LESOTHO APRM PROCESS

1. LESOTHO APRM PROCESS National Program of Action: Costing and Funding Technical National APRM Workshop on “Harmonizing the Lesotho APRM NPoA with the existing Development Strategies and the MTEF and Budget” Max Ochai MASERU, Lesotho February 27, 2014

2. Presentation • Purpose: • To share Ugandan experience in costing and funding APRM NPoA • To guide the Lesotho case

3. Outline • Introduction • Defitions • Practical Experience • Ugandan • Key Challenges and Lessons • Effort • Some Recommendations • Lesotho • Conclusion

4. 1. Introduction • APRM NPoA: • A comprehensive program that guides and mobilizes a country’s efforts in implementing necessary changes to improve state of governance and socio-economic development. • Constituent part of CRR: • Key input into peer review process • Generated in a participatory manner

5. 1. Introduction Cont’d • MTEF (tool): • A whole of government framework for supporting a strategic and policy-based approach to budget preparation: • a medium-term fiscal framework; • future costs of existing policy; and • sector strategies. • an integral part of the Budget Cycle

6. 1. Introduction Cont’d • MTEF (process): • Consists of: • a top-down resource envelope; • a bottom-up estimation of current and medium-term costs of existing policies; and, ultimately, • matching of these costs with available resources – budgeting!

7. 1. Introduction Cont’d • Budget • Annual plan • Statement of expenditure and its funding • According to IMF (2001) GFS Manual: • Revenues • Tax • Non-tax • Grants • Expenditure • Financing • Loans

8. 1. Introduction Cont’d • National Development Strategies (DS): • Set of priorities • Comprehensive • Consistent • Systematic • Priorities • DS • Inclusive of NPoA, provides the roadmap for policy priorities

9. 1. Introduction Cont’d • Dove-tail: • Planning process • Evaluation • Macro-economic analysis • Situation analysis • Prioritization[...DS confronts Budget...] • Setting resource ceilings • Estimation of resource envelope • Public expenditure review • Budgeting process • Rationale for merger of Planning and Fiscal Authorities

10. 2. Uganda: Practical Experience • Initial conditions: • Planning and budgeting functions were under one Ministry i.e. MFPED • Preparation of National Development Plan was in progress • Medium-term Expenditure Framework was mature • Macro-economic stability was key object • Requisite capacity was in place

11. 2. … Experience Cont’d • NPoA: Methodology • Desk research – 1 unit • Expert panel interviews – 200 units • Focus group discussions – 96 units • National sample survey – 1,588 HHs • Country-wide consultations • Public hearings – 4 regions • Submission of memoranda by interest groups – 4 regions

12. 2. …Experience Cont’d • NPoA: Results • 463 recommendations made in CRR • o/w 307 recommendations in CSAR • o/w 156 recommendations added by APR Panel of Eminent Persons • 200 recommendations prioritized • And, costed in NPoA over three years

13. 2. …Experience Cont’d • Costing: Institutional Arrangement • APRM-NC • Costing Team: • Professional Cost Accountants • Technical Experts in planning from: • Central Government MDAs • Bank of Uganda • Costing Team mandated to cost NPoA

14. 2. Cost of... Cont’d • Costing: Methodology • Participatory approach • Stakeholders • Head of Public Service • MDAs • LGs • NDP Preparation Core Technical Team • APRM-NC

15. 2. Cost of... Cont’d • Costing: Mechanics • Step 1: Selected a specific objective • Step 2: Selected a required action • Step 3: Determined critical tasks • Step 4: Ascertained required inputs • Step 5: Determined associated costs • Step 6: Adjusted the derived costs for: • Inflation, by 10% p.a. • Contingency, by 10% p.a. • Step 6: Validated costs

16. 2. …Experience Cont’d • Total cost estimated at US$ 4.9 billion, 2008/09 to 2010/11 FYs • NB: NPoA was NOT resource-constrained

17. 2. Cost of... Cont’d • Costing: Basic References • BFP, 2008/09 – 2010/11 FYs • Inputs • PPDA Budget Guidelines, 2008/09 FY • Unit costs • www.michaelpageinternational.com • Consultancy rates

18. 2. …Experience Cont’d • Sources of Funds • Domestic: • National Treasury • MDAs - own receipts • LGs - own collections • External: • Development Partners • Multi-lateral • Bilateral

19. 2. …Experience Cont’d • Uses of Funds • Budgetary: • Subjected NPoA to national, sectoral and sub-national priorities • Provided for implementation of NPoA in National Budget, within MTEF • Extra-budgetary: • Discretionary

20. 2. …Experience Cont’d • Disbursements • National Budget: • Annual and Quarterly Workplans • Annual and Quarterly Requisitions • Annual and Quarterly Progress Reports • Extra-budget: • Annual and Quarterly Workplans • Annual and Quarterly Requisitions • Annual and Quarterly Progress Reports

21. 2. …Experience Cont’d • Implementation • Government had primary responsibility • MDAs • LGs • Private sector and CSOs played role of: • Service delivery • Advocacy • Watch-dog

22. 2. …Experience Cont’d

23. 2. …Experience Cont’d • Institutional Mechanism • MFPED, as APRM National Focal Point: • Political oversight • APRM-NGC: • Monitoring • Reporting • NPA, as APRM National Secretariat: • Support services

24. 2. …Experience Cont’d • Capacity • Institutional: • Equipment, systems and networks • Human: • Technical officers and experts • Financial: • Own and other funds

25. 2. …Experience Cont’d • Risks and Mitigation • Perceived Risks • Failure to mobilize adequate funds (Low) • Inability to build requisite capacity (Low) : • Implementation • M&E • Reporting • Mitigation Measures • Prioritization of critical tasks • Issuance of performance contracts

26. 3. Challenges and Lessons • Key Challenges • Constrained resource envelope • assumed full support of Development Partners; and • Low planning/implementation capacity • limited influence over resource allocation

27. 3. … Lessons Cont’d • Effort • Treasury Single Account system • Introduced at Bank of Uganda • MTEF • Multi-sectoral, -institutional and -year • Capacity-building and -development

28. 3. … Lessons Cont’d • Lessons for Lesotho • NPoA Costing: • Engaged experts in planning and costing • Prepared NPoA which was SMART • Integrated NPoA into one National Plan • Refered to unit costs/price lists • Took into account macro-economic stability: • Adjusted for average annual inflation • Adjusted for annual contingency

29. 3. … Lessons Cont’d • NPoA Funding: • Executed one budget: • Pooled all funds into a single account • Disbursed funds from the same account • Initial conditions mattered • budget basics enhanced implementation of MTEF • Managed policy and planning at sector level • Adopted single budget agency, responsible for co-ordination of DS, as well

30. 3. … Lessons Cont’d • NPoANDP • Thematic Paper on Governance • NDPMTEF • Sector Budget Framework Papers • MTEFBudget • Annual Budget Call Circulars

31. 4. Some Recommendations • To Republic of Lesotho: • Adopt one comprehensive National Plan • Engage experts in costing and planning • Use one macro-framework to constrain both National Plan and MTEF • Open budgeting process to stakeholders • Apply MTEF process to cover all sectors • Execute one comprehensive budget

32. 5. Conclusion • Effective implementation of a SMART NPoA can change state of governance and socio-economic development • Apply same macro-fiscal framework to National Plan (incl. NPoA) and MTEF • MTEF process is key to effective implementation of National Plan • Execute a comprehensive budget

33. Kea leboha