Collaborators WB-ADB-GOP Partners LGUs Civil Society Donors Local Capacity Mobilization/ Building 7. Policy Reform Evaluation PEPFMR 2. Preparation 3. Coalition Building 5. Interim Results and Outcomes 1. Identification 4. Appraisal 6. Negotiations AAA Cycle: The PEPFMR Story Policy Notes, SSR, other ESW Govt. program (Procurement Reform, NGAS, PEM Program, Fiscal Performance Indicators) ADB work on PEM ASEM TF: Improving Governance ADB-GOP-WB (Joint Working Groups, consultations) WB-ADB (Harmonizing processes, consultant engagement/TORs, internal process requirements) WB Internal (EASPR-EAPCO partnership, role of sector boards, coordinating peer review) Enhanced communication (within GOP, GOP exec- constitutional bodies, GOP exec-LGUs, GOP-donors) Continuous process (missions, field visits, consultations, CG meeting, Govt. discussions) Products (PEPFMR, CFAA, CPAR) Actions (Decision Draft review, GOP discussions, internal clearances, GOP clearance) Outputs/Interim Outcomes (Procurement law, revenue forecasting, MTEF refinement, NGAS implementation, COA reorganization, improved financial reporting, CSC Strategic Plan, CS modeling, DSDS) Instruments (ASEM x 2, IDF x 3, PHRD, ADB TA) Action plan (prioritization, sequencing, cost, TA/investment, donor coordination, monitoring) CAS Triggers, PEPFMR Key Messages (planning, budget execution, financial mgmt, procurement, HR mgmt, decentralization)

1. Identification – The Building Blocks Policy notes, SSR, other ESW Government program –Procurement reform (DBM) –New Government Accounting System (COA) –Public Expdr Mgt Program (DBM) –Fiscal Performance Indicators (DOF) ADB work on public expenditure management ASEM TF: Improving Governance & Reducing Corruption

2. Preparation Process: Getting The Collaboration Right ADB-GOP-WB –Joint Working Groups (Procurement, FM & PEM) –Consultations with LGUs, civil society, donors WB-ADB –Harmonizing task processes –Coordinating consultant TORs and engagement –Working around internal process requirements WB Internal –EASPR-EAPCO partnership –Role of Boards (PSGB, FM, Procurement) and OPCS – integration processes, clearances, quality control –Coordinating peer review process for 3 elements

3. Coalition Building Enhancing Communication Within GOP executive –DOF, DBM, BIR Between GOP executive & constitutional bodies –DBM-CSC, DBM-COA, DBM-Congress Between GOP executive & LGUs Between GOP & donors Continuous process Missions and field visits Consultations (January 2002) Consultative Group Meeting (March 2002) Govt discussions (October-November 2002)

4. Appraisal Products PEPFMR CFAA CPAR Actions Decision Draft review GOP discussions (October 2002) Internal clearances –World Bank PS/FM/Proc Boards, ADB GOP clearance (April 2003)

5. Interim Results & Outcomes Outputs & Interim Outcomes Procurement Reform Law & Draft IRRs Improvement in revenue forecasting method MTEF refinement NGAS implementation COA reorganization Improved financial reporting CSC Strategic Plan ( ) Civil service modeling tool Decentralization and Service Delivery Study

5. Interim Results & Outcomes Instruments for Identified TA Needs ASEM Trust Funds –Improving Governance/Reducing Corruption –Strengthening Institutions –Pensions IDF Grants –Enhancement of Revenue Mobilization (BIR) –Strengthening Exp. Mgmt. for Wagebill Control –Strengthening Financial Management Capacity (proposed) –Procurement Reform PHRD Grant for PSSL ADB Technical Assistance –ARMM –Capacity Building

6. Negotiation Refining PEPFMR Implementation Plan Seek to Agree on: –Prioritization and sequencing – Cost – TA and investment requirements – Donor coordination – Impact and monitoring indicators Put out agreement in public domain

8. Risk Assessment CategoryMitigation Measure Political: 2004 elections - progressive hesitation on policy reforms; more decisions taken by President ’ s Office Step up analytics and have agenda and policy proposals ready for new Administration Build consensus for core agenda to be supported by all donors Maintain dialogue with GOP at technical level Identify interlocutors in OP Identify a wider set of stakeholders and reach out Fiscal – deficit widens: Revenue collection does not improve Expenditure controls weaken Disseminate core DPR/PEPFMR messages in this area Fiduciary: NGAS implementation goes awry Financial reporting weakened Intensive partnership with COA Strengthen financial reporting in key spending entities (DSWD) IDF Grant for capacity building Administrative: Weak interagency coordination Lack of capacity Too many initiatives (MTEF, SEER, OPIF, BEATS, CUBES) Focus on oversight agencies (DOF, DBM, NEDA, COA, BSP, CSC) Capacity-building in oversight agencies to be part of core agenda Intensive implementation support and supervision for grants

7. Policy Reform Evaluation CAS Triggers Increase in revenues as measured by Tax/GNP ratio Decline in government liabilities as measured by NG Deficit/GNP ratio Increase in share of capital outlays and MOOE as compared to personal services

7. Policy Reform Evaluation PEPFMR Key Messages Improving aggregate fiscal discipline –BIR transformation –Indexation of sin taxes Managing off-budget risks –Improved recognition of contingent liabilities –Establishment of centralized risk management unit in DOF –Pension reform – especially SSS Strengthening SEER and OPIF process

7. Policy Reform Evaluation PEPFMR Key Messages Planning & budgeting for the medium term –Center-Sector and Center-LGU coordination –Improved revenue forecasting techniques –3-year department budgets with prioritization Budget execution –Improved links between budget allotment & cash authorization –Simplified release process & reporting systems Financial management –Accounting rules (IFAs, contingent liabilities) –Continued development of Integrated Financial Management System

7. Policy Reform Evaluation PEPFMR Key Messages Public procurement –Legal framework – Procurement IRRs, BOT law –Increased agency participation in Government Electronic Procurement System (GEPS) –Procurement auditing Human resource management –Executive actions on administrative consolidation –Wage bill and employment control –Competitive and transparent compensation policy –Civil Service Personnel Information System

7. Policy Reform Evaluation PEPFMR Key Messages Decentralization –Strengthen LGU capacity for: Taxpayer registration and audits Financial management Budget management Procurement