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Country Responses to the Financial Crisis Naomi Ngwira Eng

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“Country Responses to the Financial Crisis”
Behxhet Brajshori, Deputy Minister, Ministry of the Economy and Finance, Republic of Kosovo
Lulzim Ismajli, Director of Treasury, Ministry of the Economy and Finance, Republic of Kosovo
Naomi Ngwira, Director, Department of Debt and Aid, Ministry of Finance, Malawi
Obadiah Mailafia, Chariman, Center for Policy and Economic Research, Nigeria
During this panel, participants will share observations of the effects of the crisis on their economies and future plans. They will also share existing tools to safeguard their investments.
The session will include a discussion on how they are mitigating the impacts and how they
expect to cover the cost. Panelists and the audience will be asked to address the following
questions.
Registration

Immediate Actions Being Taken to Manage the Impact

Is the situation different for middle vs. lower income countries?
How does the current financial crisis affect a country’s ability to borrow?
Is the situation different for resource rich countries?
Can we learn anything from previous financial crises (e.g. Asia and Latin America)?
How are recipient countries more efficiently managing their donor aid?
What is the role of the government in solving financial sector issues?

Published in: Economy & Finance, Business
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Country Responses to the Financial Crisis Naomi Ngwira Eng

  1. 1. Aid Management Information Systems - A tool for strengthening public financial management 19 th May 2009 Miami, Florida - USA
  2. 2. Contents <ul><li>Background </li></ul><ul><li>What are AIMS and what are they for? </li></ul><ul><li>Malawi’s experience on use of AIMS </li></ul><ul><li>Challenges of AIMS </li></ul><ul><li>Vision for the future </li></ul><ul><li>Increased Accountability - Using AIMS for change </li></ul>
  3. 3. Background <ul><li>Scaling up resources for development and increased aid levels require concomitant improvement in aid effectiveness; </li></ul><ul><li>In order to maximize increased aid levels, there is need for recipient countries to have, among other things, transparent and effective information systems of managing aid to facilitate better budget planning and execution; </li></ul><ul><li>On the donors’ side, there is need for transparency and predictability of their aid operations; </li></ul><ul><li>Aid Information systems (AIMS) are, therefore, critical to changing the way donors operate through aligning their procedures/practices with Government systems; </li></ul><ul><li>AIMS are one of the key instrument to achieving greater development results </li></ul>
  4. 4. What are AIMS and what are they for? (1/2) <ul><li>AIMS are IT applications, usually databases, for recording and processing information about development initiatives and the related aid flows in a country </li></ul><ul><li>Besides recording aid activities, AIMS are useful in decision making such as budget planning and execution </li></ul><ul><li>AIMS are not complete Public Finance Management Systems (PFMS). Instead, AIMS provide and interface between PFMS of aid recipients and information stored in donor systems; </li></ul><ul><li>AIMS allows for harmonized reporting of aid and how the aid resources have been used. Thus, they are tools for mutual accountability. </li></ul>
  5. 5. What are AIMS and what are they for? (2/2) <ul><li>AIMS can support poverty reduction through efficient aid delivery as follows: </li></ul><ul><ul><li>Facilitate decision making on the allocation of resources by providing an overall picture of aid flows; </li></ul></ul><ul><ul><li>Assist in identifying funding gaps, alerting both the Government and donors on the financing needs; </li></ul></ul><ul><ul><li>Support the national strategies and MDGs by making information relative to flows contributing to the specific indicators </li></ul></ul><ul><ul><li>Support national PFMS by interfacing with the national budget; </li></ul></ul><ul><ul><li>Improving aid predictability through multi-year programming; </li></ul></ul><ul><ul><li>Foster transparency and accountability by recording and tracking projects and financial flows. </li></ul></ul>
  6. 6. Malawi’s Experience with AIMS (1/4) <ul><li>The Ministry of Finance in Malawi has made significant progress in managing aid information since 2005. Prior to this, only debt data was held; </li></ul><ul><li>The Ministry of Finance consulted with users and providers of data before designing a reporting format in excel which included all information related to donor financing (amount committed, relevant dates, currency and amounts, of disbursements etc) </li></ul><ul><li>Initially, information was collected to: </li></ul><ul><ul><li>Monitor the prevailing macroeconomic programme with IMF (PRGF) </li></ul></ul><ul><ul><li>Provide a basis for project monitoring </li></ul></ul><ul><ul><li>Improve budget comprehensiveness </li></ul></ul>
  7. 7. Malawi’s Experience with AIMS (2/4) <ul><li>As data collection and analysis improved, we did more: </li></ul><ul><ul><li>Annual reporting on aid inflows by sector, national development strategy theme, donor, modality etc. </li></ul></ul><ul><ul><li>Calculate indicators of aid effectiveness and dependence: predictability, use of national systems, use of PBAs, % of budget; </li></ul></ul><ul><ul><li>Promote sector-led aid effectiveness reviews as part of national reviewing process </li></ul></ul>
  8. 8. Malawi’s Experience with AIMS (3/4) <ul><li>Due to the complexity of handling large volumes of aid information using excel spreadsheets, the Government of Malawi decided to adopt a comprehensive aims </li></ul><ul><li>In 2008, the Government adopted the Aid Management Platform (AMP), which is a user-friendly web-based system for tracking aid inflows. </li></ul><ul><li>AMP has facilities for tracking the financial flows in donor funded programmes as well as the physical implementation progress. </li></ul><ul><li>It also has a facility for generating customized reports on aid management depending on the needs and requirements of the user. </li></ul><ul><li>The main attraction of the AMP, however, was our ability to request changes to the system to improve its fit to Malawi’s specific needs </li></ul>
  9. 9. Malawi’s Experience with AIMS - Data Analysis (4/4) <ul><li>With AIMS, the Ministry of Finance produces mid-year and annual reports which provide a comprehensive view of the distribution and effectiveness of aid </li></ul><ul><li>Our annual reports (at www.finance.gov.mw ) look at: </li></ul><ul><ul><li>Aid by donor </li></ul></ul><ul><ul><li>Aid by modality </li></ul></ul><ul><ul><li>Aid by national development strategy theme and functional sector </li></ul></ul><ul><ul><li>Predictability of aid </li></ul></ul><ul><ul><li>Proportion of aid administered through the budget </li></ul></ul><ul><ul><li>Aid dependency (GDP, budget, development expenditure) </li></ul></ul><ul><ul><li>Sector level analysis of aid </li></ul></ul>
  10. 10. Challenges <ul><li>Progress in Malawi has been made in spite of a number of challenges </li></ul><ul><li>Some donors remain reluctant or unable to provide data regularly: UN agencies are particularly culpable, but intermittent problems exist with most donors </li></ul><ul><li>Unavailability of timely data continues to impose a ceiling on budget comprehensiveness </li></ul><ul><li>Quality assurance of data remains difficult: information is taken on trust </li></ul><ul><li>Publication of data is yet to show results in changing donor behaviours. This is demonstrated in the next slides </li></ul>
  11. 11. Changing behaviours? (1/2) In 2006/07, we published a damning report on predictability of aid – only four donors disbursed within +/- 10% of submitted projections Publication of data was expected to lead to improved performance
  12. 12. Changing behaviours? (2/2) Instead, performance deteriorated markedly, particularly when budget support is excluded. Transparency without accountability structures will not work.
  13. 13. Vision for the Future <ul><li>We will strive to improve the process and outcomes of tracking aid through improved collection and analysis of aid data and increased accountability </li></ul><ul><li>The process of collecting and analyzing aid will be streamlined through implementation of the web-based Aid Management Platform. </li></ul><ul><li>This system will allow faster collection and analysis of data. Public access to data can be granted from the system – increases transparency. User friendly format is demonstrated overleaf. </li></ul><ul><li>Accountability structures associated with aid monitoring will also need strengthening </li></ul>
  14. 14. Increased Accountability - Using AIMS for change <ul><li>As already demonstrated, information alone will not produce change. We must use it strategically </li></ul><ul><li>Increased publicity associated with reporting – use of media, distribution to CSO networks - can create pressure for change </li></ul><ul><li>National review processes need further strengthening, with more analysis of aid, and reform recommendations for specific donors who are problematic </li></ul><ul><li>Need for increased communication of country level performance to donor HQ’s to create top-down pressure for improved performance </li></ul><ul><li>Ideally, an international network whereby such information can be shared to assess aid effectiveness by country and by donor country office can be instituted </li></ul>
  15. 15. Thank you for listening May 2008

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