Executive Program in Public Financial Management John F. Kennedy School of Government Harvard University July 10 - 28 2006 Contents Week 1 July 10 - 14 July 10 Day 1 Introduction Module 1 Political Economy and the Macroeconomics of the Budget Unit 1 – Public Financial Management: Definitions and Frameworks Unit 1 - Public Financial Management: Definitions and Frameworks July 11 Day 2 Module 1 Political Economy and the Macroeconomics of the Budget Unit 2 - The Budget Constraint Unit 2 – The Budget Constraint Unit 3 – Growth July 12 Day 3 Module 2 How to look at a budget Unit 1 - Budget Structure and Classification Unit 1 – Budget Structure and Classification Unit 1 – Budget Structure and Classification July 13 Day 4 Module 2 How to look at a budget Unit 2 - Basics of Budget Analysis Unit 2 – Basics of Budget Analysis Module 1 Political Economy and the Macroeconomics of the Budget Unit 4 – Role of the Government Sector Unit 5 - Fiscal Policy and Financing July 14 Day 5 Module 3 Accounts and Financial Reporting Unit 1 – Basics and Bases of Accounting Unit 2 - Financial Reporting Module 1 Political Economy and the Macroeconomics of the Budget Unit 6 - Debt Unit 7 - Globalization - 1 –
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Executive Program in
Public Financial Management
John F. Kennedy School of Government Harvard University
July 10 - 28 2006
Contents
Week 1 July 10 - 14
July 10 Day 1 Introduction Module 1 Political Economy and the Macroeconomics of the Budget Unit 1 – Public Financial Management: Definitions and Frameworks Unit 1 - Public Financial Management: Definitions and Frameworks
July 11 Day 2 Module 1 Political Economy and the Macroeconomics of the Budget Unit 2 - The Budget Constraint Unit 2 – The Budget Constraint Unit 3 – Growth
July 12 Day 3 Module 2 How to look at a budget Unit 1 - Budget Structure and Classification Unit 1 – Budget Structure and Classification Unit 1 – Budget Structure and Classification
July 13 Day 4 Module 2 How to look at a budget
Unit 2 - Basics of Budget Analysis Unit 2 – Basics of Budget Analysis Module 1 Political Economy and the Macroeconomics of the Budget
Unit 4 – Role of the Government Sector Unit 5 - Fiscal Policy and Financing
July 14 Day 5 Module 3 Accounts and Financial Reporting
Unit 1 – Basics and Bases of Accounting Unit 2 - Financial Reporting
Module 1 Political Economy and the Macroeconomics of the Budget Unit 6 - Debt Unit 7 - Globalization
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Week 2 July 17 - 21
July 17 Day 6 Module 4 Costs in the budget Unit 1 - Principles of costs and costing
Unit 2 - Price based budgeting and unit costing Module 5 Budget execution Unit 1 – Commitments, Disbursement, Cash Management
July 18 Day 7 Module 6 Financial Information Systems Unit 1 – Managing IT Unit 2 – Integrated Financial Management Information Systems (IFMIS) Unit 3 – IFMIS Case Studies
July 19 Day 8 Module 7 Budget Planning and Implementation Unit 1 – Financial Calendar Unit 2 – Planning the Budget Unit 2 - Planning the Budget
July 20 Day 9 Module 8 Aggregate Budgeting and Performance Unit 1 – Moving from External to Internal Control Unit 2 – Performance Budgeting Unit 2 – Performance Budgeting
July 21 Day 10 Module 9 Assessing Financial Systems Unit 1 - Guidelines Module 10 PFM Reform Unit 1 – Frameworks of PFM Reform Unit 2 – Case Studies of PFM Reform
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Week 3 July 24 - 28
July 24 Day 11 Module 11 Political Accountability and Legislative Oversight Unit 1 – Legal Framework Unit 2 – Legislative Oversight Unit 2 – Legislative Oversight
July 25 Day 12 Module 12 Decentralization
Unit 1 - Principles and Practice of Decentralization Unit 1 – Principles and Practice of Decentralization Unit 2 – Issues in Financing Local and Regional Governments
July 26 Day 13 Module 13 Revenue Policy Reform
Unit 1 – Framing Revenue Policy Unit 2 – Managing Tax Reform Unit 2 – Managing Tax Reform Module 14 Group Presentations Unit 1 – Group Presentations
July 27 Day 14 Module 14 Group Presentations Unit 1 - Group Presentations Unit 1 – Group Presentations Unit 1 – Group Presentations Unit 1 – Group Presentations
July 28 Day 15 Module 15 Program Conclusion
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Harvard 2006 Public Finance Program
July 10 - 28 2006
Objective: The overall objective of the program is to provide a basis for better understanding of core issues in public finance management as they relate to the functions of the legislative and executive budget managers. Learning Outcomes: At the end of the course participants should be able to explain the key requirements of a good public finance system and be able to evaluate the various systems and practices they encounter during their normal duties.
Content Public finance management is a large area for study, and a short course cannot cover all of it. This course focuses on the main public finance issues that participants will encounter, starting with a simplified study of the political economy and macroeconomic background to the budget in order to broaden understanding of the different approaches to the role of government, the fiscal deficit and associated issues. A theme of the course is the tension between reform, which moves towards aggregate budgeting and longer term budget planning, and traditions of incremental budgeting which are hard to change. There many actors in a budgetary system – accountants, economists, sectoral managers, public sector workers, legislatures. Systems change requires understanding of all perspectives, and the course covers the basics of public sector accounting, the role of the legislature and, on a broader front, different approaches to the role of government. Case studies are drawn from contemporary examples, many of them being work in progress, either in which the core resource persons are directly involved or peripherally. The studies are intended to give insights into practical questions facing governments as they try to improve their public finance management systems; and to provide a basis for participants to discuss and reflect on their own experiences. In addition, by studying the case materials in advance of the sessions participants will be able to raise issues that interest them in the context of the presentations. The coverage of this program is extensive. There will be areas with which participants are not familiar, and which will not be fully dealt with in the sessions. It is hoped that enough stimulus is provided for participants to do their own research – in particular there is much material on the internet, including the OECD site which is perhaps the highest quality.
Methodology The methodology of the course is designed so that the diverse levels of knowledge of public finance that are likely to be found in a typical group of course participants are taken into account. Those with limited knowledge should be able to gain core skills, while those with more familiarity with the basic issues will encounter aspects of public finance with which they may be less familiar. The course is divided into modules and each module is built on units. Each module will include some or all of the following:
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• Powerpoint slides, mainly for reference and structure. • Course notes / papers for selective sessions that summarize key issues and raise
talking points that participants can pursue in their own researches and in the sessions if they wish. The course notes are not academic pieces but summaries of thoughts that arise from the literature and from experience. The notes need to be read and discussed in the small groups prior to the next day’s session.
• Selected readings from the literature on the subject. Each Module has a set of readings, and although participants may not be able to get through all the readings during the course, they can refer to them later. Those readings that are required for the sessions will be indicated in advance. The main course reader is the Asian Development Bank’s public expenditure manual, which provides lucid and comprehensive accounts of most aspects of public expenditure (less on revenue).
• Studies of contemporary cases of the subject matter. There are different types of cases. Some will require participants to read a few pages of material, and reading should be done before the session. Participants will discuss cases in small groups and in the complete group. Other cases are presented with powerpoint. All the cases are intended to highlight specified technical issues raised in the course materials, and to bring out certain issues that are not contained in the presentations.
• Discussion: participants will already have experience in many of the areas covered by the course, and the approach will emphasise sharing of experiences between participants in discussions.
These structure of the course can be considered in the context of the following frameworks:
Framework 1: Framework of Public Financial Management
Transaction Budgets Accounts Cash Management Reporting and Audit Information Technolo
get Planning
gy
Legislative Policy Development Appropriation Expenditure Evaluation
The Platforms of Public Financial Management
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Macroeconomy Response to crisis
DEFICIT INSTITUTIONAL
Revenue Expenditure control
Expenditure planning
Forecasting Revenue Reforms
Accounts reform
Expenditure control
Allocation techniques
Budget formats
Allocation formulae
Costing MTEF
Output Programme Performance
Legislature & Structure of Government
Privatisation & SOEs
Tax reforms
Chart of Accounts
Accrual Double Entry
Indicators & Targets
ALLOCATION
Decentralisation
Political economy
Framework 2: Interactions within a Public Finance System
In the context of Framework 1 good public finance systems perform all three functions well. The most basic task is to get the transaction platform functioning efficiently as this provides effective control as well as information for management, planning and oversight. Budgets should be driven by a policy framework and not by ad hoc incrementalism. Accountability and contestability of budgets is provided by legislative oversight. The three functions overlap. For example, information from the transaction platform is needed to formulate budget strategies and programming as well as facilitates evaluation of expenditure. Framework 2 illustrates the same set of interconnections, showing the potential impact of reform and change in public finance systems. Note the pivotal role of the Chart of Accounts, and how the structure of the budget influences and is influenced by all other parts of the system. During the program each module and unit will be located in their positions in these frameworks, thereby helping participants to see how each fits into the whole, and to appreciate how the program is sequenced.
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DAY 1 – Monday July 10
0900 – 1030, Monday July 10
Introduction Key Themes Outline of the programme Introduction of participants Introduction of faculty Introductory Reading: A Wildavsky, ‘A Budget for all Seasons? Why the traditional budget lasts’, Public Administration Review Vol 38, November 1978, pp 501-509.
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Module 1 - Political Economy and the Macroeconomics of the Budget
Objectives The purpose of this Module is to locate public finance management in the wider context of economics and growth. The module is divided into 7 units, which will last over 5 days.
Learning Outcomes
When participants have completed the Module and read the readings, they will be able to discuss in reasonably specific terms the macroeconomics of the budget and aggregate fiscal discipline (the deficit).
Contents of the Module Unit 1 – Public Finance Management: definitions and frameworks Unit 2 – The Budget Constraint Unit 3 – Growth Unit 4 – Role of the Government Sector Unit 5 – Fiscal Policy and Financing Unit 6 – Debt Unit 7 - Globalization
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1100-1230, 1400 – 1530 Monday July 10
Module 1 Unit 1 – Public Finance Management: Definitions and Frameworks
Objectives of the Unit To define the meaning of public finance management, and to set out practical frameworks for the analysis of public finance systems. Contents of the Unit What is public finance? Exercise and discussion on public money Frameworks we use to structure the program
Session Reading • Course Note: “Understanding the Concept of Public Money.”
• Allen Schick, A Contemporary Approach to Public Expenditure Management, Chapter 1 Overview.
• Allen Schick, “Does Budgeting Have a Future?” OECD Journal of Budgeting, 2(2), 2001, pp. 7-31.
Reference Reading
• S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian Development Bank, Manila, Chaps 1 & 2.
• Bailey S, ‘Philosophical and Analytical Frameworks for Public Finance’, Chap 1 in Bailey S, Strategic Public Finance, Palgrave Macmillan, 2004, pp 1 – 25.
• Bailey S, ‘The Relative Scale of Public Finance’, Chap 3 in Bailey S, Strategic Public Finance, Palgrave Macmillan, 2004, pp 53 – 85.
Preparation for Tuesday Read Fischer and Easterly
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Day 2 – Tuesday July 11
0900 – 1230 Tuesday July 11
Module 1 Unit 2 - The Budget Constraint
Objectives of the Unit
To give a basic idea of how budgets are structured and the algebraic conventions used for government expenditure; to introduce in more detail the definitions of the fiscal deficit; and to apply the analytical framework to tables of the operations of government.
Contents of the Unit
The ‘iceberg’ of public finance Definitions of the deficit The budget constraint
Exercise & Case Study
• reading a Table of Operations of Government
Session Reading
• Course Note 'Public Finance and the Role of Government'
• Fischer S & W Easterly, ‘The Economics of the Government Budget Constraint’, World Bank Research Observer, Vol 5 Nr 2, July 1990, pp 127 – 142.
• IMF, The Macroeconomics of Managing Increased Aid Inflows: Experiences of Low-Income Countries and Policy Implications, August 8, 2005.
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1400 – 1530 Tuesday July 11
Module 1 Unit 3 – Growth
Objectives of the Unit
To obtain an overview of the various factors that economists believe – based on either theory of statistical evidence – cause some countries to perform better than others, as measured by the rate of growth of GDP.
Contents of the Unit. • Domestic factors from neoclassical growth theory (Solow):
investment, education, and low population growth • Total Factor Productivity: technical and managerial innovation • Favorable environment for capitalism: evolution of social systems, economic freedom,
political and economic stability, development of financial system, and macroeconomic stability
• Geography: tropics vs. temperate, size, convenience for trade, natural resources • Convergence • Openness • The ‘natural resource curse’ • Case: East Asia’s success
Session Reading • Jeffrey Frankel, “Why Economies Grow the Way the Do,” Canadian Bureau of
Economics, September, 1998.
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Module 2 - How to look at a budget
Objectives The objective of this Module is to analyse how budgets are structured and classified, and to introduce basic methods of budget analysis. The module consists of two units which will be covered over two days.
Learning Outcomes After completing the Unit and its associated readings participants will be able to
• describe the principles of budget structure, classification and coding • identify the main elements in a budget structure • articulate the drivers of budget reform and the move from incremental ‘traditional’
systems to more outcome oriented systems
Contents of the Module Unit 1 – Budget Structure and Classification Unit 2 – Basics of Budget Analysis
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DAY 3 – Wednesday July 12
0900 - 1230 Wednesday July 12
Module 2 Unit 1 – Budget Structure and Classification
Objective of the Unit
To introduce the principles of budget structure and classification, international standards and approaches to design of classification systems; and the function and purpose of the Chart of Accounts. Contents of the Unit Principles of Classification International guidelines and standards Chart of Accounts
Case studies and exercises • Exercise – analysis of COFOG • Case Study – Design and Development of the Ethiopian Chart of Accounts
Course Reading • Course Note: “How to Look at a Budget.”
• Richard Allen and Daniel Tommasi, Managing Public Expenditure: A Reference Book for Transition Countries, OECD, 2001, Chapter 4, pp. 121-142.
Reference Reading • IMF, Government Finance Statistics Manual, 2001, pp. 3-5, 35-110, 156-159,
164-184.
• IMF, A Manual on Government Finance Statistics, 1986, pp. 143-174. • S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian
Development Bank, Manila, Chap 3 (esp) pp 69-77, 230-231.
• Ministry of Finance and Economic Development, Federal Democratic Republic of Ethiopia, Budget Reform Design Manual Version 2.1, February 17, 2000, pp. 7-38, 39-62.
• http://unstats.un.org/unsd/cr/family2.asp?Cl=4 and http://unstats.un.org/unsd/cr/registry/regcst.asp?Cl=4&Lg=1
Objectives of the Unit To introduce the main elements of analysis of budget structure and format, and the different ways of approaching budget analysis, using selected budgets as case studies.
Contents of the Unit
• Types of budget • Comprehensiveness • Discretion • Accountability
Case studies • Jamaica, Lebanon, Viet Nam, India, Ghana
Course Reading • Course note: How to look at a budget
1400 – 1530 Thursday July 13
Module 1 Unit 4 – Role of Government
Objectives of the Unit
To consider the proper balance between the public and private sector, and to define some key concepts.
Contents of the Unit. • Key concepts in public spending • Proper role of the public sector: How big should it be? • How are outlays financed: taxes, domestic borrowing, monetization, foreign borrowing • Budget balance concepts.
Course Reading • ‘Budget deficits: Dicing with Debt,” The Economist, August 23, 2003, p. 11. • Martin Feldstein, “The Role for Discretionary Fiscal Policy in a Low Interest Rate
Environment,” NBER Working Paper No 9203, September 2002. • Drazen and Brender, “Political Budget Cycles in New versus Established
Democracies,” NEBR Working Paper No. 10539, June 2004.
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1600 – 1730 Thursday July 13
Module 1 Unit 5 – Fiscal Policy and Financing
Objectives of the Unit To survey models of how fiscal policy (government spending, taxation and borrowing) interacts with economic growth, the current account deficit, and political variables. Contents of the Unit. • Some important macro models • Some political economy models
Course Reading • Drazen and Brender, “Political Budget Cycles in New versus Established
Democracies,” NEBR Working Paper No. 10539, June 2004.
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Module 3 Accounts and Financial Reporting
Objectives The purpose of this Module is to review government accounting, reporting procedures, activity based costing and strategies of ‘appropriate practice’ for developing countries to evolve their accounting systems.
Learning Outcomes After completing the Module and its associated readings participants will
• be knowledgeable of simple double entry bookkeeping operations and how expenditures are accounted
• explain the different bases of accounting (cash and accrual) and understand their applications
• familiarity with different kinds of government financial statements • familiarized with international standards of accounting • understand an ‘appropriate’ strategy of evolving accounting systems in
developing countries from cash to full accrual basis
Contents of the Module Unit 1 – Basics and Bases of Accounting Unit 2 – Financial Reporting
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DAY 5 – Friday July 14
0900 – 1030 Friday July 14
Module 3 Unit 1 – Basics and Bases of Accounting
Objective of the unit This Unit locates accounting within PFM and outlines the basics and bases of accounting.
Contents of the unit
Accounting and PFM Reform Accounting concepts
• Methods of book-keeping (single, double entry; debit / credit) • Bases of accounting (cash, modified cash, modified accrual, accrual) • The accounting process
Exercise, Discussion & Case Studies
• Treatment of accounting transactions from a cash, modified-accrual and full accrual basis.
• Athukorala S.L, and B. Reid, ‘Case: A Week in the Life of a Small Country,’Accrual Budgeting and Accounting in Government and its Relevance for Developing Countries, Asian Development Bank, 2003, p. 6.
• Richard Allen and Daniel Tommasi, ‘Case: Comparison of Accounting Bases,’ Managing Public Expenditure: A Reference Book for Transition Countries, OECD, 2001, Chapter 11, pp. 293-294.
Course Reading
• Richard Allen and Daniel Tommasi, Managing Public Expenditure: A Reference Book for Transition Countries, OECD, 2001, Chapter 10.
• Athukorala S.L, and B. Reid, Accrual Budgeting and Accounting in Government and its Relevance for Developing Countries, Asian Development Bank, 2003, Chapter II, pp 1-14.
Reference Reading • Decentralization Support Activity, Oromia Region Accounting System,’ Volume
III, Version 1.0, April 2005.
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1100 – 1230 Friday July 14
Module 3 Unit 2 Financial Reporting
Objective of the unit The purpose of this Unit is to introduce government reporting and select standards of reporting Contents of the unit
• Different types of financial statements • Standards of financial statements
Exercise, Discussion & Case Studies
• Statements of different countries
Course Reading
• IFAC, Financial Reporting Under the Cash Basis of Accounting, January 2003, pp 37-52.
• IFAC, IPSAS 1 Presentation of Financial Statements, May 2000, pp 59-69.
• S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian Development Bank, Manila, Chap 11.
Reference Reading • Robert Kravchuk and William Voorhees, ‘The New Government Financial
Reporting Model Under GASB Statement No. 34: An Emphasis on Accountability,’ Public Budgeting and Finance, Fall 2001, Vol 21, No 3, pp. 1-30.
• Australian Public Service, Beyond Bean Counting, Chap 6, pp 55 – 70.
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1400 – 1530 Friday July 14
Module 1 Unit 6 – Debt Objectives of the Unit An overview of the trouble countries can get into by borrowing too much, specifically the case of crises in emerging markets
Contents of the Unit. • Spreads in emerging markets and their determinants • Debt crises: inflow stage, outflow stage, crisis stage • Management of crises • Debt dynamics
Course Reading • Kenneth Rogoff, “This Time It’s not Different,” Newsweek International, February
16, 2004.
1600 – 1730 Friday July 14
Module 1 Unit 7 – Globalization Objectives of the Unit Overview of the increasing cross-border integration of markets through trade.
Contents of the Unit. • How far has globalization gone • The effects of trade openness on growth • Effects of globalization on other objectives • Global Governance
Course Reading Jeffrey A. Frankel, “External Opening and the World Trade System,” written for the forum “From the Washington Consensus Towards a New Global Governance,” Fundacio CIDOB, Barcelona, Spain, September 24-25, 2004.
Reference Reading IMF, Chapter I, Economic Prospects and Policy Issues, in World Economic Outlook: Globalization and Inflation, available at: http://www.imf.org/external/pubs/ft/weo/2006/01/pdf/c1.pdf.
Module 4 – Costs, Cost Drivers, and Cost / Price Based Budgeting
Objectives The purpose of this Unit is to describe the principles and methods of costs and costing budgets, and to introduce price-based budgeting. The module is divided into two units.
Learning Outcomes After completing the Unit and its associated readings participants will be able to
• explain the different types of cost and how they are used • explain activity drivers and how output (price-based) costs are constructed • calculate unit costs
Contents of the Module Unit 1 – Principles of Costs and Costing Unit 2 – Price Based Budgeting and Unit Costing
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Day 6 – Monday July 17
0930 – 1030 Monday July 17
Module 4 Unit 1 – Principles of Costs and Costing
Objectives of the Unit To introduce types of cost and costing models
Contents of the Unit
Costs and policies – joining the dots
Cost analysis basics
• economic and financial costs • fixed and variable costs • direct and indirect (overhead) costs • avoidable costs and the cost decision tree • sunk costs • transaction costs
Cost drivers
Cost and responsibility centres
Costing systems • Cost-price-volume • Activity based costing
Case studies • Avoidable costs in New South Wales
Session Reading Background Briefing Paper: Perspectives on Cost Australian Public Service, Beyond Bean Counting, pp. 71-86.
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1100 – 1230 Monday July 17
Module 4 Unit 2 – Price Based Budgeting and Unit Costing
Objectives of the Unit To introduce price based budgeting & methods of constructing unit costs.
Contents of the Unit
• Price based budgeting • How to develop unit costs • Norm based budgeting
Case studies
• Thailand education costing; Viet Nam norm based budgets, UK roads budget
Session Reading Marc Robinson, ‘Output-Purchase Funding and Budgeting Systems in the Public Sector,’ Public Budgeting and Finance, Vol 22, No 4, Winter 2002, pp. 17-33.
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Module 5 – Budget Execution
Objective The purpose of this Unit is to introduce participants to the many components of budget implementation.
Learning Outcomes After completing the Unit and its associated readings participants will be able to
• describe the stages of budget execution • describe the main functions of budget management • describe what is required for good cash management • Different models of budget execution
Contents of the Module Unit 1 – Budget Execution
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1400 – 1530 Monday July 17
Module 5 Unit 1 – Budget Execution
Objective of the unit Present the concepts of budget execution: management of the budget, disbursement, different approaches to the Treasury function. Contents of the unit • control of appropriation, commitments
• votes on account
• projections of cash requirements
• disbursements, control of disbursements on line item versus zero treasury balance (aggregate projection)
• procurement of goods and services
• payable management
• cash management & treasury function
• maintaining adjusted budgets • commitment control internal audit
• agency period, closure of books
Session Reading
• S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian Development Bank, Manila, Chaps 7, 8, 9
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Module 6 – Financial Information Systems
Objectives The purpose of this Module is to provide financial managers an understanding of the challenge of effectively managing financial information systems. The Module examines what are Integrated Financial Management Information Systems (IFMIS) and the issues that need to be considered in procurement and implementation.
Learning Outcomes After completing the Module and its associated readings participants will be able to
• Understand the critical concepts for successfully managing a large scale systems implementation project
• Demystification of the technical jargon • Understand what a core IFMIS should be and an appropriate implementation
strategy • Understand the tradeoffs of an evolutionary versus ‘big bang’ approach to IT
reform • Understand the tradeoffs of a custom versus off-the-shelf solution • Awareness of the sources of risk and failure in IT projects
Contents of the Module Unit 1 – Managing Information Technology Unit 2 – Integrated Financial Management Information Systems Unit 3 – IFMIS Case Studies
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Day 7 – Tuesday July 18
0900 - 1030 Tuesday July 18
Module 6 Unit 1 – Managing Information Technology
Objective of the unit
To provide frameworks for financial managers to better manage financial information systems and IT reforms. The Unit presents the principal risks and sources of underperformance of IT systems and how to mitigate risk.
Contents of the unit Where do Systems Go Wrong Planning and Managing an IT Project: before and after
Discussion & Case studies
• United States • Poland
Session Reading • OECD, ‘The Hidden Threat to E-Government: Avoiding Large Government IT
Failures,’ PUMA Policy Brief No. 8, March 2001.
• Paul Dorsey, ‘Top 10 Reasons Why Systems Projects Fail,’ 2005. • Elana Varon, ‘For the IRS There’s No Easy Fix,’ Australian CIO, June 9, 2004.
• Shane Harris, ‘Taming the IRS’, June 14, 2004.
Reference Reading • OECD, ‘Management of Large Public IT Projects, Case Studies,” (United
Kingdom), May 2001. • National Audit Office, ‘Part 1: The Procurement of Major IT-Enabled Projects,’ in
Improving IT Procurement,’ November 5, 2004.
• Dorotinsky, B, ‘Implementing Financial Implementation System Projects’, (presentation) The World Bank, November 2003.
Module 6 Unit 2 Integrated Financial Management Information Systems (IFMIS)
Objectives of the unit
Understand what an IFMIS is and what needs to be considered in implementing these solutions.
Contents of the unit What is an IFMIS Issues in Procuring an IFMIS Why is successful and sustainable implementation so rare?
Discussion & Case studies
• South Africa, Ethiopia • Participants experience
Session Reading
• Case Study: ‘South Africa National Treasury.’ • Mike Parry, ‘Why government need Integrated Financial Management Systems,’
April 2004. • Mike Parry, ‘Why Government IFMS Procurements so Often Get It Wrong,’ ACCA International Public Sector Bulletin, Issue 4, January 2005, pp. 4-7. • Bill Dorotinsky, ‘Technology and Corruption: The of FMIS,’ The World Bank,
March 2003.
Reference Reading
• William Dorotinsky, ‘Financial Management Information Systems and Anti-Corruption: Limits to Technology,’ The World Bank, 11th International Anti-Corruption Conference, 2003.
• S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian Development Bank, Manila, Chapter 14.
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1400 – 1530 Tuesday July 18
Module 6 Unit 3 Case Study of a Financial Information System
Objectives of the unit
Present an in-depth study of an evolutionary strategy of financial information systems reform that is custom not off-the-shelf. Understand the trade-offs of a custom versus an off-the-shelf approach and the constraints faced in development and implementation.
Contents of the unit
Description of an FIS (IBEX) Implementation strategy Lessons for other country FIS development Pros and Cons of bespoke versus commercial off-the-shelf systems
Discussion & Case studies
• Ethiopia • Participants experience
Session Reading • Decentralization Support Activity Project, ‘IBEX Executive Summary,” February
23, 2005. • Stephen Peterson, Decentralization Support Activity Project, ‘Procuring a New
Financial Information System: Issues to Consider,’ March 28, 2005.
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Module 7 - Budget Planning and Implementation
Objectives The purpose of this Module is to work through the budget process according to the Financial Calendar, and describe each element of the process.
Learning Outcomes After completing the Module and its associated readings participants will be able to
• Understand the financial calendar • explain in detail all the components of the budget process • identify weaknesses in their own budget processes
Contents of the Module Unit 1 – The financial calendar Unit 2 – Planning the budget
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Day 8 – Wednesday July 19
0900 – 1030 Wednesday July 19
Module 7 Unit 1 Financial Calendar
Objective of the unit
To set out the annual budget preparation process, and its relations to the planning phase of the calendar.
Contents of the unit
• The key phases in a financial calendar
• Appropriate timing and sequencing
Discussion & Case studies
• Ethiopia, Kenya • Participants presentation of financial calendars
Session Reading
• S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian Development Bank, Manila, Chapters 4, 6.
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1100 – 1230, 1400-1530 Wednesday July 19
Module 7 Unit 2 Planning the budget
Objective of the unit
Introduce the various methods of planning the budget, including medium term plans and their relevance and practicality.
Contents of the unit
Relating plans to resources (reallocative budgeting) Whole of government budgeting Budget Planning (medium term frameworks, indicative plans)
Discussion & Case studies
• Ghana, Australia, UK • participants
Session Reading
• S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian Development Bank, Manila, Chapters 12, 13
Reference Reading • OECD, Survey of Budgetary Practices and Procedures, February 2003. • Tarshys, D. ‘Time Horizons in Budgeting,’ OECD Journal of Budgeting, Vol 2, Nr
2, 2002, pp. 77-103.
• Le Houerrou P & R, Medium Term Expenditure Frameworks: From Concept to Practice—Preliminary Lessons from Africa, World Bank, February 2002.
• OECD, A Longer Term Orientation to the Budget Process, October 2002.
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Module 8 – Aggregate Budgeting and Performance
Objectives The purpose of this Module is to analyse the options that are being explored around the world as alternatives to line item incrementalism, including the integration of performance into the budget, aggregation of budget lines and the use of formula systems
Learning Outcomes After completing the Unit and its associated readings participants will be able to
• explain the implications of different types of system on budget control • describe the main issues that arise when moving away from ‘traditional’ systems to
performance oriented systems • identify the main problems of measurement and setting performance objectives of
measurement and setting performance objectives
Contents of the Module Unit 1 – Moving from external to internal control Unit 2 – Performance measurement
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Day 9 Thursday July 20
0900 – 1030 Thursday July 20
Module 8 Unit 1 Moving from External to Internal Control
Objective of the unit
To introduce the concepts of external and internal control, aggregation of budget lines and integration of performance into the budget system
Contents of the unit
Aggregate budgeting • Moving from external to internal control • Block grants
Types of performance related budget • Programme budgeting
Integrating costs and performance : outcome / output budgeting
Discussion & Case studies
• Thailand’s ‘Seven Hurdles’ Case studies on Australia, Ethiopia, Thailand, France; participants’ presentations Session Reading
• S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian Development Bank, Manila, Chap 15.
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1100 – 1230, 1400-1530 Thursday July 20
Module 8 Unit 2 Performance Budgeting
Objective of the unit
To analyse key issues relating to performance measurement, and different ways in which performance is integrated into the budget system (need to work out a better distinction between these two units)
Contents of the unit
Types of performance measurement
Discussion & Case studies
• Critical appreciation of performance based block grant allocations to districts in the southern region of Ethiopia
• Pollit C, Integrating Financial Management and Performance Management,
Reference Reading • Allen Schick, ‘The Performing State: Reflection on an Idea Whose Time has come
but Whose Implementation has Not,’ OECD Journal on Budgeting, Vol 3, No 2, 2003.
• Rose A, Results Oriented Budget Practice in OECD Countries, ODI, February 2003. • Schick A, ‘The Road to PBB: The Stages of Budget Reform’, American Society for
Public Administration, 1980.
• Robinson, M, ‘Output-Purchase Funding and Budgeting Systems in the Public Sector’, Public Budgeting and Finance, Winter 2002, pp 17 – 33.
• Campbell C, ‘Juggling Inputs, Outputs, and Outcomes in the Search for Policy Competence: Recent Experience in Australia’, Governance: An International Journal of Policy and Administration, Vol 14 Nr 2, April 2001, pp 253 – 282.
• Perrin B, Implementing the Vision: Addressing Challenges to Results-Focused Management and Budgeting, OECD.
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Module 9 – Assessing Financial Systems
Objectives The purpose of this Unit is to introduce the various frameworks and standards that are used to assess financial systems.
Learning Outcomes After completing the Unit and its associated readings participants will be able to
• define what needs to be covered when assessing public finance systems • explain fiscal transparency and accountability as the basis for good financial systems
Contents Unit 1 – Guidelines
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Day 10 Friday July 21
0900 – 1030 Friday July 21
Module 9 Unit 1 – Guidelines
Objective of the Unit To set out the analytical framework of fiscal transparency Content of the Unit
Review international guidelines for evaluating the design and performance of public financial systems.
Discussion & Case Studies
• IMF Manual on Fiscal Transparency, 2001 • PEFA criteria
Session Reading
• IMF Manual on Fiscal Transparency, 2001
Reference Readings
• Best Practices for Budget Transparency, OECD, 2001
• Joint Public Expenditure Working Group of the World Bank, IMF, PEFA, PFM Performance Measurement Framework, revised consultative document, Feb 12, 2004
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Module 10 – PFM Reform
Objectives The purpose of this Module is to provide frameworks for understanding the strategy and sequencing of financial reform.
Learning Outcomes After completing the Module participants will be able to:
• understand the ‘best practices’ of financial reform based in the literature • be exposed to the ‘appropriate’ practices of select countries which have reformed or
are currently in the process of a reform • critically assess a strategy of financial reform
Contents Unit 1 - Frameworks of PFM Reform Unit 2 – Case Studies of PFM Reform
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Day 10 Friday July 21
1100 – 1230 Friday July 21
Module 10 Unit 1 Frameworks of PFM Reform
Objective of the unit
To present the key frameworks of PFM reform.
Contents of the unit
• Frameworks of PFM reform
Session Reading
• Allen Schick, ‘The Road to PBB: the Stages of Budget Reform,’ Public Administration Review, Vol. 26, December 1966, pp. 243-258.
• Allen Schick, ‘Opportunity, Strategy and Tactics in Reforming Public Management,’ OECD Journal on Budgeting, Vol. 2, No. 3, pp. 7-34.
Reference Reading • S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian
Development Bank, Manila, Chap 17.
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1400– 1530 Friday July 21
Module 10 Unit 2 Case Studies of PFM Reform
Objective of the unit The purpose of this Unit is to examine case studies of PFM reform particularly focused on budget and accounting reform
Contents of the unit
• Sequencing of budget reform • Arguments for and against moving to full accrual accounting for developing countries • Locate accounting reform within broader PFM reform and present an ‘appropriate’
strategy of driving modern budget reform (e.g. performance budgeting) with adequate accounting and financial information systems
• The case study of the Ethiopian accounting reform which introduced modified-cash accounting and double-entry bookkeeping is presented and analyzed.
Exercise, Discussion & Case Studies
• Case studies: Ethiopia, Thailand Case Study: ‘The Thai Budget Modernization—the Seven Hurdles.’ The World Bank, ‘Thailand’s hurdle approach to budget reform,’
• Participants experiences
Session Reading
• Decentralization Support Activity, ‘Project Brief,’ March 29, 2005.
• Stephen Peterson, ‘Financial Reform in a Devolved African Country: Lessons from Ethiopia,” Public Administration and Development, Volume 21, 2001, pp. 131-148.
• Jack Diamond, ‘Performance Budgeting—Is Accrual Accounting Required,’ Working Paper No 02/240, IMF, December 2002.
• Athukorala S.L, and B. Reid, Accrual Budgeting and Accounting in Government and its Relevance for Developing Countries, Asian Development Bank, 2003, pp. 15-62.
Reference Reading
• Decentralization Support Activity, Manual 3: Federal Government of Ethiopia Accounting System: Volume I, Accounting for Modified Cash Basis Transactions,’ Version 1.1, December 2002, pp. i-iii, 1-10, 26-36.
• S Schiavo-Campo and Tommasi D, Managing Government Expenditure, Asian Development Bank, Manila, Chap 10 (esp) pp. 239-245.
• IFAC Study 14, ‘Transition to the Accrual Basis of Accounting: Guidance for Governments and Government Entities (Second Edition),’ December 2003.
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Module 11 – Political Accountability and Legislative
Oversight
Objectives The purpose of this Unit is to define political accountability for public finance and explore the relation between legislatures and governments in respect of fiscal and economic policy and budget oversight.
Learning Outcomes After completing the Unit and its associated readings participants will be able to
• develop and describe a financial calendar • explain the functions of the legislature in accountability for public finances • describe the legal basis of the budget and the essential components of budget law • explain fiscal responsibility • (explain the essential features of Supreme Audit Institutions)
Contents of the Module Unit 1 – Legal Framework Unit 2 – Legislative Oversight
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Day 11 Monday July 24
0900 – 1030 Monday July 24
Module 11 Unit 1 – Legal Framework
Objective of the unit To set out the legal framework of public finance.
Contents of the Unit
The legal framework of the budget • Budget Laws • Audit Laws • Fiscal Responsibility • Other legislation
Discussion & Case studies
• Budget Law in Uganda, Viet Nam
Readings
• S Schiavo-Campo and Tommasi D, ‘A Model Organic Budget Law’, Annex VIII in Managing Government Expenditure, Asian Development Bank, Manila.
Other reading • INTOSAI, Independence of SAI Project: Final Task Force Report, March 31 2001.
• INTOSAI, Code of Ethics and Auditing Standards, 2001.
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1100 – 1230; 1400 – 1530 Monday July 24
Module 11 Unit 2 Legislative Oversight
Objectives of the unit To set out all the requirements for legislatures to be accountable to electorates for the collection and use of public finances.
Contents
Main functions of the legislature in the budget process (the legislative budget process) • Appropriation • Requirements for effective oversight • Interest and capacity • Resources • Information • Procedures
Institutions (parliamentary committees)
Techniques of oversight State Audit
Discussion & Case studies
• Appropriation in Australia, Ethiopia
Session Reading
• Schick A, ‘Can National Legislatures Regain an Effective Voice in Budget Policy?, OECD Journal on Budgeting, 2002, pp 15 – 42.
• Winer S L & W Hettich, ‘Structure and Coherence in the Political Economy of Public Finance’, draft paper prepared for the the Oxford Handbook of Political Economy, Version November 16 2004 (http://ssrn.stanford.edu). This reading is also for Unit 1.
Reference Reading • Schick A, ‘The Role of Fiscal Rules in Budgeting’, OECD Journal on Budgeting,
Vol 3 nr 3, 2003.
• Liphart A, ‘Macro-Economic Management and the Control of Violence’, Chap 15 in Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries, Yale, 1999, pp 258 – 274.
• Healey, John, ‘Multi-Party Electoral Politics: Comparative Experience and Conclusions’, Chap 7 in Healey J and W Tordoff, Votes and Budgets: Comparative Studies in Accountable Governance in the South, 1995, pp 237 – 257.
• Wehner J, ‘Principles and patterns of financial scrutiny: public accounts committees in the commonwealth, Commonwealth and Comparative Politics, November 2003.
Objectives The purpose of this module is to introduce the principles and practice of decentralization, with particular reference to financing decentralized governments
Learning Outcomes After completing the Unit and its associated readings particpants will be able to
• Explain the different forms of decentralization • Understand the basic structure of intergovernmental transfers and local revenue
systems
Contents of the Module Unit 1 – Principles and practice of decentralization Unit 2 – Issues in financing local and regional governments
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Day 12 Tuesday July 25
0900 – 1230 Tuesday July 25
Module 12 Unit 1 – Principles and Practice of Decentralization Objectives of the unit To introduce the different rationales for, types of, and possible problems with decentralization Contents of the unit Rationales for decentralization
• Economic and administrative factors – service delivery, growth, equity • Fiscal factors – budgetary pressure, fiscal effort • Political concerns – exit, voice, and loyalty
• Everyone does everthing? The Case of China • Decentralization as conflict resolution? The Dayton Accord
Session Reading
• Paul Smoke, “Decentralisation in Africa: Goals, Dimensions, Myths and Challenges,” Public Administration and Development, 23 (Feb. 2003): 7-16.
Reference Reading • Wallace E. Oates, “On the Theory and Practice of Fiscal Decentralization,” March
2006 [available at www.law.nyu.edu/bradfordconference/papers/Oates.pdf] • World Bank Institute, Decentralization Briefing Notes (Washington, 1999), pp.2-
Module 12 Unit 2 – Issues in Financing Local and Regional Governments Objective of the unit To set out basic approaches to designing and implementing a viable decentralized fiscal system. Contents of the unit Basic principles
• Functions, then finance • Hard budget constraint
Assigning sub-national taxes
• Why it matters • Criteria and instruments – choice matrix
Closing the gap(s) – intergovenmental fiscal transfers
• Rationales for and types of transfers – choice matrix • Formula-based transfers – need, capacity, effort
Local government borrowing
Discussion & Case studies
• Choosing local taxes – rural vs. metropolitan governments • Designing transfers in Colombia
Session Reading
• Richard Bird, Intergovernmental Fiscal Relations in Latin America: Policy Designs and Policy Outcomes, Sustainable Development Department Technical Papers Series, Inter-American Development Bank (Washington, 2001).
Reference Reading • Robert D. Ebel, “Subnational Tax Policy Design,” Draft paper for World Bank
course on Practical Issues in Tax Policy, 2003 • Roy Bahl and Johannes Linn,”Fiscal Decentralization and Intergovernmental
Transfers in Less Developed Countries,” Publius: The Journal of Federalism, Winter 1994
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Module 13 – Revenue Policy Reform
Objectives The purpose of this module is to introduce the basic factors affecting the framing of revenue policy and the management of tax reform.
Learning Outcomes After completing this unit and its associated readings participants will be able to
• Describe the basic factors affecting tax policy choices • Understand the key issues determing the success of major tax reforms
Contents of the Module Unit 1 – Framing Revenue Policy Unit 2 – Managing Tax Reform
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Day 13 Wednesday July 26
0900 – 1030, Thursday July 26
Module 13 Unit 1 – Framing Revenue Policy Objective of the unit To introduce the basic factors influencing the level and structure of revenue systems and revenue forecasting Contents of the unit The range of revenue choices
• Charges, fees, and earnings • Seignorage and debt • Regulatory taxes • General taxes
Fiscal architecture
• Demographic • Economic • Institutional
Revenue forecasting
• Objectives – normal, contingency, special • Techniques – quantitative, qualitative • Assessment – over or under?
Discussion & Case studies
• Starting from scratch: post-conflict rebuilding • Setting targets – and missing them: experience in developed and developing
countries
Session Reading
• Annette Kyobe and Stephan Danninger, “Revenue Forecasting – How is it Done? Results from a Survey of Low-income Countries,” IMF Working Paper WP/05/24, February 2005.
Reference Reading • Sally Wallace, “Fiscal Architecture,” Module for World Bank Course on Practical
Issues in Tax Policy, 2003.
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1100 – 1230, 1400-1530 Wednesday July 26
Module 13 Unit 2 – Managing Tax Reform Objective of the unit To set out the key factors that experience suggests are essential to achieving success in tax reform efforts Contents of the unit Setting the goal
• Revenue…and more? • Fitting the ‘architecture’ • The political setting
Designing the reform
• Big bang, or incremental • The important, the difficult, and the complex • Strategy and tactics
Selling reform
• Need for a champion • Administration matters…a lot • Assembling support and reducing opposition
Discussion & Case studies
• Thinking it through: Indonesia in 1980s • Periodic incrementalism:Colombia • China – step by step?
Session Reading
• Richard M. Bird, “Managing the Reform Process,” Working Paper 0301, International Tax Program, Rotman School of Management, University of Toronto, April 2003
Reference Reading • Richard M. Bird, “Administrative Dimension of Tax Reform,” Working Paper
0302, International Tax Program, Rotman School of Management, University of Toronto, April 2003.
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Module 14 – Group Presentations
Objectives
Groups will select a country and present a particular feature of its reform and/or its overall reform strategy to illustrate and integrate concepts from the program. Off particular interest is the uniqueness of the country’s experience and its adherence or departure from ‘international best practice.’ What are the unique paths country’s are taking in reform.
Learning Outcomes Participants will in their groups understand in detail a key PFM theme and from the other group presentations, will have a comparative understanding of other key PFM themes.
Contents of the Module Unit 1 – Group Presentations
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1600-1730 Wednesday July 26
Module 14 Unit 1 – Group presentations Objective of the unit Participants and their groups present a key theme in public financial management in a comparative empirical context. Contents of the unit Thirty minute group presentations.
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Day 14 Thursday July 27
0900 – 1730, Thursday July 27
Module 14 Unit 1 – Group presentations Objective of the unit Participants and their groups present a key theme in public financial management in a comparative empirical context. Contents of the unit Thirty minute group presentations.
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Module 15 – Program Conclusion
Objectives To synthesize the country presentations by the groups and integrate further the concepts of the program. A principal objective is to highlight ‘appropriate’ practices that work and identify success factors. Present some concluding remarks on the content of the program and discuss with participants their thoughts on the program.
Learning Outcomes Provide participants with a review of the key themes of the course and the practical applications as presented in case studies and group presentations.
Contents of the Module Unit 1 – Lessons and Summary Observations
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Day 15 Friday July 28
1030 – 1230 Friday July 28
Module 15 Unit 1 Lessons and Summary Observations
Objective of the unit Presentation of the lessons from the course case studies and group presentations. Summary observations on reform of public financial management. Discussion with participants of the content of the course. Contents of the unit • Lessons of the Group Presentations • Key themes during the course • Participants views of the course