MTEFs in the Pacific

Strengthening Public Financial Management in Pacific Developing Member Countries;

These and other efforts have produced positive results in several aspects of PFM. For instance, public auditing in the Pacific region overall has advanced substantially in the past decade, with numerous audit backlogs cleared and a significant improvement in audit quality. Likewise, the application in the Pacific of the Public Expenditure and Financial Accountability (PEFA) PFM Assessment Framework reveals that planning and budget processes are rated satisfactorily (B+ average). Given their potential to better link policy with budgets and to enable better decision-making, it is not surprising that emphasis has been placed on developing medium-term expenditure frameworks (MTEFs), but some reviews caution countries to implement MTEFs only when basic financial controls and annual budgeting are working well. However, Pacific island countries rate poorly in terms of budget execution, with payroll controls scoring a C- average and internal audit scoring a D+ average. A Pacific auditor-general reported recently to their public accounts committee that “Put simply, sometimes there is nothing to audit because the records are non-existent” … “there was a lack of bank reconciliations, poor documentation supporting the transactions, lack of physical stocktakes … and ineffective budget controls. [… Moreover, the Office has been] auditing accounts and records that are sometimes six years old.”15 The situation described is not uncommon in the Pacific.