Public Finance Management Reform The Georgian Experience 2008 ICGFM Winter Conference December, 2008
Introductions <ul><li>Speakers </li></ul><ul><ul><li>Papuna Petriashvili,  Deputy Minister </li></ul></ul><ul><ul><li>Budg...
Presentation Overview <ul><li>History of Public Financial Reforms (PFR) </li></ul><ul><li>Objectives of PFR </li></ul><ul>...
Reasons PFMR Initiated in Georgia <ul><li>Develop Government Strategic Directions, make priorities more sophisticated  </l...
Reasons PFMR Initiated in Georgia <ul><li>Anticorruption activities to improve State Finance Management and increase trans...
PFM System Goals <ul><li>Maintain fiscal discipline, macro-economic stability and budget predictability. </li></ul><ul><li...
PFRM Components National Priorities Government Strategy Basic Data & Direction Medium Term Expenditure Framework Annual Bu...
Budget Planning Reform <ul><li>Establish program budgeting system. </li></ul><ul><li>Improve budgeting and reporting for P...
Resource Management Reforms <ul><li>Continued Treasury Reforms </li></ul><ul><ul><li>E-treasury functional Design prepared...
Resource Management Reforms <ul><li>Consolidating and further improving revenue management : </li></ul><ul><ul><li>Complet...
Macroeconomic Indicators
Strategic Budgeting Reform Actions <ul><li>Budget reform goals </li></ul><ul><ul><li>Improve budget and reflect comments o...
Strategic Budgeting Reform Actions <ul><li>Improve legislation base </li></ul><ul><li>Integrarte MTEF into Budget process ...
  MTEF approach in annual budgeting Forecast Budget Budget Forecast Forecast Budget T T +1 T +2 T+1 T +2 T +3 T +4 T +5 MT...
Budget Process Reforms <ul><li>Adoption of the regulation by the Govenment of Georgia </li></ul><ul><li>Complete involveme...
Budget Planning Reforms <ul><li>Improved and simplified budget systems: </li></ul><ul><ul><li>Circular </li></ul></ul><ul>...
Lessons Learned <ul><li>PFRM is an ongoing, multi-year process </li></ul><ul><li>Multi-year systems provide stability </li...
What’s Next for PFRM <ul><li>Update plan based upon : </li></ul><ul><ul><li>Post conflict needs </li></ul></ul><ul><ul><li...
Questions and  Comments
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Mon 330 Petriashvlli

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Public Finance Management Reform The Georgian Experience
2008 ICGFM Winter Conference
December, 2008

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Mon 330 Petriashvlli

  1. 1. Public Finance Management Reform The Georgian Experience 2008 ICGFM Winter Conference December, 2008
  2. 2. Introductions <ul><li>Speakers </li></ul><ul><ul><li>Papuna Petriashvili, Deputy Minister </li></ul></ul><ul><ul><li>Budget Department </li></ul></ul><ul><ul><li>Georgian Ministry of Finance </li></ul></ul><ul><ul><li>Liana Skhirtladze </li></ul></ul><ul><ul><li>MTEF Advisor </li></ul></ul><ul><ul><li>Georgian Minister of Finance </li></ul></ul><ul><li>Moderator </li></ul><ul><ul><li>Tim Grewe, Resident Advisor </li></ul></ul><ul><ul><li>US Department of Treasury </li></ul></ul><ul><ul><li>Office of Technical Assistance </li></ul></ul>
  3. 3. Presentation Overview <ul><li>History of Public Financial Reforms (PFR) </li></ul><ul><li>Objectives of PFR </li></ul><ul><li>Primary Elements </li></ul><ul><li>Public Financial Management Vision Strategy </li></ul><ul><li>Medium Term Expenditure Framework </li></ul>
  4. 4. Reasons PFMR Initiated in Georgia <ul><li>Develop Government Strategic Directions, make priorities more sophisticated </li></ul><ul><li>Make a reasonable forecast on the bases of good macroeconomic parameters </li></ul><ul><li>Develop united e-Treasury system </li></ul><ul><li>Tax reform </li></ul><ul><li>Improve revenue planning </li></ul><ul><li>Local budget system reform </li></ul><ul><li>Develop Integrated Information System </li></ul>
  5. 5. Reasons PFMR Initiated in Georgia <ul><li>Anticorruption activities to improve State Finance Management and increase transparency </li></ul><ul><li>Conformance to International Standards </li></ul><ul><li>Donor coordination and using the international financial assistance money more effectively and efficiently </li></ul><ul><li>Implement Neighbor policy and NATO entry conditions (international liabilities) </li></ul><ul><li>Improve public finances and services </li></ul>
  6. 6. PFM System Goals <ul><li>Maintain fiscal discipline, macro-economic stability and budget predictability. </li></ul><ul><li>Promote a strategic approach in allocating resources to priorities. </li></ul><ul><li>Ensure the effective and efficient use of resources. </li></ul><ul><li>Accountability in the use of public resources. </li></ul>
  7. 7. PFRM Components National Priorities Government Strategy Basic Data & Direction Medium Term Expenditure Framework Annual Budget Sector Strategies
  8. 8. Budget Planning Reform <ul><li>Establish program budgeting system. </li></ul><ul><li>Improve budgeting and reporting for PLE’s. </li></ul><ul><li>Improve capital budgeting </li></ul><ul><li>Extend reforms on local government level </li></ul><ul><li>Improved public involvement and information </li></ul>
  9. 9. Resource Management Reforms <ul><li>Continued Treasury Reforms </li></ul><ul><ul><li>E-treasury functional Design prepared </li></ul></ul><ul><ul><li>E-treasury System technical specification prepared </li></ul></ul><ul><ul><li>Financial Module and Software Licenses Procured </li></ul></ul><ul><ul><li>Financial Module customized </li></ul></ul><ul><ul><li>Security system designed and implemented </li></ul></ul><ul><ul><li>Pilot phase launched </li></ul></ul>
  10. 10. Resource Management Reforms <ul><li>Consolidating and further improving revenue management : </li></ul><ul><ul><li>Complete on-going reforms including simplification of customs and tax codes. </li></ul></ul><ul><ul><li>Strengthen tax and customs administration. </li></ul></ul><ul><ul><li>Improve management of tax arrears </li></ul></ul><ul><ul><li>Implement risk based system for audit identification </li></ul></ul><ul><li>Improve oversight of MOF budget execution </li></ul><ul><li>Improve capital asset management </li></ul>
  11. 11. Macroeconomic Indicators
  12. 12. Strategic Budgeting Reform Actions <ul><li>Budget reform goals </li></ul><ul><ul><li>Improve budget and reflect comments of Independent Public Expenditure Financial Accounting (PEFA) Assessment </li></ul></ul><ul><ul><li>Simplify the budget process </li></ul></ul><ul><ul><li>Increase linkage between budget documents </li></ul></ul><ul><ul><li>Strengthen management and improve expenditure policy </li></ul></ul><ul><ul><li>Improve budget process coordination </li></ul></ul><ul><ul><li>Increase transparency and availability to the public </li></ul></ul>
  13. 13. Strategic Budgeting Reform Actions <ul><li>Improve legislation base </li></ul><ul><li>Integrarte MTEF into Budget process and institutionalize it </li></ul><ul><ul><li>Introduce medium term thinking and medium term action plan on the state and local level </li></ul></ul><ul><ul><li>Link state policy, planning and budget processes in the medium term </li></ul></ul><ul><ul><li>Reallocate resources to meet government priorities </li></ul></ul><ul><li>Basic Data and Direction Document (BDD) </li></ul><ul><li>State Budget Forms </li></ul><ul><li>State Budget Format </li></ul>
  14. 14. MTEF approach in annual budgeting Forecast Budget Budget Forecast Forecast Budget T T +1 T +2 T+1 T +2 T +3 T +4 T +5 MTEF and Annual Budget MTEF should be closely linked to the technical and institutional processes of the budget preparation
  15. 15. Budget Process Reforms <ul><li>Adoption of the regulation by the Govenment of Georgia </li></ul><ul><li>Complete involvement of spending agencies on all levels </li></ul><ul><li>Medium term action plan – a bases for developing the BDD document </li></ul><ul><li>Fully integrate MTEF into budget process and format. </li></ul><ul><li>Improve linkages to BDD and sector priorities </li></ul><ul><ul><li>Comprehensive goals </li></ul></ul><ul><ul><li>Performance indicators </li></ul></ul><ul><li>GFS 2001 at all levels </li></ul><ul><li>Revised budget legislation </li></ul><ul><li>Improved intergovernmental finance systems (Formula) </li></ul>
  16. 16. Budget Planning Reforms <ul><li>Improved and simplified budget systems: </li></ul><ul><ul><li>Circular </li></ul></ul><ul><ul><li>Execution </li></ul></ul><ul><li>Strengthen capacity of Parliament to review budget proposals. </li></ul><ul><li>Improve capital investment project planning and budgeting. </li></ul>
  17. 17. Lessons Learned <ul><li>PFRM is an ongoing, multi-year process </li></ul><ul><li>Multi-year systems provide stability </li></ul><ul><ul><li>Political transition </li></ul></ul><ul><ul><li>Economic swings </li></ul></ul><ul><ul><li>Conflicts </li></ul></ul><ul><li>Quality of systems improve over time </li></ul><ul><li>Political and Executive support required for success </li></ul><ul><li>Danger of “over-committing” to reforms </li></ul>
  18. 18. What’s Next for PFRM <ul><li>Update plan based upon : </li></ul><ul><ul><li>Post conflict needs </li></ul></ul><ul><ul><li>PEFA Report </li></ul></ul><ul><li>Focus for next three year: </li></ul><ul><ul><li>PFMIS Implementation </li></ul></ul><ul><ul><li>Improved budget system law </li></ul></ul><ul><ul><li>Improved annual budget law </li></ul></ul><ul><ul><li>Implement MTF in local governments </li></ul></ul><ul><ul><li>Program budgeting system </li></ul></ul><ul><ul><li>Capital budgeting systems </li></ul></ul>
  19. 19. Questions and Comments

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