Random thoughts on Improving PFM Technical Assistance

'The best solutions are those where international experience is judiciously mixed with local genius'-Suhas Joshi

Some more comments on Richard Allen's post about improving effectiveness of PFM TAs';

- I don't see any problems in moving towards what locals and advisers see as best practice; as long we consider that there are many recipes of 'best practice'

-TA reports should always start the dialogue, but how does one institutionalise discussion and follow up of TA reports on PFM? Which committees should be responsible, and at which level?

- Mr. Joshi also makes importance points in the comments-'countries therefore do not need large prescriptive reports but help is resolving the constraints they have'. I fully agree, 'it is more useful to have as a TA someone who understands the country and has spent some time there'

- One of the biggest problems I've seen are consultants who want to take you for a ride- this is a problem for assistance provided by some international donors who have weak internal expertise, exceptions include World Bank and IMF. Countries need to seriously think the donor they approach for reform PFM areas and whether they have a comparative advantage in them.

Does talking about ownership and capacity makes sense?

An informative piece on the PFM technical assistance provided to Burundi- one of the poorest countries in the world.

A PFM strategy and its corresponding action plan for the period 2009–11, was adopted by the Council of Ministers in May 2009. It has been designed to address PFM weaknesses identified in particular through FAD diagnostic work since 2005, the Public Expenditure Management and Financial Accountability Review (PEMFAR) finalized by the World Bank in February 2008, and a Public Expenditure and Financial Accountability (PEFA) assessment performed by the European Commission (EC) in December 2008....

While promising initiatives have been recently implemented, including the installation of a Steering Committee chaired by the Minister of Finance, and of nine technical groups to implement the PFM reforms, the leadership of the reforms process within the MoF and to coordinate TA provided by donors will need to remain a point of attention....

Because of the slow pace of progress, signs of discouragement (from the experts), de-motivation (from the staff), and impatience (from the donors) are appearing, especially if it is considered that the “easiest” part of the reform has been done—strategy, action plan, laws, and decree in particular—and that the next step being a full and consistent implementation of all the provisions and actions developed in these various documents.

My tentative thoughts on the piece-

-IMF and World Bank needs to run the show, rhetoric of ownership is important, but when there is acute capacity constraints, lets face it, IMF should be the demanding advocate.

-What's an effective central finance agency? Their finance minister needs to have clarity on this important issue.

-PEMFAR of the World Bank appears a decent standard document- on MTEF they recommend Tajkistan approach which may not be the best approach. If any one can provide a link to their PEFA please do so,

-Most importantly we encourage the Fund to write more similar pieces on country case studies.

Related:
Managing Public Finance in Burundi- USAID;

The Ministry of Finance currently comprises some 250 employees (not including customs). Its workforce is thin and unmotivated at higher levels (except for some of the top officials), and drifting and underskilled at lower levels. The general erosion of staff and skills in the Burundi government, not only because of the conflict but because of the much higher compensation offered in Rwanda more recently as well, is well known and has affected the Ministry of Finance as much as the rest of the government. Issues of capacity building in the Ministry of Finance are thus no different than systemic capacity building and civil service issues in general.

Burundi, Economic Reform and Financial Transparency Assessment Program (2005-2006)

The Greeks of Burundi

EU Relations with Burundi

Burundi- Country Statistics

Development Jobs

World Bank Job Offer: Public Financial Management Specialist

The closing date:February 14, 2010

MIGA Professionals Program (MPP)
Looking for a Risk Officer, Accounting Office, and Underwriter

Marco-Fiscal Advisor- Afghanistan
Deloitte
Apply By: 11 February 2010

The Advisor will:

* Review appropriateness of MOF macroeconomic model for macro-fiscal analysis and forecasting.
* Review the process for integrating the MOF macroeconomic model to the revenue projections model and medium term fiscal framework (MTFF)
* Document data requirements for model and assist MOF in developing MOU's with DAB and statistical agency for the periodic provision of updated data for the model.
* Develop manuals and training materials to assist in building the knowledge and expertise of MOF staff in use of the Macroeconomic model.
* Provide coaching, formal training and mentoring to MOF staff in the use of the model.

Institutional Development Expert - Sri Lanka
Sinclair Knight Merz
Apply By: 20 January 2010

Namibia - Support to the National Planning Commission Secretariat
ECORYS
Apply By: 11 February 2010

ADB has a lot of anticipated vacancies for economists and PFM experts

PFM Books

The Many Faces of Public Management Reform in the Asia-Pacific Region;

During the past decade, globalization and democratization have been the major forces that helped transform the structures, functions, and processes of Asian public sectors. Nevertheless, these transformation efforts of Asian countries vary considerably depending on local context, and have met with different degrees of success. Some countries experienced smooth transformations. For others, the reform process has been more volatile. These issues were explored at a conference July 7-9, 2008 in Bangkok, Thailand, hosted by the Faculty of Political Science, Chulalongkorn University, and co-sponsored by the International Public Management Network, the Asia-Pacific Governance Institute, and Thailand Democracy Watch. This book presents some of the works contributed by participating scholars and practitioners at the conference. The contents fall into three categories: corruption and anti-corruption initiatives, public financial management reforms, and public management reforms with emphasis on performance and results.

Editor are Clay Wescott, Bidhya Bowornwathana, L.R. Jones,

Highly recommended:
World Bank, 2008. Public Sector Reform: What Works and Why? An IEG Evaluation of World Bank Support.

By a Consultant for another Consultant?

Senior Budget Adviser- Timor Leste (deadline October 6)

From the scope of work;

-Where requested, report to and advise the Senior Management and on matters of budget design and execution;
-Develop the management and leadership skills of the National Director, focusing in particular on:
clear comprehension of his core roles and responsibilities;
identifying how directorate workflows fit into these roles and responsibilities;
effective delegation;
realistic workload assessment and planning; and
inculcating some basic concepts of team-building.
-Support the development and execution of the national budget in line with the budget guidelines;
-Assist in the integration of the services provided by the Ministry to Line Ministries in the areas of budgeting, planning, treasury functions and procurement.
-Build capacity within the budget and expenditure review units with a view to, over time, a greater percentage of the work of the units can be undertaken independently by national staff,
-Build the capacity of local staff to oversee the management of line Ministry budget processes;
-Support the development of new systems and processes as the budget design is gradually computerised onto the FMIS and devolved to line agencies;
-Provide advice and support to the implementation of the performance budgeting element of the FMIS;
-To instill and further develop a client focus culture in the budget and expenditure review units.
-Provide advice on the budgetary impacts of various government initiatives to the Minister for Finance;
-Provide holistic/ strategic advice on ministry issues, as requested; and,
-In consultation with the Professional Development Program director, identify training needs for staff in the National Directorate of the Budget and Planning and develop strategies to secure the necessary skills needed to ensure the long term viability of the National Budget Directorate.
-Perform such other technical and inline functions as may be required by the Program Services Directorate or the Ministry of Finance.

I've to say good luck to the Budget Adviser.

Related;
Timor-Leste PEFA

A Balancing Act: Implementation of the Paris Declaration in Timor-Leste

East Timor- AUSAID

Timor-Leste: Reflections on the 10th anniversary of independence

Timor-Leste-World Bank

Affordable Computing for Schools in Developing Countries

Total Cost of Ownership (TCO): A Study of Models of Affordable Computing for Schools in Developing Countries

"Total cost of ownership" (TCO) is often underestimated, sometimes grossly, when calculating costs of ICT in education initiatives in developing countries. Estimates of initial costs to purchase equipment to overall costs over time vary widely; typically they lie between 10-25% of total cost. That said, there is a dearth of reliable data, and useful tools, to help guide education decisionmakers in their assessments of the true costs of educational technology initiatives.

A recent whitepaper from Vital Wave Consulting, "Affordable Computing for Schools in Developing Countries: A Total Cost of Ownership (TCO) Model for Education Officials", and accompanying case study of ICT in education initiatives in India , provide further insight and perspective on this important and often controversial issue. The white paper discusses key issues related to technology use in education and presents several major findings, including:

* Academic research and private-sector investment decisions indicate that computers in schools contribute to improved academic outcomes, boost a nation’s economic competitiveness, and attract job-creating economic investments.
* Governments need to consider the entire cost of school computing solutions, rather than merely the initial expenses. A total cost of ownership model takes into account recurrent and hidden costs such as teacher training, support and maintenance, and the cost of replacing hardware over a five-year period.
* Support and training are recurrent costs that constitute two of the three largest costs in the total cost of ownership model. They are greater than hardware costs and much higher than software fees.
* Ultra-low cost computers and Linux-based solutions are relatively equal in cost to traditional hardware and proprietary software solutions because they require higher labor and replacement costs over a five-year period.
* The total cost of ownership for different computer types and software platforms is relatively consistent.

Fiscal Expert of the Day- Mr. Fiscal Space

Peter S. Heller

Best known book;
Who Will Pay? Coping with Aging Societies, Climate Change and Other Long-Term Fiscal Challenges

Some of his articles;

Pity the Finance Minister: Issues in Managing a Substantial Scaling-up of Aid Flows

Understanding Fiscal Space

The Budgetary Impact of Privatization: Examples from New Zealand and Prospects for Ireland

The Recurrent Cost Problem: An International Overview

Government Employment and Pay: Some International Comparisons

The Problem of Recurrent Costs in the Budgeting and Planning Process,

What Should Macroeconomists Know about Health Care Policy? A Primer

His Blog- Thinking About Fiscal Space

Multimedia;
What Is the Right Fiscal Policy for Growth

A good decision

Sanjay Pradhan to head World Bank Institute;

“Today policymakers around the world want to know what has worked elsewhere, and they want to connect with practitioners in other parts of the world. They want just-in-time global knowledge that can be customized for local conditions. The World Bank Institute can serve as a premier global platform that connects practitioners with cutting-edge development knowledge.” Mr. Pradhan said. “By supporting dynamic capacity development that inspires, informs and catalyzes innovative reforms across countries, the World Bank Institute can play a very helpful role in improving development outcomes.”

Tajikistan- invaded by consultants?

This assignment is part of the Public Sector Reform Project (PSRP), funded by the International Development Association's (IDA) grant. The aim of the project is to implement key aspects of the 2006 Government's Public Administration Reform Strategy (PARS). The Executive Office of the President of the Republic of Tajikistan (EOP) intends to apply part of the grant proceeds for consulting services to conduct Vertical Functional Reviews of seven Ministries.

The PAR Strategy envisages streamlining through functional reviews functions and structures of the central government, local state authorities and local self-governance. The functional reviews shall develop recommendations for improved allocation of functions and competences for effective policy implementation and effective delivery and accessibility of public services.

- Vertical Functional Reviews of Seven Ministries

Related;
Developing Methods and Procedures for Performance Appraisal of Civil Servants

Development of the Public Financial Management Strategy

The objective of the assignment is to assist the government of Tajikistan, in particular the Ministry of Finance to (1) improve Budget Classification and Chart of Accounts in compliance with the international standards; (2) conduct functional reviews of the public financial system, including the analysis of gaps and issues in the existing systems and proposed changes to business process; and (3) develop a Public Financial Management Strategy and an action plan that will provide a basis for modernization of public financial management in Tajikistan.

Public Sector Reform TA

Conduction of a horizontal functional review of state power bodies of the Republic of Tajikistan

How to be an expert in PFM?

The assignment is for an ex-post evaluation of the Institutional Strengthening of the Ministry of Finance of Sierra Leone. This project was intended to provide capacity support to the Ministry of Finance and Economic Development, given the low capacity at the Ministry at the end of the war. Following the monitoring mission undertaken by the EC, an external mid-term evaluation was carried out at the request of the EC delegation and complying with provisions in the Financing Agreement.

- The Expert should have a relevant master's degree in Financial Management.

- Public Financial Management experience (10 years) in strategic planning, financial programming, institutional and organisational development and evaluations, project performance measurement.

- Minimum of 10 years experience in developing countries.

- The expert must have previous experience in project evaluation in the Economic sector, preferably with regard to EC funded projects. S/he must be familiar with the logframe and with evaluation of institutional strengthening programmes.

Related;
Ministry of Finance/UNDP Launch joint programme support to MTEF

An MTEF to Manage Aid Flows

IMF recommends Dominica;

The mission recommended moving gradually to a medium-term expenditure framework (MTEF) to help manage the effects of recent aid inflows. In recent years, the government has taken steps to diversify its trade and economic cooperation linkages, especially with China and Venezuela, which has resulted in increased (but uncertain) aid flows (Box 5). This includes assistance under the PetroCaribe and Bolivarian Alternative for the America’s (ALBA) agreement with Venezuela. An MTEF would give greater predictability to government expenditure, reduce economic volatility, and help prevent an appreciation in the REER associated with aid-financed spending beyond the economy’s absorptive capacity. The mission also recommended improving the framework for executing and monitoring grant-financed projects. This would be aided by early approval of the pending Finance Administration Act, which would enhance recording and accountability in government finances. Regarding financing under the PetroCaribe and ALBA agreements, staff and the authorities agreed that such financing should be consistent with the overall public expenditure and debt strategy, and preserve the passthrough of changes in international oil prices. The authorities indicated that they propose to save the bulk of the concessional financing for fuel consumption under the PetroCaribe initiative. They plan to set up an investment fund, possibly at the ECCB, and restrict their spending on social projects from this source to the net return derived from the investment fund. Arrangements are also being made to incorporate the government owned petroleum trading company and ensure that its activities are clearly reflected in the government accounts.

Related;
Hype and Reality: "The" Medium-term Expenditure Framework in Developing Countries

If you want to Fight Poverty and Save the World

Accepting applications for the Acumen Fellows class of 2010

MTEF Expert of the Day - Graham Scott

Dr. Graham Scott, former Secretary to the Treasury of New Zealand. Some of his experience;

Office of the Public Sector Development
Commission, Bangkok in cooperation with the World Bank – Case Study on Thailand’s Public Sector Reform. Writing a case study for inclusion in a book on the Royal Thai Government’s Public Sector Reform to assist other developing countries, particularly Asian countries, contemplating public sector reform.

Advised Royal Government of Bhutan on the development of new financial management arrangements to support the move from a monarchy to a constitutional democracy. This included drafting a Public Finance Act and advising on the design and implementation of reforms associated with this Act. [World Bank project]

World Bank - Governance Reform in Lao PDR. Writing a background report on governance reform in Lao PDR as input for the Lao PDR Country Policy and Institutional Assessment (CPIA).

Advised Government of Latvia on financial management reforms including reforms to the budget process (MTEF etc). Assisting Ministry of Finance and Ministry of Economy with development of new programmes, strategic plans and the linking of this work to the budget and reporting systems.

Advised Ministry of Finance and Economy on the concepts and implementation of MTEF approach to budgeting. Includes advice on roles and responsibilities in the MTEF process, programme design, legal matters, timing and information requests and processing.


Advisor to the World Bank on the public expenditure review for Mongolia.

Advisor to Ministry of Finance in Macedonia on reforms to financial management and organisational developments within the Ministry of Finance, including implementing strategic planning processes

Advisor to the Office of the Auditor General of Canada on the examination of the public service reform initiatives- also 1994,1995.

Visiting Scholar to the Fiscal Affairs Department of the International Monetary Fund. Produced paper for publication- “Government Reform in New Zealand”. Occasional paper No 140, International Monetary Fund, Washington DC, October 1996.

The Secretary to the Treasury, Government of New Zealand
The chief executive of the Treasury responsible for providing policy advice on a broad range of economic, financial and commercial issues. The significant work achieved during this time included:

• Design and implementation of approaches to fiscal policy and public management which revolutionised the way New Zealand governments manage their financial affairs.
• Development of the State Sector Act and the Public Finance Act which brought about the devolution of financial authority to government departments and agencies and pioneered the concepts of output-based budgeting and performance management.
• Initial development of New Zealand’s pioneering Fiscal Responsibility Act which strengthened the accountability of the executive to parliament for sound principles of fiscal management on a medium and long-term framework.
• Design and administration of New Zealand’s corporatisation programme which created State-owned enterprises out of many departmental functions and incorporated them under New Zealand company law. Privatisation of most of these activities.
• Redesign of the functions of the New Zealand Treasury, including privatising the management of pension funds and other functions.
• Establishment of the Debt Management Office, an office which holds responsibility for the policy and administration of the government’s official debt. This has become a world leader in the application of modern portfolio management techniques to government debt management.

MTEF Advice for Laos- Asian Development Bank

In early 2005, ADB provided technical assistance in developing a MTEF for the Lao PDR. According to an assessment of the TA;

The TA provided the Government with the general MTFF and MTEF models, together with detailed explanatory notes on the basic concepts and workings of the models. The Excel-based spreadsheet MTEF has also been converted into a database model (in Access software), which is a simpler, more standardized, and better tool for data management of large cumulative annual data. A strategy and manual for implementation of a government-wide MTEF was likewise submitted to the MOF.

The MTEF is an analytical tool that would assist the Government in budget preparation. The methodology used for developing MTEF has been the baseline/forward estimates approach. It means that as a first step, government expenditures are projected over the medium term (typically 3 years) on the basis of existing expenditure levels. The projection is adjusted for projected inflation and pay increases, projections of the numbers of beneficiaries of public services9 and commitments for future spending that have already been made by the Government.

As a second step, and at the start of a new budget preparation cycle, ministries and agencies can request the MOF for additional funding in order to reduce underfunding of existing policies or to fund new policies. Such requests have to be fully justified. If approved, the baseline/forward estimates are adjusted accordingly. The MTEF is a moving process: every year, the MTEF is rolled forward 1-year and reprioritized.

Indicative MTEFs for the education and health subsectors (that is, primary education and expansion of rural health infrastructure) were developed and presented to the Government. The basis of the MTEFs is the cost of implementing sector programs (at the subsector level) over the medium term according to existing government policies at existing service levels (i.e., the baseline). The MTEF and the procedures for updating and revising it are firmly anchored in the budget preparation process and the overall spending ceiling (derived from MTFF), which lays out the parameters for budget preparation….

TA 4627 also developed a budget preparation model that included a revised budget calendar, revised content of the budget circular, and new budget request templates.

More importantly, the TA provided useful advice on the revisions to the draft Budget Law, the draft Implementation Decree, the budget nomenclature system and chart of accounts, and budget preparation procedures...

The outputs generated by TA 4627 were effectively used to inform the Lao PDR’s fiscal planning and budget policies. Institutional measures were also recommended to ensure more effective capacity for managing the MTFF and MTEF. In particular, the TA continued capability development that includes appreciation and applied skills in basic macroeconomics (and basic economics in general) and in basic principles of public expenditure management. Similarly, the need for interagency coordination with respect to the macroeconomic framework was identified, and it was suggested that this could be developed through the establishment of a formal committee process.

Given the gains achieved by TA 4627, a follow-through TA amounting to $1.1 million funded under the Asian Development Bank’s TA Special Fund will be initiated in 2008 for a more extended implementation of the models developed under the TA across line

Further according to ADB;

Overall Assessment and Rating: The TA was highly successful in providing the methodological foundation for the MTFF and MTEF aimed at strengthening LAO PDR's budget management processes, (and the subsequent adoption of the MTEF). This was viewed as a positive response to the weaknesses in expenditure planning. The flexibility in TA implementation enabled having the budget basics in place to facilitate future implementation of an MTEF as a basic tool for fiscal planning. TA’s efforts culminated in encapsulating MTEF in the Implementing Decree of the Budget Law, the legal framework for the strategic management of the Budget. The TA also contributed to the drafting of the associated implementing decree and the study of policy options to reform the fiscal transfers system.

Major Lessons: One of the key lessons learned in the implementation approach and progress in Lao regarding the introduction of MTEF is to be flexible and respond to government’s requirements during implementation. The pace of implementation of a project needs to take into account the institutional environment. In Lao PDR, the institutional environment mitigates against a rapid pace of project implementation. Basic skills building should ideally precede implementation of projects such as this one, and an assessment of existing institutions and their capacity is a crucial first step. In the absence of an experienced national fiscal management specialist, a full-time international consultant should be on site. To conclude, the potential for implementing planning and budgeting reforms is there, but the implementation process is likely to remain slow and must take into account progress in reforms in other elements of public finance management, institutional constraints and the need for basic skills development.