Vaseva Cerelala presenting the drawing with a theme of public finance management made by a local artist, Tui Ledua from Kanalevu Illustrations & Animations.

What do you know about how the government manages money (public finance management as they call it)? Probably about as much as I did before I followed a course available here. Want to know what I learned? Here it goes.

By Definition

Public Finance Management (PFM) in its most basic definition is simply how governments manage their resources, their public finances. If like me, you have wondered how the government decides which schools, roads and bridges to build and how a public hospital gets enough doctors or vaccines to serve the public, then you are well on your way to understanding PFM. So, how does government decide? One factor is the information available to them on where the money is needed the most. In 2020, our partners in Fiji, Tonga, Tuvalu, and Vanuatu asked street vendors and farmers about how the closure of borders was impacting them. This helped the government understand how to help informal workers until then left out of financial support packages.

PFM is about the money that is collected and spent by the government. It involves the laws, institutions, system processes and rules used by governments for allocating public funds. Those rules also guide public spending, accounting for the use of funding and conducting checks through audits.

But public finances are also about how much money is collected and how much can be spent. In Tonga for instance, the rule about how families would pay for water was about to change, and our partners the Civil Society Forum Tonga helped show how this would prevent women access essential reserves. This information enabled Parliament to open national consultations on the price and access of water (how much can the government collect from payments and how much they should spend on improving the pipes). 

These seemingly technical and sector-based decisions are all connected to fiscal policy choices. A good public finance system is one where all of the services provided by government is managed in a way that focuses on raising the standard of living of people, and at the same time, ensures the country is not completely out of pocket or stagnating economically (macro-economic stability).

Participants sharing ideas at the EU funded UNDP Public Finance Management Modules Pilot Training (Photo: PIANGO)
PFM illustration by Kanalevu Illustrations & Animations (Photo: UNDP)
Tui Ledua from Kanalevu Illustrations & Animations drawing on the topic of public finance management (Photo: PIANGO)

The Course

The UN Development Programme (UNDP) through its Public Finance Management Project with support from the European Union has recently developed a set of modules to provide people with a basic understanding of PFM. The video below outlines what they cover - basically the why, who, how and when public money is spent. I completed them together with the most diverse group of civil society members, some actively participating in budget submission work and budget scrutiny and some doing community work. From this training, I learned about fiscal policy and the choices that result in potholes! Light was shed on areas of entry whereby civil society groups can link in and perhaps find a space to influence budget decisions.

The first set of entry points is pre-budget adoption, where governments decide the national priorities (national development plans), how much money will be spent overall (fiscal policy) and who will spend the money (Ministry of Health or City Council). The second set of entries is post-budget, while the money is being collected and spent (budget execution), documented (accounting and reporting), and checked on (control and audit). All of this is managed through institutions (government, parliament, Auditor General) dedicated to making a difference to people’s lives. As you can see, the coverage of public finance is broad and its rules based on principles of effectiveness, efficiency and transparency.

The People

Sometimes the most important thing is to re-think of how all of this happens: should you always choose the cheapest option, or should you spend more on better quality and greener products? For this, you need to look into the rules and regulations of buying and procuring, which is what our partners in Solomon Islands are doing. If you want to see if the government followed the rule, you should inquire with the Auditor General’s Office. Our partner the Pacific Association of Supreme Audit Institution, is doing just that.

In Fiji, the Fiji Council of Social Services (FCOSS) and the Citizens Constitutional Forum (CCF) chose to focus on budget submissions. This is an opportunity for citizens, businesses, or any group to share their views with government on what should be included in the budget. Budget submissions usually respond to budget consultations. They are happening in Fiji right now, don’t miss your chance to have a say.

The government will consider budget submissions if they align with its National Development Plan. Every government must and will have a sort of development plan to use as a basis for their work. It articulates what needs work (health or education) to achieve a vision of development. The Fiji Government has a five-year and a 20-year development plan.

PFM is an issue that needs everyone’s attention whether you’re a taxi driver, a farmer, a chief executive officer in a multi-national corporation or a market vendor selling produce in the market, we all pay taxes, either through income or through other forms of taxes and PFM affects us all. This makes all of us equally responsible to be informed, to share credible information and to use that information for the betterment of our people and our country.

If you're interested, you can learn more here. And if you're passionate, you can apply for the Public Finance Small Grants to make a difference. The deadline is 22nd April 2021.

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