To what extent do public financial management systems support fiscal transparency and public accountability?

Abstract

This study examines the consequences of PFM systems in the context of developing countries. More specifically, the study first investigates the association between PFM systems, and both fiscal transparency and public accountability, and whether existing economic, political and social institutional oversight factors in developing countries (e.g., supreme audit institution (SAI) independence, parliamentary oversight, and female participation in political leadership) moderate the association between PFM systems, and both fiscal transparency and public accountability. Finally, it explores the role of PFM systems in terms of addressing the issues of potential opportunities for corruption during (and after) periods of national/global emergencies. To meet these objectives, the first stage involves a quantitative approach (i.e., regression analyses) using the largest country-level datasets to date. For the second stage, to complement our understanding of PFM systems during ‘normal periods’ by considering the impact of COVID-19, the study undertakes qualitative field research in three developing countries - Nepal, Sri Lanka, and Ghana. Our findings show that an improved PFM system is associated with an improved fiscal transparency and improved public accountability, and institutional factors have a partial positive moderating effect on association between PFM systems, and fiscal transparency and public accountability. While PFM reforms have resulted in some positive changes (e.g., digitalization) in the area of ‘accounting and reporting’, weak implementation and enforcement of existing PFM systems still appear to be an issue, and notably in the area of public procurement and oversight. This study contributes to the existing policy debates and academic literature by examining the role and impact of PFM in supporting fiscal transparency and public accountability with a focus on the role of national oversight institutions and the lessons learnt from the COVID-19 pandemic and beyond. Finally, a number of policy recommendations are put forward

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Identifiers

ORCID for Collins Ntim: orcid.org/0000-0002-1042-4056

ORCID for Alaa Zalata: orcid.org/0000-0003-2018-4313

ORCID for Faizul Haque: orcid.org/0000-0003-1556-3466

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