Moving Forward PFM reforms In Kyrgyz Republic On behalf of the DFID and World Bank Bishkek, September 26, 2005

Background GoK expresses strong voice on harmonizing donor support in content and process Consensus created among donors in Kyrgyz to work together on PFM reform PEFA assessment, Public Expenditure Reviews, and GSAC has already paved a platform toward a more strengthened approach to PFM reforms in Kyrgyz Republic

The New Approach to PFM Reform A country-led agenda – including a PFM reform strategy and action plan A donor coordinated program of support – coordinated, coherent, multi-year program of PFM work that supports and is aligned with the government’s PFM strategy A shared information pool – a common framework and information set for measuring and monitoring results over time

A country-led PFM reform strategy and action plan The government-led reform program Home-grown, country specific agenda. Good practices suggest (i) sequence and priorities of reform activities and measures, (ii) holistic view of the PFM system, institutions and processes. Informed by policy dialogue with donors. Planning and undertaking diagnostic work over time. Designing a prioritized and sequenced reform program. Implementing reforms Monitoring of progress over time.

2. A donor coordinated program of support What we don’t want Government reform strategy influenced by ad-hoc donors requests encourages a fragmented approach to PFM reforms The Strengthened Approach A government-led reform strategy, supported by a coordinated program of work by donors, facilitates an integrated and sequenced reform process. Donor 2 Donor 3 Government-led PFM Reform Strategy External audit Procurement Donor 4 Budget preparation Coordinated program of support by donors Treasury reforms Donor 1

3. Monitoring of progress of PFM reforms Monitoring of progress enables decision-makers in government and donor agencies to assess the success and difficulties of the reform process and make decisions accordingly. Reform measures/activities (training, new law, etc.). Implemented institutional and system changes (IFMS, new budget calendar, etc.). Changes in the performance of the PFM system over the years. -> requires a framework that ensures: Consistency over time; Precise, objective measurement of progress; Systematic coverage of the budget cycle.

Success Factors policy coherence Coordinated policy agendas, consistent with government strategy or priorities Sector policy work that consistent with another sector Policy coherence improved financial management certainty in timing of donor approvals, funding availability funding sync with the government’s budget timetable More funding channelled through treasury system better information sharing Consistent approaches to providing financial/project information to government Alternative and flexible funding arrangements programmatic or basket approaches for external assistance funding Better organization of missions Coordinated (joint if possible) missions Sensible timing of missions; e.g., avoid busy periods of budgeting cycle