1 adb grant 0133-cam: public financial management in rural development ministries (component 1) news...
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ADB Grant 0133-CAM: Public Financial Management in Rural Development
Ministries (Component 1)
News and Developments of the Public Financial Management Reforms in MOWRAM
March 26, 2010, SOKHA HOTEL
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Processes of Public Financial ManagementMULTI-YEAR
PLANNING AND BUDGETING
ANNUAL BUDGETALLOCATION OF
CASH TO MINISTRIES
BUDGET EXECUTION:Internal control,
Revenue Collection, Procurement,
Expenditure Control
ACCOUNTINGBUDGETARY
CONTROL REPORTING
ANNUAL FINANCIAL
STATEMENTS
INTERNAL AUDIT – part of
internal control
EXTERNAL AUDIT – external opinion
PERFORMANCE REPORTING: Achievement of objectives, value for
money
POLICY
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The Public Financial Management Reform Program
• Implemented since 2004.
• Designed as four ‘platforms’ of progressive improvement, with the following objectives:
Platform 1: Making the budget more credible in terms of timely and effective delivery of funds to budget managers.
Platform 2: Implementing effective financial accountability.
Platform 3: Linking policy to the budget to create a fully affordable policy agenda.
Platform 4: Integrating performance accountability and financial accountability.
3ADB Grant 0133-CAM: Component 104/19/23
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PFM Reform Program in Cambodia 4 platforms of PFM development
Platform 1 - More credible budget
Platform 2 - Effective financial accountability
Platform 3 – affordable and prioritized policy agenda
Platform 4 – effective performance accountability
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The Public Financial Management Reform Program
• The first stage of PMFRP concentrated on Platform 1 and was mainly focused at Ministry of Economy and Finance. The target of achieving a more credible budget was achieved in 2006.
5ADB Grant 0133-CAM: Component 104/19/23
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Budget Credibility – Platform 1
Since implementation of Platform 1 …. There is more certainty that resources for
ministries will be:1. Available as envisaged in the budget2. Released on time to ministries
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Budget Credibility – Platform 1
Results achieved in Platform 1 …. Improvements have been made to:• Law on State Budget System• Budget classification / chart of accounts • Macrofiscal discipline• Budget preparation and management systems• Debt management• Tax revenue administration• Commitments and payment request system• Decreasing use of cash• Closing unnecessary bank accounts and
strengthening the Treasury Single Account
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Budget Credibility – Platform 1
Results achieved in Platform 1 …. • Capacity has improved: short and long term
training, etc• Recruitment better linked to budget
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The Public Financial Management Reform Program
• We are now in Stage 2 of PFMRP which is mainly concerned with implementing Platform 2, that is improving the financial accountability of budget managers.
• This stage therefore involves managers in all ministries, departments and agencies of the Royal Government of Cambodia, at national and sub-national level.
9ADB Grant 0133-CAM: Component 104/19/23
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Implementing stage 2
• It is now possible to:• Focus on those who are responsible for using
the budget resources • Enable a fairer emphasis on accountability for
the use of resources• Give greater empowerment to those using
budget resources• Have greater visibility and transparency on
the use of resources
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The Public Financial Management Reform Program
Main objective of financial accountability:• Managers should be able to show how they have used the money
they have been entrusted with. Systems needed: • Good records of budgets and actual transactions, so that regular
comparisons can be made and differences explained. • Achieved by installing Financial Management Information System
(FMIS).• Installation of FMIS will require improvements to many work
processes and controls in ministries.Planning:• The master document for PFMRP Stage 2 is the Consolidated Action
Plan (CAP 2). • Based on this, ministries have produced their own Ministry Action
Plans (MAP).
11ADB Grant 0133-CAM: Component 104/19/23
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Platform 2 /CAP2 Core Areas
1. Continue P1 activities, including rollout to line ministries at central and provincial levels
2. Implement P2 activities
3. Advance work on activities for later platforms
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SUMMARY OF WORK UNDER PFMRP STAGE 2 – CAP2
Platform 1 – more credible budget
Platform 3 – fully affordable policy agenda through policy budget linkage
Platform 2 – effective financial accountability
4 OBJECTIVES FOR FURTHER - Revenue policy and administrationSTRENGTHENING: - Debt management
- Cash and bank a/c management - Public procurement
8 OBJECTIVES BUILDING ON PLATFORM 1: - Roles, functions and responsibilities - Incentives and sanctions - Budget classification & chart of accounts - Budget execution and transactions - Accounting and financial reporting - Internal auditing / inspection - Fiscal decentralisation - Institutional capacity and motivation
2 OBJECTIVES FOR ADVANCE WORK: - Improve & extend program budgeting - Comprehensiveness and integration of budget
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Ministry Action PlanThe MAP for MOWRAM follows the suggested structure given in the
CAP2. There are five areas of reform activities.
Revenue Administration and Policy: (not relevant): input to non fiscal revenue policy, Review of prices, and Improving capacity of revenue collectors.
1. Budget Preparation: This is a major area. Work includes: – defining the roles and responsibilities of budget managers– extending the budget classification – extending program budgeting – integrating the different budgets which are used at the
moment (program budget, non-program budget, project budgets)
– improving budget reporting.
14ADB Grant 0133-CAM: Component 104/19/23
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Ministry Action Plan
2. Budget Implementation: Another major area Includes:
– cash planning,
– improvements to procurement,
– streamlining the approval of payments,
– improving the accounting and reporting system so that it is ready for transition to the FMIS.
3. Audit and Monitoring: This area covers the role and effective operation of internal audit, which is a vital part of the system to improve accountability.
15ADB Grant 0133-CAM: Component 104/19/23
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Ministry Action Plan
4. Financial Management Information System: This is not just a ‘computer project’. Introduction of the FMIS will require proper documentation of existing systems and proposed new systems, changing of workflows, training and change management. It will affect the work of financial managers and line managers and provide them with greatly improved information.
5. Capacity Development: This area covers the functional review of the ministry, recruitment retention and job rotation policies, identification of skills gaps, training needs and plans, and motivation.
16ADB Grant 0133-CAM: Component 104/19/23
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MOWRAMPFM Working Groups ???
e.g. MAFF has set up a PFM Working Group and five subgroups, as follows:
17ADB Grant 0133-CAM: Component 104/19/23
Subgroup Number
Name Areas of MAP covered
Subgroup 1 Strategic Policy Area 2
Subgroup 2 Setting up policies and income-expenditure management
Areas 1 and 3
Subgroup 3 Information policy management Area 5
Subgroup 4 Capacity building management and functional analysis
Area 6
Subgroup 5 Monitoring & Evaluation and Auditing Area 4
MOWRAM could ensure the PFM Working Group Structure by learning from MAFF or MRD.
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Minister
Working DirectorH.E. Lord Reaksmey
Vice DirectorMr. Doung Bunny
Coordinating Officer
Mr. Hong Bonaka
Administration Officer
Miss Mol Sokary
Vice DirectorMr. Hong Narith
Controller OfficerMr. Ngoun Soty
Subgroup 1
Strategic Policy
Subgroup 2
Setting up Policies and
Income/expenditure Management
Subgroup 3
Information Policy Management
Subgroup 4
Ability Management and works analysis
Subgroup 5
M & E and Auditing
MINISTRY OF AGRICULTURE, FORESTRY AND FISHERIESPFM Organization
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Strategic Framework of the Royal Government of Cambodia
STRATEGIC FRAMEWORK• Government’s Rectangular Strategy (Stage II)• National Strategic Development Plan (Ministry of
Planning)• Third Socioeconomic Development Plan (SEDPIII:
2005-2010)• Sector Development Plans – (SDP)
MAFF/MOWRAM/MRD• External Development Partner programs
(Example ADB /World Bank /EU) e.g. ADB’s
19ADB Grant 0133-CAM: Component 104/19/23
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Strategic Framework of the Royal Government of Cambodia
SECTOR: STRATEGIC DEVELOPMENT PLAN (SDP)• How these are linked to the national plans?MOWRAM:
– Foundation 1: RGC Rectangular Strategy Phase II;– Foundation 2: Sub-decree on the establishment of
MOWRAM;– Foundation 3: National Policy on Water Resources
Sector.
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Strategic Framework of the Royal Government of Cambodia
EXTERNAL DEVELOPMENT PARTNER PROGRAMS• Asian Development Bank (ADB)
– ADB country strategy and program 2005–2009• (i) intensifying agricultural productivity and diversifying
livelihoods; • (ii) supporting rural development policy and institutional
arrangements to coordinate sector interventions• (iii) promoting rural development through Tonle Sap • (iv) strengthening water resources and integrated river basin
management for sustainable natural resource management, • (v) supporting PFM for rural development ministries • (vi) sustaining rural livelihoods - sub-regional “new agriculture”
solutions• AusAID / Other bilateral organizations
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Strategic Framework of the Royal Government of Cambodia
EXTERNAL DEVELOPMENT PARTNER PROGRAMS• World Bank (WB)
– Microfinance– Garment Sector– Land Titling– Aid Coordination– Public Finances– Oil and Gas Revenue
• AusAID / Other bilateral organizations
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Strategic Framework of the Royal Government of Cambodia
EXTERNAL DEVELOPMENT PARTNER PROGRAMS• AusAID
– First, it supports research that aims to increase and secure the productivity of rice-based farming systems.
– Second, it supports applied R&D that underpins agricultural diversification, particularly into non-rice field and horticultural crops and ruminant livestock.
– A third thrust recognises the vulnerability due to climate variability and change.
– Cambodia Agricultural Value Chain Program (CAVAC)
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Strategic Development Plans
MINISTRY OF WATER RESOURCES & METEOROLOGY
2009-2013• Elements:
– Review of the 2004-2008– Sector Analysis– Mission & Goals & Objectives– Strategy– Action Plan
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Strategic Development Plans
MINISTRY OF WATER RESOURCES & METEOROLOGY 2009-2013
• Activities– Irrigation – Construction & Rehabilitation– Irrigation – Maintenance – Dams – Maintenance – Canals - Construction & Rehabilitation– Drought Intervention, flood mitigation & Management– Hydrology & Meteorology – Human Resource Development
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Strategic Development Plans
MINISTRY OF WATER RESOURCES & METEOROLOGY
2009-2013• Linkage with National Strategy
– First: Rectangular Strategy• Promoting agriculture sector• Rehabilitation & construction of physical infrastructure• Developing private sector & job creation• Human resource development
26ADB Grant 0133-CAM: Component 104/19/23
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Strategic Development Plans
MINISTRY OF WATER RESOURCES & METEOROLOGY
2009-2013• Linkage with National Strategy
– Second: Sub-decree of establishing MOWRAM• Degree 58, June 30, 1999 – Mandate:
– Define policies for the sector /prepare & implement law – Study water resources– Develop & conserve water resources– Manage water resources & mitigate risk– Provide meteorological & hydrology information
27ADB Grant 0133-CAM: Component 104/19/23
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Strategic Development Plans
MINISTRY OF WATER RESOURCES & METEOROLOGY
2009-2013• Linkage with National Strategy
– Third: National Policy on Water Resources• Vision:
– Provision of safe water at reasonable price for all citizens– Supply sufficient water for agriculture, industry & economic
activities– Respond to and minimize water related hazards– Keep water resources free from pollution
{Note: MOWRAM cooperates closely with MAFF for water strategy}
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Strategic Development PlansLinkage Tool: Logical Framework
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Strategic Development PlansLinkage Tool: Logical Framework
30ADB Grant 0133-CAM: Component 104/19/23
• Goal: the higher order objective to which a development intervention is intended to contribute
• Outcome (or Purpose): the likely or achieved short-term and medium-term effects of an intervention’s output
• Outputs: the products, capital goods, and services which result from a development intervention; may also include changes resulting from the intervention which are relevant to the achievement of outcomes.
• Inputs: the financial, human and material resources used for the development intervention
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Strategic Development PlansLinkage Tool: Logical Framework
31ADB Grant 0133-CAM: Component 104/19/23
• What is the difference between outcome and outputs?• Example:Goal: Everyone riding a motorbike must wear a helmet!Input: The number of police hours employedOutputs: The number of fines given to motorbikes stopped by
the policeOutcome: The number of motorbike riders wearing helmets
increasesThe above illustrates that monitoring outcomes is the most
definitive way of informing whether an objective is being realized.
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