Subnational Public Financial Management: Institutions and Macroeconomic Considerations

IMF Working Papers, June 1, 2005

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Subnational Public Financial Management: Institutions and Macroeconomic Considerations

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Bibliographic details

• Authors: Maria A Albino-War, Raju J Singh, Ehtisham Ahmad
• Published: June 1, 2005
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451861273.001

Executive summary

• Transparent public financial management at the subnational level requires institutions and processes that mirror those needed at the central government level.
• Mirroring central government PFM systems helps generate better accountability and competition among different subnational governments, which are critical elements for good governance and efficiency of decentralized administrations.
• Subnational debt has implications for overall macroeconomic stability that concern the central government.
• The paper identifies key components of subnational public financial management, with particular focus on subnational debt monitoring and management.

Major themes and findings

• Institutional design:
  • Subnational PFM should include institutions and processes analogous to those at the central government level to ensure accountability and competitive pressures among subnational units.
• Accountability and governance:
  • Better accountability and competition among subnational governments are critical elements in ensuring good governance and efficiency of decentralized administrations.
• Macroeconomic considerations:
  • Subnational debt carries implications for overall macroeconomic stability that are of concern to the central government.
• Subnational debt monitoring and management:
  • The paper places particular emphasis on subnational debt monitoring and management as a key component of subnational PFM systems.

Policy implications and recommendations (implied by focus)

• Align subnational PFM institutions and processes with central government standards to strengthen accountability.
• Establish robust subnational debt monitoring frameworks to manage fiscal risks that could affect macroeconomic stability.
• Promote competition and transparency among subnational governments to improve efficiency in decentralized administrations.

Content in this bundle

• 1. Brazil: Subnational Primary Balance, 1992–2003
  • 1. Brazil: Subnational Primary Balance, 1992–2003 (Markdown version)
  • 1. Brazil: Subnational Primary Balance, 1992–2003 (PDF)