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THE PFM REFORM STRATEGY [2008-2012]

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]

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  1. 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

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. THE PFM REFORM STRATEGY [2008-2012] CONTEXT OF PUBLIC FINANCIAL MANAGEMENT REFORMS GoR- Progress Report on PFM Reform Strategy-180408

  8. 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

  9. SUMMARY FROM PEFA PERFORMANCE REPORT-2007 GoR- Progress Report on PFM Reform Strategy-180408

  10. 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

  11. THE PFM REFORM STRATEGY [2008-2012] REFORM STRATEGY GoR- Progress Report on PFM Reform Strategy-180408

  12. 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

  13. 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

  14. 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

  15. 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

  16. THE PFM REFORM STRATEGY [2008-2012 KEY COMPONENTS OF PFM REFORMS GoR- Progress Report on PFM Reform Strategy-180408

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. 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

  25. 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

  26. 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

  27. 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

  28. KEY COMPONENTS OF PFM REFORMS 2- PFM Reform Components.doc GoR- Progress Report on PFM Reform Strategy-180408

  29. 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

  30. THE PFM REFORM STRATEGY [2008-2012] IMPLEMENTING PFM REFORMS – Indicative Directions GoR- Progress Report on PFM Reform Strategy-180408

  31. 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

  32. 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

  33. 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

  34. 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

  35. 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

  36. THE PFM REFORM STRATEGY [2008-2012 INDICATIVE GOVERNANCE ARRANGEMENTS GoR- Progress Report on PFM Reform Strategy-180408

  37. 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

  38. 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

  39. THE PFM REFORM STRATEGY [2008-2012] 3- GoR- Indicative Governance Arrangements for the PFM Reforms.doc GoR- Progress Report on PFM Reform Strategy-180408

  40. 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

  41. THE PFM REFORM STRATEGY [2008-2012] Thank you for the attention! Discussions GoR- Progress Report on PFM Reform Strategy-180408

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