Strengthened Approach and PFM-PR Case Study: Ukraine Bill Dorotinsky The World Bank Washington, DC January 2007

Outline Background and Context Current Status Strategy Approach Impetus for Change Timeline Recent Bank Support Current Status Strategy Approach

Ukraine Impetus of Change Immediate: Late 2004 Orange Revolution New government eager to move forward March 2005 Budget revision Inadequate access to data on spending, revenues Low cooperation across PFM agents Minister unable to fulfill tasks Medium to Long-Term EU Harmonization, conforming to EU standards

Timeline Treasury merged into MoF PFM/MoF Reform strategy development April White Paper on Internal Audit Reform April MOF Reorg Decree Gov’t Change End 2004 Orange Revolution Aug New Gov’t 2004 2005 2006 Govt call for WB support in PFM WB advisory team on-ground WB support to reorg implementation PFM Project Prep March Election

Recent Bank Support Advisory support to White Paper on Internal Control Reform Advisory support to MoF Reorganization Research, paper, advice Internal MoF survey of staff on operational problems Treasury II (follow-on to successful interim Treasury project) converted to PF Modernization Project, supporting MoF integration Finalizing PEFA assessment to feed into reform strategy Partnership with Government, supporting Government-led agenda

Current Status April 2005 Presidential Decree reorganizing MoF, putting Treasury, internal audit, Tax and Customs under MoF oversight. Treasury actually merged into MoF in December 2005. MoF developing PFM reform vision (White Paper), MoF mission statement, to guide reforms MoF developing project components March 2006 Election – no government until August New Government taking reforms forward Meets their needs, regardless of politics Broad support in MoF kept work progressing, issues live

Approach MoF internal working group, composed of division heads, led by two Deputy Ministers Already overcoming traditional stovepipes Institutionalizing reforms Active Bank advisory support to MoF Bank lead in donor coordination on PFM, supporting Government chaired DCG 44 separate PFM donor assistance projects, spanning 12 donor organizations from 9 countries

Strategy Meet Government needs, help solve problems faced today Use advice, papers, workshops and training creatively Use AM’s to send clear messages, summarize advice Provide options, pro/cons, no recommendations Share knowledge liberally WB working as part of reform working group, regular presence on-site Multi-level counterparts, from Minister, DM’s, to Directors PEFA PFM-PR to give complete picture benchmark system operation, serve as baseline for measuring reform strategy impact serve as baseline for donor interventions

PFM-PR Fit naturally into work with MoF Valuable input into reform strategy development Most data obtained in normal course of work Results shared real-time Formal report for record-keeping, but value already added Donors sharing information, using PFM-PR