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Monday, December 1, 2008

Anita Angelovska-Bezoska Observations on PFM Reforms

Anita Angelovska-Bezoska, Chief Economist, Central Bank of Macedonia presented her observations on the objectives of PFM reforms, as well as her specific experiences implementing PFM reforms and require fiscal control, the strategic allocation of resources and efficient and effective use of those resources were the objectives of PFM reform in Macedonia.
Ms. Angelovska-Bezoska emphasized that the budget needs to be used as a macro fiscal tool and that fiscal strategy needs to be closely coordinated with monetary policies. She noted that there are trade-offs between fiscal controls and strategic allocation of resources. Tight financial controls are generally needed at the beginning of any reform, but these controls needed to be loosened. This forms part of a gradual approach to achieving all three goals.

Budget reform is also challenging. Budget preparation needs to focus on results, responsibility with a medium term perspective according to Ms. Angelovska-Bezoska. Budget execution reforms required improving cash management with the Treasury Single Account (TSA) being the most visible result. TSA is a prerequisite to effective cash management and reducing borrowing costs. During the questions and answers, she noted that the change from bank accounts as appropriation to appropriation control with a TSA is difficult for many practitioners to understand.

Commitment control is also needed for timely expenditure execution with real-time reporting.
The Government of Macedonia introduced more flexibility than line-item budgeting by introducing aggregate appropriation controls. Ms. Angelovska-Bezoska remarked that line-item budgeting requires too much administration of budget transfers and provides few benefits.
This public financial management reform has changed the role of audit from the focus on compliance to results.

Ms. Angelovska-Bezoska stressed that successful reform depends on the country situation. A country with a good budget situation can reform faster. Donor coordination is key. External Technical Assistance (TA) can be very helpful to assist in reform.

Mon 130 Angelovska
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Mon 130 Angelovska Sp
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