BUDGET%20

1
BUDGET FINANCIAL MANAGEMENT

• AT SUBNATIONAL LEVELS
• LAC Experience

2
Truth Fallacy of Big Numbers

• 14,000 municipalities
• More than 200 intermediate governments
• Less than 1 percent have access to direct credit
• All of them can accumulate indirect, floating and
  contingency debt
• With little or no political or auditing controls

3
Concentración geográfica del stock de deuda
municipal (2003)
4
Deuda municipal a nivel departamental (2002)
5
Deuda municipal a nivel departamental (2002)
6
Deuda registrada por tipo de acreedor (como
porcentaje del total de la deuda registrada)
7
Where does the problem lie?

• Anticipated payments, commitments and within the
  year budget reforms are not adequately reflected
  in budget provisions, treasury or medium term
  fiscal planning
• High moral hazard and/or lack of adequate
  accounting and provisioning for labor and
  judicial (contingency) liabilities
• Poor revenue forecasting Weak enforcement of
  hard budget constraint

8
What are the countries doing?Ex-Post Visit to
the ABC

• Colombia Accounting back at the center
• Mexico ERP for automatic linkages and
  adjustments between commitments (procurement and
  legal liabilities), budgeting, disbursements and
  fiscal plans
• Integrated Financial Management (now part of ERP)
  as standardization tool
• Accounting comes back to Min. of Finance

9
What is still missing?

• Slow transition towards international accounting
  standards
• Resistance to standardization (federal)
• Resistance to ERP as a means towards reform of
  structures and personnel