Govt. pur­sues pub­lic funds man­age­ment re­form

Business Bhutan - - Front Page - Pema Sel­don from Thim­phu

Since strength­en­ing pub­lic fi­nan­cial man­age­ment (PFM) is a key el­e­ment of gov­er­nance, the gov­ern­ment is pur­su­ing a PFM re­form ac­tion pro­gram based on Pub­lic Ex­pen­di­ture and Fi­nan­cial Ac­count­abil­ity (PEFA) find­ings, ac­cord­ing to a re­cent re­port is­sued by World Bank.

The Pub­lic Fi­nan­cial Man­age­ment Per­for­mance Re­port says that based on the 2010 PEFA as­sess­ment re­port, the gov­ern­ment has pre­pared a time bound ac­tion plan to bring about im­prove­ments in the PFM

frame­work lead­ing to en­hance­ment in qual­ity of pub­lic spend­ing.

As part of the gov­er­nance agenda, strength­en­ing PFM sys­tems is an area of high pri­or­ity for the gov­ern­ment. Given that the gov­ern­ment is a ma­jor con­troller of pub­lic re­sources, the gov­ern­ment over the years has been mak­ing progress in PFM cov­er­ing bud­get prepa­ra­tion and ex­e­cu­tion, con­trol, re­port­ing and over­sight.

“There is in­creased leg­isla­tive over­sight on bud­get ap­proval through a finance com­mit­tee and of au­dit re­ports through a pub­lic ac­counts com­mit­tee,” the re­port states.

Sim­i­lar to other coun­tries, the pub­lic at large has be­come more de­mand­ing about trans­par­ent and ef­fi­cient gov­ern­ment. With all strate­gic doc­u­ments plac­ing a great de­mand and im­por­tance for a trans­par­ent and ef­fi­cient gov­ern­ment and good gov­er­nance, PFM within the coun­try is ex­pected to strengthen.

The gov­ern­ment has taken two large ini­tia­tives, which in­clude for­ma­tion of a PFM-gov­er­nance group (PFM-GG) and es­tab­lish­ment of a PFM-multi-donor fund (PFM-MDF). These two ini­tia­tives will help the gov­ern­ment to meet the ob­jec­tives of find­ing sus­tained re­sources to carry out PFM re­forms. With the for­ma­tion of the PFM-GG, in­sti­tu­tional ar­range­ments are in place to spear­head the PFM re­form agenda. PFM-GG, a na­tional plan for Bhutan will co­or­di­nate re­sources re­quired for the im­ple­men­ta­tion of the ac­tion plan. Mean­while, the PFM-MDF will help the gov­ern­ment im­ple­ment its PFM re­form pro­gram in a co­or­di­nated and holis­tic way. This is done through a bas­ket-fund­ing mech­a­nism by es­tab­lish­ing an MDF, which pro­vides a com­mon plat­form for de­vel­op­ment part­ners to come to­gether by pool­ing their re­sources and ef­forts in strength­en­ing PFM in Bhutan.

Ac­cord­ing to the re­port, MDF plays a cat­alytic role in lever­ag­ing knowl­edge and fi­nanc­ing by draw­ing on the best ex­per­tise in the field and work­ing closely with a broad range of part­ners and stake­hold­ers.

Euro­pean Com­mis­sion and Aus­trian De­vel­op­ment Agency will ini­tially fund the MDF through a Euro 4mn con­tri­bu­tion.

The re­port also states that sig­nif­i­cant devel­op­ments in de­cen­tral­iza­tion have taken place in Bhutan. Ac­cord­ing to it, the in­tro­duc­tion of the re­source al­lo­ca­tion for­mula for the bud­get­ing of dzongkhags and gewogs has pro­vided more clar­ity in terms of re­source al­lo­ca­tion and has fa­cil­i­tated lo­cal level plan­ning.

Is­sues of Lo­cal Gov­ern­ment (LG) rules and other guide­lines also brought clar­ity to the roles of the lo­cal gov­er­nance sup­port.

How­ever, weak hu­man ca­pac­ity in terms of num­bers and skills and inad­e­quate re­source base of own-source rev­enue of the LGs and bu­reau­cratic ad­min­is­tra­tive sys­tems ham­per ef­fi­ciency and ef­fec­tive­ness. These need to be ad­dressed by the gov­ern­ment.

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