Inadequate public finance statistics

To be effective, public finance policies must be based on accurate and comprehensive statistics on the financial transactions of public agencies. The weaknesses of national data sources are due to delays in auditing, weak administrative systems, and incomplete reporting of subnational government and state owned enterprise accounts. This makes it very difficult to get a timely, complete and accurate picture of the main sources and uses of public funds. Fiscal planning, consistent fiscal policy design, and financial accountability by decision-makers are thus significantly impeded. The weakness of public finance data, at a time of rapid increase in the public sector, complicates the design and implementation of public finance policies.

[Developing countries] For most developing countries consistent data are available only for the past decade or two and often cover only the central government. Comparable data on regional and local governments and on state-owned enterprises are patchy across countries and over time. Up-to-date national accounts data are not available in many developing countries. Whilst accounting systems may have been implemented, there are countries in which the data supplied is so late or so unreliable that they cannot serve as a basis for rational public expenditure or monitoring. Managers at all levels may either disregard requests for budget estimates for the next fiscal year or submit estimates far in excess of what is possible (reasoning that the government cannot fail to allocate some resources to their activities, that whatever they might submit is unlikely to be reflected in the ultimate budget, and that the actual release of funds will not match the budget anyway). And yet such unrealistic budget submissions in turn destroy confidence among those receiving them such that all phases of the process lose credibility in a cycle of mutually reinforcing scepticism.