INTRODUCTION
The Department of Finance, as the lead agency in implementing PFM reforms has seen an overwhelming show of commitment from Government Agencies, Development Partners and Stakeholders since the launching of the Public Expenditure and Financial Accountability (PEFA) Road Map 2015 – 2018.
The PEFA 2017 Annual Reform Monitoring Report has been prepared and has been presented to CACC and development partners in August 2018. The 2017 Report is the report by Government on the progress of the implementation of Public Financial Management reforms in the Public Expenditure and Financial Accountability (PEFA) Road Map. The report highlights key priority areas for implementation by 13 key national departments and agencies. The purpose of the report is to provide evidence that progress is being made against the reforms in the PEFA Road Map 2015-2018.
Preparations for the PEFA repeat assessment and the PEFA sub-national assessment commenced towards the end of 2018. Both, the PEFA repeat assessment and the PEFA sub-national assessment are planned for completion in 2019. This work is highly technical and therefore the Department will require assistance by both PFTAC and an EU Technical Expert for the PEFA repeat assessment and PEFA sub-national assessment. We have obtained undertakings from both PFTAC and the EU that they will be in a position to assist. The EU Technical Expert’s ToR has been drafted and agreed with the EU and will be finalized in early 2019. The EU Technical Expert is expected to in the country in April 2019.
The outcome of the PEFA repeat assessment will be important, as it will measure our performance over the last 3 years of PEFA roadmap 2015-2018 implementation.
The Department of Finance led whole-of-government Public Expenditure and Financial Accounting (PEFA) review program in the second half of 2015, culminated in the public release of the PFM reform Road Map 2015-2018. It provides a comprehensive and sequenced program of reforms to be taken forward over the next three years.
Overview
In March 2014, the PNG Department of Finance started a review and assessment of PNG’s public financial management (PFM). Officials from several departments were involved, including Finance, Treasury, Planning& Monitoring, Personnel Management, Internal Revenue Commission, Customs, Auditor General, Education, Health, the Central Supply and Tenders Board, the National Economic And Fiscal Commission, the Department of Provincial and Local Level Government Affairs, and the Department of Prime Minister & NEC.
The assessment was based on the internationally recognised Public Expenditure and Financial Accountability (PEFA) framework, developed by a consortium1 of multi-lateral institutions and donors in 2004. As of May 2015, the assessment framework has been applied at least once to evaluate the PFM systems in 149 countries.
The PEFA framework today assesses the following aspects of public financial management relative to international standards for good practice:
- Credibility of fiscal strategy and Budget
- Comprehensiveness and Transparency
- Asset and Liability Management
- Policy based Planning and Budgeting
- Predictability and Control in Budget Execution
- Accounting, Recording and Reporting
- External Scrutiny and Audit
Between March 2014 and February 2015, PNG officials conducted a Self-Assessment using the PEFA Framework, and identified both the strengths and weaknesses in PNG’s PFM systems. Subsequently, in March 2015, the Self- Assessment was used to inform an independent assessment conducted by the International Monetary Fund. The results of both assessments were quite similar. The Self-Assessment demonstrated that many PNG officials were clearly aware of the problems existing in PNG’s current PFM system, and also the steps that need to be taken to address those problems. This awareness is important because the first prerequisite to changing broken processes is to recognise that they are broken.
This PFM Reform Roadmap will: Summarise the major findings of the PEFA Assessment- many of which had been highlighted in studies and reports during the past decade by PNG’s Auditor General, PNG’s Public Accounts Committee, and several multi-lateral and bi-lateral agencies working in PNG; and list and prioritise important actions that