Public financial management

Public financial management (PFM) is critical to basic economic governance and essential in establishing the performance, legitimacy and accountability of functional states.

Public financial management has to do with the effective administration of funds collected and spent by governments. It underlies all government activity and incorporates all components of a country's budget cycle including:

• the mobilisation of revenue
• the allocation of these funds to various activities
• the expenditure and accounting for spent funds

Ineffective public financial management systems hamper development and increase the risk of corruption. Unfortunately, weak systems still prevail in many developing countries.

Improving government efficiency

As societal needs are inevitably greater than the resources available to governments, all public resources must be used as efficiently as possible with a minimum of government waste.

Efficient public financial management is central to mutual trust and shared consensus between a government and the population. Improving the effectiveness of systems in developing countries allows governments to make best use of scarce resources.

This may generate widespread and long-lasting benefits, such as enabling the country to manage its own development, reducing poverty, achieving greater gender equality and realizing balanced growth.

Increased revenue, tax fairness, and transparency

In Mali, Canada is providing technical assistance to build the revenue mobilization capacity of the Malian tax and land administration. This is in order to help the government be less financially dependent on foreign aid.  In turn this will enable Mali to make progress in terms of increased revenue, tax fairness, and transparency in tax management.

Contributing to economic growth

In the Caribbean region, Canada is supporting an initiative that seeks to improve macroeconomic and public financial management capacity of targeted Caribbean countries. This is in the context of rising financial vulnerabilities as well as to increase regional cooperation/integration to foster economic growth in the Caribbean region.