Good Financial Governance in Budget Preparation, Execution and Reporting Stakeholder Conference Tunisia 3 November 2010

PFM: Scope of enquiry Budget Preparation Budget Execution Accounting and Reporting Fiscal frameworks Budget Process Medium term Planning Sector planning Performance information Cash management Internal Audit Internal Controls Procurement Accounting Standards Accounting procedures Reporting Classification &COA TRANSPARENCY and THE INTEGRATION OF AID Financial liabilities IFMS Debt Contingent liabilities Role of Legislature

PFM Reform Achievements Better legal frameworks More credible fiscal frameworks Modernised budget classification Improvements in central budget processes and better mechanisms for sector planning in selected countries Wide-spread efforts to make available performance information Procurement reform initiated in selected countries Progress towards risk-based internal audit Progress towards use of accounting standards Improved in-year reporting

Technical Challenges Weak links in upstream budget processes Revenue forecasting lags and weak domestic incentives for reliable fiscal forecasting High use of non-transparency extra-budgetary mechanisms Systematic political involvement weak MTP not effective Broaden classification reforms Capital and recurrent integration still inadequate Capacity for strat planning and budgeting at sector level weak Performance information not used effectively

Technical Challenges continued Weak links in downstream processes Cash not managed optimally Cash planning weak Commitment controls weak Payroll controls weak Procurement systems weak in practice Capacity for effective internal audit weak Weak support and capacity to operationalise accounting standards Reconciliations not done regularly Need to strengthen internal reporting Need to strengthen management of IFMS reforms Debt management challenges

Macro challenges Fiscal and budget transparency Implementation gap Informality in budget execution systems Approaches to undertaking PFM reforms Sequencing of reforms Integration of donor funds Capacity to sustain PFM reforms

Priorities for reform Address fiscal transparency shortfalls Ownership and sequencing of reforms Align PFM capacity and reforms Political leadership and ownership of, commitment to and involvement in budget system Prioritise African management of aid and integration into budget

Legislative oversight Context, powers and institutional strength Powers vary Amendment, reversionary budgets and executive flexibility Institutional strength Time, committee system, access to information and research capacity Priority Not powers, but practice Executive dominance and cooperation Links to SAIs