In 2016 a massive transformation and overhaul of the Public Finances (Management) Act was completed. After wide consultation and awareness building, a Public Finances (Management) Bill and an NEC submission were prepared and submitted to the National Executive Council (NEC) for their endorsement. NEC endorsed the submission of the Bill to be presented in Parliament; and it was tabled in Parliament which was passed in August 2016 as an Act.
The purpose of the amendment of the PFMA Act in 2016 was to capture the needs of a growing economy, so that it meets the needs of the State and the people of Papua New Guinea. It is aligned to international best practices and promotes transparency and accountability in using public funds.
The Public Finances Management Act was written in 1995 when the economy and the national budget were at a manageable level. Given the current government budget size and the larger growing economy, the government saw the need for a more modern, robust and transparent public finance management system. The new PFMA is now a robust and flexible tool to manage the fiscal affairs of the country. This Act also makes any non-compliance with the PFMA a criminal offense that carries a prison term of not exceeding 15 years and a fine not exceeding K2 million for individuals and a fine not exceeding K50 million for companies or persons. This criminal provision is consistent in the Public Money Management Regularization Act 2017 and the National Procurement Act 2018.
Public Finances Management Manual (FMM) and the various Financial Instructions (FIs) issued under the PFMA have been updated and are ready for issue. As soon as the national procurement Act is commenced, these updated FIs and FMM will be issued.