Improving Public Financial Management

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10 Νοε 2013 (πριν από 3 χρόνια και 5 μήνες)

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Tanzania:

Improving Public Financial Management


Central and Local Governments









General Budget Support

Annual Review Meeting



November 25, 2009








2

1.
Background

2.
Key Issues:

i.
Integrated Financial Management System

ii.
Cash Management

iii.
Fund Flows

iv.
Reporting

v.
Budget Management

3.
Next Steps

Overview





3


The Public Financial Management Reform Program (PFMRP) has
provided support for PFM reforms for more than a decade in
Tanzania.

Background

PFMRP Phase I

PFMRP Phase II

PFMRP Phase III

1999 to 2003

2003
-
2007

FY 2009

FY 2010

Ministry of Finance

Ministry of Finance

Ministry of Finance

Ministry of Finance


National Audit Office

National Audit Office

National Audit Office


Public Procur
e
ment
Regulatory Authority

Public Procur
e
ment
Regulatory Authority

Public Procur
e
ment
Regulatory Authority


Zanzibar

Zanzibar

Zanzibar



Parliament of Tanzania

Parliament of Tanzania



Ministry of Natural
Resources

Ministry of Natural
Resources



Ministry of Local
Government

Ministry of Local
Government



Ministry of Lands

Ministry of Lands




Ministry of Education




Ministry of Health




Ministry of Infrastructure






4


Strategic
Plan
for PFMRP III was launched
in November 2008
.


The MOU governing financing arrangements was signed in April
2009.

Background





5


In 2008/09 PFMRP provided funding for key PFM reforms:



Shift to GFS 2001 Economic Classification


Introduction of IPSAS Accounting


Professionalizing Internal Audit


22 Sub Treasuries connected to IFMIS


70 Procurement Audits


Major support to four FM training schools of MOFEA


Improving External Audit


move to Level 3 of
Afrosai

E.


Support to Parliamentary Accountability Committees


Support for revenue enhancement systems to Min. of Nat.
Resources and Min. of Lands


Support to PMORALG for IT and Financial Management
Specialists


Zanzibar


support to MOF, Audit and the Assembly.


Does this make for a credible reform program?




Background





6

Background


The priority for 2009/10 is to ensure that core systems are
further strengthened:



Integrated Financial Management System



Cash Management



Fund Flows



Reporting



Budget Management







7

Integrated Financial Management System





8

Integrated Financial Management System





9


Limited improvement over the last 10 years


Many activities still conducted outside EPICOR


Cash Planning, Procurement Planning, Tendering, Requisitions, Quality Control,
Inventory, Revenue Collection (except for summaries), Asset Management,
Budget Planning & Monitoring, Auditing, Debt Management


Approach to project development


Not seen as a comprehensive system. Developed as separate components


Contractual agreements with vendors


None
-
existent for some key systems functions


Over reliance on vendor


Ownership


System still largely viewed as Acc Gen application with insufficient focus on
Budget and Planning functions


Reliability


Some improvement in incorporating a budget reallocation table. However there
are ongoing challenges in bank reconciliation, data warehousing, revenue
reconciliation, Electronic Funds Transfer (EFT).


Integrated Financial Management System





10

Integrated Financial Management System


Local Government implementation of IFMS is much more
challenging than for Central Government.

Source: Survey of District
Treasurar’s

on their biggest constraints
-

66 responses (August 2009).





11

Integrated Financial Management System


CAG is undertaking a major review of IFMS due to ongoing
concerns regarding reliability, effectiveness and appropriateness.





12


There are ongoing challenges regarding cash management


including timely deposit of government revenues into the
Consolidated Fund, control over government cash in commercial
bank accounts, liquidity and debt management.


Cash Management





13


On the revenue side there are challenges regarding the quantum of
revenue collected. CAG’s report for 2008 /09 states:




The amount reported as transferred from TRA to the
Exchequer Account as per the consolidated statement was
Shs.3,352,642,632,000 which differs with that reported by
TRA of Shs.3,548,831,912,503 a shortfall of
Shs.196,189,280,503. (US$ 151 m.)



The disparities noted cast doubt as to the reliability of the
data reported in the National Consolidated Accounts and
Treasury management is called upon to follow up and make
the necessary reconciliations and adjustments.





Cash Management





14


There are also challenges regarding proper collection and timely
transmission of revenues from Line Ministries to the Consolidated
Fund.





Cash Management

Vote

Ministry/Department

Retention





%ge

28

Public Security and Safety

60

29

Home Affai
rs & Prison Services

60

34

Foreign Affairs

100

37

PMO
-

Government Printer

70

41

Justice
-

Adm Gen

85

46

Educational & Vocational Training

100

48

Lands

67

49

Water

70

51

Home Affairs

33

52

Health

100

58

Energy & Minerals

25

64

Commercial Court

50

96

Natural Resources

V
arious

93

Immigration Services

52

94

Information, Culture & Sports

90

98

Infrastructure
-
Gvt Stores

85

98

Infrastructure

TAA

100

98

Infrastructure


Policy & Planning

50

99

Livestock Development

75






15


GoT

revised its estimate of government bank accounts with
commercial banks from 36,406 in 2007 to 43,406 in July 2009.


In August 2009, MOFEA instructed
BoT

to close 31,441 bank
accounts.



Cash Management





16


District
Treasurar’s

operate between 25
-
40 bank accounts each.



Cash Management

Rombo Local Council:
Cash Balances 2005 - 06
-
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
400,000,000
General Fund
Development
Misc Deposit
Area Coordinator
Works Service
Health
Education
Water
Road Toll Fund
Land Development
CESS Fund
Agriculture Extension
Tanzania Social Action Fund
Sensa Wilaya ya Rombo
Women and Youth Development
Rural Financial Services Programme
Livestock Development
Agriculture Development
Adult Education
Aids Project
Community Health Fund
District Executive Director Community
District Executive Director District CA
Capital Dev and Building Capacity Grant
TZ. Sh.
JULY
AUGUST
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
JANUARY




17


Several local governments have large monthly balances. These are
in bank accounts where Banks charge interest for retaining these
balances.

Cash Management


Mwanza City Council :
Bank Balances (Selected Accounts)
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
Jan 2003
June 2003
Jan 2004
June 2004
Jan 2005
June 2005
Jan 2006
Ts. Sh.
General Fund
Development Fund
Misc. Deposit
LGCDG
Plot Sales Cash Account
Deposit II Cash Account
Education Cash Account
Health Cash Account
Road Fund A/c




18

Fund Flows


Fund flow arrangements are overly complex.





19


There are
ongoing concerns
regarding the quantum and timing of
release of funds.

Fund Flows


Cash Balance in Education Sector Account (Account No. 5)
0
200,000,000
400,000,000
600,000,000
800,000,000
1,000,000,000
1,200,000,000
1,400,000,000
July
04
Aug.
04
Sep.
04
Oct.
04
Nov.
04
Dec
04
Jan 05
Feb
05
Mar
05
Apr 05
May
05
June
05
July
05
Aug
05
Sept
05
Oct 05
Nov
05
Dec
05
Jan 06
Arumeru District Council
Rombo District Council




20


There are
ongoing concerns
regarding the quantum and timing of
release of funds.

Fund Flows





21

Fund Flows


Project Aid has been less predictable than budget support.





22

Fund Flows


Predictability of fund flows from Basket Funds has been mixed.





23

Fund Flows


Predictability of fund flows from Basket Funds has been mixed.





24

Fund Flows


Predictability of fund flows from Basket Funds has been mixed.





25

Fund Flows


Predictability of fund flows from Basket Funds has been mixed.





26

Fund Flows


Sectoral

fund flows
-

e.g. for HIV AIDS
-

are
difficult to map.





27

Reporting


CAG has commented on the inability of the IFMS to generate
accurate and timely financial statements.



The
Epicor

system has not been activated to incorporate and
process records of non
-

current assets, inventories, and
generation of LPOs,
Cheques
, and generic reports.


In
addition, the system does not allow for individual sub
-
vote
holders to prepare their bank reconciliation statements.


A
number of modules in the system were found not operative
including the inability of the system to prepare the end of
year financial statements.



Even after 10 years EPICOR is not integrated with either PLANREP
or SBAS or other planning and budgeting tools in
GoT
.





28

Reporting


Monthly multiple
reporting requirements deplete the already weak
capacity of
units such as Local Governments.





29


The MTEF is not a good predictor of resource allocation for the
outer years.










In some cases it is also not a good predictor of resources for the
current year.


Budget Guidelines
Budget
Budget Guidelines
Budget
2008/09
2008/09
2009/10
2009/10
Cluster I
48%
47%
-1.0%
51%
47%
-4.2%
Cluster II
34%
37%
3.0%
29%
37%
7.8%
Cluster III
18%
16%
-2.0%
20%
16%
-3.5%
CHANGE
CHANGE
BG 05/06-
07/08
2005/06
2006/07
2007/08
2008/09
2007/08
2008/09
2009/10
2008/09
2009/10
2010/11
2009/10
2010/11
2011/12
Cluster I
39
43
49
48
42
43
41
48
50
51
51.2
54.6
53.4
Cluster II
43
35
30
31
41
37
39
34
33
31
29.2
29.3
30.4
Cluster III
18
22
21
21
17
20
20
18
17
18
19.5
16.1
16.1
BG 06/07-08/09
BG 07/08-09/10
BG 08/09-10/11
BG 09/10-11/12
Cluster I : Growth of the economy and reduction in economic poverty

Cluster II : Improvement of quality of life and social being

Cluster III : Governance and Accountability

Budget Management





30


Neither the Clusters nor the sectors have a good idea of what the
resource envelop for the year is going to be as can be seen in the
data for FY 2008/09.





Budget Management





31

Budget Management


Issues
such as equity in
allocations are still to be resolved.





32

Budget Management

Councils
Total income
Expenditure
Over Expenditure
Percent
1
Korogwe DC
2,176,209,944
8,881,438,011
-6,705,228,067
-308%
2
Babati DC
3,830,231,205
8,409,075,599
-4,578,844,394
-120%
3
Musoma MC
4,187,727,128
5,555,049,627
-1,367,322,499
-33%
4
Mwanza CC
15,895,983,168
20,836,067,909
-4,940,084,741
-31%
5
Kahama DC
12,857,829,603
15,223,263,427
-2,365,433,824
-18%
6
Namtumbo
5,739,376,273
6,784,355,261
-1,044,978,988
-18%
7
Kisarawe DC
5,434,607,167
6,214,030,274
-779,423,107
-14%
8
Manyoni DC
6,028,513,315
6,643,128,122
-614,614,807
-10%
9
Njombe DC
12,058,296,985
13,037,126,470
-978,829,485
-8%
10
Chunya DC
7,534,647,492
8,089,627,771
-554,980,279
-7%
11
Rungwe DC
11,665,412,324
12,411,491,814
-746,079,490
-6%
12
Singida DC
11,239,204,271
11,873,705,220
-634,500,949
-6%
13
Singida MC
5,070,528,928
5,266,690,444
-196,161,516
-4%
14
Kilombero DC
9,160,258,548
9,500,886,848
-340,628,300
-4%
15
Ngorongoro D/C
4,317,248,683
4,458,613,253
-141,364,570
-3%
16
Monduli D/C
6,043,899,619
6,231,915,835
-188,016,216
-3%
17
Iramba DC
11,585,071,712
11,896,986,217
-311,914,505
-3%
18
Makete DC
4,771,909,635
4,894,072,274
-122,162,639
-3%
19
Mbozi DC
18,540,992,088
18,992,710,874
-451,718,786
-2%
20
Kishapu DC
5,278,948,882
5,380,187,570
-101,238,688
-2%
21
Mafia DC
4,308,722,829
4,386,954,865
-78,232,036
-2%
22
Meatu DC
7,074,491,676
7,138,110,471
-63,618,795
-1%
23
Ileje DC
4,887,172,803
4,924,467,573
-37,294,770
-1%
24
Rombo DC
11,654,523,101
11,729,874,336
-75,351,235
-1%
25
Kilindi DC
3,920,507,191
3,945,460,867
-24,953,676
-1%
26
Hai DC
12,098,616,526
12,159,320,542
-60,704,016
-1%
27
Muleba DC
12,426,143,140
12,466,114,780
-39,971,640
0%
28
Mufindi DC
13,202,835,411
13,228,537,435
-25,702,024
0%
Total
232,989,909,647
260,559,263,689
-27,569,354,042
-12%

Carry
forward of unspent balances
in LGA’s defeats the very
purpose of effective budget management.





33


CAG’s Report for 07/08 states:



For
a number of years I have noted huge sums of development
funds remaining unspent at the end of the year.
The
same were
not
rebudgeted

in the subsequent year.
This
defeats the logic of
preparation and approving of the Council’s budget.



Budget Management

S/N
Name of Council
Audit Findings
1.
Singida Municipal Council

Overspent for some items up to 676% • Under expenditure ranging
from 44% to 100% • Huge variances between approved budget actual
expenditure • Deficit of Shs.196,161,516
2.
Mbalali District Council
Amount spent over and above Council’s approved budget

Shs.16,681,413
3.
Rungwe District Council
Expenditure spent over and above the Council’s budget estimates
4.
Morogoro District Council
Poor budget performance huge variances with the is items ranging
from 36% to 8,155% above permitted
5.
Tabora District Council

Spent of Shs.44,187,780 without a budgetary provisions • Items
overspent ranging from 13% to 100%
6.
Tunduru District Council
Expenditure made without budget provision Sh.47,760,267 contrary to
Sect. 43 of LGFA 1982.
7.
Masasi DC
Existence of expenditure items which have incurred expenditure over
and above the approved budgetary provisions up to Shs.163,587,579




34


Service delivery will improve if resources are delivered in a
predictable manner, are used effectively and efficiently and there is
improved monitoring and oversight.



We need to work together to ensure that there are visible
improvements in:



Integrated Financial Management System



Cash Management



Fund Flows



Reporting



Budget Management



Summary





35


Thank You