USD700k for Enhancing Aid Effectiveness

What would Easterly say?

Lao People’s Democratic Republic:Capacity Strengthening for Enhancing Aid Effectiveness

Principal Aid-Effectiveness Functions in Government
• National planning (National Socio-Economic Development Plan and Public Investment Program)
• Sector Assistance Program Planning
• Local Government Investment Planning
• National Aid Coordination
• Sector Aid Coordination
• Provincial Aid Coordination
• Aid Policy Reform
• Aid Policy Reform Tracking
• Aid Information and Reporting Systems
• Aid Program Evaluation
• Project and Program Design
• Project and Program Implementation
• Project and Program Monitoring
• Project and Program Evaluation

How much spending is enough on strengthening public expenditure management?

The People's Republic of Bangladesh intends to apply for a grant of around US$ 95 million from a Multi-donor Trust Fund (MDTF) administered by the International Development Association (IDA) and with the participation of five development partners, Department for International Development (DFID), European Commission (EC), Canadian International Development Agency (CIDA), Danish International Development Agency (DANIDA) and the Netherlands, toward the cost of Strengthening Public Expenditure Management Program (SPEMP) and it intends to apply part of the proceeds to payment for goods, works and services to be procured under this program.

- Strengthening Public Expenditure Management Program in Bangladesh

IMF Fact of the Day

The Fund devotes about a quarter of its budget to capacity building. It extends beyond the mere provision of technical assistance and includes work on standards and codes, financial sector assessment, and training of officials.

-The Role of the Fund in Low-Income Countries - Background Paper

GFS data quality in Dominica

Statistical capacity problems affect the timely production of quality government finance statistics. In particular, the data are subject to frequent revisions stemming in part from omissions and misclassifications. Data on central government operations are incomplete and must be supplemented with additional information from external sources. For instance, some operations are undertaken outside the consolidated fund. These include certain investment spending, loan and grant receipts, and on-lending and transfers to public enterprises. As a result, capital expenditure data, recorded by the Treasury, must be supplemented with additional donor financing information, particularly because the public sector investment program (PSIP) data are not timely. Delays in the reporting of the PSIP data reportedly stem from reporting delays from the line ministries.

Several ongoing initiatives to strengthen expenditure management, should help minimize the extent of this problem. There is an ongoing effort to automate the expenditure execution process. A new automation technology installed in all line ministries in 2005 should allow all local purchase orders (LPOs) to be electronically generated and tracked. Commitments are charged against a specific budget allocation once the LPOs are generated. All ministries and suppliers of goods and services are compelled to use the new system. Only limited financing data are available. Although progress has been made in improving the measurement of the government's debt, there are concerns that there is still some under-recording of government commitments.

The authorities do not provide consolidated nonfinancial public sector data. Data for the rest of the public sector—Dominica Social Security and the public enterprises—must be obtained directly from each entity during Fund Article IV consultation missions.

No government finance data are reported to STA for publication in the International Financial Statistics (IFS) or the Government Finance Statistics (GFS) Yearbook.

via Dominica: 2008 Article IV Consultation - Staff Report

Indonesia: Progress in Fiscal Institution Building

Recommended reading- Indonesia: Selected Issues, chapter IV;

Progress has been made in strengthening technical capacity at the central government level. Within the Ministry of Finance (MoF), the Fiscal Policy Office (FPO) is now fully operational with a mandate for macro-fiscal projections and analysis, including assessments of fiscal risks. The FPO now prepares fiscal risk statements that are included in the annual budget documents—making Indonesia one of the pioneers in fiscal risk analysis among emerging market economies. Operational management of debt-related risks is undertaken by the Directorate General (DG) for Debt Management, which is responsible for both domestic and external debt management.

Despite some progress, parliament’s technical capacity for fiscal policy analysis is still limited. Parliament’s (DPR) budget committee plays an important role in the budget approval processes, though with excessive emphasis on details which are usually seen as being within the province of the executive (such as close scrutiny of macroeconomic assumptions and detailed review of expenditure items—as opposed to scrutiny at a more aggregated level found in other countries). In contrast with this wide ranging mandate, the DPR had limited qualified technical staff and few with specializations. Some improvement in these areas has been achieved through: (1) increasing the number of technical staff; and (2) greater specialization of staff through the establishment of specific parliament commissions (e.g., the economic commission). These commissions are now able to provide some analytical and technical support to members of parliament, though the DPR’s effectiveness in budget scrutiny and oversight is still inadequate. Intense involvement of the DPR at the pre-budget presentation stages remains (6–7 months before the new fiscal year), but there is only limited focus on medium-term budget issues and on the results of policies embedded in the annual budget. The 2003 State Finances Act calls for an unusually early date for approval by parliament of the annual budget law (2 months before the new fiscal year); nonetheless, DPR committees continue to be involved in budget approval after the annual budget law has been adopted in plenary session. The DPR’s follow-up on the external audits of the Supreme Audit Institution (BKP) remains weak.

Progress has been made in improving the quality of government accounts, but is still incomplete. The adoption of government cash management regulations in July 2007 was an important step in improving the transparency of government banking arrangements. The regulations strengthen the Minister of Finance’s powers to consolidate government bank accounts. On this basis, the MoF conducted a census of government bank accounts operated by ministries and budget users outside treasury control. The ensuing ministry-by-ministry analysis of accounts revealed that over 20,000 government accounts existed. Some of these off-budget bank accounts have either been closed or integrated with the treasury. This was a sizeable step towards establishing an operational treasury single account (TSA). However, there are still a few impediments to the establishment of a TSA. In particular, government deposits held at Bank Indonesia (BI) are poorly remunerated, which impedes the development of active cash management (since the opportunity cost of idle government deposits is small). Transparency also improved following the incorporation of the regional development and investment accounts into financial reports and budget documents. Progress in integrating the operation of other extrabudgetary funds in the budget has been limited

The disclosure of fiscal information to the public has improved significantly.
Several recent amendments to ministerial decrees should help improve fiscal data quality and transparency. In particular, the chart of accounts now requires that the budget, in-year fiscal reports, and annual financial statements use the same terminology, which should simplify budget monitoring. The publication of a comprehensive fiscal risk statement accompanying the annual budget document significantly improves the transparency of fiscal policies and associated risks. In this context, improved reporting of information by SOEs should enable the FPO’s risk management unit to better assess risks for selected key SOEs. The reporting of information on central government debt is now comprehensive and timely, and key contingent liabilities are also disclosed in the annual fiscal risk statement (including those related to public-private partnerships). However, little progress has been made on reporting general government debt (though local government debt remains negligible), and debt accumulated by public enterprises.

Early progress has been achieved in strengthening internal and external audit bodies and in fighting corruption among public officials. The BPK mandate has been strengthened by the adoption of a 2006 law (and associated decrees in 2007). BPK staff headcount has been significantly increased (currently 6,000 staff covering 28 provinces) and training has been improved in both the IG and BPK, though needs remain significant. However, both the MoF’s IG and BPK are experiencing difficulties in accessing taxpayers data needed to investigate potential misconduct of tax officials owing to taxpayers privacy concerns, even though the law provides both institutions such access. Memorandum of understandings between the MoF and the internal and external auditors to address this issue are under discussion. Finally, the role of the Financial and Development Supervisory Agency (BPKP) as an internal audit body has not been reviewed—BPKP is part of the president’s office and has jurisdiction on central government finances. However, it shares internal audit responsibilities related to ministries with the IG, with an unclear distinction between their mandates.

Jordan: Technical Assistance, 2000–2008

Fiscal

• May 2000 Framework for managing nontreasury accounts

• September 2000 Oil pricing mechanism
• January–June 2002 Pension reform
• January–September 2002 GST reform
• November 2002 Macrofiscal capacity and treasury single account
• February, October 2003 Revenue administration reform
• June, August, December 2003 Peripatetic advisor on single treasury account
• February, June, October 2004 Peripatetic advisor on revenue administration reform
• February, May 2004 Public expenditure management
• August 2004–June 2005 Resident expert in macrofiscal management
• February 2005 Distributional effects of replacing oil subsidies
• February–March 2005 Revenue administration reform
• April 2005 Fiscal ROSC
• February, May 2006 Public financial management
• April–August 2006 Expert visits on revenue administration reform
• October–November 2006 Revenue administration inspection visit
• March–April, July, December 2007Revenue administration reform (METAC)

Monetary and Financial

• January–February, April–May 2001, International reserve management
• April–May 2008, Debt management strategy

Statistical

• July 2000 National accounts statistics
• January–February 2002 Report on the Observation of Standards and Codes—Data module

• December 2003 Follow-up on Report on the Observation of Standards and Codes—Data module
• Oct. 2003–Jan. 2004, Mar–May 2004 Balance of payments statistics
• April–May 2004 Government finance statistics
• December 2006 National accounts statistics
• October–November 2006 SDDS Assessment mission
• July 2007 Follow-up on SDDS/Government Finance Statistics

Other

• March 2008 Financial programming workshop

Source: Jordan: 2008 Article IV Consultation - Staff Report

For Discussion: IMF has done a relatively better job at capacity development than other IFIs, especially the peripatetic model has been quiet effective. Discuss.

Related; IMF to Enhance Impact of Its Technical Assistance

In the IMF's FY2008 alone, close to 200 "person-years" (or about 52,000 working days) of assistance was delivered to IMF member countries

An MTFF for Suriname

The mission welcomed the authorities’ interest in establishing a medium-term fiscal framework (MTFF) and encouraged them to move as fast as feasible on this front.

• Staff proposed that fiscal discipline over the medium term be anchored on a debt target of no more than 20–25 percent of GDP when revenues are at trend. This would allow some room for debt to temporarily rise when commodity revenues were unusually low, without threatening sustainability. The authorities found this ceiling somewhat restrictive, and preferred a ceiling of some 30 percent.

• Staff indicated that an MTFF should also include a target for the non-mineral balance. The authorities explained that setting a formal target for this would require changing legislation, which could take time. They will consider the staff’s recommendation to appendix). Staff also indicated that it would be advisable to supplement the MTFF by a ceiling on expenditure growth, especially since the debt ceiling is non-binding and formal adoption of a target for the non-mineral balance may take time.

• A well-managed natural resource fund (NRF) could help safeguard surpluses and accumulate financial assets as future mining projects come on stream. Staff stressed that an NRF should be fully integrated into the budget, with no independent spending authority. The authorities agreed that, since new large mining projects are not expected to come on stream in the near term, priority should be given to establishing an MTFF. Staff also pointed to the need to settle external arrears before starting asset accumulation in an NRF, and supported plans to normalize relations with creditors.

The mission urged better assessment of fiscal risks. Available public debt statistics cover only debt contracted or guaranteed by the central government. In addition, some state-owned enterprises are legally allowed to borrow without government guarantee, and reporting on their operations is incomplete. The mission recommended improving monitoring mechanisms and reporting their operations in budget documents. The authorities noted that cases of public enterprises borrowing with no government guarantee had been very rare, and that for external loans, creditors consistently asked for a government guarantee even for financially sound enterprises. They explained that a ministry of finance unit was already charged with monitoring public enterprises, although they were not yet in a position to comprehensively report these entities’ operations in budget documents.

Source:Suriname: 2008 Article IV Consultation - Staff Report


Related;
Suriname - Key Indicators

Governance in Suriname- IADB

Some IADB Projects in Suriname
Program for the Modernization of the Surinamese Tax Administration
Public Financial Management Assessment

Support for the Public Sector Investment System

Design of Pension Reform

Strengthening of Public Sector Management-USD 6,250,000
Road Map for Public Sector Reform
Institutional Strengthening of Debt Management
Advisory Services to the Central Bank of Suriname

Do qualifications of a finance minister matter?

Maybe not. The following is the qualification of Trevor Andrew Manuel, South Africa's Finance Minister.

* Matriculated from Harold Cressy High School, Cape Town
* National Diploma in Civil and Structural Engineering, from the Peninsula Technikon
* Executive Management Programme from Stanford National University, Singapore

Assorted Technical Assistance- ADB

Nepal: Knowledge Transfer for Public Procurement

Bhutan- Strengthening the Debt Management Capacity of the Department of Aid and Debt Management-Undisbursed $6,672;

• A debt policy. The TA final report produced a “borrowing policy and strategy.” It includes a framework for government borrowing, recommended borrowing ceiling and parameters, an on-lend policy, and guidelines on the use of guarantees. Despite the delivered output, it took additional Government efforts to finalize the debt policy, which was drafted independently by the Government after the TA completion. Nonetheless, the exposure from the consultants’ preparation of the “borrowing policy and strategy” was helpful to the DADM staff in finalizing the debt policy. In 2008, the debt policy is in the process of being mainstreamed into the decision-making process. This TA output was therefore relevant but not sufficient, as well as less effective.

A loan procedures and regulations manual. A brief loan manual was prepared under the TA. The manual described government borrowing cycle and the responsible agency functions. MOF used such information to produce the Standards Operating Procedures (SOP). SOP is in use and effective. However, this TA component did not contribute to the more comprehensive “Aid and Debt Management Manual” because of government reorganization that separated aid and debt management functions. Therefore, the Government was unable to produce a combined manual. Under such a circumstance, this TA output was still relevant, effective, and sustainable.

• A complete and consolidated database on all loans and grants. Procurement and installation of the database were the largest TA component. In early 2006, the CS-DRMS for loan and grant recording was procured. Significant efforts were made by ADB to reduce the price for a non-Commonwealth member. As a result, the system procured was cost effective and suitable in the Bhutanese context. The system has been essential for the country’s debt policy management and formulation. This TA output was highly relevant, highly effective, and most likely sustainable.

• Strengthened debt management capacity of public debt management staff. Continuous ADB TA support from 2003 to DADM delivered concrete results in strengthened debt management capacity. Six DADM staff members have been trained and are now proficient in using the CS-DRMS. All six are still with DMD, and the developed capacity is retained. Because of the complex nature of the software system, DMD staff requires continuous support to use the new database. This TA output was highly relevant, highly effective, efficient, and most likely sustainable.

• Timely feedback provided in the form of descriptive and analytical reports to other user departments of the Government and aid agencies. The information generated by CS-DRMS provides descriptive and analytical reports to line ministries. Such reports helped MOF formulate critical decisions in macroeconomic management and development planning. This TA output was highly relevant, effective, efficient, and sustainable.

Major Lessons
The TA completion was delayed because the TA design did not foresee the extended time required for software procurement and launch. The selection of a suitable system, especially fitting the Bhutanese context was time consuming. The Government conducted exhaustive reviews, including country site visits, and extensive negotiation of the price. Database conversation from original Excel sheets to the CS-DRMS also took longer time than originally planned. The extensive time on software procurement and launch therefore affected some remaining TA outputs. These issues need to be taken into consideration for the subsequent TA design and implementation.

Capacity Building for Fiscal Reforms in Sikkim- Undisbursed-$183,889;

Overall Assessment and Rating: The TA was successful in introducing VAT in the State, and designing a fiscal consolidation program in conjunction with capacity building trainings in several areas (see the previous section). The consulting firm was selected under the Quality and Cost Based Selection Process (QCBS) at a significantly lower cost than anticipated during TA processing. Thus, the objective of the TA was accomplished without utilizing the entire amount of the original TA budget. The proposed overall rating of the TA is successful

Major Lessons: Sustaining the capacity building effort in a small state like Sikkim is a difficult challenge. The follow-up actions are often not pursued after the period of assistance. In such a situation, designs of the capacity building initiatives become very crucial. The capacity building process needs to be completed within the TA period so that the desired sector outputs could be achieved without immediate follow-up actions. For example, the VAT manual and the VAT rules were designed under the TA, and adequate training was provided to the concerned staff. In other words, the desired output was not exposed to exogenous risks in terms of Government’s commitment for training.

Mauritius Government Finance Statistics- Data Quality

ROSC- Data Module for Mauritius was recently posted by the IMF. The recommendations on government finance statistics are well worth a look;

• Legally/officially assign the responsibility to compile GFS for the general government to the CSO.
• Strengthen and increase staff resources for work on GFS
• Inform the users of the internal approval processes of the data
• Prepare a detailed migration path and obtain official approval for implementing GFSM 2001.
• Continue work on improving the timeliness of source data by obtaining an agreement on the timely provision of data from all major source data providers.
• Improve the timeliness of the general government operations data.
• Regularly check for consistency between GFS and monetary data and prepare a reconciliation table.
• Explain the revision policy in the GFS publication
• Prepare and disseminate advance release calendars for central government operations and outstanding central government debt.

On the capacity side;

The CSO has four staff positions dedicated to the compilation of annual GFS for the general government sector and in cooperation with the MOFED the functional classification of budgetary central government expenditure on a quarterly basis. These staff also are assigned to compile quarterly general government statistics for the national accounts. Resources are limited; in particular staff resources are constrained taking into account the current migration from the methodology described in the GFSM 1986 to the methodology described in the Government Finance Statistics Manual, 2001 (GFSM 2001). While computer resources seem adequate at the moment, any additional demands could over-extend these resources.

On-the-job and external training have been available to the MOFED and CSO staff. Formal internal training has not been provided. Some staff have attended external training on the GFSM 1986 and on the GFSM 2001.

Significant progress to automate government finance compilation procedures has been achieved recently through the implementation of the Treasury Accounting System (TAS) used by the Accountant-General to follow the cash flows of the budgetary central government. However, this process needs to be extended to other areas of the general government. Data for non-budgetary central government and local governments are input manually. A new chart of accounts, based on the GFSM2001, is currently being prepared and is expected to be implemented as from the financial year 2008/09.