Professional Documents
Culture Documents
Responses to an Economically
Challenging World
Results of a Worldwide Survey January 2011
ICGFM
The International Consortium on Governmental Financial Management
About the survey Contents
In 2004, the International Consortium on Governmental Financial Management
(ICGFM) asked Grant Thornton LLP (Grant Thornton) to conduct its first 1 Introduction
international survey of government financial executives, titled “Resisting
Corruption in the Public Sector.” In 2009, Grant Thornton conducted a second 2 Impact of the global financial
survey on behalf of ICGFM, focused on public financial management reform. crisis
The second survey provided insight into the experience of national governments
engaged in improving the management of public resources, as well as in making 5 Investment in infrastructure
their finances more transparent and their financial information more useful for
managing public sector operations. 8 Increasing transparency
This third survey, conducted in 2010 by Grant Thornton on behalf of ICGFM, 10 Conclusions
focuses on responses to the global financial crisis, infrastructure investment,
public private partnerships and transparency.
Survey methodology
Grant Thornton partners and staff conducted in-person interviews with public
financial managers and executives, using an open and closed-ended survey
instrument. We also designed and carried out a multilingual online survey of the
same target audience, which member firms of Grant Thornton International Ltd
promoted in their respective countries.
Anonymity
Our survey does not attribute thoughts and quotations to any respondents, nor do
we name them, their institutions or their specific countries. These measures were
essential to gain the confidence and full cooperation of the government officials
who participated in the survey.
Introduction
In the second half of 2008, the world saw the beginnings of the This survey examines both the impact and the responses
most significant economic disruption in over 50 years. After to the economic upheavals of the last two years from a public
initial problems in the global credit markets, the economies of financial management perspective. It seeks to provide insight
most nations were negatively affected with recession becoming into the choices made by government financial leaders and the
the norm in most countries in the world. tools employed to respond to the public financial management
The resulting challenges to public financial managers challenges that have arisen.
resulting from cascading economic impacts have been enormous.
Faced with unpredictable economic flows and a demand for
government response, governments had to assess the economic
impact on their countries, evaluate policy options, and chart a
course to counter immediate negative impacts while laying a
foundation for future growth.
Nearly half of all respondents said their country had been Chart 1: Has the global financial crisis had an impact on your country?
impacted by the global financial crisis (Chart 1). Of those, 77
percent (or a third of all respondents) saw a negative impact.
Yes 48%
We asked interviewees to rate the impact of the financial
No 33%
crisis on various economic indicators using a scale of one to five, Do not know/does not apply 19%
with one being very negative and five being very positive. Survey
respondents reported the highest negative impact to be on Gross
Domestic Product (GDP) and currency value (Chart 2).
“The main effect is the reduction of internal and external
resources; thus, planned projects were delayed,” said one interviewee.
Below are a few comments from interviewees who saw a
negative effect:
• “My country depends on foreign aid, which was reduced.
The size of projects had to be reduced accordingly.”
• “There has been a reduction in taxes collected from
expatriates working in different countries, a reduction in Chart 2: What has been the effect of the financial crisis on
direct foreign investment, a loss of foreign investors and fewer economic activities?
locally-produced products in the international market.”
Positive Neutral Negative
• “The crisis has had a negative impact on revenue collection
and billing authority. We’ve also seen increased borrowing 100%
20%
For some, the effect of the financial crisis was mixed: “Initial
0
reaction was negative, but we were able to turn it into an
Gross Domestic Currency Export Ability to Public sector
opportunity for growth.” Product value revenue issue debt expenditures
A few saw a positive impact, and one such interviewee
said, “The global financial crisis has forced and accelerated
public financial management reform to reduce the cost of the
Public Administration.”
“We’ve put forth new public financial management
regulations and solutions,” echoed another.
Chart 3: Has your country initiated a stimulus program? Chart 5: What are the key indicators that will activate the need to
unwind or end your country's stimulus program?
Yes 60%
No 25%
30%
Do not know/does not apply 15%
25%
20%
15%
10%
5%
0
GDP Lower Improved debt Inflation Interest Political
growth unemployment capacity rates climate
Infrastructure investments serve as one of the primary vehicles Attracting outside investment
for stimulating an economy, and nearly all respondents According to survey respondents, outside investment is an
reported that their country will need substantial investment in important source of revenue for infrastructure projects, and
infrastructure to support economic expansion. The top three more than half of our respondents said their country is focused
areas of need are education, transportation and healthcare on securing such investment. The most often-cited goals of
(Chart 6). outside investment are improving the necessary infrastructure,
improving their country’s legal system, increasing government
transparency, and providing tax incentives and currency reforms
(Chart 7).
Even among the few respondents who said their country
was not making a significant push to attract foreign investment,
creating the right environment to facilitate that type of
investment was still an area of focus. As one respondent said,
“We have not pursued an active policy to attract outside
investments; no special treatment has been provided. However,
our government’s position is to avoid creating structural
obstacles for foreign investors.”
Chart 6: Which areas of infrastructure present the most critical need Chart 7: What are your country's primary areas of focus to increase
for investment? outside investment?
20% 40%
15% 30%
10% 20%
5% 10%
0 0
y er t
tion tion are les g ing t en nse ons Improve necessary Improve Greater Tax Currency
ca rta lt hc wa
b
n olo ou
s Wa tm fe ris
Ed
u o a e ch H tre
a De P infrastructure legal system transparency incentives reforms
n sp He en Te
a /R te
Tr rg
y ion Wa
s
e at
En orm
Inf
“In view of recent events, our government tried to interest the private sector in a PPP-type
investment, but this first try has not met with great success because of mistrust between
the two parties—and the fact that rampant corruption exists in the public sector.”
Three-quarters of interviewees said their country had either Chart 12: Has your country adopted new international standards
made or renewed a strong commitment to improve financial to improve public financial management governance and transparency?
management transparency for citizens (Chart 11). 80 percent
Yes 80%
have adopted new international standards to improve public
No 10%
financial management governance and transparency (Chart Do not know/does not apply 10%
12). The most commonly-adopted standards are International
Auditing Standards, International Public Sector Accounting
Standards and Government Financial Standards (GFS) compliant
chart of accounts (Chart 13).
Chart 11: Has your country made or renewed a strong commitment Chart 13: Which new international standards has your country adopted?
to improve public financial management transparency for your citizens?
50%
Yes 76%
No 19%
40%
Do not know/does not apply 5%
30%
20%
10%
0
International International Government Financial
Auditing Public Sector Standards/Compliant
Standards Accounting Standards Chart of Accounts
Chart 14a: Has your country adopted eXtensible Business Reporting Chart 14b: Are there plans to adopt XBRL in the future?
Language (XBRL) to enhance transparency and public access to data?
Turmoil in the financial markets that began in 2008 affected When adopting a spending program, public financial
economies around the world, including more than half the managers must determine the focus of additional spending. An
countries included in this survey. For a majority of these increase in spending on infrastructure was given as the number
countries, the impact was negative. Respondents pointed to one area of focus for increased investment. When asked what
adverse effects on economic growth, currency values and export type of infrastructure was most critical, respondents ranked
revenue, among others. Education, Transportation and Healthcare as the top three
To respond to these negative consequences, public financial priorities.
managers followed similar policy paths adopting economic Along with the adoption of extraordinary policies to combat
stimulus programs. Over 60 percent of respondents indicated the impact of the global financial crisis was also a commitment
that stimulus programs had been adopted, and over half of to increased transparency in public financial management,
those pursuing stimulus programs believed them to have been as indicated by more than three-fourths of all respondents.
successful. One method used to introduce greater accountability and
By their nature, stimulus programs cannot go on indefinitely. visibility into public financial management was the adoption
Having opted to stimulate the economy through public of international public sector financial standards, including
expenditure, public financial managers must consider which International Auditing Standards and International Public Sector
economic triggers should serve as a benchmark measurement Accounting Standards. The full impact of the global financial
for phasing out economic recovery programs. Most respondents crisis is not yet over, and headlines continue to be dominated
indicated that improvements in economic growth should by the resulting economic fallout. Ongoing impacts include
be the primary trigger, followed by improvement in general localized debt crises, deficit sustainability and continued high
employment. The third most often cited reason to phase out unemployment.
stimulus spending was a country’s limit to debt capacity. For Public financial managers face some of the most challenging
some countries, the ability to use public expenditures to boost times in decades in meeting their responsibilities, but they have
economic activity is constrained by an inability to borrow at will faced them not only with a variety of policy measures but with
to increase expenditures. an unprecedented commitment to transparency.
ICGFM
The International Consortium on Governmental Financial Management
The International Consortium on Governmental Financial Management Grant Thornton LLP Global Public Sector
(ICGFM) brings together diverse governmental entities, organizations and The people in the independent firms of Grant Thornton International Ltd provide
individuals who are financial management practitioners such as accountants, personalized attention and the highest-quality service to public and private clients
auditors, comptrollers, information technology specialists, treasurers and others in more than 100 countries. Grant Thornton LLP is the U.S. member firm of
working in all levels of government. Our mission emphasizes activities to promote Grant Thornton International Ltd, one of the six global audit, tax and advisory
professional development and the exchange of information. Our programs organizations. Grant Thornton International Ltd and its member firms are not
provide activities and products to advance governmental financial management a worldwide partnership, as each member firm is a separate and distinct legal
principles and standards and promote their implementation and application. entity. Visit www.GrantThornton.com/publicsector.
Internationally, ICGFM sponsors meetings and conferences that bring together Grant Thornton LLP Global Public Sector, based in Alexandria, Va., is a global
government financial managers from around the world to share information and management consulting business with the mission of providing responsive
experiences in governmental financial management to educate members and and innovative financial, performance management and systems solutions to
others about innovations, best practices and emerging issues. We also foster governments and international organizations.
research concerning governmental financial management and disseminate
information and results to our members and the public. 333 John Carlyle Street
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For more information on ICGFM, visit http://www.icgfm.org.
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