Public Expenditure Management

Abstract

Public expenditure management (PEM) is a central instrument of economic and development policy. The three overall goals of PEM are fiscal discipline, strategic resource allocation and good operational management. Effective PEM is also a key component in good governance, which rests upon what the ADB has termed the four pillars of accountability, transparency, predictability and participation. Accountability holds officials responsible for their actions. Transparency involves ensuring access to relevant information at low cost. Predictability results from an environment in which laws and regulations are clear, known in advance, and uniformly and effectively enforced. Participation requires the existence of channels through which reliable information is provided, enabling all stakeholders at all levels to be involved in the consultation and decision-making process.