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Managing and Controlling Extrabudgetary Funds

Author

Listed:
  • Dimitar Radev
  • Richard I Allen

Abstract

This paper addresses issues relating to the establishment and financial management of extrabudgetary funds (EBFs), a large group of government entities that on average accounts for 40 to 45 percent of central government expenditure-two-thirds of which represents social security funds-in countries at various stages of development. If improperly designed and managed, EBFs can undermine effective fiscal control. However, they also bring potential benefits in the form of greater autonomy of decision-making in countries with well-established governance and financial management systems that have applied the "agency model" of devolved public management and fiscal control. The paper develops a typology of EBFs and argues that EBFs are frequently created because of failures in the budget system and political economy factors that need to be recognized and, where possible, corrected. The paper recommends that data on EBFs be consolidated within a unified system of fiscal reporting and proposes an analytical framework that governments might use to evaluate the effectiveness and utility of their EBFs.

Suggested Citation

  • Dimitar Radev & Richard I Allen, 2006. "Managing and Controlling Extrabudgetary Funds," IMF Working Papers 06/286, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:06/286
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    References listed on IDEAS

    as
    1. Ken Gwilliam & Ajay Kumar, 2003. "How Effective Are Second-Generation Road Funds? A Preliminary Appraisal," World Bank Research Observer, World Bank Group, vol. 18(1), pages 113-128.
    2. Sanjeev Gupta & Catherine Pattillo & Smita Wagh, 2006. "Are Donor Countries Giving More or Less Aid?," Review of Development Economics, Wiley Blackwell, vol. 10(3), pages 535-552, August.
    3. James M. Buchanan, 1963. "The Economics of Earmarked Taxes," Journal of Political Economy, University of Chicago Press, vol. 71, pages 457-457.
    4. Sanjeev Gupta & Catherine A Pattillo & Smita Wagh, 2006. "Are Donor Countries Giving More or Less Aid?," IMF Working Papers 06/1, International Monetary Fund.
    5. Gwilliam, Ken & Shalizi, Zmarak, 1999. "Road Funds, User Charges and Taxes," World Bank Research Observer, World Bank Group, vol. 14(2), pages 159-185, August.
    6. Rolando Ossowski & Steven A Barnett & James Daniel & Jeffrey M. Davis, 2001. "Stabilization and Savings Funds for Nonrenewable Resources," IMF Occasional Papers 205, International Monetary Fund.
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    Cited by:

    1. Mihaela Grubisic & Mustafa Nusinovic & Gorana Roje, 2009. "Towards Efficient Public Sector Asset Management," Financial Theory and Practice, Institute of Public Finance, vol. 33(3), pages 329-362.
    2. Adriana Camacho & Daniel Mejía, 2013. "Las externalidades de los Programas de Transferencias Condicionadas sobre el crimen: el caso de Familias en Acción en Bogotá," DOCUMENTOS CEDE 010552, UNIVERSIDAD DE LOS ANDES-CEDE.

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