Strengthening Public Financial Management through Transparency in Timor-Leste

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  • What’s confusing?
  • US congress is tying to cut funding for government transparency which is thought to be too expensive
  • Yet, Timor-Leste can afford this luxury. Why?
  • Globalization has created a new environment
  • Of competition among countries
  • Where businesses have choice of where to do business
  • Where citizens are watching government
  • And citizens, as we’ve seen in the Middle East, are empowered.
  • What is the government trying to accomplish?
  • Enable building civil society: local NGOs, the media
  • Build infrastructure
  • educate
  • Get citizen involvement
  • And improve government performance.
  • Does this sound like crazy talk?
  • Transparency can provide country stability
  • Business confidence
  • But most importantly: avoid the resource curse where developing countries with resources tend to have poorer governance and higher corruption than resource poor countries.
  • Technology enables developing country governments to leapfrog more developed countries. This is based on the notion that developing countries
  • Use what has already been proven
  • Skip what doesn’t work
  • & skip unneeded stages
  • So, modernizing
  • Much quicker than developed countries
  • Here’s the government vision
  • Which has been sequenced since 2002
  • And forms part of holistic reforms in public financial management that is modernizing and decentralizing.
  • There are 5 transparency steps in Timor-Leste
  • Support for international standards to provide comparability including
  • IPSAS/IFRS reporting
  • EITI for revenue transparency
  • IMF standards for financial statistics
  • And use of recommended good practices for creating credible budgets
  • I expect Timor-Leste to announce support for IATI soon.
  • Providing performance tools to government managers is another critical part of improving outcomes and decisions
  • In particular, showing budget execution to see whether the government on track for development outcomes
  • Manage government documents
  • Including for freedom of information
  • Electronic government procurement to improve value for money is
  • Scheduled to go live in August
  • Financial transparency
  • Went live on March 15th.
  • with interactive drill down into government data
  • with 10 years of budget execution data with drill down through the government chart of accounts
  • export to numerous machine readable formats, plus tracking the entire budget cycle: original budget, budget transfers, commitments, obligations and actuals
  • Country leadership is required
  • In Timor-Leste, the mission of “goodbye conflict, welcome development”, is driven by the government
  • It is also important to learn from the mistakes of others
  • To ensure that transparency is part of a fiscal discipline strategy
  • That’s because transparency isn’t an option
  • In an era where the majority of people own mobile telephones, it has become impossible to hide the bad news – and the good news. It’s becoming increasingly important for governments to enable transparency and leverage technology to improve performance thanks to thousands of citizen auditors
  • Because the equation is that the value of improved performance is far higher than damages in confidence caused by embarrassment
  • Because it generates citizen discussion
  • And encourages civil society to participate in what is important to the government
  • Transparency isn’t something that you do once, or by itself. It’s part of a staged public financial management strategy
  • With every step aligned to government priorities and
  • Building capacity
  • Should be aligned with modernizing public financial management. This goes beyond software training to improving capacity in IT and project management. And beyond training to include knowledge systems to provide e-learning outside the classroom. Financial systems need to be intuitive and operate in local languages. International consultants are ideal to mentor – they need to become less “operational”
  • That’s why development partners and contractors performance should be based on making government personnel self-sufficient
  • Open systems is software that integrates well with other software to provide more choices to governments.
  • This is part of the overall trend towards more transparency. We are seeing a transparency revolution to an open environment- where, for example, organizations like the World Bank are publishing machine readable information as a matter of course rather than as an exception.-MORE-We appear to be in a transition period in government transparency. Governments have begun to publish information in document or machine readable format rather than relying on access to information requests as the primary method of transparency.There is a recognition that current data, with some errors, is more valuable that dated perfect information.Governments have begun to look data less as a revenue generation opportunity. And, more governments are realizing that publication of government data can act as an economic engine, or, as Tim O’Reilly calls it, “government as platform.” In other words, the network effect means that information becomes more valuable as it combines or mashes.The press is becoming “disintermediated” thanks to transparency portals.
  • These two trends in open systems an open government are more than coincidental. It is difficult and expensive to create open data from closed systems. That’s why many open government projects run into problems trying to get data out of proprietary back-office systems.International public sector standards are better enabled through open IT standardsAt the same time as a move to open systems.-MORE-We are in a transition period from closed to open systems in the software industry. In the closed system era, integration within the product suite was considered paramount. Enterprise software companies competed on the basis of horizontal and vertical functionality.  Economies of scale meant that the largest vendors provided the best extensibility. Today, SOA provides integration, application assembly, and reuse.Proprietary middleware was used to lock customers into the entire “stack”. Open systems were presented as risky because proprietary standards tended to be faster. The software industry is in a transition period where proprietary systems are opening up. This is often seen as a way to extend proprietary systems by the larger vendors. There is a concerted effort to build out an eco-system of partners who add value to proprietary systems. We believe that this will transition to fully open systems. Software companies will compete on openness and customer processes rather than lock-in.
  • So, leapfrog is possible. The 5 Timor-Leste initiatives compare well with the current transparency state in the US
  • This is also interesting – showing Timor-Leste just behind the United States on extractive revenue transparency. And, all of the countries ahead of the US, except for Norway, are emerging or developing economies.
  • How does Timor-Leste achieve this leapfrog?Vision. Developed countries often have a limited vision for change or have structures and interests that slow change.Many citizens in developed countries see government intervention as suspicious, yet many other countries see government intervention in development as critical.Technology evolved over time in the United States where there are multiple systems to support performance and transparency dispersed across many departments and agencies making it very difficult to have a single view of government. This becomes the latecomer’s advantage.
  • Strengthening Public Financial Management through Transparency in Timor-Leste

    1. 1. Strengthening Public Financial Management through Transparency in Timor-Leste<br />International Consortium on Governmental Financial Management<br />May 17, 2011<br />
    2. 2. Confusion?<br />Strengthening Public Financial Management in Timor-Leste <br />2<br />
    3. 3. Strengthening Public Financial Management in Timor-Leste <br />Congress cuts transparency funding<br />
    4. 4. How can Timor-Leste afford government transparency?<br />Strengthening Public Financial Management in Timor-Leste <br />4<br />
    5. 5. globalization<br />Strengthening Public Financial Management in Timor-Leste <br />
    6. 6. = competition<br />Strengthening Public Financial Management in Timor-Leste <br />
    7. 7. choice<br />Strengthening Public Financial Management in Timor-Leste <br />
    8. 8. citizens are watching<br />Strengthening Public Financial Management in Timor-Leste <br />
    9. 9. empowered<br />Strengthening Public Financial Management in Timor-Leste <br />
    10. 10. Democratic Republic of Timor-Leste (RDTL)Transparency Objectives<br />Strengthening Public Financial Management in Timor-Leste <br />10<br />
    11. 11. Strengthening Public Financial Management in Timor-Leste <br />build civil society<br />Strengthening Public Financial Management in Timor-Leste <br />
    12. 12. build infrastructure<br />Strengthening Public Financial Management in Timor-Leste <br />
    13. 13. build capacity<br />Strengthening Public Financial Management in Timor-Leste <br />
    14. 14. build citizen involvement in government<br />Strengthening Public Financial Management in Timor-Leste <br />
    15. 15. improve government performance<br />Strengthening Public Financial Management in Timor-Leste <br />
    16. 16. ?<br />Strengthening Public Financial Management in Timor-Leste <br />
    17. 17. 3<br />HIGH<br />AUSTRALIA<br />2<br />1<br />Normalized Government Effectiveness Index<br />UGANDA<br />0<br />PAPUA NEW GUINEA<br />-1<br />Higher the government effectiveness = higher the country GDP Per Capita<br />-2<br />209 Countries<br />LOW<br />Source: The World Bank<br />-3<br />GDP Per Capita (PPP, logs)<br />Benefits of Transparency Government Effectiveness and GDP*<br />* At purchasing power parity<br />Strengthening Public Financial Management in Timor-Leste <br />
    18. 18. 3<br />HIGH<br />2<br />AUSTRALIA<br />1<br />PAPUA NEW GUINEA<br />Normalized Voice and Accountability Index<br />0<br />UGANDA<br />-1<br />Higher the government accountability = higher the country GDP Per Capita<br />-2<br />207 Countries<br />LOW<br />.<br />-3<br />GDP Per Capita (PPP, logs)<br />Benefits of Transparency Voice and Accountability and GDP*<br />Source: The World Bank<br />* At purchasing power parity<br />Strengthening Public Financial Management in Timor-Leste <br />
    19. 19. 3<br />AUSTRALIA<br />HIGH<br />2<br />1<br />Normalized Control of Corruption Index<br />PAPUA NEW GUINEA<br />0<br />UGANDA<br />-1<br />Higher the control of corruption = higher the country GDP Per Capita<br />-2<br />204 Countries<br />LOW<br />-3<br />GDP Per Capita (PPP, logs)<br />Benefits of TransparencyControl of Corruption and GDP*<br />Source: The World Bank<br />* At purchasing power parity<br />Strengthening Public Financial Management in Timor-Leste <br />
    20. 20. = stability<br />Strengthening Public Financial Management in Timor-Leste <br />
    21. 21. = investor confidence<br />Strengthening Public Financial Management in Timor-Leste <br />
    22. 22. avoid theresource curse<br />Strengthening Public Financial Management in Timor-Leste <br />
    23. 23. technology leapfrog<br />Strengthening Public Financial Management in Timor-Leste <br />
    24. 24. use what works<br />Strengthening Public Financial Management in Timor-Leste <br />
    25. 25. skip what doesn’t work<br />Strengthening Public Financial Management in Timor-Leste <br />25<br />
    26. 26. skip stages<br />Strengthening Public Financial Management in Timor-Leste <br />
    27. 27. modernize<br />Strengthening Public Financial Management in Timor-Leste <br />
    28. 28. rapidly<br />Strengthening Public Financial Management in Timor-Leste <br />
    29. 29. review<br />Transparency and Accountability<br />The next generation of public financial management technology will allow the public to track the budget live, to see where every dollar is being spent, and to gain renewed confidence in the process<br />Democratic Republic of Timor-Leste Vision<br />Strengthening Public Financial Management in Timor-Leste <br />
    30. 30. sequenced<br />Strengthening Public Financial Management in Timor-Leste <br />
    31. 31. Public Financial Management – Foundation for Country Growth<br />Public Financial Management<br />GoTL LAWS<br />Human Resource Development<br />Decentralization<br />FMIS<br />(software and hardware)<br />Autonomous Agencies<br />Procurement Commission<br />Capacity Building<br />(Training)<br />Ministries<br />Strengthening Public Financial Management in Timor-Leste <br />
    32. 32. Strengthening Public Financial Management in Timor-Leste <br />
    33. 33. 1. International Standards<br />Strengthening Public Financial Management in Timor-Leste <br />
    34. 34. IPSASInternational Public Sector Accounting Standards<br />Strengthening Public Financial Management in Timor-Leste <br />
    35. 35. EITIExtractive Industries Transparency Initiative<br />Strengthening Public Financial Management in Timor-Leste <br />
    36. 36. GFSGovernment Financial Statistics<br />Strengthening Public Financial Management in Timor-Leste <br />
    37. 37. MTEFMedium Term Expenditure Frameworks<br />Strengthening Public Financial Management in Timor-Leste <br />
    38. 38. IATIInternational Aid Transparency Initiative<br />Strengthening Public Financial Management in Timor-Leste <br />
    39. 39. 2. Manager’s Dashboard<br />Strengthening Public Financial Management in Timor-Leste <br />
    40. 40. review<br />examines budget execution data<br />integration with macro-economic data<br />integrated with back-office procurement & commitment accounting within IFMIS<br />Strengthening Public Financial Management in Timor-Leste <br />40<br />
    41. 41. 3. Document Management<br />Strengthening Public Financial Management in Timor-Leste <br />
    42. 42. repository for freedom of information<br />manages correspondence with senior managers<br />
    43. 43. 4. e-Procurement Portal<br />Strengthening Public Financial Management in Timor-Leste <br />
    44. 44. review<br />44<br />vendor alerts<br />tender results published<br />government tenders published<br />integrated with back-office procurement & commitment accounting within IFMIS<br />Strengthening Public Financial Management in Timor-Leste <br />
    45. 45. 5. Transparency Portal<br />Strengthening Public Financial Management in Timor-Leste <br />
    46. 46. review<br />www.transparency.gov.tl<br />Strengthening Public Financial Management in Timor-Leste <br />46<br />
    47. 47. subscribe<br />drill down<br />articles<br />
    48. 48. Expenditures, Transparency Portal<br />10 years of data<br />drill through the chart of accounts<br />
    49. 49. Expenditures, Transparency Portal<br />export to xls, doc, pdf, html, xml<br />track commitments<br />
    50. 50.
    51. 51.
    52. 52. Lessons Learned<br />Strengthening Public Financial Management in Timor-Leste <br />52<br />
    53. 53. 1. Leadership<br />Strengthening Public Financial Management in Timor-Leste <br />
    54. 54. Goodbye Conflict, Welcome Development<br />Timor-Leste will be the country that goes down in history as the nation to put a stop to falling victim to large companies and the resource curse<br />Prime Minister XananaGusmão<br />Strengthening Public Financial Management in Timor-Leste <br />
    55. 55. 2. Learn from the mistakes of others<br />Strengthening Public Financial Management in Timor-Leste <br />
    56. 56. Goodbye Conflict, Welcome Development<br />When we in the developing world face these types of crisis, which we do on a more regular basis than our colleagues in more economically advanced nations — then we are repeatedly told to increase our openness to the global economy, to trust in the market but to regulate them well. To be honest this approach has worked<br />Minister of Finance Emilia Pires<br />Strengthening Public Financial Management in Timor-Leste <br />
    57. 57. 3. Transparency is not an Option<br />Strengthening Public Financial Management in Timor-Leste <br />
    58. 58. Strengthening Public Financial Management in Timor-Leste <br />citizen auditors<br />YouTube<br />Facebook<br />Twitter<br />SMS<br />
    59. 59. 4. Transparency = Performance > Embarrassment <br />Strengthening Public Financial Management in Timor-Leste <br />
    60. 60. Strengthening Public Financial Management in Timor-Leste <br />
    61. 61. Role of Civil Society<br />NGO’s can help organise literacy groups and provide<br />materials. They can provide private education and<br />education for the blind. They can provide school<br />materials for students, and assist with school equipment<br />chairs and books<br />• NGO’s can help us organise and run technical training<br />courses in our villages<br />Timor-Leste National Vision<br />Strengthening Public Financial Management in Timor-Leste <br />
    62. 62. 5. Sequenced Holistic Multiple-Year PFM Strategy<br />Strengthening Public Financial Management in Timor-Leste <br />
    63. 63. review<br />Improve government performance<br />Improve transparency & accountability<br />Improve budget execution<br />Improve government capacity<br />Public Financial Management – Foundation for Country Growth<br />Strengthening Public Financial Management in Timor-Leste <br />
    64. 64. 6. Build Capacity<br />Strengthening Public Financial Management in Timor-Leste <br />
    65. 65. review<br />Training beyond software<br />IT capacity<br />Project management<br />Government accounting<br />Beyond training<br />Adaptable help<br />E-Learning<br />Knowledge management<br />Intuitive systems<br />Translation including terminology<br />Simple & goal-oriented interfaces<br />Mentoring<br />Strengthening Public Financial Management in Timor-Leste <br />PFM Modernization<br />Alignment with Capacity Building<br />
    66. 66. 7. Require Sustainability in Partner Performance<br />Strengthening Public Financial Management in Timor-Leste <br />
    67. 67. 8. Adopt International Standards<br />Strengthening Public Financial Management in Timor-Leste <br />67<br />
    68. 68. 9. Leverage Open Systems<br />Strengthening Public Financial Management in Timor-Leste <br />
    69. 69. Transition to Open Environment: Transparency<br />
    70. 70. Transition to Open Systems: Technology<br />
    71. 71. 10. Leapfrog is possible <br />Strengthening Public Financial Management in Timor-Leste <br />
    72. 72. www.revenuewatch.org<br />Strengthening Public Financial Management in Timor-Leste <br />
    73. 73. How?<br />Strengthening Public Financial Management in Timor-Leste <br />
    74. 74. Links<br />Open Systems Enable Government Transparency Leapfrog http://www.freebalance.com/blog/?p=1559<br />E-Government Transparency in Developing Countries http://www.cutter.com/offers/egovt.html<br />Developing Countries can Leapfrog Developed Countries in Government Transparency http://tech.state.gov/profiles/blogs/how-developing-countries-are<br />More: dhadden@freebalance.com<br />Strengthening Public Financial Management in Timor-Leste <br />74<br />
    75. 75. Goodbye Conflict, Welcome Development<br />Strengthening Public Financial Management in Timor-Leste <br />

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