FINANCIAL FRAMEWORK REVIEW (FFR)

Financial Framework Review (FFR) in a Glance

1.0 INTRODUCTION

The Financial Framework Review, since its inception in 2010, moved at a slow pace until this year (2016) when the pace has increased substantially. The FFR has took a holistic approach and comprised of reviews on Public Finance (Management) Act (PFMA) 1995, Financial Management Manual (FMM) and the Financial Instructions.

2.0 NATIONAL GOVERNMENT SUPPORT AND FUNDING

As part of the Implementation of PEFA Road Map reforms, the National Government through the National Executive Council (NEC) has finally approved an additional budget funding of K2million for the Financial Framework Review to support the Public Financial Management (PFM) reforms; (NEC Decision No: 288/2015 (gazetted)).

3.0 EUROPEAN UNION FUNDED TECHNICAL ASSISTANCE

A Technical Advisor to lead the Financial Framework Review (FFR) was engaged for 9 months by European Union after a diplomatic approach by the Government of PNG. The Department of Finance appreciates the level of assistance from the European Union, as well as other donor partners (Canberra Finance-Australia, Asian Development Bank, IMF), for the FFR project since inception.

4.0 FFR TERMS OF REFERENCE AND KEY STAKEHOLDER ENGAGEMENT

The FFR Project is guided by approved Terms of Reference. The FFR Project time-line is fixed and the draft Bill is expected to be introduced in Parliament in June Sittings – 2016 Parliamentary Calendar.

Members of the Technical Working Group comprised of the departments and agencies of Finance (Chair), Treasury, National Planning, Prime Minister & NEC, Personnel Management, Constitutional Law Reform Commission (CLRC), State Solicitor’s Office, Office of Auditor-General, Central Supply and Tender Board (CSTB), Works, Health, Education and a Representative of Provincial Treasurers.

The FFR Secretariat was established to provide high level of technical support to the FFR Project. It is comprised of key Technical Officers of the Department of Finance appointed by the Secretary, to undertake this very important national project.

5.0 FFR TEAM’S ENGAGEMENT WITH STAKEHOLDERS

The FFR Team has had several meetings with key state agencies outside of the normal TWG meetings, for example –

  • A meeting with CSTB; discussed on the intended new Procurement Law and the Procurement Authority that will come into force and its implication on the PFMA (Part VII – State Tenders & Contracts).
  • A meeting with CLRC to discuss the law review consultation process and consequential effects on other legislation that will be impacted by the PFMA review.
  • A meeting with State Solicitor to discuss the expedited release of Certificate of Necessity before the legislative package is submitted to NEC for blessing and proceeds to Parliament in June Sitting.
  • Government’s Legal Draftsman (First Legislative Council) was approached to notify them of the timeline for the introduction of the amendments to Parliament and discuss the necessary processes.

6.0 FFR TIME TABLE

  • FFR on track for First Reading in Parliament in June sittings.
  • FFR Version 6 completed and covers PFMA Parts I-XII inclusive.
  • After the last meeting of TWG – FFR Team will be ready to submit the Draft Instruction in a Bill form to CLRC, State Solicitor for legal clearance and NEC for final endorsement.
  • First Legislative Counsel has agreed to start working on the Bill as soon as matter sent to CLRC.
  • Once new PFMA is in Parliament, the FFR Secretariat will review the Finance Management Manual and update Financial Instructions consistent with the current changes.

7.0 CRITICAL DATES

  • Since Friday 25 March is Good Friday, next TWG meeting is Wednesday 23 March at the 4th Floor, DoF, main Conference Room.
  • Version 6 released to TWG (14 March 2016) to be considered by TWG at meeting of 23 March 2016.
  • Submit PFMA review Draft Instruction to CLRC and State Solicitor on the 31 March 2016.
  • First draft of the Bill (PFMA) to Legislative Counsel on 31 March 2016.
  • Submit legislative package to NEC 29 April 2016.

8.0 SCHEDULE OF PFMA REVIEW IN VERSIONS PER PARTS

VERSIONS PARTS OF PFMA PROGRESS COMMENTS PERIOD DELIBERATION/ COMMENTS
Version 1 I & II Review completed (FFR Team) FFR Team 1wk TWG Team 2wks FFR Team
Version 2 I, II & III Review completed (FFR Team) FFR Team 1wk TWG Team 2wks FFR Team
Version 3 I, II, III, Viii & Delegation Review completed (Both FFR Team & TWG) FFR Team 1wk TWG Team 2wks TWG & FFR Team
Version 4 I, II, III, IV, V, VA, VI, VIII & IX Review completed (Both FFR Team & TWG) FFR Team 1wk TWG Team 2wks TWG & FFR Team
Version 5 I, II, III, IV, V, VA, VI, VII, VIII, IX, X, XI, & XII Review completed (FFR Team) FFR Team 1wk FFR Team
Version 6 I, II, III, IV, V, VA, VI, VII, VIII, IX, X, XI, & XII Review completed (Both FFR Team & TWG) FFR Team 1wk TWG Team 2wks TWG & FFR Team

NOTE: FFR Version 6 does not include Transitional (Part XIV) or savings clauses – these are for State Solicitor and Legislative Council lawyers to discuss with FFR Team.

7.0 CONCLUSION

For further information on the Government’s Public Finance Management Reform Project please contact the Financial Framework Review Secretariat on telephone numbers: 3288208, 3288606, 3288117, 3288124 or email: ffr.QandA@finance.gov.pg