the capabilities of finance ministries

[sybihida]

Many studies have been focused on the role of public finance and fiscal policies and their effect on the economy, but very few studies on those that are mostly responsible for implementing these policies. After the IMF paper on functions and organization of finance ministries (https://www.imf.org/external/pubs/cat/longres.aspx?sk=43382.0), the UK’s Overseas Development Institute has launched a new report on the capabilities of finance ministries (https://www.odi.org/publications/10447-pfm-public-finance-management-capabilities-ministries-finance )

This report investigates the question of what makes a capable finance ministry using multiple in-depth case studies: Germany, United Kingdom, Mexico, South Africa, Uganda, Nepal, and Sierra Leone. Each case study covers institutional context, organisational features, and fiscal and social outcomes, as well as an analysis of capabilities. The report also draws on detailed country-level case research from Viet Nam and Chile.

[John Short]

"In the UK,  Gordon Brown was well known as an economist" p39 ODI paper ..................Discuss.

[sybihida]

I do not have any information to talk about the professional level of Gordan Brown, but I think he got that portfolio as a politician not as an economist—not by chance (maybe) he became PM.

In my view, I would prefer a politician as a minister of finance rather than a (nonpolitician) professor, in fact, a strong politician. Of course, I’m thinking for a smart honest politician (do not laugh—some politician can pass this condition). Proposing new policies and getting them passed in parliament and supported by people is not an easy job. A strong political leadership heading a finance ministry would provide an easier job for the head of the government.
So, before looking for a good economist to lead a ministry of finance, first, we should look for someone that has strong political support not only within a ruling party but by people. It would be good to appoint a Nobel Prize economist that on the first day in the job becomes a good politician. 

[John Short]

Agree that the person must be a politician who can "command" his peers.  Of course the Minister then needs sound advice from those that know the subject.  The danger is the politician overrides advice and enacts bad/poor economic policy to promote political objectives. 

Gordon Brown has an undergraduate degree (Scottish MA) and a PhD in history and lectured on politics judging from his Wikipedia entry.


On the overall topic the IMF paper is also discussed in http://pfmboard.com/index.php?topic=7822.msg24914#msg24914

[sybihida]

You are right: in most cases politicians think they know better than professionals/civil servants on how the system works and try to promote on their own way—mostly to achieve their own political objectives. How to hedge about this? Not easy, but I would prefer an increased transparency, which can help on accountability. And here is the trap. Politicians do not like transparency, and this is especially in developing and LIC countries. As in many things our friend comes in help, time. It needs time, but it seems that it is a long time.

[John Short]

A good example of this "conflict" is in revenue forecasting where the politician wants a high forecast so as to spend more.  If left to the revenue agencies, forecasts will tend to be low as their performance is likely to be measured against the forecast.  An independent honest broker is needed to produce a realistic as forecast as possible.  All forecasts, wherever the source, should have their assumptions published with the figures to provide transparency and contestability!

[STONE]

Capabilities of Ministries of Finance - A key aspect of capability of a Ministry of Finance is for the Minister of Finance to have the support of the Cabinet and the person who chairs it…

Necessary but not sufficient...


(President) Zuma faces backlash after sacking Minister of Finance
https://www.ft.com/content/9a9f8006-1537-11e7-80f4-13e067d5072c