This book begins with the current fiscal
situation in eurozone countries such as Greece and Spain who emboldened by the
currency integration adopted the policy of borrowing in euro that was
available at low interest rates, and fueled their public spending. For a while
they enjoyed a rising level of prosperity at the cost of burgeoning public
debt. This resulted in the erosion of productivity in these countries making their
exports uncompetitive, poor financial governance and lax surveillance of tax
collections. Although the Maastricht Treaty creating the euro zone laid down
strict norms for fiscal deficit and public debt in relation to GDP for
the member countries, these were circumvented by creative fiscal accounting
practices and underlying obsolete systems that understated their real levels. When
the truth was discovered, there was a near-implosion in the euro area requiring
collective bail-out measures by Germany and others to save it from collapse.
Failure to adopt high fiscal management system standards that allowed such
misleading practices is not uncommon in other regions, such as transition economies and developing countries.
policies may vary across countries, but countries should reform their fiscal management
systems adopting international standards. The book sets out the common
contours of these reforms. The author shares his knowledge and forty years of international experience with
countries planning to improve their fiscal management systems.
Subra Ramamurthy is well known internationally as a fiscal
management expert and he has over forty years of experience in about thirty
countries, such as Russia, Kazakhstan, China, Central Asian and East European
countries, and the Middle East. He mostly worked for the International Monetary
Fund starting in 1991 as its full-time resident advisor and was later engaged
as peripatetic specialist on its technical assistance programs and diagnostic
missions. Pre-1991 he was with the Commonwealth Secretariat and the United
He was also engaged in delivering specially tailored
lectures to Russian speaking and Arab countries and China.
His expertise in fiscal management ranges from preparation
of economic forecasts and medium-term fiscal framework to budget execution
issues and planning and implementing management information systems.
His qualifications include FCIS, FCCA (UK), and
PhD (USA). He has authored several papers and his
articles on fiscal issues have appeared also in professional journals
He brings to
this book his scholarship, unique and sometimes exotic experience and insight
into fiscal management system reforms and challenges under diverse country
settings to share with the international public finance practitioners.