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THE PFM REFORM STRATEGY [2008-2012]. Progress Report on PFM Reform Strategy for JBSR By:- Thomas Gatabazi/Stephen Emasu, Accountant General/PEFA Advisor April 24, 2008. OBJECTIVE OF THE PRESENTATION. The main objectives of the Progress Report are to:-
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THE PFM REFORM STRATEGY [2008-2012] Progress Report on PFM Reform Strategy for JBSR By:- Thomas Gatabazi/Stephen Emasu, Accountant General/PEFA Advisor April 24, 2008
OBJECTIVE OF THE PRESENTATION The main objectives of the Progress Report are to:- • Indicate A Broad Outline of The PFM Reform Strategy; • Set Out Indicative Components of the PFM Reform Strategy; • Present An Indicative PFM Governance and Implementation Arrangements; and Progress has been and Zero Draft Expected on April 30, 2008. GoR- Progress Report on PFM Reform Strategy-180408
CONTENTS OF THE PRESENTATION • Introduction & Methodology • Context of Public Financial Management Reforms • The Challenges • Key Components of the PFM Reforms • Indicative Governance and Implementation Arrangements • Next Steps to completion GoR- Progress Report on PFM Reform Strategy-180408
INTRODUCTION & METHODOLOGY • The assignment started in March 2008. • MINECOFIN is the main driver – The Secretary General/Secretary to the Treasury, and the Accountant General. • The work draws heavily from the following documents:- • The EDPRS Document [2008-2012] • The recently completed PEFA Performance Report; other studies by the IMF among others. • Documents of MINECOFIN, e.g. Action Plan for 2008, Strategic Plan [2008-2010], Strategic Development Plan [2008-2010]; IMF AFRITAC Report- November 2007 among others. • Auditor General’s Reports -2005, 2006, and 2007 • Discussions with several Government Officials conducted– none so far with Development Partners, Rwanda Revenue Authority & OAG GoR- Progress Report on PFM Reform Strategy-180408
KEY COMPONENTS OF THE PFM REFORMS Typically PFM includes:- • Budget Planning- Macroeconomic Framework, Fiscal Targets set, Development or Policy Objectives • Budget Formulation and Preparation- Budget Policy and Procedures • Budget Execution - Cash Management, Financial Management systems, Policies, Standards, Procedures etc • Budget Reporting and Accounting • Budget Oversight- OAG, Parliament GoR- Progress Report on PFM Reform Strategy-180408
KEY BUDGETARY OUTCOMES • Aggregate Fiscal Discipline • Strategic Allocation of Resources • Efficient Use of Resources – for Service Delivery GoR- Progress Report on PFM Reform Strategy-180408
THE PFM REFORM STRATEGY [2008-2012] CONTEXT OF PUBLIC FINANCIAL MANAGEMENT REFORMS GoR- Progress Report on PFM Reform Strategy-180408
CONTEXT OF RWANDA’s PFM SYSTEM Rwanda’s PFM reforms are linked to the Vision 2020; the just completed PRSP; current EDPRS [2008-2012]; and the MDG. • A number PFM Reforms have been completed successfully, others still in progress. • Legal and Regulatory Framework has been Strengthened successfully. • Much of the progress to date has been due to strong political willingness, and commitment of government officials at all levels. BUT MUCH MORE STILL REMAINS – Institutions, Systems, Capacity, Procedures among others……………………….. GoR- Progress Report on PFM Reform Strategy-180408
SUMMARY FROM PEFA PERFORMANCE REPORT-2007 GoR- Progress Report on PFM Reform Strategy-180408
Summary PEFA Assessment- The Scores 1- GoR- Summary of the Results of the PEFA Assessment- 2007.doc GoR- Progress Report on PFM Reform Strategy-180408
THE PFM REFORM STRATEGY [2008-2012] REFORM STRATEGY GoR- Progress Report on PFM Reform Strategy-180408
CHALLENGES OF IMPLEMENTING PFM REFORMS • PFM Reforms:- • are complex, demanding and involves many stakeholders • Some are cross-cutting while others involve sub-national government units • require Massive Resources, Talent, Time, and • Are without “Blue Prints”, except best practices • There are Threats of Reform Fatigue • Risk of loss of Direction and Prioritization of the Reforms, Many TAs, Decreasing Impact GoR- Progress Report on PFM Reform Strategy-180408
THE PFM REFORM STRATEGY [2008-2012] The Objectives of the PFM Reform Strategy are to:- • Coordinate and Sequence Reforms According to Government Priorities • Coordinate Engagements of DPs to meet the Development Agenda of the Government • Make PFM Reforms Contribute to the MDG, particularly the EDPRS The Strategic Outcome measure for the PFM Reforms in the EDPRS is “Enhanced Public Financial Management” GoR- Progress Report on PFM Reform Strategy-180408
INDICATORS FOR PFM REFORMS IN THE EDPRS There are seven Indicators as follows:- • Improved Multi-Year Perspective in Fiscal Planning, Expenditure Policy, and Budgeting Improved. • Stock of arrears to total expenditure reduced- baseline set for 2007. • The Expertise and accounting and reporting of the government institutions improved. • Internal Audit Function Improved. GoR- Progress Report on PFM Reform Strategy-180408
INDICATORS FOR PFM REFORMS IN THE EDPRS…Contd • Coverage of external audit enhanced. • Public enterprise fiscal risks reduced. • Proportion of tenders awarded competitively or with justification GoR- Progress Report on PFM Reform Strategy-180408
THE PFM REFORM STRATEGY [2008-2012 KEY COMPONENTS OF PFM REFORMS GoR- Progress Report on PFM Reform Strategy-180408
KEY COMPONENTS OF PFM REFORMS The 6 Key Identifiable Components for Reforms are:- • Consolidate Economic Reforms- Planning • Strengthen Budget Formulation and Preparation • Improve Financial Management and Reporting • Consolidate Public Procurement Reforms • Consolidate Intergovernmental Fiscal Relations GoR- Progress Report on PFM Reform Strategy-180408
KEY COMPONENTS OF PFM REFORMS….Contd • Develop Adequate Human Resource Capacity For PFM. Excluded for Special Reasons • Strengthen Budget Oversight – Office of the Auditor General. • Strengthening Rwanda Revenue Authority. GoR- Progress Report on PFM Reform Strategy-180408
COMPONENT 1: CONSOLIDATION OF ECONOMIC REFORMS Strategies:- • Strengthen Macroeconomic & Fiscal Framework • Fiscal and Budget Framework Papers consistent Macroeconomic and Fiscal Framework • Align Macroeconomic Framework with practices of the East African Community [EAC] • Develop and Implement Public Debt Strategy • Harmonization of DPs towards Budget Support • Strengthen Revenue Forecasting GoR- Progress Report on PFM Reform Strategy-180408
COMP. 2: STRENGTHEN BUDGET FORMULATION AND PREPARATION Strategies:- • Strengthen & Integrate MTEF into the Budget Cycle • Introduce & Mainstream Performance Based Budgeting & Sector Wide Budgeting • Introduce and Mainstream Gender Budgeting • Improve Quality and Timeliness of in-year budget reports GoR- Progress Report on PFM Reform Strategy-180408
FINANCIAL MANAGEMENT COMPONENT There are two parts in this Component:- • The Accountant General’s Office- Financial management and accounting; • The Office of the GCIA- for Internal Audit function Best to introduce Sub-Components GoR- Progress Report on PFM Reform Strategy-180408
COMP. 3: (A) ACCOUNTANT GENERAL’S OFFICEIMPROVE FINANCIAL MANAGEMENT & REPORTING Strategies:- • Conduct Organization Review of the AG’s Office and Finance Units in MDAs • Strengthen Financial Management and Internal Controls • Implement RES for Accountants & Internal Auditors • Accelerate Planning for & Implementation of SmartGov • Consolidate Public Accounting Reforms • Strengthen Cash Management & STA GoR- Progress Report on PFM Reform Strategy-180408
COMP. 3: (B) OFFICE OF THE GPIASTRENGTHEN INTERNAL AUDIT FUNCTION Strategies:- • Conduct Organization Review of the Office of the GCIA and Internal Audit Units • Strengthen and Upgrade Internal Audit • Operationalize Audit Committees • Implement RES for Accountants & Internal Auditors • Conduct Payroll Audits & Specialized Audits GoR- Progress Report on PFM Reform Strategy-180408
COMP. 4: CONSOLIDATE PUBLIC PROCUREMENT REFORMS Strategies:- • Strengthen Procurement Units in MDAs • Conduct Procurement and Compliance Audits • Strengthen Rwanda Public Procurement Authority • Strengthen Procurement Appeals Mechanism GoR- Progress Report on PFM Reform Strategy-180408
COMP. 5: CONSOLIDATE REFORMS TO DEEPEN INTERGOVERNMENTAL FISCAL RELATIONS Strategies:- • Develop and Implement Fiscal Decentralization Strategy • Improve Transparency in the Transfer Mechanism • Strengthen & Streamline Intergovernmental Reporting • Improve Budget Preparation Process in Districts etc • Improve Local Revenue Mobilization • Improve Financial Management in Districts and Implement SmartGov for Local Governments GoR- Progress Report on PFM Reform Strategy-180408
COMP. 6: CAPACITY BUILDING FOR PFM Strategies:- • Implement ACCA Training Program for accountants and internal auditors • Build Capacity for Budget Process both at Central and Sub-National Governments • Build Capacity for MTEF and Econometric Modelling • Build Capacity for Performance Based Budgeting in all Budget Agencies • Build Capacity for Users of SmartGov/IFMS • Build Capacity for Conducting Risk Based Audits and other specialized internal audits • Build Procurement Capacity at various Procurement Units GoR- Progress Report on PFM Reform Strategy-180408
COMP. 7:STRENGTHEN BUDGET OVERSIGHT MINECOFIN will not be responsible for this Component- except providing backup and Coordination A] Office of the Auditor General Strategies:- • Strengthen Independence • Increase Audit Coverage?? • Build Capacity – Financial, VFM Audit, Computerized environment?? • Improve Efficiencies in Audit Procedures B] Parliamentary Role in Oversight Strategy:- • Strengthen Parliamentary Participation and Scrutiny GoR- Progress Report on PFM Reform Strategy-180408
KEY COMPONENTS OF PFM REFORMS 2- PFM Reform Components.doc GoR- Progress Report on PFM Reform Strategy-180408
KEY COMPONENTS OF PFM REFORMS….Contd Outstanding Work with Definition of Components are:- • Defining Component Objectives or Goals. • Defining Component Outcomes, Outputs, Activities, Sequencing & Timelines…. and matrix tables • Defining Component Indicators. • Cost Estimates to arrive at Realistic Budgets GoR- Progress Report on PFM Reform Strategy-180408
THE PFM REFORM STRATEGY [2008-2012] IMPLEMENTING PFM REFORMS – Indicative Directions GoR- Progress Report on PFM Reform Strategy-180408
PFM REFORM IMPLEMENTATION ARRANGEMENTS- ---Two Options There are two alternatives for Consideration:- • First Option - Integrate PFM Reform within Government Functions- mainstream right from the Start with a mini Secretariat or • Second Option- Set up a Full Blown PFM Secretariat in MINECOFIN operating like a Project Implementation Unit GoR- Progress Report on PFM Reform Strategy-180408
PFM REFORM IMPLEMENTATION ARRANGEMENTS- First Option • Each Component to have a Senior Government Official as the Component Leader with the exception of Financial Management Component – 2 Component Leaders -[AG & GPIA]. • The Component Leaders Report to the Secretary General/ST • Each Component to have two TAs or more– one international expert and one national expert in the relevant area to work closely with the Component Leader. • Financial Management Component to have 4 TAs or more – 2 international experts and two national experts [AG & GPIA] GoR- Progress Report on PFM Reform Strategy-180408
PFM REFORM IMPLEMENTATION ARRANGEMENTS- First Option…….Contd • Team Leader [also a TA] to coordinate and monitor progress of the reforms in each Component • The TL for the TAs - Reports to Secretary General/ST • Both the Component Leaders and the TAs form the Technical PFM Reform Committee [for PFM Reforms] under the Leadership of the Secretary General/ST • M&E – To be introduced – For EDPRS [PERs, PETS, and SWAPs] and for PFM Reforms be part of PFM Technical Reform Team • A mini PFM Secretariat [TL] in the SG/ST’s Office to ensure coordination and facilitation of TAs GREATER OWNERSHIP & CAPACITY GoR- Progress Report on PFM Reform Strategy-180408
ROLE OF THE TEAM LEADER [TL] The TL [for the TAs] to ensure among other things the following:- • Greater Coordination of TAs and Reforms • Reforms are on track, on focus, on time • Harmonization and sequencing of the reforms • Speedy resolution of reform issues • Timely production of consolidated periodic progress reports for all components. GoR- Progress Report on PFM Reform Strategy-180408
PFM REFORM IMPLEMENTATION ARRANGEMENTS- Second Option • Set up a full blown PFM Reform Secretariat in the Office of the Secretary General/ST • The Secretariat has TL, TAs for each Components • TAs – international and National paired up and are assigned to each Component Leaders • Component Leaders play key role in driving the Reforms • The Secretariat adequately resources, has a management and administrative functions- for fast tracking and effectiveness • Formal M & E, FM, etc established EFFECTIVE & RAPID RESULTS GoR- Progress Report on PFM Reform Strategy-180408
THE PFM REFORM STRATEGY [2008-2012 INDICATIVE GOVERNANCE ARRANGEMENTS GoR- Progress Report on PFM Reform Strategy-180408
NATIONAL PFM STEERING COMMITTEE In order to manage the complexity of the PFM reforms, associated risks, and coordinate the reforms in an orderly sequenced manner:- a National PFM Steering Committee, chaired by the Secretary General/Secretary to the Treasury in MINECOFIN GoR- Progress Report on PFM Reform Strategy-180408
MEMBERSHIP OF NATIONAL PFM STEERING COMMITTEE To keep all stakeholders engaged with the PFM reforms, provide adequate oversight, and coordinate various reforms, the National PFM Steering Committee to include:- • SG, Ministry of Local Governments; • SG, Ministry of Public Service and Labour; • SG, Ministry of Health; • SG, Ministry of Education??? • SG, Ministry of Defence; • Representatives of Development Partners • The Auditor General – Ex Officio?? • Head of Parliamentary Commission • Director of HIDA – Ex officio member; • Head of RITA – Ex officio member; • Component Leaders – Ex officio members • Team Leader of the TAs – Ex officio member GoR- Progress Report on PFM Reform Strategy-180408
THE PFM REFORM STRATEGY [2008-2012] 3- GoR- Indicative Governance Arrangements for the PFM Reforms.doc GoR- Progress Report on PFM Reform Strategy-180408
NEXT STEPS FOR COMPLETING THE ASSINGMENT • Presentation to the JBSR – Progress Report on PFM Reform Strategy • Complete Component Objectives, Outputs, Activities, Indicators, Cost Estimates, Sequencing • Complete Management and Coordination Mechanism • Complete a Zero Draft of the PFM Reform Strategy – April 30, 2008 • Conduct Stakeholders Workshop – May 15, 2008 • Issue Final Draft for Validation- June 15, 2008 • GoR Adopts of the PFM Reform Strategy – June 30, 2008 GoR- Progress Report on PFM Reform Strategy-180408
THE PFM REFORM STRATEGY [2008-2012] Thank you for the attention! Discussions GoR- Progress Report on PFM Reform Strategy-180408