Good Practice in Budget Management

Abstract

This policy brief examines the recent experience of the Cook Islands, Kiribati, and Tonga with budget management reform, in order to draw lessons on how the quality and efficiency of overall public spending in the Pacific could be improved.

The global economic crisis placed severe strain on the budgets of many of ADB's Pacific developing member countries (DMCs). Different countries were affected in different ways. In Tonga and Samoa inward remittances fell sharply, depressing the level of economic activity; in Fiji and the Cook Islands, tourism declined; in Kiribati and Tuvalu, the global fall in equity prices led to a sharp decline in trust fund revenues; and, in Solomon Islands and Nauru, demand and export prices for the main commodity exports of timber and phosphates fell as global demand contracted. By early 2009, with the exceptions of Timor-Leste, Tonga, and Vanuatu, the Pacific DMCs were recording large, negative fiscal balances.

ADB has provided assistance with budget management to a number of Pacific DMCs over many years. This policy brief examines the recent experience of the Cook Islands, Kiribati, and Tonga with budget management reform, including elements of broader public financial management which impact on budget management such as procurement and external auditing, in order to draw lessons on how the quality and efficiency of overall public spending in the Pacific could be improved.