Reforms in public finance

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RONALD S. GOSECO

The Financial Executives Institute held its 2nd General membership Meeting on February 15. The theme of the meeting was Governance and Reforms in Public Finance. We invited Budget Secretary Benjamin Diokno and the Chairman of the Institute of Corporate Directors, Francis Estrada, as speakers.

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It has been a long-standing advocacy of FINEX to publish and distribute information about the government budget as we believe that it represents the priorities and plans of the administration. As finance practitioners, we’ve always looked at budgets as stories, and not just a set of numbers. The fiscal budget is no different. It tells the story of what the government wants to accomplish over the course of a year. It describes projects that they want to implement and where they want them implemented. It tells a story of favored departments. Some years it would be national defense and security; other years it would be health, and still others, it would be public works. These projects might have been part of a campaign promise or some, not at all. These are stories that we have all been monitoring and watching over the years, almost like a TV series, except that these stories affect our lives, as well as our future.

This last meeting was important to us in that sense. It represented the moral intersect between public finance and good governance. As public finance would affect our daily lives, we, as citizens, have to continually monitor where these plans would lead to. This is almost akin to a board of directors electing the officers and fiscal managers of an administration. As board directors, we set the strategic direction for a better future. This should be performance-oriented. We want to ensure that our assets, in this case, all the government funds are correctly planned and utilized in a sustainable manner.

Second, we need to ensure that we have the policy guidelines that would allow all the branches of government to actually execute the strategic direction that was set by the administration. We then have to act as vigilant citizens in monitoring the performance of the administration against what it has set out to achieve. As we all know, very few programs go as planned. A perfect budget plan is always an elusive ideal.

It is, therefore, important that information, developments and feedback are constantly monitored to allow us to understand and navigate through the winding landscape. As citizens-directors, we have to hold ourselves responsible over the results. We have to be certain that the fiscal budget would actually add value to the country’s bottom line.

The Institute of Corporate Governance that Mr. Estrada chairs gives a great deal of importance to culture that draws from social responsibility and ethics. This is predicated on the fundamental demands of governance.

This demand of governance is straightforward: fairness, transparency and accountability. These are the fundamental principles underlying good governance, whether in government or in private corporations.

Fairness requires that all stakeholders, regardless of creed, race or gender, are treated justly and equitably.

Transparency requires that all transactions be above board and compliant with laws and regulations. In particular, all reports should be truthful and adequate and in line with global reporting standards.

Accountability requires a system of checks and balances that rewards good performance and punishes bad performance on the basis of well- defined delegation of authority and performance evaluation. These should apply to the different departments of government as they do in private practice.

Ethics sets forth norms of internal conduct and behavior, particularly in relating and dealing with others. Fairness presupposes openness toward others and acceptance of our obligations toward them.

Transparency adds to openness and a deep sense of identification to one’s own well-being with the welfare of others. It calls for a spirit of solidarity. Accountability imposes upon us a sense of stewardship over the assets and the environment entrusted to us.

Social responsibility sets norms for taking into serious account the external environment, inclusive of all the people around us, whose lives we are morally bound to uplift. Fairness asks from all of us to take good care of the assets that we have fiduciary responsibility for, so these assets can continue to serve future generations, to withstand the test of time and contribute positively to the progress of the entire nation. Transparency asks for selflessness, restraining greed and selfishness and to show a genuine spirit of service to others.

With a weak foundation in ethics and social responsibility, the regulatory initiatives will always come up short. The discussions emphasized the need to embed these two guideposts in our culture to achieve real progress and genuine reform in public finance.

Ronald S. Goseco is currently EVP of the Financial Executives Institute and COO of IDI-Volkswagen. The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX.

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