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THE GLOBAL FINANCIAL CRISIS IMPACT ON THE PUBLIC SECTOR
Following a comprehensive international survey, KPMG outlined a new image of the current economic situation specific to the public sector, in light of the impact exerted on the public sector by the worldwide economic recession.
The main domains under scrutiny included specific strategies and potential changes that should be adopted by public authorities in the near future, public institutions budget, lessons learned from the recession, as well as the future of the public sector in general.
The survey revealed that most of the respondents (53%) considered bringing radical changes to the general long-term strategy with no intention, however, to modify the short-term strategy. Quite on the opposite side were the Central and Eastern European states where the majority (74%) planned to bring changes to their short-term strategy from 2010 onwards, without rethinking their general long-term strategy.
With respect to public institutions budgets, 49% of the respondents anticipated a drop in funds in 2010, 36% believed that budgets would remain intact whereas only 13% had an optimistic view, anticipating an increase in budgeted amounts.
In the opinion of most of the respondents, the public sector will suffer changes as a result of the economic decline, becoming more efficient, increasingly transparent, downsizing and showing better performances in public spending but facing difficulties in attracting funds. At the same time, governments were expected to focus on a package of measures to foster economy as a whole, with the respondents of the Central and Eastern European states reporting a higher interest in reaching fiscal stability and a better use of EU funds.
While some of the respondents stressed that the main lesson to be learned from past recessions was that more attention should be paid to the spending of public funds and the need for stricter audits, a large number of respondents were of the opinion that this period was unlike any other previous recession. The Central and East European officials who participated in the survey appeared to perceive the financial crisis rather like a regular phenomenon: in their opinion, economy has constantly been hit by recession periods and a major role is played by the state of economy at the time when it is struck by crisis. As a consequence, advance planning, in their opinion, should not to be overestimated.
“In Romania, the survey revealed that public institutions considered changing the short and medium-term strategy, with some of the most drastic measures being a cut-down in staff numbers and acquisition costs. The survey also unveiled that the public sector was expected to become more efficient in both financial and operational terms after having gone through the financial crisis and experiencing its specific effects”, said Daniela Nemoianu, Head of Advisory services and a partner of KPMG in Romania.
The KPMG survey was carried out throughout the year 2009 with the participation of 162 official representatives (from various domains of the public sector) spanning 15 countries from the European, Australian and North-American continents.
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About KPMG:
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 146 countries and have 140,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG in Romania operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chișinău. We currently employ more than 600 partners and staff, both Romanian and expatriates.
© 2010 KPMG Romania S.R.L., a Romanian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Romania.
