January 30, 2013 I MPLEMENTATION S TATUS OF SPFMP

O UTLINE OF P RESENTATION  Introduction and Objectives of the Project  The PEFA Framework in Nepal  Project Components  Project Financing  Physical and Financial Achievements of Project  Implementation Issues  Ongoing Activities  Way forward  Capability plan and resource gap

I NTRODUCTION AND O BJECTIVE OF THE P ROJECT  Government of Nepal has introduced a Project on Public Financial Management (PFM) reform focusing on strengthening PFM system with the support of Multi Donor Trust Fund. ( Starting Date: October 1 st 2011, Ending Date: December 31 st 2014 )  Higher Level objectives of the project are to improve the PFM System of GoN and to contribute to the fiscal consolidation agenda of GoN.  The Specific objective of the project is to improve expenditure and enhance government accountability and transparency by strengthening treasury system, improving financial reporting and building up PFM capacity.

PEFA F RAMEWORK IN N EPAL  PEFA is an Integrated Public Financial Management Reform agenda of Government of Nepal.  PEFA Assessment was conducted in and Report published in 2008 with 31 performance indicators (of which 3 are Donors related) which are recognised globally,  The main objective of PEFA Nepal is to enhance accountability and transparency of the public expenditure.

SPFM P C OMPONENTS Component 1: Implementation of Treasury Single Account (TSA) System (Total Costs US$ 3.8 m) Component 2: Strengthening accounting and reporting practices in public and private sector (Total Costs USD $1.00 m) Component 3: Supporting the Capacity Building of the PEFA Secretariat (Total Costs: USD 0.90m)

P ROJECT FINANCING Component and /or activity Project Cost (USD million) Grant Financing through MDTF GoN Contribution Component 1. Implementation of Treasury Single Account (TSA) System Component 2. Strengthening accounting and reporting practices in public and private sector Component 3. Supporting the Capacity Building of the PEFA Secretariat Total

O VERALL P ROGRESS P HYSICAL T ARGET AND A CHIEVEMENT OF FY 2011/12 ComponentsActivities/TargetsAchievement 1.Implementati on of TSA 2. Strengthening accounting and reporting practices in public and private sector 3. Supporting the Capacity Building of the PEFA Secretariat Roll out of TSA IFRS, Commitment Accounting and Piloting of NPSAS Strengthening PEFA Secretariat, implementation of PFMRP Strategy Phase I Research and Analysis in High priority PFM areas Develop and implement communication strategy TSA Rolled out in 60 districts 5 Regional IT Hub Established High Capacity RISC Server 740 IVM (128GB) Procured and Installed. Studies, Procurements, Trainings, Seminars and Workshops conducted on IFRS. NPSAS prepared, mandatory part of its translation into Nepali has been completed and ministries finalized for piloting (MoPPTM and MoCWSW) Establishment of PEFA Resource Center 34 PEFA orientation programs conducted. National training on PFM/PEFA conducted Interaction Program on PFM with Society of Economic Journalist(SEJON) PEFA Website Developed and updated IEC Materials published regularly

P HYSICAL P ROGRESS ON C OMPONENT 3 Activities as per AgreementAchievement Secretariat manual and procedures preparation and implementation Conduct PEFA Steering Committee Meetings Conduct of research studies Conduct of Seminar and Workshop on PFM PEFA Newsletter and Journal publication Repeat PEFA Assessment Information, Education and Communication (IEC) Strategy has been developed and is being implemented. 12 Steering Committee Meetings conducted. Studies on establishing Debt Management Office and Debt Sustainability Analysis conducted 34 PEFA orientation programs (7 Central, 3 Regional and 24 District level) conducted. National training on PFM/PEFA conducted (1) Interaction Program on PFM with Society of Economic Journalist(SEJON) (1) 4th series of PEFA Newsletter and Volume 1 of PEFA Journal published (2 nd volume in final stage of publication) Concept Note is being prepared on PEFA repeater survey

F INANCIAL T ARGET (NR S.) Components Category Allocation Total Last yearCurrent Year Component 1: Implementation of Treasury Single Account (TSA) System Component 2: Strengthening accounting and reporting practices in public and private sector Component 3. Supporting the Capacity Building of the PEFA Secretariat

F INANCIAL A CHIEVEMENT.... In percentage ComponentCategory Expenditure Total* Percentage Progress Remarks Last year Current Year Component 1: Implementation of Treasury Single Account (TSA) System ( ) $ 60.50% Component 2: Strengthening accounting and reporting practices in public and private sector (68.04) $ 54.29% As the translation process delayed, the training and piloting process could not proceed Component 3. Supporting the Capacity Building of the PEFA Secretariat (89.58) $ 26.86% The exposure visits held up, activities at NPC slacked and activities in MLD were paid by themselves. Total (1740) $ 5662 (65.69) $ ( ) $ 56.74%

C OMPONENT 3: F INANCIAL STATUS ComponentsProject cost GrantGovt. source Expenditure grants($1=Rs.86) Exp. Govt. sources Total Support to PEFA Secretariat Finance in PFMR strategy Research and Analysis Awareness programs

Statement of Activity-wise Progress S.N.Program/ActivitiesStatusBudget AllocationExpenditureProgress % 2011/122012/13Total2011/122012/13Total 1Capacity Building of PEFA Secretariat 1.1 Activities Under Capital Expenditure aFurnuture Procurement Ongoing bMachinery and Equipment Procurement Ongoing Total of Capital Expenditure Activities Under Recurrent Expenditure Implementation of IEC Stratedy PEFA Operational Guideline Publication Completed Publication of PEFA Progress Report Ongoing Publication of IEC Material (PEFA Handbook, Brochure, Journal, Newsletter strategic plan ) Ongoing Development of PEFA Website Completed Management of PEFA Resource Center Established Research and Study PEFA Assessment Support Ongoing PEFA Innovative Grants Postponed PFM Intership Support Postponed National PEFA/PFM Consultant In Eval Proc Awareness Programs Central, Regional and District PEFA Orintation Programe = Interaction with SEJON on PEFA and PFM Completed PEFA/PFM TV Talk Program Ongoing Interaction with University on PEFA and PFM Ongoing Capacity Enhancement 3 Days PEFA/PFM National Training Completed PEFA ToT Completed Exposure Tour on PEFA/TSA/NPSAS Ongng Participation on International Conference Ongoing Capacity Enhancement of Staff Ongoing Monitoring and Evaluation of PEFA/PFM activities Ongoing Strengthening DPIUs Ongoing

1.3Co-ordinatory Programe Ministry of Local Development aFiduciary Risk Reduction Action Plan Completed Office of Auditor General bPreparation of Risk Based Audit Manual Completed National Planning Commission cStrengthening MTEF System Completed Financil Comptroller General dStudy on Establishment of DMO Completed eDebt Sustanability Assessment Completed Total of Recurrent Expenditure Administrative Expenditure Total of Recurrent Expenditure Grand Total

O NGOING A CTIVITIES  Roll-out the TSA System in all districts  Enrichment and strengthening of IT HUBs (7)  Support to DTCOs for TSA Implementation (for the improvement of physical facilities and capacity development)  PEFA Orientation Programs, Seminars, Workshops and PFM related Trainings,  Further Development of PFM/PEFA related IEC materials  Strengthening PIUs and DPIUs  Preparation for Repeat PEFA Assessment (NPPR Action plan )  Preparation of NPSAS implementation  Exposure visits on PEFA/TSA/NPSAS study cum observation  Local PFM Donors Forum (Meeting every two months)

I MPLEMENTATION I SSUES  Poor understanding on PFM/PEFA among the stakeholders  Budget not fully policy and programs  Relatively Complicated procurement legislation and weak HRD on public procurement  Weak interagency coordination and cooperation in enhancing PFM  Human Resource Management  Political instability

T HE W AY F ORWARD Overall: Roll out of TSA with full functional Core Treasury System. Implementation and institutionalization of the NPSAS based on the cash based IPSAS. Repeater PEFA Assessment Internalize and integrate PEFA tool as a challenge and opportunity to improve transparency and accountability in PFM A fully functional Debt Management System of global standards Expenditure control (capping over expenditures) and forecasting mechanism Effective human resources planning,PFM capacity development Implementation of the recommendations of the Government Budget Management and Expenditure Review Commission Enhancing IT system for smooth and consistent operation in FCGO and DTCOs

Implementation of PFMRP Strategy Phase I Conduct Research studies into high priority areas of PFM; which are as under:Debt Management Expenditure Tracking surveys Commitment Accounting Public property management and accounting Establishment of PFM Training Academy HRM Strategic Plan in PFM Capability Development Plan Trainings:  Master trainers for PEFA Assessment  Master trainers for NPSAS/ IFRS  PFM area Exposure visits:  PEFA Assessment Best Practices  PFM Reform Best Practices  IPSAS, IFRS Best Practices  TSA Best Practices T HE W AY F ORWARD ……

T HANK YOU