Public Finance Management: Essence, Problems, and Development Prospects

Abstract

The chapter justifies the increased interest in public sector financial management (PFM) through its scaling up in the economy. The paper reveals the essence of the PFM system, through an analysis of the definitions of the PFM, the role of the public sector in the economy, the key elements of the PFM system, and a comparative analysis of financial management systems in the public and the private sectors of the economy. The problematic issues of the functioning of the PFM system, which include the issues of assessing the quality of the PFM, are analyzed. The quality of the PFM is understood as its effectiveness, efficiency, and achievement of the goals of the PFM, the main of which is the growth of the well-being of society. The statement proved that the amount of public spending is not evidence of the effectiveness of the PFM system. The factors influencing the efficiency of the PFM system functioning are revealed. The importance of financial information formed in the system of state accounting on an accrual basis on the basis of IPSAS for making government decisions is revealed. An alternative point of view on the formation of financial information is given.