The document provides an overview of public financial management reforms in Ethiopia and Tanzania. It discusses the following key points:
1) Both Ethiopia and Tanzania implemented selective reforms focused on systematically addressing weaknesses in financial control. Ethiopia took a hybrid approach of evolving existing systems, while Tanzania installed a new integrated financial management system.
2) Ethiopia's reforms focused on the legal framework, budgeting, accounting, reporting and automation while maintaining strong manual controls. Tanzania's reforms were driven by information technology and focused on procurement, disbursement and a central payment system.
3) Both countries' reforms were successful in improving financial control, but Ethiopia's reforms took more time to evolve existing
The document discusses budget transparency reforms in the Kingdom of Lesotho, including its public financial management (PFM) reform efforts and the implementation of an integrated financial management information system (IFMIS). It provides background on Lesotho and an overview of PFM reforms, focusing on improvements to budgeting processes through a medium-term expenditure framework (MTEF) and the implementation of an IFMIS to replace an outdated financial system. It describes successes so far but also ongoing challenges to ensure sustainability of reforms.
The document compares public expenditure management (PEM) reforms in New Zealand and Australia. Both countries introduced reforms to improve aggregate fiscal discipline, allocation efficiency, and operational efficiency. New Zealand's reforms included establishing state-owned enterprises, abolishing permanent public sector tenure, enhancing transparency through the Public Finance Act, and the Fiscal Responsibility Act. Australia introduced a medium-term expenditure framework focusing on forward estimates, macroeconomic planning, and portfolio budgeting. Key similarities in the PEM reforms of both countries include increased transparency, devolution, contestability, and commitment to fiscal discipline.
Dorotinsky public financial management trends and lessonsicgfmconference
This document discusses trends in public financial management (PFM) reforms. It outlines the objectives of PFM as macrofiscal discipline, strategic resource allocation, and technical efficiency. Popular reforms aim to change incentives to better meet these objectives by altering rules, roles, and information. Recent reforms have focused on budget formulation tools like capital budgets and performance budgets differently across countries based on income level. There is a need for PFM reforms to address real problems and be tailored to each country's circumstances and stage of development.
Public Financial Management Reform presentation Mohamed Dahir
This document discusses good governance in public financial management reform. It defines good governance as processes for making decisions in the best possible way. Good governance includes macroeconomic stability, social equity, and efficient institutions. It also discusses principles of good governance like participation, rule of law, transparency, and equality. Principles of public financial management reform include legitimacy, accountability, and performance. Stakeholders in good public financial governance are government institutions and the Ministry of Finance, Parliament, and civil society. Reforms must be implemented sequentially based on a country's existing capacities.
Akinwunmi Ambode discusses the progress of Nigeria Finance Reforms.
Excerpt from the lecture delivered at the retreat of the Forum of Accountants-General in Nigeria, Victoria Island, Lagos.
Public Expenditure Management: Allocative efficiency, forward estimates, publ...Shahril Budiman Png
This presentation address to finding the one function of Allocative efficiency as part of PEM objectives. In addtion, it has presented several research from Allen shick and collaboration the government expenditure in Indonesia and Malaysia with several exercise have been given to audience to understanding several practice concept.
Capital Budgeting And Public Financial Managementjoelnshisso
The document discusses capital budgeting and public financial management in the Democratic Republic of Congo. It analyzes data comparing the DRC to Belgium and finds that the DRC lacks necessary data to properly conduct capital budgeting due to outdated or missing records of capital assets and financial statements. This hinders accurate evaluation of investment needs and capital budgeting decisions that are important for public sector development and economic growth.
The four dimensions of public financial managementicgfmconference
In two relatively short articles, Michael Parry first proposes a definition of the modified cash basis of accounting and then describes the four dimensions of public financial management. We welcome this approach of relatively short articles addressing key issues in governmental financial management and would encourage other authors to follow Michael’s example in future issues.
The document discusses budget transparency reforms in the Kingdom of Lesotho, including its public financial management (PFM) reform efforts and the implementation of an integrated financial management information system (IFMIS). It provides background on Lesotho and an overview of PFM reforms, focusing on improvements to budgeting processes through a medium-term expenditure framework (MTEF) and the implementation of an IFMIS to replace an outdated financial system. It describes successes so far but also ongoing challenges to ensure sustainability of reforms.
The document compares public expenditure management (PEM) reforms in New Zealand and Australia. Both countries introduced reforms to improve aggregate fiscal discipline, allocation efficiency, and operational efficiency. New Zealand's reforms included establishing state-owned enterprises, abolishing permanent public sector tenure, enhancing transparency through the Public Finance Act, and the Fiscal Responsibility Act. Australia introduced a medium-term expenditure framework focusing on forward estimates, macroeconomic planning, and portfolio budgeting. Key similarities in the PEM reforms of both countries include increased transparency, devolution, contestability, and commitment to fiscal discipline.
Dorotinsky public financial management trends and lessonsicgfmconference
This document discusses trends in public financial management (PFM) reforms. It outlines the objectives of PFM as macrofiscal discipline, strategic resource allocation, and technical efficiency. Popular reforms aim to change incentives to better meet these objectives by altering rules, roles, and information. Recent reforms have focused on budget formulation tools like capital budgets and performance budgets differently across countries based on income level. There is a need for PFM reforms to address real problems and be tailored to each country's circumstances and stage of development.
Public Financial Management Reform presentation Mohamed Dahir
This document discusses good governance in public financial management reform. It defines good governance as processes for making decisions in the best possible way. Good governance includes macroeconomic stability, social equity, and efficient institutions. It also discusses principles of good governance like participation, rule of law, transparency, and equality. Principles of public financial management reform include legitimacy, accountability, and performance. Stakeholders in good public financial governance are government institutions and the Ministry of Finance, Parliament, and civil society. Reforms must be implemented sequentially based on a country's existing capacities.
Akinwunmi Ambode discusses the progress of Nigeria Finance Reforms.
Excerpt from the lecture delivered at the retreat of the Forum of Accountants-General in Nigeria, Victoria Island, Lagos.
Public Expenditure Management: Allocative efficiency, forward estimates, publ...Shahril Budiman Png
This presentation address to finding the one function of Allocative efficiency as part of PEM objectives. In addtion, it has presented several research from Allen shick and collaboration the government expenditure in Indonesia and Malaysia with several exercise have been given to audience to understanding several practice concept.
Capital Budgeting And Public Financial Managementjoelnshisso
The document discusses capital budgeting and public financial management in the Democratic Republic of Congo. It analyzes data comparing the DRC to Belgium and finds that the DRC lacks necessary data to properly conduct capital budgeting due to outdated or missing records of capital assets and financial statements. This hinders accurate evaluation of investment needs and capital budgeting decisions that are important for public sector development and economic growth.
The four dimensions of public financial managementicgfmconference
In two relatively short articles, Michael Parry first proposes a definition of the modified cash basis of accounting and then describes the four dimensions of public financial management. We welcome this approach of relatively short articles addressing key issues in governmental financial management and would encourage other authors to follow Michael’s example in future issues.
This document summarizes a study that examined the effects of Integrated Financial Management Information System (IFMIS) on financial reporting effectiveness of district local governments in Uganda. Some key findings of the study include:
1) IFMIS was found to positively affect and improve financial reporting effectiveness in Ugandan district governments by ensuring consistency, accuracy, timeliness, transparency and relevancy of reports.
2) IFMIS supports effective budget preparation, transaction processing and financial report preparation, thereby fulfilling the objective of improving financial accountability through prompt reporting.
3) The study found IFMIS improves financial reporting effectiveness through realistic budgeting based on available resources, integration of departmental budgets, ranking of financial priorities, and easy tracking of
The document discusses financial management reforms in India. It defines public finance management and outlines some of the traditional approaches. It notes recommendations have been made to shift the focus from inputs to outcomes, adopt a medium-term budget framework aligned with plans and accounts, and provide greater autonomy and decentralization. Weaknesses in the budgetary process are also summarized, including unrealistic estimates, a lack of coordination between policy, planning and budgeting, and an overemphasis on inputs over outcomes.
Hadden public financial management in government of kosovoicgfmconference
Doug Hadden, FreeBalance The Government of Kosovo has achieved remarkable results in Public Financial Management
(PFM) reform. This post-conflict country once managed through a United Nations mandate
has sequenced legal reform, improved governance, and achieved international PFM standards
under difficult conditions.
Sequencing PFM reform is considered a good government practice, although “it is impossible
to prescribe a sequence of reforms which is appropriate in all circumstances (DFID 2001).”
There are numerous lessons in the Kosovo experience linking reform to context that can be
leveraged by governments around the world.
Public Sector Productivity - Ronnie Downes and Sean Dougherty, OECDOECD Governance
This presentation was made by Ronnie Downes and Sean Dougherty, OECD, at the 38th Annual Meeting of OECD Senior Budget Officials held in Lisbon, Portugal, on 1-2 June 2017
Investigating Government Accounting Reform In The Greek National Health Servi...icgfmconference
This document discusses accounting reforms in Greek public hospitals, specifically the introduction of accrual-based accounting in 1997. It provides background on the Greek health system and accounting reforms. A survey was conducted of finance directors at all 132 Greek public hospitals in 2008 to understand perceptions of benefits, problems, and satisfaction with the new accounting system. The responses provide evidence on the implementation and effects of introducing accrual accounting in the Greek health sector.
The document discusses public financial management (PFM) reforms in the Philippine government. It defines PFM and outlines its core elements, which include budget preparation, execution, accounting, reporting, auditing, and debt management. It describes key PFM initiatives in the Philippines, including the Unified Accounts Code Structure (UACS) and the Government Integrated Financial Management Information System (GIFMIS). The UACS establishes a standardized coding framework, while GIFMIS is an IT-based system for integrated budget preparation, management, execution, accounting and reporting. The document emphasizes that PFM reforms aim to improve efficiency, accountability and transparency in the use of public funds.
The document discusses how a "Citizens' Guide to the Budget" (CGB) can strengthen fiscal transparency and increase public participation. A CGB typically explains a country's budget proposals and economic context in a clear, non-technical way. Governments publish CGBs to inform citizens about fiscal policy and enhance accountability. CGBs provide an accessible snapshot of a country's fiscal position and decisions. They can supplement technical budget documents and provide insight into specific economic and spending decisions. The timing of a CGB is important - it should be published when the budget is presented to the legislature to allow public participation in debate.
The document discusses Citizens' Guides to the Budget (CGB) which aim to increase fiscal transparency and public participation in budgeting. CGBs typically explain annual budget proposals and the economic context in a clear, non-technical way. They can strengthen accountability, buy-in for policies, and accessibility of fiscal information. The document outlines recommended contents of a CGB, including discussions of the economic outlook, spending and revenue plans, fiscal risks, and how the budget supports government objectives. It emphasizes presenting information in an engaging format with charts and making CGBs widely available.
Effectiveness of the Public Financial Management Assessment Tool or (PFMAT) i...IJAEMSJORNAL
In both theoretical and practical areas, the issue of public sector management and the use of public finances is highly critical. The management of public finances is vital if public services, like local government, are to operate smoothly and effectively. If public financial management is such a vital element in a country's growth, it is crucial to know, quantify and develop the factors leading to poor public financial management. This descriptive research interest is on the effectiveness of the public financial management assessment tool or PFMAT for local government units. The chosen subject of the study is the Municipality of Talavera, Nueva Ecija, and the focus is on the results of the PFMAT report of the municipality for the covered fiscal years 2014-2016 and 2016-2018. The study revealed that the PFMAT is a standard tool that states the weak areas of the public financial performance of LGU-Talavera, thus paving the way for improved services for the residents of the municipality. LGU-Talavera has gradually improved its public financial performance in 2014-2018. PFMAT is therefore an effective tool for evaluating public finances to strengthen the town's financial capability, thereby enhancing the overall performance of the LGU.
From the medium term fiscal frameworkto ministries' ceilingsJean-Marc Lepain
This document discusses the methodology for constructing medium-term expenditure ceilings and allocating budgets to ministries in Brunei. It begins by explaining the purpose of medium-term ceilings, which is to link fiscal and sectoral policies, prioritize spending, and conduct fiscal adjustments in an orderly manner. It then covers the methodology, including setting aggregate and sectoral fiscal targets, disaggregating budgets to ministries, and addressing issues like time horizons, coverage, and managing uncertainty. The document concludes by emphasizing the importance of understanding baselines versus ceilings and the demands this system places on both ministries and the Ministry of Finance.
The document discusses introducing financial management and control (FMC) reforms in Georgia. It outlines several key points:
1. The current financial control system focuses solely on budget compliance and does not consider value for money or managerial accountability. Introducing FMC would address these issues.
2. The main problems with the current system are weak organizational management and a lack of managerial accountability. FMC would establish clear responsibilities for managers to improve performance.
3. Introducing FMC should be done gradually in three stages - financial control, managerial control, and then full financial management. Each stage requires pilot testing before full implementation. The goal is to improve value for money and financial awareness over time.
Developments in performance budgeting - Zulkhairil Amar Mohamad, MalaysiaOECD Governance
This presentation was made by Zulkhairil Amar Mohamad, Malaysia, at the 14th OECD-Asian Senior Budget Officials Meeting held in Bangkok, Thailand, on 13-14 December 2018
Evolution of budgeting system in malaysia presentation (3 nov 3pm edit)Mohd Hasim Ujang
A group presentation slide for the subject 'Budget Administration', Master of Public Policy, University Malaya. The subject was taught by Tan Sri Sulaiman Mahbob, former Director-General of Economic Planning Unit, Prime Minister's Department and current Chairman of Felda Global Ventures (FGV).
This project aims to upgrade Lebanon's economic analytical capacity by focusing on key economic and social issues and empowering public officials. It will operate on two tracks: providing economic analysis skills training to officials and tackling important reform areas. The project will focus on promoting economic stability by addressing inflation and securing social security for the elderly through pension reform. It will last two years with a budget of $240,360 USD. Officials will be split into two working groups to produce analytical materials and policy responses on these issues. The first group will work to establish robust inflation measures. The second will analyze Lebanon's pension system and propose a universal non-contributory pension and healthcare system for the elderly.
This document provides an overview of key economic concepts and the economic environment. It begins by explaining the objectives of the module which are to explain the economic environment, basic economic concepts, micro and macroeconomics, and different economic situations and their causes. It then defines important economic terms like scarcity, resources, supply, demand, market equilibrium, production, cost, efficiency, and opportunity cost. It also distinguishes between microeconomics and macroeconomics and defines economic growth, development, inflation, employment, and unemployment.
The document discusses India's fiscal system and reforms. It outlines the goals of fiscal policy as mobilizing resources, promoting growth, ensuring stability and equitable distribution. It discusses tax and expenditure reforms since the 1990s aimed at simplification, rationalization and widening the tax base. Reforms also focused on privatization, expenditure quality and reducing non-developmental spending. The document calls for further reforms to increase productive spending and finance development goals through improved resource mobilization and expenditure efficiency.
Evolution of budgeting system in malaysia (10 page)Mohd Hasim Ujang
A group assignment for the subject 'Budget Administration', Master of Public Policy, University Malaya. This subject was taught by Tan Sri Sulaiman Mahbob, former Director-General of Economic Planning Unit, Prime Minister's Department and current Chairman of Felda Global Ventures (FGV).
Financial management reforms and the economic performanceAlexander Decker
This document summarizes a research study that examined the impact of financial management reforms on the economic performance of public sector entities in Kenya from 2007/2008-2011/2012. The study found that financial reforms achieved more than half of intended performance targets over the period. Budgetary reforms had the strongest relationship to performance indicators, followed by accounting reforms, while audit reforms did not significantly impact performance. The study concludes that more emphasis should be placed on budgetary and accounting reforms to improve economic performance in the public sector.
Relationship between Financial Reporting Reforms and Performance of Selected ...Dr. Amarjeet Singh
Over the past few decades, the world has witnessed
spectacular transformations of public financial management
systems. Kenya transformed its financial reporting system
with a view of enhancing credibility of its financial reports.
The objective of the study was to examine the relationship
between financial reporting reforms and the performance of
selected County Governments in Kenya. The study was guided
by descriptive research design and the target population was
184 treasury staff from Bomet, Kericho, Nakuru and Narok
County Governments. Census sampling technique was
employed in selecting the respondents to the study. Data were
collected using semi-structured, self-administered
questionnaires. Data was analyzed using descriptive and
inferential statistics. The findings revealed that financial
reporting reforms showed statistically significant correlation
(r=0.673) with the performance of selected County
Governments in Kenya. It was recommended that adoption of
IPSAS in financial reporting should be strengthened to ensure
optimal performance of the county governments.
This document summarizes a study that examined the effects of Integrated Financial Management Information System (IFMIS) on financial reporting effectiveness of district local governments in Uganda. Some key findings of the study include:
1) IFMIS was found to positively affect and improve financial reporting effectiveness in Ugandan district governments by ensuring consistency, accuracy, timeliness, transparency and relevancy of reports.
2) IFMIS supports effective budget preparation, transaction processing and financial report preparation, thereby fulfilling the objective of improving financial accountability through prompt reporting.
3) The study found IFMIS improves financial reporting effectiveness through realistic budgeting based on available resources, integration of departmental budgets, ranking of financial priorities, and easy tracking of
The document discusses financial management reforms in India. It defines public finance management and outlines some of the traditional approaches. It notes recommendations have been made to shift the focus from inputs to outcomes, adopt a medium-term budget framework aligned with plans and accounts, and provide greater autonomy and decentralization. Weaknesses in the budgetary process are also summarized, including unrealistic estimates, a lack of coordination between policy, planning and budgeting, and an overemphasis on inputs over outcomes.
Hadden public financial management in government of kosovoicgfmconference
Doug Hadden, FreeBalance The Government of Kosovo has achieved remarkable results in Public Financial Management
(PFM) reform. This post-conflict country once managed through a United Nations mandate
has sequenced legal reform, improved governance, and achieved international PFM standards
under difficult conditions.
Sequencing PFM reform is considered a good government practice, although “it is impossible
to prescribe a sequence of reforms which is appropriate in all circumstances (DFID 2001).”
There are numerous lessons in the Kosovo experience linking reform to context that can be
leveraged by governments around the world.
Public Sector Productivity - Ronnie Downes and Sean Dougherty, OECDOECD Governance
This presentation was made by Ronnie Downes and Sean Dougherty, OECD, at the 38th Annual Meeting of OECD Senior Budget Officials held in Lisbon, Portugal, on 1-2 June 2017
Investigating Government Accounting Reform In The Greek National Health Servi...icgfmconference
This document discusses accounting reforms in Greek public hospitals, specifically the introduction of accrual-based accounting in 1997. It provides background on the Greek health system and accounting reforms. A survey was conducted of finance directors at all 132 Greek public hospitals in 2008 to understand perceptions of benefits, problems, and satisfaction with the new accounting system. The responses provide evidence on the implementation and effects of introducing accrual accounting in the Greek health sector.
The document discusses public financial management (PFM) reforms in the Philippine government. It defines PFM and outlines its core elements, which include budget preparation, execution, accounting, reporting, auditing, and debt management. It describes key PFM initiatives in the Philippines, including the Unified Accounts Code Structure (UACS) and the Government Integrated Financial Management Information System (GIFMIS). The UACS establishes a standardized coding framework, while GIFMIS is an IT-based system for integrated budget preparation, management, execution, accounting and reporting. The document emphasizes that PFM reforms aim to improve efficiency, accountability and transparency in the use of public funds.
The document discusses how a "Citizens' Guide to the Budget" (CGB) can strengthen fiscal transparency and increase public participation. A CGB typically explains a country's budget proposals and economic context in a clear, non-technical way. Governments publish CGBs to inform citizens about fiscal policy and enhance accountability. CGBs provide an accessible snapshot of a country's fiscal position and decisions. They can supplement technical budget documents and provide insight into specific economic and spending decisions. The timing of a CGB is important - it should be published when the budget is presented to the legislature to allow public participation in debate.
The document discusses Citizens' Guides to the Budget (CGB) which aim to increase fiscal transparency and public participation in budgeting. CGBs typically explain annual budget proposals and the economic context in a clear, non-technical way. They can strengthen accountability, buy-in for policies, and accessibility of fiscal information. The document outlines recommended contents of a CGB, including discussions of the economic outlook, spending and revenue plans, fiscal risks, and how the budget supports government objectives. It emphasizes presenting information in an engaging format with charts and making CGBs widely available.
Effectiveness of the Public Financial Management Assessment Tool or (PFMAT) i...IJAEMSJORNAL
In both theoretical and practical areas, the issue of public sector management and the use of public finances is highly critical. The management of public finances is vital if public services, like local government, are to operate smoothly and effectively. If public financial management is such a vital element in a country's growth, it is crucial to know, quantify and develop the factors leading to poor public financial management. This descriptive research interest is on the effectiveness of the public financial management assessment tool or PFMAT for local government units. The chosen subject of the study is the Municipality of Talavera, Nueva Ecija, and the focus is on the results of the PFMAT report of the municipality for the covered fiscal years 2014-2016 and 2016-2018. The study revealed that the PFMAT is a standard tool that states the weak areas of the public financial performance of LGU-Talavera, thus paving the way for improved services for the residents of the municipality. LGU-Talavera has gradually improved its public financial performance in 2014-2018. PFMAT is therefore an effective tool for evaluating public finances to strengthen the town's financial capability, thereby enhancing the overall performance of the LGU.
From the medium term fiscal frameworkto ministries' ceilingsJean-Marc Lepain
This document discusses the methodology for constructing medium-term expenditure ceilings and allocating budgets to ministries in Brunei. It begins by explaining the purpose of medium-term ceilings, which is to link fiscal and sectoral policies, prioritize spending, and conduct fiscal adjustments in an orderly manner. It then covers the methodology, including setting aggregate and sectoral fiscal targets, disaggregating budgets to ministries, and addressing issues like time horizons, coverage, and managing uncertainty. The document concludes by emphasizing the importance of understanding baselines versus ceilings and the demands this system places on both ministries and the Ministry of Finance.
The document discusses introducing financial management and control (FMC) reforms in Georgia. It outlines several key points:
1. The current financial control system focuses solely on budget compliance and does not consider value for money or managerial accountability. Introducing FMC would address these issues.
2. The main problems with the current system are weak organizational management and a lack of managerial accountability. FMC would establish clear responsibilities for managers to improve performance.
3. Introducing FMC should be done gradually in three stages - financial control, managerial control, and then full financial management. Each stage requires pilot testing before full implementation. The goal is to improve value for money and financial awareness over time.
Developments in performance budgeting - Zulkhairil Amar Mohamad, MalaysiaOECD Governance
This presentation was made by Zulkhairil Amar Mohamad, Malaysia, at the 14th OECD-Asian Senior Budget Officials Meeting held in Bangkok, Thailand, on 13-14 December 2018
Evolution of budgeting system in malaysia presentation (3 nov 3pm edit)Mohd Hasim Ujang
A group presentation slide for the subject 'Budget Administration', Master of Public Policy, University Malaya. The subject was taught by Tan Sri Sulaiman Mahbob, former Director-General of Economic Planning Unit, Prime Minister's Department and current Chairman of Felda Global Ventures (FGV).
This project aims to upgrade Lebanon's economic analytical capacity by focusing on key economic and social issues and empowering public officials. It will operate on two tracks: providing economic analysis skills training to officials and tackling important reform areas. The project will focus on promoting economic stability by addressing inflation and securing social security for the elderly through pension reform. It will last two years with a budget of $240,360 USD. Officials will be split into two working groups to produce analytical materials and policy responses on these issues. The first group will work to establish robust inflation measures. The second will analyze Lebanon's pension system and propose a universal non-contributory pension and healthcare system for the elderly.
This document provides an overview of key economic concepts and the economic environment. It begins by explaining the objectives of the module which are to explain the economic environment, basic economic concepts, micro and macroeconomics, and different economic situations and their causes. It then defines important economic terms like scarcity, resources, supply, demand, market equilibrium, production, cost, efficiency, and opportunity cost. It also distinguishes between microeconomics and macroeconomics and defines economic growth, development, inflation, employment, and unemployment.
The document discusses India's fiscal system and reforms. It outlines the goals of fiscal policy as mobilizing resources, promoting growth, ensuring stability and equitable distribution. It discusses tax and expenditure reforms since the 1990s aimed at simplification, rationalization and widening the tax base. Reforms also focused on privatization, expenditure quality and reducing non-developmental spending. The document calls for further reforms to increase productive spending and finance development goals through improved resource mobilization and expenditure efficiency.
Evolution of budgeting system in malaysia (10 page)Mohd Hasim Ujang
A group assignment for the subject 'Budget Administration', Master of Public Policy, University Malaya. This subject was taught by Tan Sri Sulaiman Mahbob, former Director-General of Economic Planning Unit, Prime Minister's Department and current Chairman of Felda Global Ventures (FGV).
Financial management reforms and the economic performanceAlexander Decker
This document summarizes a research study that examined the impact of financial management reforms on the economic performance of public sector entities in Kenya from 2007/2008-2011/2012. The study found that financial reforms achieved more than half of intended performance targets over the period. Budgetary reforms had the strongest relationship to performance indicators, followed by accounting reforms, while audit reforms did not significantly impact performance. The study concludes that more emphasis should be placed on budgetary and accounting reforms to improve economic performance in the public sector.
Relationship between Financial Reporting Reforms and Performance of Selected ...Dr. Amarjeet Singh
Over the past few decades, the world has witnessed
spectacular transformations of public financial management
systems. Kenya transformed its financial reporting system
with a view of enhancing credibility of its financial reports.
The objective of the study was to examine the relationship
between financial reporting reforms and the performance of
selected County Governments in Kenya. The study was guided
by descriptive research design and the target population was
184 treasury staff from Bomet, Kericho, Nakuru and Narok
County Governments. Census sampling technique was
employed in selecting the respondents to the study. Data were
collected using semi-structured, self-administered
questionnaires. Data was analyzed using descriptive and
inferential statistics. The findings revealed that financial
reporting reforms showed statistically significant correlation
(r=0.673) with the performance of selected County
Governments in Kenya. It was recommended that adoption of
IPSAS in financial reporting should be strengthened to ensure
optimal performance of the county governments.
The main aim of this study was to examine the Influence of Management Accounting Practices on Performance of Kisumu County Government. The study aimed specifically to examine how the performance of Kisumu County Government is influenced by financial planning and budgeting and internal control and public finances governance. One of the objects of a transfer is to bring economic resources closer to the people, and effective public financial management practices are needed to make this felt by the people. The reviewed literature shows that limited studies are being conducted on the same subject and therefore this study aims to fill the gap by contributing to the existing knowledge. In the past six years, Kenya has experienced many challenges despite the improvement of the legislative and institutional frameworks for the management of public finances which are not in line with the global expected standard practice and therefore lead to a poorer service delivery. This study also aims to strengthen policies that streamline prudent public resource management. The study was based on participatory theory, contingency theory and institutional theory. The study employed mixed research and a deliberate technique for sampling. The county's director and accountants from the treasury of Kisumu County were among the respondents. In the case of primary data, a questionnaire was used to collect secondary data from the Budget Office, the Office of the Auditor General and the County Treasury Office. In the study qualitative and quantitative data were used. While content analyzes were used for qualitative data analysis, the Social Science Statistics Package Version 25 was used for quantitative data analyzing descriptive and inferential statistics. The effect of management accounting practices on the Kisumu County Government's performance has been assessed by a multiple linear regression analysis. The main finding was the importance of internal control practices involving monitoring, control environments, and internal audits (F (1, 196) = 156,124).
The document discusses the history and processes of fiscal administration in the Philippines. It begins with definitions of fiscal administration and describes how it has evolved from the Revolutionary Government in the late 1800s to present day. It outlines the principal agencies involved in fiscal functions like the Department of Finance, Department of Budget and Management, and Commission on Audit. The document also discusses budgeting concepts, income sources, fiscal control mechanisms, and new policy guidelines for budgeting that focus on priority development areas and performance-based spending.
1. Councils face severe long-term financial challenges due to reduced income from central government and increased demand for services.
2. Good financial management is essential for councils to deliver services and steward taxpayer money effectively during this difficult time. It involves taking a long-term approach to planning rather than just focusing on the short-term.
3. By managing for the long-term instead of just predicting the future, councils can plan for unavoidable changes, prevent undesirable outcomes, and control what they can to position themselves as well as possible for reduced funding.
Public Sector Reforms in Africa: Focus, Challenges and Lessons Learntinventionjournals
Several public sector reforms (PSR) have taken place in Africa over the last few decades with
varying degrees of success. These range from very excellent performance to limited success and then failure.
However, regardless of the evaluation results, they have without a doubt had an impact on the way we
understand and shape public management on the African continent. Inevitably, a number of insights and lessons
have been gained on the subject matter. In this article, I suggest that a number of lessons have been learnt
which should guide reformers to improve on public sector reforms and scholars to seek further explanations for
failure and success. There is also the need for students of public sector reforms to question further the
prevailing assumptions and theories underpinning these reforms. In the light of the challenges facing public
sector reform in Africa, this paper argues that ownership of reform programmes by African governments and
other stakeholders is necessary.
Financial administration refers to activities related to generating, regulating, and distributing monetary resources for public organizations. It has traditionally been viewed as managing funds, but now is seen more broadly as part of overall management. The scope of financial administration includes financial planning, budgeting, resource mobilization, investment decisions, expenditure control, and accounting/auditing. It plays an important role in modern governments by influencing socioeconomic policies through fiscal tools.
Assessing Accrual Accounting Reform in Greek Public Hospitals:An Empirical In...Filippos Stamatiadis
This document analyzes the adoption of accrual accounting reforms in Greek public hospitals. It discusses how Greece introduced accrual accounting into the public sector, including public hospitals, as part of New Public Management initiatives. The document reports on a survey of chief financial officers at Greek public hospitals that examined the level of adoption of accrual and cost accounting standards and the impact of various contingent factors on compliance with the accounting reforms. The survey found the level of adoption was positively associated with IT quality, training, staff education levels, and consultant support, but not with other factors like hospital size or reform costs.
Government budgeting & expenditures issues & problemsLouie Medinaceli
The document summarizes the Philippine government's implementation of a medium-term expenditure framework (MTEF), also known as multi-year budgeting, to address limitations of its previous one-year budgeting system. The MTEF establishes three-year budget ceilings and baselines for government agencies to foster fiscal discipline, strategic prioritization of resources, and improved operational efficiencies. It also links the budget more closely to the country's medium-term development plan through a consultative planning process. Initial results suggest the MTEF is helping the Philippine government better manage its budget and expenditures over multiple years.
This document provides a concept note for updating Yemen's 2005 PFM (public financial management) reform action plan. It outlines the need to develop a new, consolidated action plan to coordinate PFM reforms and donor assistance. The document discusses weaknesses in previous plans and outlines recommendations for the structure and management of an updated action plan. Key points include dividing the new plan into emergency and consolidation phases, focusing on budget credibility, streamlining budget execution, accountability, and fiscal decentralization. The document also recommends establishing management structures like steering committees and a PFM reform secretariat to oversee plan implementation.
The document discusses the Fiscal Consolidation Programme and Manual. The Programme aims to restructure revenues and expenditures to put the budget on a sustainable path over 5 years through policy reviews, structural reforms, and streamlining processes. The Manual provides guidance for ministries to develop their own consolidation plans. It outlines conducting Policy Reviews to identify inefficient policies and alternative service delivery methods. Ministries then develop Sector Reform Plans with structural, policy, and process reforms. Finally, Fiscal Consolidation Plans translate reform plans into monetary terms with budgets forecasted after consolidation. The overall goal is to reduce spending and financing pro-growth investments to diversify the economy.
This document discusses Pakistan's budgetary system and reforms. It covers topics such as the budget preparation process, public expenditure management, reforms like the Medium Term Budgetary Framework and Medium Term Development Framework, and decentralization efforts. The objectives of public expenditure management are outlined as fiscal discipline, strategic allocation of resources in line with priorities, and good operational management. Annual budgets aim to be comprehensive while allowing some flexibility. Management controls, auditing, and evaluation aim to promote accountability and improve spending quality over time.
This document discusses performance management systems in Tanzania's public service. It begins by providing background on Tanzania's economic and political reforms since independence, and the subsequent public service reforms aimed at improving performance, accountability, and service delivery.
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A critical analysis of public financial management reform in ethiopia and tanzania
1. Developing Country Studies www.iiste.org
ISSN 2224-607X (Paper) ISSN 2225-0565 (Online)
Vol.4, No.9, 2014
130
A Critical Analysis of Public Financial Management Reform in
Ethiopia and Tanzania.
Abdu Muhammed (Corresponding author)1
Ethiopian Civil Service University, Addis Ababa, Ethiopia. School of Graduate Studies
PO box 5648, Addis Ababa
Tel: +251-912-215425 Email: abdumuhamme@gmail.com
Abstract
In developing countries, reform of wasteful public financial management systems is vital to secure economic
growth and development by capitalizing on the efficient use of limited public finance. Successful reform needs
to take account of local conditions and should focus on both the process of reform. Both the Ethiopian and
Tanzanian reforms have been successful. Both pathways were selective and focused on systematically
addressing key weaknesses in financial control. The first order task was to instill effective control while the
second order task is to improve the efficiency of control. Both involved extensive customization. In comparing
the two countries of public financial management reform, actions of Ethiopian reform have been the following:
evolve existing systems, Hybrid approach, Focus on legal framework, budget, accounts, Reporting, automation
replicates, Strong manual controls over commitments, Procurement, disbursement and Sequencing. Whereas
Tanzanian PFM Reform Actions: driven by Information Technology- install new, procedures and discipline,
Insulated ‘turnkey’ Information Technology approach using a commercial Software package, Focus on Central
Payment System—procurement and Disbursement—a cash budget.
Keywords: Ethiopia, Tanzania, Budget reform, Expenditure planning reform, Accounts reform, Integrated
Financial Management System.
1.0. Introduction
Sound Economic Governance is essential for the achievement of reduction in poverty levels and improvements
in economic growth for Developing countries. Effective public expenditure management and good public
financial management are important for efficient and equitable utilization of scarce national resources. As cited
by Dick Durevall and Mattias Erlandsson (2004) Public Financial Management (PFM) is concerned with the
management of public money, where the expenditure budget process has a core role. The expenditure budget
process can be divided up in to various stages: long-term planning, annual budget formulation in the executive,
passage in Parliament, implementation and oversight. Effective management of public finances means that
policy makers can take into account available resources and the implications of policy choices. Thus, a
requirement for a well-functioning budget process is proper institutions and decision-making processes. The
objective of PFM reform is to implement these, or to improve the existing ones.
In developing countries, traditionally, public sector financial management intended with circumventing wastage
and wasteful spending, and especially, the loss of public money through various forms of corruptions. The rise of
New Public Management has significantly reduced the emphasis given to public financial management regularity
and integrity (Andy Wynne, 2005). The World Bank’s Handbook (World Bank, 1998), for example, outlines the
three main objectives of public sector financial management as ensuring:
1
The author is currently PhD candidate and Lecturer In Ethiopian Civil service University
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Most of the reforms in developing countries have been supported and guided by World Bank and the aid
agencies. These organizations may have played an important role in encouraging the adoption of New Public
Management type of reforms through their aid programmes and related conditionalities (Minogue, 2000 cited in
Andy Wynne, 2005).
In developing countries, reform of wasteful public financial management systems is vital to secure economic
growth and development by capitalizing on the efficient use of limited public funds. As cited by Commonwealth
Secretariat (2005) Successful reform needs to take account of local conditions and should focus on both the
process of reform (i.e. how to achieve the correct “enabling environment”) as well as substantive changes to the
fiscal framework (i.e. what to change).
Therefore, the objective of this paper is to analyze the public financial management reforms of Ethiopia and
Tanzania. The rest of this paper is structured as follows: Following section one is section two which deals with
the experience of Public financial management reforms in Ethiopia, Section three reviews the main lessons that
may be drawn from experience from Tanzanian Public financial management reforms and finally, section four
will present a critical analysis of public financial reform between the two countries.
2.0. Ethiopian Public Financial Management Reform Programme
After the dawn fall of the Derg regime and replaced by the Ethiopian Federal Democratic Republic of Ethiopia
(EPRDF), The new system which was under taken by the change of government in 1991 required new
orientation of the civil service with change in the management structure and system, as well as in attitude.
Aggregate fiscal discipline
Allocation of resources in accordance with strategic
priorities, and
Efficient and effective use of resources in the
implementation of strategic priorities.
Box 1: principles that should be applied during the process of reform
Reform must be implemented as part of an overall strategy which should be home-grown and
country-led. Donors may contribute funds, ideas and technical skills and can develop strategies to
support reform, but the reform strategy itself must be country-owned.
Reform must start with sound policy formation at macroeconomic level, including defining the
purview of the state, the framework of government, key institutional arrangements, and macro-
economic policy.
Reform must be backed up with political commitment at the highest level and The Ministry of
Finance or equivalent department should be imbued with the strongest possible political authority
to oversee public financial management.
Key institutions need to be empowered to operate autonomously from government.
Reform needs to be managed. Government needs to make use of all available skills.
The progress of reform must be effectively measured and monitored by setting performance
related benchmarks and indicators vis-à-vis agreed objectives, empirical measurement of these
benchmarks, and analysis thereof by oversight bodies (ibid).
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EPRDF introduced the Civil Service Reform Program (CSRP) in 1996. The CSRP was also part of a wider
attempt to affect a policy of transition from the old practice of single party hegemony to a multiparty system, and
changing the centrally planned economic model to a market variant (Getachew H. and Richard C. 2006). The
CSR attempts to address the complex and interrelated problems relating to accountability, transparency,
effectiveness, and efficiency, and to reverse declining productivity and restore public confidence.
Ethiopian Expenditure Management & Control (EMC) is one of the civil service reform programs which were
managed by the Ministry of Finance & Economic Development (MOFED), to implement Public Financial
Management Reform of the country. In the last decades the Ethiopian Government has been under taken public
financial management reform of financial procedures and information systems that is an example of process
change, not innovation.
The Decentralization Support Activity (DSA) project has had a profound impact at all levels of government. A
platform approach has been taken to reform. Initial measures have been taken to enhance the transaction
platform through budget reforms (e.g. bringing together capital and recurrent budgets, reclassifying expenditure,
drawing up new chars of accounts), planning reforms (budget calendars) accounting reforms (moving to double-
entry, modified cash, single-pool systems through a series of incremental and sequenced reform) and FIDS
reforms (effectively seeing automation of these reforms once established, culminating in the development of an
integrated system showing budget and dispersal information alongside accounting/budget execution information)
.
A second series of reforms have enhanced the policy/performance platform through the creation of a
Macroeconomic and Fiscal Framework, and is currently continuing at SN level with reforms to the block grant
mechanisms and a move towards more performance based budgeting.
The DSA project implemented a3-steep approach to process change of financial procedure i.e.
The sequencing are
Stage 1: ‘toning’ (comprehension) Documentation, massive training, and legal framework
Stage2: ‘toning’ (improving) new chart of accts, budget classification, redesign of forms, FIS
Stage3: ‘reforming’ (expanding) Cost center budgeting, double entry, modified cash, MEFF, Performance
framework, unit cost/needs based transfer, Redesigned IFMIS
The Government’s medium term program for public expenditure reform is contained in the Expenditure
Management and Control Program (EMCP). The main objectives of the EMCP are to bring about institutional
and structural changes in public expenditure management so as to improve both its strategic and technical
components.
Unlike most African and developing countries, Ethiopia observes a hard budget constraint. This financial
discipline has been the foundation for rapid decentralization and has allowed the PFM reform to take the
necessary time to evolve the existing systems and start a long-term fundamental PFM reform which is
sustainable and expandable. It has also meant that Ethiopia did not have to take shortcuts (e.g. write off the six
year backlog in accounts) which would have undermined discipline and procedures of effective financial control.
Box 2: five Components of Civil Service Reform
1. Top management systems
2. Expenditure management and control
3. Human Resource management
4. Ethics and
5. Service Delivery and quality of service.
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Effectiveness was not bartered for efficiency. Unlike the case of Tanzania and most developing countries, the
PFM reform was not a response to a breakdown in financial control which required an immediate short-term
response.
2.2 Implementation of Public Financial reform Programme
Initially, the public financial management reform consists of the following nine sub program. These were:
Of the total nine sub program the External audit sub program has been managed by the Office of the Federal
Auditor General (OFAG) while, Accounting & audit Profession is currently put under the Ethiopian Civil
Service University (ECSU) by the Ministry of capacity building. The sub program which is implemented and its
achievements in detail are discussed in the following.
Legal frame work: the objective of this sub program is drafting & implementing various financial proclamation,
regulation, & directives that will have disciplined and well controlled public finance management in the country.
In legal public finance the following activities were implemented
Federal public financial management law (act) No.57/1996 is proclaimed by Negarit Gazeta on 19th
day of
December 1996 E.C in the above proclamation; Collection and deposit of money, Budget function and
management public disbursement, procurement and control, public debt management are included.
public finance regulation No 17/1997 is issued by the council of ministers on 1st
day of July 1997 E.C
different financial guidelines are prepared
Trainings are given at Federal & regional level
Budget reform: The objectives of these sub-programs are to improve the integration of capital & recurrent
budget, to change the previous Line Item Budgeting by Performance budgeting, to strengthen Budget activities
on BIS. Most of these sub-programs are completed in 1994 E.C and starting from in 1994 budget year it is
practically works on federal public body.
Ethiopia has under gone a major Budget reform involves to changes: namely, changes of process and change of
structure. The development of new financial calendar is the best example of change in budget process while
chart of account is the best example of budget structure. Chart of account is the foundation of any Public finance
system. It permits accounting (the management & recording of financial transactions). & allocation decisions
(What should public money be spent on?) to be integrated & related to government priorities. Computerized
Budget Information System (BIS) is practically implemented on different part of the country. Performance
budgeting also replaced by Line Item Budgeting integration of capital & recurrent budget are also improved.
Box 3: Sub program of the public financial management reform
Legal frame work
Budget reform
Public Expenditure planning reform
Accounts reform
Internal audit reform
External audit reform
Cash management reform
Integrated Financial information Management and
Accounting & audit Profession
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Expenditure planning reform: the objective of theses reform is to improve the coordination of budgets with in
different polices. A new indicative financial calendar was introduced in EFY 1994 (2001/02). It includes a
planning and a budgeting cycle. The planning cycle has three stages which are implemented in sequence:
The elaboration of a Macro-Economic and Fiscal Framework (MEFF);
The multi-year programming through the preparation of a Public Investment Program (PIP);
The development of a Fiscal Plan.
The achievements were the following:
The PIP conceptual framework & preparation manual have been developed & Trainings are given
A three-year macro economic and Fiscal framework & PIP for the Federal level (five consecutive year )
prepared & distributed for relevant institutions
A need based unit cost transfer formula has been designed in collaboration with SNNP, Amhara & Oromia
BOFED, to assist the allocation of Budget to Woredas
Annually for Three consecutive years, Public expenditure forecast has been prepared by Jurisdiction,
programme & project, & by source of finance.
Accounts reform: the objective of theses reform is to introduce modern government accounting system that is
supported by modern technology, to design government accounting system, which could contain & produce the
necessary &appropriate information & provide timely financial reports.
these part of the reform has introduced a modified- cash accounting system in place of the provisions cash
accounting system
A new Chart of account has been prepared & implemented for the accounting system
Single entry accounting system was changed by double entry accounting system which is the central
requirements for improving financial control and for keeping accounts current.
The reform assists the government in clearing a six years backlog to less than one year & reducing monthly
expenditure reporting in regions to two months
Trainings are given at Federal, regional, sub- regional level on the new system,
Internal audit reform: the objective of theses reform is to introduce an effective & successful audit functions
to the civil service at the federal & regional level & to ensure transparent & responsible internal audit system in
the country. The achievement theses reforms are the following
In federal budget institution & all regions pre-audit functions are replaced by post-audit
An Internal audit manual & training module are prepared & implemented both at federal budget institution
& regions or city administrations.
Financial information system: the objective of theses reform is to improve the quality, accuracy & timeliness
of financial information for quick & reliable decision making. The achievement theses reforms are the following
the outline for the introduction of an Integrated Financial Management Information System (IFMIS) was
developed & awareness workshops held.
Some applications are transferred from a redundant mainframe environment to pc based server platforms &
assisted in the provision of training & hardware provision to BOFEDs.
The IBEX disbursement module is developed & implemented in MOFED & BOFEDs.
The IBEX budget module, IBEX accounts module, IBEX Migration tools, & standalone version of the IBEX
application has been developed & implemented in federal & region.
2.3 Ethiopia’s Pathway of Public Financial management Reform Summary
Ethiopia’s Pathway of Public Financial management Reform Summary is indicated in the following Figure
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FY 96 FY 98-03 FY 06
3.0. Tanzanian Public Financial Management Reform Programme
In 1998, the Government of Tanzania initiated the Public Financial Management Reform Programme (PFMRP)
whose strategic goal is to achieve “high economic growth, macro-economic stability and sustainable efficient
delivery of public services” by establishing effective financial management arrangements which minimize
resource leakages and strengthen accountability. The PFMRP builds on the structural reforms of the mid-nineties
which aimed to address the country’s severe economic and financial crisis by restoring macro-economic
stability, fiscal control and discipline, and implementing a core budget and accounting system across all
ministries.
Since the launch of the PFMRP, the Government of Tanzania has endorsed various assessments of its public
financial management environment. Specifically, in 2001, the Country Financial Accountability Assessment
(CFAA) recommended various improvements to Government of Tanzania processes including: financial
planning, budgeting and budget execution; accounting and financial reporting; public sector auditing; legislative
scrutiny, ethics and integrity; local government financial accountability; public access to information. Following
this, in 2002, the Report on the Observance of Standards and Codes (ROSC) made further proposals for
enhancing transparency with respect to budget preparation, execution, and reporting. It is also noteworthy, that in
2001, to back developments in public sector financial management, new Public Finance and Procurement Acts
were promulgated. The results of the CFAA, ROSC and the country procurement assessment review together
with changes to the legislative framework, led to the re-evaluation and revamping of the PFMRP.
The revised PFMRP long-term strategy clearly articulates the strategies to realize specific intermediate outcomes
in the medium-term (Phase 2) together with associated indicators and expected outputs. The revised strategy
identifies ten components in Phase 2 to be implemented under the Permanent Secretary Finance (PSF)
Components are as follows:
• Multi-year budget planning
• Performance budgeting
Frameworks
• Financial Statements
• Management accounting
• Trained to date: 73,000
• IT: (Custom, Int’l Standards
S/A, LAN, WAN
• Cost Center Budget
• Double Entry Bookkeeping
• Modified Cash Accounting
• Trained to date: 47,
• IT: (Custom, Relational
• Databases; S/A, LAN)
• Line Item Budget
• Single Entry
Bookkeeping
• Cash Accounting
• IT (Spreadsheets,
S/A)
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The objective of the Tanzanian public financial reform was to rapidly establish control over cash. Ministries
were incurring large commitments and overdrafts and the country was running unsustainable deficits—there was
not a hard budget or cash constraint and financial control was neither effective nor efficient. The initial reform
introduced a centralized payment system (CPS) in the Auditor General’s Office (not in the Ministry of Finance)
which was later extended to district treasuries in a standalone version. The system was based on the Platinum
mid-level COTS [commercial off-the-shelf] and was extensively customized to meet requirements (Stephen
Peterson, 2007).
Reforming public financial systems is a work in progress. Tanzania has made great strides in expenditure control
(the first objective of good PFM) and is on the way to the second objective: the locative efficiency of resources
through improved distribution to the different sectors in conformity with government policies. Achievement of
the third objective—the efficient and effective use of public resources for public services, through improved
operational management—is still a way off, as is the case in most other developing countries Notwithstanding
these weaknesses, the system is working better than expected. The Government continued to improve its
management of public expenditure. Tanzania has elaborated the Integrated Financial Management System
(IFMS), and has rolled it out throughout central government and parts of local government. Budget preparation
has also progressed. Predictability of resources to the MDAs and the appropriate timing or resource transfers are
still impaired by the late approval of the budget1
.
3.1 Implementation of PFMRP
The implementation of the PFMRP is overseen by a Joint Steering Committee (JSC) of Tanzanian Government
and donors, which meet quarterly to agree strategy and plans, monitor implementation, and authorize the release
of funds from the PFMRP Basket Fund to the Exchequer. The JSC is chaired by the Permanent Secretary
Finance, and provides the mechanism for a regular dialogue between Tanzanian Government and donors about
the reform program. The PRMRP Manager is a Deputy Permanent Secretary from the MoF, who heads the
PFMRP Coordination Secretariat2
.
The Secretariat’s role is to support the MoF in coordinating and monitoring the PFMRP. In addition, in April
2005, the JSC established the PFMRP Working Group (PFMRP-WG) to advise the JSC on the progress, work
plan and budget of the PFMRP. The PFMRP-WG involves
1
United Republic of Tanzania- European community Country strategy paper and National indicative program for the period
2008-13
2
David Shand et. al (2006) Japan center for international finance
Box 4: Permanent Secretary Finance (PSF) Components
Component 1: Policy analysis and development
Component 2: External resources management
Component 3: Budget management
Component 4: Treasury management and accounting
Component 5: Procurement
Component 6: Information technology services
Component 7: Investment management
Component 8: Administrative support services
Component 9: External audit services
Component 10: Programme leadership, coordination, monitoring and evaluation.
the Component Managers from MoF departments, Public Procurement Authority and
National Audit Office responsible for
Leading the different components,
the PRMRP Coordination Secretariat, and
Four donor representatives; the number of donor representatives is deliberately limited to
avoid dominance by this group.
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3.2 Current PFM Strengths & Weaknesses:
The IFMIS system implementation is truly impressive. PEM has obvious implications for the quality of budget
preparation. Overall, progress in Tanzania has been encouraging. Reforms in the classification system have been
well integrated with the IFMIS project and have facilitated revised methods of budget preparation and
accounting. The IFMIS has yielded benefits, in terms of expenditure control and fiscal reporting, although more
progress remains to be made in this area. Tanzania has one of the best performing PEM systems in sub-Saharan
Africa. However1
:
Internal audit system is largely ineffective.
External audit organization has weak capacity. Can’t undertake computerized audits.
Large leakages continue to through procurement process.
At the local government level, there were no standardized Expenditure reporting formats.
4.0. Analysis Between Ethiopian and Tanzanian Public Financial Management Reform
Both the Ethiopian and Tanzanian reforms have been successful. Both pathways were selective and focused on
systematically addressing key weaknesses in financial control. The first order task was to instill effective control
while the second order task is to improve the efficiency of control. Both involved extensive customization.
A public sector reform has the following attributes: ownership, purpose and approach. When we conceder
ownership Ethiopia’s PFMR was located within a broader civil service reform designed and driven by the
government. Whereas, Tanzanian PFMRP designed and driven by the Government and Foreign Aid Agencies.
The Ethiopian government pursued an explicit strategy of limiting the influence of foreign aid agencies to ensure
that it owned the reform. Bilateral and multilateral foreign aid agencies that were willing to provide grants (not
loans) were invited to fund select parts of the reform with overall coordination located in the Prime Minister’s
Office and initially supervised in detail by the Prime Minister.
The sources and form of financing were important because the financial reform was not tied to burdensome and
unrealistic conditionalties—reform could proceed at an appropriate speed. Unlike Tanzanian, the purpose of
Ethiopian Public financial reform was to rapidly upgrade the country’s financial system because of its
deterioration caused by a long civil war and the urgent need to support the agenda of decentralization. The
approach was to comprehensively upgrade the civil service generally and expenditure management specifically.
The approach to expenditure management was to evolve rather than replace existing systems because of the
overriding government policy to rapidly decentralize.
Comparing the two reforms, Ethiopia’s was driven by policy (administrative decentralization) while Tanzania’s
was driven by crisis (the need for a cash budget). Ethiopia’s reform strategy was to evolve its legal framework
and financial procedures using automation in a supportive role. However, Tanzania’s strategy was based on the
assessment that the procedures were deemed ‘totally dysfunctional’ and that automation needed to be the driver
of the reform. Ethiopia’s reform started with a hard budget constraint and strong manual systems (effective
control existed), and sought to improve the efficiency of the control of existing systems before changing them.
Automation in Ethiopia was principally used to improve the efficiency of control. While Automation in Tanzania
was used to institute both effective and efficient control. The considerable difference in size of the two countries
needs to be considered.
When we compare the two countries of PFM Reform Actions Ethiopia PFM reform:
evolve existing systems
Hybrid approach
1
Diamond .J. et. al (2005) Selected African Countries: IMF Technical Assistance Evaluation—Public Expenditure
Management Reform
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Focus on legal framework, budget, accounts, Reporting, automation replicates
Strong manual controls over commitments, Procurement, disbursement and
Sequencing.
Whereas Tanzanian PFM Reform Actions:
driven by Information Technology- install new
procedures and discipline
Insulated ‘turnkey’ IT approach using a commercial
Software package
Focus on Central Payment System—procurement and Disbursement—a cash budget.
Comparison of The Ethiopian & Tanzanian IFMIS can be assessed in terms of the following criteria which is
believed ‘good’ public sector information system should have.
Assessment of the Assessment of the
Ethiopian IFMIS Tanzanian IFMIS
1. Operational. Yes. Works Yes. Works
each countries
2. Reliable. Yes. 97% uptime Unclear
3. Functional. Yes. Meets all user Mixed. CPS initially-no
. Requirements sub-head budgetary
Four language Control; current version does
4. Capable. Yes. Good Performance Mixed. Problems of band
Extensive reporting width management
Capacity Effective in
Managing low bandwidth
5. Compatible. Ye Extensive Unclear. Management of legacy
Migration tools data or different configurations?
6. Useable. Mixed. Senior & middle Mixed. Limitations of
Government staff are still government staff to
Learning to fully use the fully using the functionality
Reporting capabilities.
7. Credible. Yes Foreign aid agencies Yes. Foreign aid agencies
Respect, increased funding are increasing support
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It is important, when looking at PFM reform issues in Ethiopia, to appreciate the context in which such reforms
operate. Ethiopia has historically had a strong civil service culture that has survived the changes in government
and governance structures that marked the last quarter of twentieth century Ethiopian history. Commitment to
the ethos of public service is high. Historically there have also been low levels of corruption in terms of rent
seeking; such behavior is not culturally acceptable (although this may be changing). And un like Tanzanian,
commitment to reform is high in Ethiopia – when reform is embraced it is often embraced whole-heartily (as
evidenced by the reforms around decentralization, which witnessed very swift roll-out of reforms that actually
marked profound changes in the way in which the business of government was conducted).
Before the reform was conducted both countries have often suffered from the following Budget Preparation &
Budget Execution weaknesses.
Budget Preparation Issues such as:
Incremental annual budgeting, no forward medium-term framework
Budget based on unrealistic projections
Dual budgets: recurrent vs. development
Detailed line item budgeting, emphasizing inputs without much regard to functions or programs
Coverage often incomplete
Unrealistic budget timetable
Budget Execution Issues
While problems in budget execution are often merely the consequence of unrealistic budget preparation, there
were some distinctive characteristics of implementing budgets in the two countries that have created their own
specific concerns.
Expenditure control: a persistent problem
Modernization not facilitated by the budget management system
Weak internal control and internal audit
Accounting framework
External audit
Since PFMR has its own Country specific in nature, whether the objective of any reform met or not, there should
be a bench mark to compare with the reforms achievement.
Different arrangements may exist for PFM performance measurement and monitoring depending on country
circumstances and accountability requirements of donors. Some countries, including some middle-income
countries may have reasonably robust systems for measuring and monitoring results which could be relied upon
by donors. In many other countries, such systems may need to be progressively put in place justifying the need
for a credible externally validated assessment of PFM performance.
To facilitate this, International Financial Institutions and donors have jointly developed an integrated PFM
performance monitoring framework, on which consultation is taking place with partner government and other
stakeholders, that covers all aspects of the budget cycle including budget formulation and execution,
procurement, accounting, auditing and internal and external controls. The framework includes a common set of
indicators (attached at annex 1), and an accompanying analytic report, which could provide a common platform
for dialogue between government and donors regarding the current performance, recent progress and a single
action plan for reform and capacity development .
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References
Andy Wynne. (2005). Public Financial Management Reforms in Developing Countries: Lessons of Experience
from Ghana, Tanzania and Uganda. ACBFWP/07/2005
Commonwealth Secretariat. (2005). Guidelines for Public Financial Management Reform. Marlborough House
Pall Mall London SW1Y 5HX. UK.
David Shand et. al (2006) Japan center for international finance: Study Group On Public Financial Management
(PFM)
Diamond .J. et. al (2005) Selected African Countries: IMF Technical Assistance Evaluation—Public Expenditure
Management Reform
Dick Durevall and Mattias Erlandsson. (2004). Public Finance Management Reform in Malawi Country
Economic Report 2005:1. Department for Policy and Methodology.sida.
Getachew H. and Richard C. (2006). Civil Service Reform in Ethiopia: Success in two ministries. Research
Memorandum.UK
http://www1.worldbank.org/publicsector/pe/handbook/pem98.pdf
Stephen Peterson. (2007). Imperfect Systems IFMISs in Africa. Paper Prepared for the World Bank and CABRI
Conference on Budget Management and Public Financial Accountability Pretoria, South Africa.
United Republic of Tanzania- European community Country strategy paper and National indicative program for
the period 2008-13
World Bank. (1998), Public Expenditure Management Handbook, the World Bank
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ANNEX 1
PFM performance indicators
A. PFM OUT-TURNS
Aggregate fiscal deficit compared to the original approved budget.
Composition of budget expenditure out-turns compared to the original approved budget.
Aggregate revenue out-turns compared to the original approved budget.
Stock of expenditure arrears; accumulation of new arrears over past year.
B. KEY CROSS-CUTTING FEATURES: COMPREHENSIVENESS AND TRANSPARENCY
Comprehensiveness of aggregate fiscal risk oversight.
Extent to which budget reports include all significant expenditures on central government activities, including those
funded by donors.
Adequacy of information on fiscal projections, budget and out-turn provided in budget documentation.
Administrative, economic, functional and programmatic classification of the budget.
Identification of poverty related expenditure in the budget.
Publication and public accessibility of key fiscal information, procurement information and audit reports.
C. BUDGET CYCLE
Medium term planning and budget formulation
Extent of multi-year perspective in fiscal planning, expenditure policy-making and budgeting, including
procurement.
Orderliness and participation in the budget formulation process.
Coordination of the budgeting of recurrent and investment expenditures.
Legislative scrutiny of the annual budget law.
Budget execution including procurement
Effectiveness of cash flow and procurement planning, management and monitoring.
Procedures in operation for the management and recording of debt and guarantees.
Extent to which spending ministries and agencies are able to plan and commit expenditures in accordance with
original/revised budgets.
Evidence available that budgeted resources reach spending units in a timely and transparent manner.
Effectiveness of internal controls, including on procurement.
Effectiveness of internal audit, including on procurement.
Effectiveness of payroll controls.
The existence of a transparent procurement system as an integral part of the overall PFM system which is supported
by a clear regulatory framework that provides for competition, value for money and effective controls.
Accounting and reporting
Timeliness and regularity of data reconciliation.
Timeliness, quality and dissemination of in-year budget execution reports.
Timeliness and quality of the audited financial statements submitted to the legislature.
External accountability, audit and scrutiny
The scope and nature of external audit.
Follow up of audit reports by the executive or audited entity.
Legislative scrutiny of external audit reports.
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