Public Financial Management Architecture in Central Asia: International Reform Advice and Domestic Reform Practice: Case of Tajikistan Ismoil Khujamkulov Conference on Public Policy in Asia 2014 Lee Kuan Yew School of Public Policy National University of Singapore

Introduction: Research Problem International Financial Institutions (IFIs) portfolio of support for PFM reform has grown substantially, particularly since the late ‘90s Role of International Organizations in PFM reform and obscurity whether reforms meant to strengthen domestic PFM systems have their intended effects Why, despite a constant flow of financial resources allocated to the PFM projects, the outcomes of implementation do not appear to live up to expectations

Research Question and Hypothesis IFIs such as the WB and the IMF have recommended “best practices” in PFM architecture over the years. Has this advice been adopted in actual reform efforts in government of Tajikistan? If so, to what extent? If not, why not? Explore what has been advised and what is being done (a) PFM is evolving rapidly and IOs deliver aid in strengthening PFM b) success rate of implementing PFM reform advice varies along different dimensions of reform

Theoretical Framework: Applied Political Economy Analysis (PEA) Specific Policy Context Sector Level Analysis Country Analysis Global/Regional Analysis Effectiveness of IOs’ recommendations on ‘best practice’ in financial management architecture through process tracing of PFM reform, based on comparison of PEFA diagnostics with study assessment Identification of specific barriers and opportunities for PFM reform and development problem of obscurity whether reforms meant to strengthen domestic PFM system have their intended effects Context: Tajikistan and adoption of advice by WB and IMF in actual PFM reforms summarizing unexplained challenges from analysis of budget data and country- level dynamics of PFM reform Political and economic institutions in Central Asian and international level from the PFM perspective as government faces pressure to reform existing PFM system, yet has concerns about reforms

hjg Agenda Setting Design Adoption Implementation Sustainability Arenas Interest group structure Mobilization of civil society Policy role of executive Party System Role of media Issue salience International Linkages Interests and institution s Executive-legislative relations Party System Bureaucratic structures Bureaucratic interests Interests affected Characteristics of implementers Interests affected Inter-Governmental structures Interests of high/middle-level officials Capacity of public sector New interests Initiating a reform project Reformer Capacities/Network Policy Champions Policy Champion Strategies Developing a proposal Policy champion choices Design-team characteristics Design-team choices Participation/Exclusion Contesting and negotiating reform Policy characteristics Opposition and reformers strategies Capacity to negotiate Actions and choices Managing conflict Leadership strategies Reformer strategies Policy characteristics New stakeholders Implementer incentives Capacity to advocate/negotiate Alliances

Research Methodology: PEFA The PEFA Performance Measurement Framework for PFM (WB, 2005) is the most comprehensive attempt thus far to construct a framework to assess the quality of budget institutions PEFA comprises of 28 indicators which assess institutional arrangements at all stages of the budget cycle and 3 additional indicators on donor practices

Study: PEFA Framework Alternative and independent PEFA assessment of PFM performance in Tajikistan (2007 and 2012) Preliminary independent assessment conducted in March 2011 and December 2012 Methodology: PFM Performance Measurement Framework (WB, 2005) Coverage: (finished) and (on- going) Source of Data: Annual Reports on State Budget Execution, semi-structured interviews with stakeholders

What Advise Has Been Implemented? New HR management Structures Budget Data at national level published Budget Preparation incorporates MTEF Integrated Budget Classification and CoA is in place IT Centre established

What Has Not Been Implemented? UCoA has not been implemented as of 2014 Int’l Public Sector Accounting Standards still not available for implementation New Treasury Management Information System (based on new UCoA) not functional Lack of Training Sustainability BOs not ready for innovation with testing new software

Preliminary Findings Half of indicators (15 out of 31) have not changed at all (48.4%) 9 indicators show moderate progress (29%) 5 indicators show significant progress (16%) 1 indicator shows moderate deterioration 1 indicator was hard to assess because of the lack of data on tax arrears

What Has Changed?

Official PEFA Assessment and Study Findings

Summary of Findings Significant progress in performance of the PFM (2007 and 2012) is observed only in 15% of all indicators whereas official assessment records it at 35.5% Moderate progress in performance of the PFM is found in 29% of indicators whereas official assessment indicates it at 20% Almost half of the PEFA indicators % are in the same level as in 2007, whereas the official assessment assesses it at 35.5% Only one indicator in both this study and the official assessment shows deterioration in performance

Public Policy Implications PFM systems have become a key focus for the aid delivery, particularly after the PD on Aid Effectiveness (2005) The WB and IMF facilitate the process of PFM reform in Tajikistan and seem to be credible partners of government Not all their advice has been implemented or implemented successfully with the pace of PFM reform being very sluggish Assessment of PFM progress by PEFA framework shows humbler results then those presented in reports

Thank You!