High ambitions for global finance

21 Oct 15

Public finance professionals face huge challenges worldwide. But there are also good reasons to be optimistic about aiming for ambitious goals

When it comes to strengthening global public financial management, reinforcing good governance and improving transparency, we know we’re in for a long haul. Things will not change overnight, but as the world economy edges away from the sovereign debt crisis and historic slump, there are some good reasons for optimism.

At the time of writing, the United Nations is taking a significant step by launching its 2030 Sustainable Development Goals (SDGs). Goal 16, which addresses how governments can tackle corruption, bribery, theft and tax evasion, is of special relevance for public finance professionals. These problems, after all, cost developing countries some $1.26trn a year.

Meanwhile, Goal 11 focuses on how global cities have become powerhouses for international development and growth, the theme of this issue of Public Finance International. Meeting the challenges of these megacities – for sustainable funding, infrastructure, economic incentives, education and housing - will be a defining issue for the half of humanity living in cities today.

The public finance profession also has a key role to play in delivering Goal 17, which stresses sustainable partnership development between governments, the private sector and civil society. Creating monitoring frameworks, setting up regulation and oversight mechanisms – including the independent supreme audit institutions that so many countries lack – will be vital for success.

There is cause for hope too on the progress being made on the OECD/G20’s BEPS recommendations and action plan to reform the international tax framework, ensuring profits are reported where activities are carried out and value created.

Since CIPFA launched its Fixing the Foundations in 2011, we have also seen a rapid growth in the countries embarking on the journey from cash to accruals accounting – and adopting international public sector accounting standards (IPSAS). These are the key to governments accurately measuring their financial sustainability. The widespread adoption of IPSAS is further cause for optimism, ensuring greater transparency and improved decision-making.

Alongside implementing consistent international standards, we must grow the professional talent and expertise in government accounting and audit services. Political will from national and transnational bodies will,  of course, be needed to ensure these initiatives succeed.

But with the focus provided by the UN’s new SDGs, campaigns like IFAC’s Accountability Now,  and the new public finance and governance frameworks, we can hopefully move much closer to sustaining and improving outcomes for societies across the globe.

This article was first published in the autumn issue of Public Finance International magazine

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