money, assets are recorded and managed, fiscal risks are identified, and debts and guarantees are prudently planned, approved, and monitored.
• Policy-based fiscal strategy and budgeting. The fiscal strategy and the budget are prepared with due regard to government fiscal policies, strategic plans, and adequate macroeconomic and fiscal projections.
• Predictability and control in budget execution. The budget is implemented within a system of effective standards, processes, and internal controls, ensuring that resources are obtained and used as intended.
• Accounting and reporting. Accurate and reliable records are maintained, and information is produced and disseminated at appropriate times to meet decision-making, management, and reporting needs.
• External scrutiny and audit. Public finances are independently reviewed and there is external follow-up on the implementation of recommendations for improvement by the executive.                                                                                                                                                                                                                                                                                                                                (B)

  Public financial management links financial resources of a country to the service delivery to the citizens. The three outcomes of an effective public financial management are:

  • Aggregate fiscal discipline: The primary objective of public financial management is to uphold effective control over the entire budget and manage fiscal risks efficiently. This outcome necessitates that governments maintain fiscal discipline, ensuring responsible management of public funds.
  • Strategic allocation of resources: A fundamental goal of public financial management systems is to ensure that resources are allocated strategically to priority areas of government policy and plans. This involves the meticulous planning and execution of the budget in alignment with government priorities, aimed at achieving policy objectives effectively.
  • Efficient service delivery: Public financial management aims to collect revenues and allocate them to the provision of public services in an efficient and effective manner. This outcome requires the prudent utilisation of budgeted revenues to deliver optimal levels of public services within the constraints of available resources, thereby enhancing the overall efficiency and effectiveness of service delivery.