GOVERNMENT – DEVELOPMENT PARTNERS PFM GROUP COORDINATION MEETING

SANA’A, AUGUST 28 TH 2013

J E A N - M A R C L E P A I N

E U P F M S P E C I A L I S T

J L E P A I N @ Y A H O O . F R

W W W . S L I D E S H A R E . N E T / J E A N M A R C L E P A I N /

Methodology for Preparing the New PFM Action Plan

1. The New Action Plan within the Context of PFM Reforms

Why preparing a new PFM Action Plan?

Last Action Plan covering 2005-2008 never updated since.

Absence of strategic direction in PFM Reforms since 2008 and changes in the environment.

Lack of integration and common strategy between PFM stakeholders (MOF, MOPIC, MOLA, etc.).

Fragmented donor assistance not aligned on Government’s priorities.

Lack of investment in large PFM projects.

Why the Action Plan is strategically Important

The political stability of the country requires new economic policies which cannot be implemented without efficient PFM mechanisms.

Restoration of macroeconomic stability requires sound fiscal policy that cannot be put in place without strengthening revenue collection and an adequate.

Resolution of the liquidity crisis cannot be achieved only through external assistance. It require important structural PFM reform and improvement in budget execution

procedures.

What are the issues that needs to be addressed?

Budget credibility and realism

Revenue mobilisation and revenue management(taxes + customs)

Integration of the Economic Entities Budget with the General Budget

Coordination of investment planning with the recurrent budget

Alignment of budget formulation on Government’s economic priorities;

Budget execution

Fiscal decentralisation

2. Strategic Planning

Guiding Principles

Base reform agenda on well identified priorities linked to specific outcomes.

Introduce reforms in a sequenced order taking a medium term approach

Take time to formulate a comprehensive PFM strategy

Used and integrated approach associating all PFM partners.

Platform 1

Platform 2

Platform 3

Platform 4 Example of reform sequencing and Platform Strategy Enables focus

on what is done with money

A credible budget delivering a reliable and predictable resource to budget managers

Improved internal control to hold managers accountable

Improved linkage of priorities and service targets to budget planning and implementation

Improved linkage of priorities and service targets to budget planning and implementation

Broad Activities • Integration of budget (recurrent &capital budgets)

• Strengthen macro and revenue forecasting

• Streamline spending processes

Broad Activities • Re-design budgeting classification system

• Initial design of FMIS for core business processes

• Define internal audit function

Broad Activities

•Re-design budget cycle (e.g. MTEF)

• Pilot program based budgeting & budget analysis

• Further fiscal decentralisation

Enables a basis for accountability

Broad Activities

• Full design of FMIS

• Develop IT management strategy

• Initial design

Enables more accountability for performance management

Recommended Approach

Reforms can be groups in 3 to 4 ‘blocks’ or ‘platforms’:

1. Budget credibility and macroeconomic stability

2. Accountability and transparency

3. Streamlining of budget execution

4. Fiscal decentralisation

Harmonization Project

Use the Harmonization Project as an essential component that can become the core of the Action Plan.

Expend the Harmonization Project to cover budget execution;

Take into consideration the issue of fiscal decentralisation

Two Phase Strategy

1. Emergency Phase

2. Consolidation Phase

Emergency Phase

2-3 year phase

Focus: budget credibility and budget execution

Objective: support to the implementation of the Transitional Programme for Stabilization and Development

Priorities: measures addressing pressing issues such as increasing revenue and formulating sustainable fiscal policy

Public Expenditure Review and development of a comprehensive PFM strategy

Consolidation Phase

2-3 year phase

At this stage does not need to be detailed.

Should focus on reform sequencing and sound medium term strategy

More emphasis on accountability and transparency

Will be reformulated based on the result of the Public Expenditure Review.

3. Planning Management

Three Levels of Planning

1. Intergovernmental Coordination Committee

2. Ministry level planning Committee

3. Working Groups

Intergovernmental Coordination

Two types of responsibilities:

Coordination of ministerial planning committees and consolidation of the Plan

Monitoring and coordination of crosscutting issues such as the Harmonization Plan, capacity building and fiscal decentralisation

Responsibility of the Intergovernmental Coordination

Consolidation of the Plan

Ensuring that output and outcome are in line with PFM strategy and Government’s priorities

Ensuring realism of the plan in terms (a) of time frame, (b) objectives, (c) coverage, and (d) technical assistance

Identifying deliverables, verification means, key milestone and monitoring indicators

Finalizing management structure

Ministry Level

Planning Committees are responsible for:

Defining sector priorities

Identifying sub-sector components to be assigned to working groups,

Supervising working groups activities

Integrating sub-sector plans in the sector plan

Sequencing activities

Identifying outputs and outcomes, verification means, milestone, and supervision indicators

Working Groups

Working groups are responsible for:

Conducting need assessment and defining sub-sector activities;

Planning the activities of a sub-sector or addressing crosscutting issues (budget integration, fiscal decentralisation, etc.);

Identifying technical assistance needs

Implementation Mechanism

An implementation mechanism needs to be designed. It is likely to include:

1. An Intergovernmental supervision committee

2. Steering committees at ministry level

3. Ad hoc committees for crosscutting issues (harmonization plan, fiscal decentralisation)

4. A PFM Reform Secretariat

PFM Reform Secretariat

International experience shows that the existence of a strong PFM Secretariat is a key success factor of PFM reforms. Responsibilities of a PFM secretariat are:

Monitoring activities of sector and steering committees, and more especially outcomes, deliverables, milestones and achievement indicators;

Preparing regular reports for the Intergovernmental Committee and for the donors;

Identifying bottleneck and implementation issues at and early stage and formulating recommendation for solving them;

Coordinating technical assistance.

4. The Way Forward

Action Plan Preparation Time Table

September to October 2013, preparation of the first draft of the Action Plan;

Beginning of November first Government – Donor Round Table for presentation of the Draft Action Plan based on a need assessment, and first comments by the donors;

November- December 2013 finalization of the Action Plan based on donor comments;

December, second Government – Donor Round Table for presentation of the final Action Plan;

January 2014 approval of the Action Plan by the Cabinet, appointment of the Intergovernmental Coordination Committee by the Cabinet and appointment by ministries and agencies of their Steering Committees.

First Round Table

Date: Between November 18 and November 28

Format: A one day conference

Objectives:

Reviewing proposals from ministries and departments and establishing principles for prioritization of actions

Giving donors a first view of the main challenges

Discussing technical assistance needs based on a need assessment

Second Round Table

Date: Mid-December Format: A one day conference Objectives: Reaching agreement on the overall PFM strategy Finalizing the Action Plan with well identified deciding key

milestones and monitoring indicators Reviewing sector by sector proposed actions, prioritization, time

schedule, outcomes and verification criteria Calibration of technical assistance requests Defining final steps for having the plan formally approved by the

Government and endorsed by the donor community. Agreeing on the Management Structure of the PFM Reform Action

Plan including the Steering Committee and possibly a Secretariat. Agreeing on a way forward to prepare a detail PFM Assessment for

the Action Plan’s phase 2.

THANKS