Tailored Approach to Managing Public Finances

A new book by the IMF--Public Financial Management and Its Emerging Architecture--looks at reforms introduced by governments over the past two decades to improve management of public finances. These innovative ideas and reforms are changing the landscape of public finances and eventually aim to fundamentally change the way governments manage the public’s money.

The global financial and economic crisis highlighted the importance of sound public financial management in ensuring that well-designed fiscal policies are implemented effectively. Sound management of public finances means maintaining a sustainable fiscal position, allocating resources efficiently, and delivering public goods and services effectively.

The book looks at how reforms to public financial management make use of new information, processes, and rules to change the behavior of politicians and public servants to counter the ongoing challenges of managing government’s money. As identified in the book, too often the tendency for policymakers is to spend rather than save in good times; to focus on the short term; and to ignore the future costs of new policies, underlying fiscal risk, and the true state of public finances.

“The global crisis has highlighted that reforming governments’ management of public finances is no longer an option but a necessity. There is no ‘one-size-fits-all’ solution—reforms need to be tailored to countries’ individual circumstances,” said IMF Deputy Managing Director, Min Zhu, who addressed officials, journalists, and academics gathered at a special seminar to discuss the findings in the book.

IMF Survey article 

Book launch and Seminar on Public Financial Management and Its Emerging Architecture

Background and comments

Financial System Still Needs to Be Fixed

The financial system still has not been fixed and remains dangerous and fragile, says Anat Admati of Stanford University and Martin Hellwig from the University of Bonn in their book The Bankers’ New Clothes: What's Wrong with Banking and What to Do about It.  Banks remain too highly leveraged and debt is addictive. But the system can still be fixed, they argue.

Anat Admati and Martin Hellwig speak at the Peterson Institute and discuss whether banking reforms require the sacrifice of lending and economic growth. They outline an ambitious proposal to shore up financial systems and prevent future financial crisis.




Read a review in Finance & Development magazine

Admati exposes the flaws in the banking system that could trigger another financial collapse, and lays out a plan to fix it. She speaks her to Stanford Business.




Report card on global financial reform.

A Trade-off Between Credit and Welfare

The Land of Too Much: American Abundance and the Paradox of Poverty, by Monica Prasad, presents a simple but powerful hypothesis that addresses three questions: Why does the United States have more poverty than any other developed country? Why did it experience an attack on state intervention starting in the 1980s, known today as the neoliberal revolution? And why did it recently suffer the greatest economic meltdown in seventy-five years?

Monica Prasad is Associate Professor of Sociology and Faculty Fellow in the Institute for Policy Research at Northwestern University.

"Prasad’s history leapfrogs from the early New Deal to the 1970s, when economic stagnation led both Republicans and Democrats to deregulate finance to make credit even more available. At this point, we come to the familiar tale of Americans taking on too much debt, leading to speculative bubbles and the 2008 financial meltdown.
"History is where Prasad’s book runs into problems."
Read a review in Finance & Development magazine.

Prasad in the New York Times

Harvard University Press