Answer to Question #196220 in Macroeconomics for Nolo

Question

Highlight the institutional framework is in place to ensure that the South African government performs its function in a transparent, accountable and consistent manner and evaluate the effectiveness of such a framework in preventing government failure.

Answer 1

The Public Finance Management Act, No. 1 of 1999.

The framework  establishes guidelines for proper economic monitoring as well as openness and accountability processes. There are set guidelines for federal branches, statutory agencies, and various public bodies. It gives accounting officials the ability to budget while still holding them responsible for the assets they utilize.

The efficient management of resources obtained and expended by governments is the subject of public finance management. It will help to improve overall governance by safeguarding public services from exploitation and corruption. The macro economy would suffer if public funds were not well managed, with detrimental consequences for the market environment and income transfer by inflation. As a result, an efficient PFM scheme simultaneously protects public capital by being transparent, accessible, and ensuring adequate governance arrangements, as well as facilitates effective fund management, mitigating the risk of corruption.