January 30, 2013

IMPLEMENTATION STATUS OF SPFMP

OUTLINE OF PRESENTATION

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

INTRODUCTION AND OBJECTIVE OF THE PROJECT

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 1st 2011, Ending Date: December 31st 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 FRAMEWORK IN NEPAL

PEFA is an Integrated Public Financial Management Reform agenda of Government of Nepal.

PEFA Assessment was conducted in 2007-08 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.

SPFMP COMPONENTS

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)

PROJECT FINANCING

Component and /or activity Project Cost (USD million)

Grant Financing through MDTF

GoN Contribution

Component 1. Implementation of Treasury Single Account (TSA) System

3.80

2.80

1.00

Component 2. Strengthening accounting and reporting practices in public and private sector

1.00

0.75

0.25

Component 3. Supporting the Capacity Building of the PEFA Secretariat

0.90 0.75 0.15

Total 5.70 4.30 1.40

O V E R A L L P R O G R E S SP H Y S I C A L T A R G E T A N D A C H I E V E M E N T O F F Y 2 0 1 1 / 1 2

Components Activities/Targets Achievement

1. Implementation 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

PHYSICAL PROGRESS ON COMPONENT 3Activities as per Agreement Achievement

• 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 (2nd volume in final stage of publication)

• Concept Note is being prepared on PEFA repeater survey

FINANCIAL TARGET (NRS.)

Components Category Allocation Total

Last year Current Year

Component 1: Implementation of Treasury Single Account (TSA) System

1

154464 80350 234814

Component 2: Strengthening accounting and reporting practices in public and private sector

3

6900 3900 10800

Component 3. Supporting the Capacity Building of the PEFA Secretariat

4

19025 9650 28675

FINANCIAL ACHIEVEMENT....

In percentage

Component Category Expenditure Total*PercentageProgress

Remarks

Last year Current Year

Component 1: Implementation of Treasury Single Account (TSA) System

1

137512 4560142072(1648.54) $

60.50%

Component 2: Strengthening accounting and reporting practices in public and private sector

3

5864 - 5864(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

4

6600 1102 7702(89.58) $ 26.86%

The exposure visits held up, activities at NPC slacked and activities in MLD were paid by themselves.

Total149976(1740) $

5662(65.69) $

155638(1805.96) $

56.74%

COMPONENT 3: FINANCIAL STATUS

Components Project cost

Grant Govt. source

Expenditure grants($1=Rs.86)

Exp. Govt. sources

Total

Support to PEFA Secretariat

0.39 0.35 0.04 0.0255 0.0045 0.03

Finance in PFMR strategy 0.19 0.15 0.04 0.0255 0.0045 0.03

Research and Analysis 0.19 0.15 0.04 0.017 0.01 0.027

Awareness programs 0.13 0.10 0.03 0.0085 0.0015 0.01

0.90 0.75 0.15 0.09

Statement of Activity-wise ProgressS.N. Program/Activities Status Budget Allocation Expenditure Progress

%  2011/12 2012/13 Total 2011/12 2012/13 Total1 Capacity Building of PEFA Secretariat                

1.1 Activities Under Capital Expenditure                a Furnuture Procurement Ongoing 200 0 200 200 0 200 100b Machinery and Equipment Procurement Ongoing 500 0 500 494 0 494 98.8  Total of Capital Expenditure   700 0 700 694 0 694 99.14

1.2 Activities Under Recurrent Expenditure                  Implementation of IEC Stratedy                  PEFA Operational Guideline Publication Completed 150 0 150 149 0 149 99.33  Publication of PEFA Progress Report Ongoing 0 100 100 0 0 0 0  Publication of IEC Material (PEFA Handbook,

Brochure, Journal, Newsletter strategic plan ) Ongoing 440 100 540 430 95 525 97.22

  Development of PEFA Website Completed 100 30 130 100 30 130 100  Management of PEFA Resource Center Established 300 50 350 294 37 331 94.57  Research and Study                  PEFA Assessment Support Ongoing 500 0 500   0 0 0  PEFA Innovative Grants Postponed 500 75 575 0 0 0 0  PFM Intership Support Postponed 100 20 120 0 0 0 0  National PEFA/PFM Consultant In Eval Proc 735 0 735 0 0 0 0

  Awareness Programs                  Central, Regional and District PEFA Orintation

Programe 7+3+24=34 2500 285 2785 1070 236 1306 46.89

  Interaction with SEJON on PEFA and PFM Completed 0 35 35 0 35 35 100  PEFA/PFM TV Talk Program Ongoing 0 50 50 0 0 0 0  Interaction with University on PEFA and PFM Ongoing 0 50 50 0 0 0 0  Capacity Enhancement                  3 Days PEFA/PFM National Training Completed 400 0 400 371 0 371 92.75  PEFA ToT Completed 600 0 600 193 0 193 32.17  Exposure Tour on PEFA/TSA/NPSAS Ongng 5500 0 5500 0 0 0 0  Participation on International Conference Ongoing 500 0 500 324 0 324 64.8  Capacity Enhancement of Staff Ongoing 300 28 328 60 28 88 26.83  Monitoring and Evaluation of PEFA/PFM activities Ongoing 0 100 100 0 71 71 71

 Strengthening DPIUs Ongoing 0 100 100 0 0 0 0

1.3Co-ordinatory Programe                 

 Ministry of Local Development                 

aFiduciary Risk Reduction Action Plan

Completed 500 0 500 0 0 0 0 

 Office of Auditor General                 

bPreparation of Risk Based Audit Manual

Completed 1000 0 1000 889 0 889 88.9 

 National Planning Commission                 

cStrengthening MTEF System Completed 1000 0 1000 223 0 223 22.3 

 Financil Comptroller General                 

dStudy on Establishment of DMO Completed 300 0 300 295 0 295 98.33 

eDebt Sustanability Assessment Completed 300 0 300 296 0 296 98.67 

  Total of Recurrent Expenditure

  15725 1023 16748 4694 532 5226 31.20 

  Administrative Expenditure  2600 572 3172 1213 570 1783 56.21 

  Total of Recurrent Expenditure

  18325 1595 19920 5907 1102 7009 35.19 

  Grand Total   19025 1595 20620 6601 1102 7703 37.36 

ONGOING ACTIVITIES 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)

IMPLEMENTATION ISSUES

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

THE WAY FORWARD

• 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 areaExposure visits: PEFA Assessment Best Practices PFM Reform Best Practices IPSAS, IFRS Best Practices TSA Best Practices

THE WAY FORWARD……

THANK YOU