ABSTRACT
This chapter investigates how the financial cycle has been modernized and addresses the latest changes in public financial management to determine whether and how the financial crisis has affected existing practices and reform trajectories in public financial management. Recent decades have witnessed various attempts to reform public budgeting and financial management, which have been more broadly affected by New Public Management (NPM) reforms. The more substantial changes include moving from simple line-item budgeting under a centralized government bureaucracy to program and performance budgeting, performance contracts, contracting with the business and non-profit sectors, more entrepreneurial management, output and outcome measurement and fiscal decentralization. Performance-based contracts between ministries and agencies were embedded in general performance-based budgets. The use of performance information in public financial management, together with its contractual and entrepreneurial elements, has been intended to increase transparency and accountability of government.
