IFAC urges G7 ministers to take long-term view of public finances

8 Jun 15

The International Federation of Accountants has called on public finance policymakers to act in the long-term interest in the wake of the Greek debt crisis, which is no nearer to a resolution.

IFAC backed the call from US Treasury Secretary Jack Lew for European finance ministers to find quick solutions to the ongoing public sector finances crisis in Greece but urged politicians to look beyond their next term of office.

Concluding the G7 finance ministers meeting in Dresden late last month, Lew warned that delaying negotiations with Athens raised the risk of a default or a Greek exit from the eurozone and possible damage to the global economy.

“At some point there won’t be the ability for Greece to pay its bills and that will be the moment when, if it comes, there will be an accident,” Lew said.

“All parties need to move. There needs to be some flexibility on the part of the institutions [the International Monetary Fund, European Commission and the European Central Bank]. There need to be policy decisions implemented in Greece. One won’t happen without the other.”

IFCA agreed with Lew’s analysis of the Greek situation, but suggested that strong and sometimes difficult policy decisions about public sector finances needed to be made by international organisations and governments across the globe.

The global accountancy body noted that, despite many countries having faced significant fiscal, debt and other financial management issues over recent years, little has been achieved to fix poor PFM, transparency and accountability.

“Improving public sector financial management and providing for better decision making requires politicians to look beyond their next term in office, and to act in the public’s – and the next generation’s – interests,” said IFAC chief executive Fayezul Choudhury.

“It is critical that policy leaders in governments and international organisations recognise the importance of enhancing public sector finances, reporting, transparency and accountability.

“Without demanding the improvements that are necessary, these bodies are destined to be confronting – and debating – the same issues again in the near future.”

IFAC has called on the G7 to address these issues at this week’s meeting.

Meanwhile, the accountancy body welcomed Greece’s move to adopt International Public Sector Accounting Standards.

IFAC said this was “a small but very important step forward on the journey to full transparency and accountability”.

  • Judith Ugwumadu
    Judith Ugwumadu

    Judith writes about public finance, public services and economics across Public Finance International and Public Finance. She previously undertook reporting stints at Financial Adviser, Global Security Finance and The Sunday Express.

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