PUBLIC FISCAL ADMINISTRATION

Fiscal Administration is not difficult to define. In simple terms, fiscal administration is the
branch of economics that deals with the revenues and expenditures and their impact on
the economy. It is the manner of collecting something from the constituents and
spending it also for the constituents. Fiscal administration is the act of managing
incoming and outgoing monetary transactions and budgets for governments,
educational institutions, nonprofit organizations, and other public service entities.

Public Fiscal Administration fiscal administration generally refers to the process/es

involved in the revenue generation, allocation, and expenditures of the government. As
Briones (1996) puts it, “public fiscal administration embraces the formulation,
implementation, and evaluation of policies and decisions on taxation and revenue
administration; resource allocation, budgeting, and public expenditure; public borrowing
and debt management; and accounting and auditing.” Through the years, many
researches were devoted on these topics and issues; the government has also
introduced reforms like reforms in tax administration, value added tax (VAT), expanded
value added tax (E-VAT), procurement reforms, the medium-term expenditure
framework (MTEF), accounting reforms, re-engineering the bureaucracy program
(REBP), transforming local finance, and many others.

Generally, a fiscal administration shows the reality of government and public

organization in their provision of public good or service for the citizen. It is an
independent subject from the accounting, economic, political, and legal science, which
is interdisciplinary and strives for any distinct goal of studies.

A fiscal sustainability perhaps would be one ideal that this science would flounder to
crystallize and hold out. The studies would be similar to the adjacent sciences, but could
be defined ultimately for its unique feature or characteristic. The accounting or
accounting sciences would aim to set forth the standards of evaluating the operation
and asset or debt as well as the formality to show the numerical status or assessment
for the businesses, mainly private and secondarily public. The fiscal administration
involves these aspects, but there are many other elements to inculcate the minds of
fiscal researcher, such as public ideals or social justice beyond the math or numerical
requirements. The economic science would guide the criterion of practice for the
government or public organization when they contemplate on the fiscal issues or
challenges. The efficiency of budget or basic concepts, i.e., scanty resources or
appropriability problem, non-exclusion and non-exhaustion, eminent dichotomy between
the private and public sectors or privatization, distinction between provision and
production, and so on, would divulge a close dialogue and interactive understanding
between the two sciences. Nevertheless, there are differences being present invariably
and conceptually between them. For example, the market failure perhaps would be one
stigmatic condition to increase the profile of fiscal science. A provision anticipated from
the government had been defined far earlier from the classic thought, such as police
and national defense.

Constituents charge leaders, whether governmental or organizational, with establishing

fiscal policy as part of their duties in relation to responsible fiscal administration. Fiscal
policies are tools for the development of fiscal planning budgets, based on the receipt of
anticipated funding. As fund disbursement in the form of payroll, purchases, or other
expenses occur, management reports appropriate accounting information back to
organizational leaders. Historical data, future revenue projections, and current budget
demands determine needed adjustments. The entire process forms the basis for future
fiscal administration decision making. Leaders of government, nonprofits, and other
public service entities have a fiduciary responsibility to those who put them in office,
individuals better known as constituents. Effectively managing the fiscal administration
of an entity contributes to its overall financial health and ability to continue serving
constituents. As such, laws dictate much of the particulars with regard to preparing
financial statements, recording transactions, and balancing budgetary demands for such
organizations.

Public or fiscal administration is among the factors that are essential in developing good
managers for any entity either privately or publicly owned. Among the key
responsibilities that help people in management roles include budgeting, public revenue
management, public revenue expenditure, and the knowledge of block grants and
bonding and debt management and budget interactions among government agencies.
Budgeting is essential for all companies and the ability to tackle this task effectively
shapes people into becoming managers in organizations. The capability of budgeting
effectively is an essential part of a successful organization. Budgets are helpful in
establishing performance standards, motivating employees and board members, and
offering a technique of measuring results. Achieving the mission of the organization is a
key objective and this is made possible by budgeting.

Reinforcing good public financial management systems are important for democratic
governance, macro-economic stability, effective use of resources available and poverty
reduction. Good PFM systems can also help prevent corruption and foster aid
effectiveness. A sound Public Fiscal Management system is a precondition for making it
possible to effectively channel resources to service delivery like e.g. basic education
and health services. Ineffective PFM systems, on the other hand, can hamper
development and increase the risk of corruption.

A strong Public Fiscal Management system is an essential aspect of the

institutional framework for an effective state.

 Effective delivery of public services is closely associated with poverty reduction

and growth, and countries with strong, transparent, accountable PFM systems
 tend to deliver services more effectively and equitably and regulate markets more
efficiently and fairly. In this sense, good PFM is a necessary, if not sufficient,
condition for most development outcomes.

 A key element of statehood is the ability to tax fairly and efficiently and to spend
responsibly. These are fundamental characteristics of ‘inclusive’ state institutions,
which generate trust, promote innovative energies and allow societies to flourish.

 Unemployment Reduction – When unemployment is high, the government can

employ an expansionary fiscal policy. This involves increasing spending or
purchases and lowering taxes. Tax cuts, for example, can mean people have
more disposable income, which should lead to increased demand for goods and
services. To meet the growing demand, the private sector will increase
production, creating more job opportunities in the process.

Improving the effectiveness of a PFM system may generate widespread and long-
lasting benefits, and may in turn help to reinforce wider societal shifts towards inclusive
institutions, and thus towards stronger states, reduced poverty, greater gender equality
and balanced growth. Even where donor staff do not seek to strengthen PFM systems,
they need to understand them because they will often work through them, by providing
budget support or climate finance, or with them, by providing project-financed
interventions, which are then staffed and maintained through the national budget. In
short, PFM matters, and all donor staff need a basic knowledge of PFM.