Direktorat Jenderal Anggaran

<p>Public Financial Management (PFM) has evolved in the past two decades to find the most effective and efficient way of managing public sector organisations&#8217; resources (Cangiano et al. 2013). Several issues in public budgeting have triggered a number of innovations in PFM (Allen et al. 2013). One of the major problems in public finance is organisational slack or budgetary slack that originates from budget maximisation behaviour (Wyckoff 1990). Like a domino effect, such a problem can cause another problem, such as an end-of-year expenditure surge to which PFM reformers have devoted their attention and research. This paper aims to shed light on how some essential PFM innovations have been developed to solve both problems. Thus, this paper will briefly elaborate on the two problems, the role of some key PFM features in addressing those issues, and the outcome.</p>