Public finance management is a fundamental function of the government to implement its policies, having impact on the economic stance of the country and on its ability to maintain cohesion. Efficiently using public resources and allocating them to policy choices requires strong systems being in place to support public finance management. It requires continuous adjustments to improve efficiency and effective delivery of services, and reforms to change systems. It includes maintaining a stable fiscal stance over the long run while continuously improving on the services offered to the citizens and economic agents in the country.
Since public finance is the key factor to fiscal stability and sustainability,continuous improvements in Public Finance Management is a top priority for the Ministry of Finance and Treasury
Currently the Public Finance Management reform is designed to respond to the challenges found in our system, to improve efficiency and effectiveness of public spending. The goals of the PFM reform include strengthening fiscal discipline, ensuring debt sustainability and the efficient, transparent and modern management of public finances. These PFM reform goals are pursued by the Government primarily through a Public Financial Management (PFM) Project funded by World Bank . The Project mainly focus on the following key components.
- Enhancing the Medium-term Fiscal Framework.
The objective is to improve the quality of fiscal policy anchored into a medium-term fiscal perspective and improve credibility and predictability. Despite recent improvements in budget credibility and outturn, the budget remains very constrained by high and rigid current expenditures as well as by increasing debt service and health costs. Fiscal space can only be created over the medium term provided the continuation of fiscal discipline.
- Strengthening Debt and Cash Management. The objectives are to: improve the capacity to manage the cost and risk of public debt and guarantees; develop the domestic government securities market; and improve cash management to support improved budget execution
- Strengthening Management of Capital Budget.
The objective of this component is to enhance the preparation of the capital budget and implementing selection criteria for New Policy Initiatives (NPI). The project will also support Ministry of Finance & Treasury and other key stakeholders to build a screening tool for NPIs.
- Strengthening of the Public Accounting system (PAS) and Asset Management.
Government adopted SAP Solution in 2009 as PAS, and ever since the Ministry of Finance & Treasury is continuously enhancing and rolling out its adjacent modules to fill the gap in Integrated Financial Management System (IFMS). The project aims to support the strengthening of PAS by establishing highly trained and dedicated team within the Ministry of Finance & Treasury. With the help of the project a unit under the name “Public Finance Development Service (PFDS)” has formulated and SAP Functional and technical Associates have been recruited to carry out the development works of the PAS.
In parallel, the project will also assist Ministry of Finance & Treasury to value and record public assets in the SAP. The project will also support the Ministry in preparing policy for asset valuation.
- Payroll Management and Control.
The objective of this component is to support National Pay Commission (NPC) and the Civil Service Commission to review and evaluate the current pay classification structures of public sector, and implement standardized and consolidated pay classification structure.
- State-Owned Enterprise (SOE) governance and oversight.
SOEs play an important role in the economy and in the public investment program. They are increasingly exposed financially and represent a growing contingent liability for the Government. Privatization and Corporatization Board (PCB) aims to provide strategic guidance and oversight to these SOEs in cooperation with Public Enterprise Monitoring (PEM) of the Ministry of Finance and Treasury. The project aims to develop a mechanism to monitor the SOEs more systematically and strengthen the capacity at PEM and PCB.
- Procurement reforms.
Along with growth of modern technology, the project aims to assist the Government to move towards the Electronic Government Procurement (e-GP) system by strengthen the policy and regulatory framework. Project will also assist to integrate e-GP system with Integrated Financial Management System (IFMIS). Furthermore, the project will also support the pilot testing of green procurement.
- Accounting, reporting and internal audit.
The project aims to support the establishment of an accounting reform action plan which will aim at full implementation of the IPSAS modified accrual accounting for the issuance of whole-of-government financial statements, in line with recent diagnostics and recommendations in this area as well as plan for subsequent key steps in terms of comprehensiveness of accounting data, better recording of financial and physical assets and liabilities and define a credible timeline for the progressive move towards accrual accounting. This component will also focus on capacity building at Internal Audit of Ministry of Finance & Treasury.
- External Audit of the Public Sector.
The Auditor General’s Office (AGO) has shown interest in support to improve its alignment with international standards for supreme audit institutions (ISSAI) and with international good practice. The project aims to assist AGO to conduct performance audit, with introduction of pilot citizen participatory audit.