TANZANIA: TRACKING POVERTY-REDUCING SPENDING: … (ENG).pdf · 1). Accrual of debt relief and debt...
24
#1330128 v6 - Tanzania (ENG) FINAL 2001 AAP TANZANIA: TRACKING POVERTY-REDUCING SPENDING: COUNTRY ASSESSMENT AND ACTION PLAN (AAP) Prepared by Fund staff 1 In collaboration with World Bank staff and the Tanzanian authorities December 3, 2001 1 The mission comprised Sanjeev Gupta (head), Toshihide Endo, Annalisa Fedelino, and Pokar Khemani (FAD).
Transcript of TANZANIA: TRACKING POVERTY-REDUCING SPENDING: … (ENG).pdf · 1). Accrual of debt relief and debt...
#1330128 v6 - Tanzania (ENG) FINAL 2001 AAP
TANZANIA: TRACKING POVERTY-REDUCING SPENDING:
COUNTRY ASSESSMENT AND ACTION PLAN (AAP)
Prepared by Fund staff1 In collaboration with World Bank staff and the Tanzanian authorities
December 3, 2001
1 The mission comprised Sanjeev Gupta (head), Toshihide Endo, Annalisa Fedelino, and Pokar Khemani (FAD).
- 2 -
ABBREVIATIONS AND ACRONYMS AAP Assessment and Action Plan ACGEN Accountant General C&AG Controller and Auditor General GFS Government Finance Statistics HIPC Heavily-Indebted Poor Country IDA International Development Association IFMS Integrated Financial Management System LPO Local Purchase Order MDAs Ministries, Departments, and Agencies MDF Multilateral Debt Fund MoF Ministry of Finance MTEF Medium-Term Expenditure Framework PEM Public Expenditure Management PMG Paymaster General Account PORALG President Office, Regional Administration, and Local Governments PRBS Poverty Reduction Budget Support Fund PRSP Poverty Reduction Strategy Paper RAS Regional Administration Secretariat
- 3 -
Tracking Poverty-Reducing Spending in Tanzania Assessment and Action Plan (AAP)
A. Introduction
1. In February 2001, Boards of the Bank and Fund discussed the issue of tracking poverty-reducing spending in HIPCs in the context of budgetary savings stemming from the HIPC Initiative. The discussion was based on a preliminary assessment by Fund/Bank staff of public expenditure management (PEM) systems of 25 HIPCs.2
2. The two Boards concluded that HIPCs will need to track all poverty-reducing spending and not just that financed from HIPC inflows. They further requested staffs of the two institutions to review preliminary assessments of PEM systems with concerned HIPCs. This exercise is meant to assist HIPCs in identifying key weaknesses in their PEM systems as well as in formulating action plans for strengthening these systems in the short and medium term. The resulting country-owned action plans are expected to be incorporated into Poverty Reduction Strategy Papers (PRSPs) and Bank�s Country Assistance Strategy (CAS) so that financial and technical support from various development partners could be mobilized. In this regard, the Boards also requested that a list of technical assistance extended in recent years and planned in the future by various donors be prepared.
3. The purpose of this mission is to carry out such a review of Tanzania�s PEM systems and assist the authorities in the preparation of an action plan.
Why should all poverty-reducing expenditure be tracked?
4. There are three reasons why all poverty-reducing expenditure in Tanzania will need to be tracked:
• A mere focus on HIPC inflows will not ensure additionality of spending on poverty. This is because resources are fungible, and a country can offset HIPC assistance earmarked for poverty-reducing programs by lowering its own spending in those areas.
• The composition of public spending is envisaged to become increasingly pro-poor over time. The use of HIPC resources for poverty reduction would not necessarily ensure that the overall composition of public spending has tilted in favor of poverty programs. The latter is a major objective of the PRSP process and a key feature of PRGF.
2 �Tracking of Poverty-Reducing Public Spending in Heavily Indebted Poor Countries (HIPCs)� (Revised SM/01/16, March 2001) and Summing Up (BUFF/01/21, February 12, 2001). Both documents are available on the IMF website, at www.imf.org/external.
- 4 -
• It is also critical that the overall PEM systems in HIPCs are strengthened and limited technical skills not diverted to manage just HIPC inflows. Furthermore, efforts currently underway to strengthen overall PEMs should not be undermined.
Channeling of debt relief
5. In 2000/01, Tanzania received debt relief under the Enhanced HIPC Initiative amounting to US$160 million (1.9 percent of GDP). Until recently, Tanzania maintained a donor-funded Multilateral Debt Fund (MDF) to service debt obligations to multilaterals (Box 1). Accrual of debt relief and debt service payments are now channeled through the government�s main bank account at the central bank.
Box 1. Tanzania: Accounting for Debt Relief Flows
In July 1998, a Multilateral Debt Fund (MDF) was established by donors for servicing debt obligations to multilateral financial institutions. Funds were disbursed according to debt obligations falling due. The resulting budgetary savings were channeled to expenditures in priority sectors. Coordination with donors was promoted through quarterly meetings, where the government reported on its fiscal performance and, more specifically, on poverty-reducing spending. Disbursements into the MDF reached US$185 million in 1999/2000, more than twice the initial contributions in 1998/99. As Tanzania reached the decision point under the Enhanced HIPC Initiative in March 2000 and began receiving interim relief, funds in MDF quickly exceeded the amounts needed for multilateral debt service. Recognizing the fungibility of resources, the authorities began to monitor increases in total expenditures on priority sectors in order to provide assurance to donors and other stakeholders on the effective use of debt relief. At the same time, donors decided to extend general budgetary support for financing poverty-reducing programs. This led to de-linking of contributions to MDF and cash releases to priority sectors from the timing of debt-service payments. Contributions to MDF were discontinued, and a new Poverty Reduction Budget Support (PRBS) fund became operational in December 2000. When debt service payments to multilateral institutions are due, the corresponding amounts are debited from the Paymaster General Account (PMG) at the Bank of Tanzania (BoT). The BoT pays to multilaterals only the debt service net of the relief; the latter is then credited back to the PMG account. In case of debt service to bilaterals, payments are debited from the PMG account when these fall due, but net of interim relief. _____________________________________________________________________________________ 1 Originally including Denmark, Finland, Ireland, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. What should be tracked?
6. The starting point for tracking poverty-reducing spending is the full-fledged PRSP prepared by the authorities with input from various stakeholders. The Tanzania PRSP�endorsed by the IDA and Fund Boards on November 30 and December 1, 2000, respectively�identifies interventions in seven areas as poverty reducing (Box 2).
- 5 -
Box 2. Tanzania: Poverty-reducing spending identified in the PRSP The PRSP, guided by the government�s overarching National Poverty Eradication Strategy (NPES), seeks to reduce income poverty, improve human capabilities, both survival and social well-being, and mitigate extreme vulnerability among the poor. 1
In order to meet these goals, the PRSP identifies the following interventions for reducing poverty: (1) education (mostly at primary school level); (2) health (primary health care); (3) agriculture (research and extension); (4) rural roads; (5) water; (6) judiciary; and (7) HIV/AIDS. The costing of these priority interventions has been carried out in the context of ongoing Public Expenditure Review (PER) and Medium-Term Expenditure Framework (MTEF) exercises, as well as in sector-specific studies. With the objective of improving key social services, expenditure allocations for those priority sectors are being increased relative to outlays for other sectors starting in FY 2000/01. The PRSP also lists the following interventions: (1) abolishing primary school fees in order to ensure that children, especially from poor families, have access to primary school education; (2) catalyzing communities and other stakeholders to play a major role in poverty reduction through self-help schemes that entail construction of classrooms, teachers� houses, health centers, dispensaries, water facilities, and rural roads; and (3) creating employment opportunities for the vulnerable. 1The NPES is drawn from Vision 2025, which lays out the long-term development goals and perspectives of the government in the area of poverty reduction. 7. Prior to the formulation of the PRSP, Tanzania was already reorienting its spending toward pro-poor activities. This was done under the government-led Public Expenditure Review (PER) process, involving various stakeholders.
8. The PRSP Progress Report�completed by the authorities in August 2001�reinforces the emphasis on programs identified as poverty-reducing in the PRSP. The 2001/02 budget includes the costs of programs in education, health, water, and HIV/AIDS. Priority programs in roads and judicial system could not be fully funded in the budget. The costing of the new agricultural strategy will be completed in the coming year. Tanzania has put in place a framework for monitoring the implementation of the PRSP.
9. The critical issue is whether existing budget classification can be mapped with poverty-reducing spending identified in the PRSP. It is equally important for PEM systems to facilitate tracking and reporting of public spending on these programs, as well as of changes in the overall public expenditure composition.
What did the preliminary assessment for Tanzania show?
10. The preliminary assessment of Tanzania and other HIPCs reported to the two Boards earlier this year was based on 15 benchmarks. These benchmarks describe the basic requirements for a PEM system to track poverty-reducing spending; they are meant to
- 6 -
identify both weaknesses in the systems that hinder tracking as well as PEM priority areas that need upgrading. Seven benchmarks relate to budget formulation, four each relate to budget execution and reporting.
11. In the preliminary assessment, Tanzania was identified as requiring substantial upgrading in its PEM capacity (Table 1). Relative to the benchmarks, the coverage of central government was viewed by the two staffs as reasonably comprehensive; however, difficulties in consolidating general government accounts remained. Differences between the original budget and actual outlays were noted. Data on expenditures financed by donors were incomplete. The existing budget classification was assessed as reasonably good. As far as budget execution is concerned, it was noted that Tanzania relies primarily on cash budgeting, although the country is developing an Integrated Financial Management System (IFMS). The internal audit system lacked trained staff. Public Expenditure Tracking Surveys had been carried out for education and health care spending. Fiscal and monetary accounts were not fully reconciled. On reporting, spending units had responded more than four weeks after the end of the period. The audited accounts had been presented to the National Assembly with a delay of more than six months.
B. Assessment of Capacity to Track Poverty-Reducing Expenditures
12. Over the last three years, the Tanzanian government has implemented (and is continuing to do so) a comprehensive financial management reform program. Its aim is to strengthen the budget execution process, expenditure control, accountability and transparency. The implementation of IFMS, the introduction of a GFS-compliant chart of accounts for recurrent expenditures, and issuance of Local Purchase Orders (LPO) from IFMS to control expenditure commitments, are notable achievements.
13. Tanzania has increasingly devolved spending to local governments. This adds another dimension to tracking poverty-reducing spending in the country. About 70 percent of the recurrent budget and 17 percent of development budget for the seven priority sectors are transferred to local governments as block grants. However, about 73 percent of the block grants subvented for recurrent expenditures are for personal emoluments, which are centrally managed by the Department of Establishments. In addition, a part of the remaining block grants for �other charges� is managed centrally by the respective sector ministries. This is the case, for example, for procurement of drugs by the Ministry of Health for supply to local governments. Therefore, the magnitude of block grants to local governments per se overstates the difficulty in tracking poverty-reducing expenditure at the local level.
14. The mission assessed the public expenditure management capacity for tracking poverty-reducing spending against the fifteen benchmarks used in last year�s desk-based assessment for HIPCs. For each of these benchmarks, an assessment and a corresponding action plan for the short and medium term are presented (Table 2).
- 7 -
Tabl
e 1:
Tan
zani
a: A
sses
smen
t of t
he C
apac
ity to
Tra
ck P
over
ty-R
educ
ing
Spen
ding
ASS
ESS
ME
NT
BU
DG
ET M
AN
AG
EMEN
TB
ench
mar
k 1/
Des
k A
sses
smen
tA
gree
d A
sses
smen
t (p
relim
inar
y)
CO
MPR
EHEN
SIV
ENES
S
1.
Bud
get r
epor
ting
follo
ws G
FS d
efin
ition
of c
onso
lidat
ed g
ener
al g
over
nmen
t.A
BB
2.
Gov
ernm
ent a
ctiv
ities
are
not
fund
ed th
roug
h ex
trabu
dget
ary
sour
ces t
o a
signi
fican
t deg
ree.
AA
A
3.
Budg
et o
uttu
rn d
ata
(leve
ls, f
unct
iona
l allo
catio
n) a
re q
uite
clo
se to
that
of t
he o
rigin
al b
udge
t.B
CB
4.
Budg
et in
clud
es c
apita
l and
cur
rent
exp
endi
ture
fina
nced
by
dono
rs.
AB
B
CLA
SSIF
ICA
TIO
N
5.
Bud
get c
lass
ified
on
an a
dmin
istra
tive,
eco
nom
ic, f
unct
iona
l bas
is.B
BC
6.
Pov
erty
-rel
ated
exp
endi
ture
cle
arly
iden
tifie
d in
the
budg
et.
AA
BPR
OJE
CT
ION
7.
M
ulti-
year
exp
endi
ture
pro
ject
ions
inte
grat
ed in
to th
e bu
dget
cyc
le.
AB
A
INTE
RN
AL
CO
NTR
OL
8.
Smal
l sto
ck o
f exp
endi
ture
arr
ears
; litt
le a
ccum
ulat
ion
of n
ew a
rrea
rs o
ver p
ast y
ear.
AB
A
9.
Inte
rnal
aud
it is
activ
e.A
BB
10.
Trac
king
surv
eys s
uppl
emen
t int
erna
l con
trol.
BA
B
REC
ON
CIL
IAT
ION
11.
Fisc
al a
nd b
anki
ng re
conc
iliat
ion
unde
rtake
n ro
utin
ely.
AB
A
REP
OR
TIN
G
12.
Inte
rnal
bud
get r
epor
ts fr
om li
ne m
inist
ries/
Trea
sury
rece
ived
with
in fo
ur w
eeks
of t
he e
nd o
f the
rele
vant
per
iod.
BC
B
13.
Func
tiona
l cla
ssifi
catio
n is
refle
cted
in th
e in
-yea
r bud
get r
epor
ts.A
AB
FIN
AL
AU
DIT
ED
AC
CO
UN
TS
14.
Clos
ure
of th
e ac
coun
ts o
ccur
s with
in tw
o m
onth
s afte
r the
end
of t
he fi
scal
yea
r.A
AA
15.
Aud
ited
acco
unt p
rese
nted
to th
e le
gisla
ture
with
in 1
2 m
onth
s of t
he e
nd o
f the
fisc
al y
ear.
BC
C
Sour
ce: B
ased
on
prel
imin
ary
desk
-ass
essm
ent;
and
on d
iscus
sions
with
the
auth
oriti
es.
Not
es:
Shad
ing:
Mee
ts be
nchm
ark
1/A
: ful
ly m
et; B
: alm
ost f
ully
met
; C: n
ot m
et. F
or so
me
crite
ria, t
he b
ench
mar
k is
met
with
an
"A "w
hen
full
adhe
renc
e is
requ
ired;
for o
ther
, a "
B" i
s suf
ficie
nt to
mee
t th
e be
nchm
ark.
For
exa
mpl
e, c
riter
ion
3 re
quire
s tha
t bud
get o
uttu
rn d
ata
are
quite
clo
se to
that
of t
he o
rigin
al b
udge
t. T
his i
s met
with
"B
", t
hat i
s whe
n ou
tturn
and
bud
get a
re
reas
onab
ly c
lose
.
Formulation Execution Reporting
- 8 -
Tabl
e 2: T
anza
nia:
Acti
on P
lan fo
r Enh
ancin
g Cap
acity
to T
rack
Pov
erty
-Red
ucin
g Spe
ndin
g
SHOR
T-TE
RM M
EASU
RES
TIM
ING
MED
IUM
-TER
M M
EASU
RES
TIM
ING
BRID
GING
MEC
HANI
SMS
FOR
TRAC
KIN
G PO
VERT
Y-RE
DUCI
NG
EXPE
NDIT
URES
Id
entif
y pov
erty
-redu
cing e
xpen
ditu
re in
the b
udge
t: Id
entif
y bud
get l
ines
for p
overt
y -red
ucin
g exp
endi
tures
and c
ircul
ate to
resp
ectiv
e MDA
s. N
ovem
ber 2
001
1. Im
prov
e bud
get c
lassif
icatio
n and
acco
unt c
odes
by: (
1) co
mplet
ing a
pplic
ation
of
the G
FS-b
ased
econ
omic
classi
ficati
on to
recu
rrent
budg
et by
exten
ding
it to
volum
e III
budg
et es
timate
s for
regi
ons a
nd su
bven
tions
; and
(2) i
ntro
ducin
g GFS
-bas
ed ec
onom
ic cla
ssific
ation
to de
velop
ment
budg
et.
Ongo
ing,
to be
co
mplet
ed w
ith
2002
/03 b
udge
t
Impr
ove a
ccou
ntin
g for
exter
nal d
isbur
sem
ents:
Set
up a
proje
ct ac
coun
ting u
nit a
t AC
GEN
and i
mpr
ove a
ccou
ntin
g of d
onor
disb
urse
ment
s, alo
ng th
e lin
es su
gges
ted in
pa
ragra
ph 13
.
Nove
mbe
r 200
1-M
arch
2002
2. Ap
ply G
FS-c
ompli
ant f
uncti
onal
class
ifica
tion
to re
curre
nt an
d dev
elopm
ent b
udge
t. On
goin
g, to
be
comp
leted
with
20
02/0
3 bud
get
Use I
FMS
data
base
for t
rack
ing p
over
ty-r
educ
ing s
pend
ing:
Com
pile
quar
terly
repor
ts fo
r pov
erty-
reduc
ing e
xpen
ditu
res, s
tartin
g with
the c
urre
nt fi
scal
year
, bas
ed on
IF
MS
datab
ase.
De
cem
ber
2001
3. St
rength
en in
terna
l aud
it by
: (1)
defin
ing m
ore c
learly
roles
and r
espo
nsib
ilitie
s of
inter
nal a
udito
rs (IA
s); (2
) inc
ludi
ng in
terna
l aud
it fu
nctio
ns in
IFM
S an
d req
uirin
g IAs
to
auth
orize
paym
ents
with
in IF
MS;
and (
3) tr
ainin
g IAs
in us
e of c
ompu
ter-a
ssiste
d au
dit.
2002
-200
3
Enfo
rce r
epor
ting b
y loc
al go
vern
men
ts: D
esign
a sta
ndar
d rep
ortin
g for
mat,
in
coop
eratio
n with
POR
ALG,
to be
used
for q
uarte
rly re
ports
by L
Gs.
Dece
mbe
r 20
014.
Stren
gthen
exter
nal a
udit
by: (
1) bu
ildin
g ski
lls an
d cap
acity
at C
&AG
offic
e; (2
) de
velop
ing a
sepa
rate I
FMS
audi
t mod
ule fo
r stat
utor
y aud
it pe
rform
ed by
C&A
G; (3
) tra
inin
g aud
it of
ficial
s in c
ompu
ter-as
sisted
audi
t tec
hniq
ues;
and (
4) en
forc
ing
comp
lianc
e.
2002
-200
3
Issue
a cir
cular
requ
iring
subm
issio
n of q
uarte
rly re
ports
by L
Gs in
the p
resc
ribed
form
at wi
th a
dead
line f
or su
bmiss
ion
Dec
embe
r 200
15.
Cons
olida
te op
eratio
ns of
loca
l gov
ernm
ents
and i
nstit
utio
nal f
unds
with
thos
e of t
he
cent
ral go
vern
ment
; and
com
pile
fisca
l acc
ount
s of g
ener
al go
vern
ment
.20
03-2
004
Train
ing a
nd en
forc
emen
t mea
sure
s for
tim
ely su
bmiss
ion o
f qua
lity q
uarte
rly re
ports
by
LGs.
Janu
ary-M
arch
2002
6. St
rength
en th
e MTE
F pr
oces
s, en
hanc
e rea
lism
of bu
dget
estim
ates a
nd in
clude
pr
ojecti
ons f
or tw
o for
ward
fisc
al ye
ars i
n bud
get e
stim
ates.
Ongo
ing;
to be
co
mplet
ed w
ith
2003
/04 b
udge
t
OTHE
R M
EASU
RES
Impr
ove b
udge
t rep
ortin
g sys
tem by
: (1)
tran
sferri
ng el
ectro
nica
lly th
e ent
ire ac
coun
ting
datab
ase f
or th
e rem
ainin
g five
votes
to th
e cen
tral d
ataba
se m
aintai
ned b
y the
ACG
EN�s
offic
e; an
d (2)
desig
ning
repo
rting
syste
m th
at m
eets
the r
equi
remen
ts of
MoF
and
spen
ding
agen
cies.
Dece
mbe
r 200
1-Ja
nuary
2002
Insti
tute
a rep
ortin
g sys
tem on
arre
ars f
or su
bmiss
ion to
ACG
EN by
Acc
ount
ing O
ffice
rs. D
ecem
ber 2
001
Fina
lize t
erms o
f refe
rence
for e
xpen
ditu
re tra
ckin
g sur
veys
with
the o
bjec
tive o
f lau
nchi
ng th
em by
Mar
ch 20
02.
early
2002
Inclu
de a
table
prov
idin
g bud
getar
y deta
ils of
pove
rty-re
ducin
g exp
endi
tures
, star
ting
from
2002
/03 b
udge
t doc
umen
ts.
June
2002
- 9 -
Budget Formulation
Benchmark 1: Budget reporting follows GFS definition of consolidated general government 15. In Tanzania, the general government consists of the central government, local authorities, executive agencies and other government institutions. Central government operations�which are covered in the budget presented by the Minister of Finance�are not consolidated with those carried out by local authorities. This consolidation is also impeded by differences in the fiscal year at central and local government levels.3 Specific fiscal operations are also undertaken by various institutional funds (such as the Road Fund, to which the road toll�an earmarked revenue�is channeled; provident and pension funds; and the Education Fund) as well as other government agencies. Their operations are also not consolidated with those of the central government.
16. As required by the Public Finance Act 2001, the government presents annual estimates of revenue and expenditure in four volumes. Volume I includes government financial statement and revenue estimates; Volumes II and III contain recurrent expenditure for ministries, departments and agencies (MDAs), and regions, respectively; while estimates of development expenditures are included in Volume IV. Estimates for subventions/transfers to district councils do not follow economic classification as shown in Volume II.
Assessment: This benchmark is not met since the budget only partially covers operations of the general government, as defined in the Government Finance Statistics (GFS) Manual (Table 1, last column).
Action Plan: Efforts will need to be made over the next three years to consolidate the operations of the local governments and institutional funds with those of the central government. This will allow preparation of fiscal reports covering the entire general government. In the following sections of the Assessment, several other supporting actions have also been identified for strengthening the budget process, enhancing the comprehensiveness of the budget and improving the public expenditure management at the local government level.
Benchmark 2: Government activities are not funded through extrabudgetary sources to a significant degree 17. As stated above, the government budget covers almost all activities of the central government. MDAs, which collect non-tax revenue in the form of fees and charges for their services, are required to remit these fees to the treasury. The budget estimates are prepared on a gross basis. 3 The fiscal year of local governments runs from January to December; while that of the central government runs from July to June.
- 10 -
Assessment: This benchmark is met.
Benchmark 3: Budget outturn data are quite close to the original budget 18. With the implementation of IFMS, the timeliness and quality of budget outturn data has improved considerably. Furthermore, in the past two years, significant improvements have been made in formulating a macroeconomic framework and in enhancing the reliability of budget estimates; areas that in the past have been prone to accumulation of arrears due to insufficient funding have been adequately provided for in the 2001/02 budget. Although authorized by law, supplementary budgets were not presented in the preceding two budget years. The reappropriations within and between different votes are small. Owing in part to a better control of expenditure commitments, accumulation of new domestic arrears during the last year has been small. With these improvements, the budget outturn for recurrent expenditures is now reasonably close to the original budget.
Assessment: This benchmark is met.
Action Plan: There is scope for further enhancement of the realism of budget estimates by: (1) improving the predictability of revenues and other inflows, particularly disbursements by donors; (2) assessing expenditure requirements based on proper costing; and (3) limiting the use of contingencies and disclosing anticipated use of contingency provision.
Benchmark 4: Budget includes capital and current expenditure financed by donors 19. The coverage of donor-financed projects has considerably improved during the last year and is almost complete in the formulation of the budget. However, difficulties continue to be faced in accounting for donor disbursements related to these projects. The reason is that most donor disbursements are not received in the Treasury account at the central bank and released through Exchequer Issues. Furthermore, data on project expenditure financed by donors are not even recorded in the central expenditure database maintained by the Accountant General (ACGEN), in part due to separate project accounts with commercial banks. However, this does not apply to foreign loans disbursed through the budget. Grants provided in kind�such as drugs and vehicles supplied by donors�are not budgeted and accounted for. Donors have responded hesitantly to government�s repeated pleas over the last three years to channel their support through the exchequer system. The provision of donor support through the Poverty Reduction Budget Support facility represents an important step towards better integration of donor funds into the government�s budget management.
Assessment: This benchmark is not met because a significant proportion of projects financed by donors are outside the exchequer and IFMS systems.
Action Plan: In October 2001, the ACGEN sent a circular requesting donors to channel project funds through the exchequer system in order to facilitate recording of all expenditures. The circular also suggested alternative procedures for accounting for all project transactions.
- 11 -
In addition to the steps envisaged in the ACGEN�s circular, a separate project accounting unit could be set up in the office of ACGEN. This unit could:4 (1) undertake an inventory of all donor-financed projects by liaising with donors as well as MDAs, reconcile information from the two sources, establish a project database and update it regularly; (2) liaise with the MDAs and Budget Department to ensure that all projects are included in the development budget estimates; (3) request donors to provide quarterly reports on project disbursements to ACGEN with copies to MDAs as well as project managers; (4) ensure that all transactions have been properly recorded and accounted for as described in the ACGEN�s circular; (5) input manually or electronically into the FILMS central database accounting project data not on IFMS; and (6) institute quarterly reports on project expenditures; the project unit should reconcile these reports with the quarterly disbursement reports provided by donors and ensure that disbursements have been fully accounted for.
• Benchmark 5: Budget is classified on an administrative, economic, and functional basis
20. The budget classification and coding structure for the recurrent and development budgets are not uniform. GFS-based economic classification has been adopted for the recurrent expenditure estimates commencing from FY 2000/01. However, the development budget does not follow this classification. In addition, both the recurrent and development budget follow different classifications: the recurrent budget is classified in terms of programs, sub-votes and object/economic type, while the development budget is classified in terms of sub-votes and projects. GFS-compliant functional classification has been developed, but has not been applied by IFMS. The adoption of different budget classifications and account codes hinders a consolidated analysis of poverty-reducing spending in recurrent and development budgets. Finally, the program classification used in the recurrent budget is not appropriate for effective performance budgeting. One of the constraints to extend GFS-based economic classification to the development budget is the fact that about 90 percent of it is donor funded, with only a small share of this funding passing through the exchequer system; and many donors do not yet provide sufficiently detailed information on their support.
Assessment: This benchmark is not met.
Action Plan: The budget classification and account codes need improvement by: (1) extending GFS-based economic classification to the recurrent budget in Volume III (estimates for regions and subventions); (2) implementing GFS-based economic classification to development budget; and (3) developing a standard and uniform chart of accounts and account codes for recording and accounting government transactions under IFMS.
4 Some of these tasks should be coordinated with the Budget Division and the External Finance Department at the Ministry of Finance.
- 12 -
• Benchmark 6: Poverty-reducing expenditures are clearly identified in the budget
Broad details of poverty-reducing spending identified in the PRSP are outlined in Box 1. It is difficult to identify budget lines relating to this spending in the 2001/02 budget. For example, estimates for basic education�listed as poverty-reducing�are scattered across the budget.
Assessment: The benchmark is not met.
Action Plan: The first crucial step is to identify poverty-related expenditure in budget estimates consistent with the PRSP. A table indicating votes, subvotes, and item codes in recurrent and development budgets covering seven priority areas (in the PRSP) has been prepared for 2001/02 by MoF officials (Tables 3-5). These tables could be refined in consultation with spending agencies, including project managers. This exercise would also help ensuring full exchequer releases for genuine poverty-reducing spending and for proper accounting, monitoring and reporting. A summary table along these lines can be included in the budget, effective 2002/03. • Benchmark 7: Multi-year expenditure projections are integrated into the budget
cycle
21. MTEF was introduced in 1997/98 as a part of the PER exercise and covers a three-year period. The resource envelope established under MTEF is used for setting sectoral budget allocations. The budget guidelines provide the macroeconomic framework; the key spending priorities and programs; and the proposed allocation of resources over the medium term. Draft revenue and expenditure estimates are presented for the current fiscal year, along with the approved estimates for the previous fiscal year and actual results for the fiscal year prior to the previous one. However, the budget documents do not include resource allocations for two forward fiscal years.
Assessment: This benchmark is met.
Action Plan: The budget process would benefit from: (1) further strengthening of MTEF; (2) including projections for two forward fiscal years in budget estimates, and (3) using the forward year estimates as a basis for drafting annual estimates.
Budget Execution
• Benchmark 8: Small stock of expenditure arrears, little accumulation of new arrears over past year
22. Expenditure arrears�overdue unpaid bills�used to be a problem until recently. Expenditure control procedures have been strengthened with the introduction of IFMS. A commitment control system (CCS) was introduced effective July 1, 2001. The issuance of a local purchase order (LPO) generated by IFMS is now required for purchasing goods and services. The ACGEN is required to monitor expenditure commitments with the help of IFMS.
- 13 -
Table 3. Tanzania: Poverty-Reducing Expenditure, FY 2001/2002
- 14 -
Table 4. Tanzania: Disaggregation of Recurrent Poverty-Reducing Expenditure
- 15 -
Table 5. Tanzania: Disaggregation of Development Poverty-Reducing Expenditure, FY 2001/2001
- 16 -
23. The stock of expenditure arrears accumulated during July 1998-December 2000�which has been verified by external auditors�amounted to about 1 percent of GDP.5 However, data for arrears from January 2001 onwards are not available, although the authorities believe only a small amount of fresh arrears was accumulated.
Assessment: This benchmark is met.
Action Plan: With the introduction of the CCS and LPO-based system, the problem of overexpenditures including arrears is likely to be eliminated. However, it is important to continue to monitor arrears, particular at subtreasury level. Although IFMS system generates details on recorded commitments, it cannot reveal commitments or claims not recorded due to nonavailability of funds. In the absence of a formal system for monitoring payment arrears on a regular basis, it is therefore necessary to prescribe a quarterly report to collect information on accumulated unpaid bills from all Accounting Officers. A circular to this effect could be issued by ACGEN.
• Benchmark 9: Internal audit is active
24. An internal audit function exists throughout MDAs. At present, internal audit is concentrated on voucher audit, without any focus on procedures and controls. It does not make sufficient use of IFMS, due to lack of training. In general, internal audit has remained weak due to: (1) inadequate technical skills and weak managerial capacity in the finance arm of MDAs; (2) lack of use of internal audit manuals and weak oversight by the ACGEN; and (3) insufficient enforcement of punitive measures.
Assessment: The benchmark is not met.
Action Plan: The internal audit units in MDAs and the Financial Management unit in ACGEN need to be strengthened by: (1) defining more clearly their roles, responsibilities, and inter-relationship vis-à-vis each other; (2) incorporating internal audit functions into IFMS and requiring internal auditors to authorize payments within IFMS; (3) training internal auditors in use of computer-assisted audit techniques; (4) requiring a monthly performance report from Internal Auditors and Financial Controllers to Accounting Officers, with copy to MoF, ACGEN, and Controller and Auditor General (C&AG). Such a report should also include cases where payments were authorized despite serious objections from internal audit, or when high value vouchers were not shown to audit; and (5) following-up actions on reports of internal auditors and financial controllers.
5 The European Union has partly financed the clearance of pre-June 1998 domestic arrears. Arrears were temporarily accumulated during the period July-December 2000 (equivalent to about 0.3 percent of GDP). These were mostly related to financial difficulties of the utility sector, where the electricity company was not paid by the water company and thus was unable to service its external debt�which was guaranteed by the government. However, these arrears were settled during the fiscal year 2000/01 (clearance of arrears amounted to 0.5 percent of GDP).
- 17 -
• Benchmark 10: Expenditure tracking surveys supplement internal control
25. Two expenditure tracking surveys�on health and education�were conducted last fiscal year in the context of PER. These surveys have demonstrated that resources did not flow in full to their intended end-users. The MoF plans to mainstream the use of expenditure tracking surveys in monitoring budget execution; draft terms of reference for consultants for undertaking the surveys are being prepared. The authorities intend to launch these surveys in early 2002. Meanwhile, some donors are also supporting similar surveys�for example, the European Union has been financing quarterly tracking surveys on the provision of educational material since July 2000 (Table 6).
Assessment: This benchmark is met.
Action Plan: It is important that consultants be engaged by early 2002 to implement expenditure tracking surveys, particularly in areas identified as poverty reducing.
Budget Reporting
• Benchmark 11: Fiscal and banking reconciliation is undertaken routinely
26. Since the government�s consolidation of its cash balances into a single bank account at the central bank, checks are drawn on this account and printed centrally by ACGEN for most MDAs. However, a significant number of project accounts are maintained at commercial banks and donors� funds are not channeled through the central bank. The reconciliation of bank accounts with the Bank of Tanzania�which was subject to long delays until last year�is now performed on a routine basis by ACGEN, via computerized records kept under the IFMS. Project accounts with commercial banks are reconciled monthly. Differences between the above-the-line budget records and below-the-line financing of the deficit have been contained significantly.
Assessment: This benchmark is met.
Benchmark 12: Internal budget reports from line ministries/treasury are received within four weeks of the end of the relevant period 27. With the introduction of IFMS, internal budget reports on exchequer issues, commitments and payments can be generated in real time for MDAs, which are online and connected to the central database maintained by ACGEN. However, five Votes (State House and Defense) are using IFMS on a stand-alone basis and off-line. The data for these votes is provided in a diskette. This data is then merged in a spreadsheet with data for the other MDAs.
Assessment: This benchmark is met.
- 18 -
Ta
ble
6. T
anza
nia:
Exi
stin
g an
d Pl
anne
d A
ssist
ance
in P
ublic
Exp
endi
ture
Man
agem
ent
D
onor
Pr
ojec
t Titl
e O
bjec
tive
Scop
e Im
plem
entin
g A
genc
y St
art d
ate
Dur
atio
n
Swed
en
Inte
grat
ed F
inan
cial
M
anag
emen
t and
A
ccou
ntab
ility
Pro
ject
(I
FMA
P).
Dev
elop
inte
grat
ed b
udge
t sy
stem
s for
pla
nnin
g an
d ac
coun
ting.
Cen
tral g
over
nmen
t, su
b-tre
asur
ies,
and
loca
l gov
ernm
ents
.
Acc
ount
ant
Gen
eral
�s O
ffic
e Si
nce
1997
; Se
ptem
ber
2001
28 m
onth
s
IMF
B
udge
t cla
ssifi
catio
n an
d m
anag
emen
t D
evel
op G
FS-b
ased
cl
assi
ficat
ion
Cen
tral g
over
nmen
t M
oF
1998
24
mon
ths
Swed
en
Con
trolle
r and
Aud
itor
Gen
eral
�s O
ffic
e Pr
ovid
e tra
inin
g an
d co
mpu
teriz
atio
n C
entra
l gov
ernm
ent
Con
trolle
r and
A
udito
r Gen
eral
�s
Off
ice
2002
U
nder
di
scus
sion
UK
D
FID
Tr
aini
ng o
f off
icia
ls o
n th
e Pu
blic
Fin
ance
Act
. Im
prov
e un
ders
tand
ing
of
GoT
offi
cial
s of t
he n
ewly
pr
omul
gate
d Pu
blic
Fin
ance
A
ct a
nd p
ursu
ant r
egul
atio
ns.
Trai
ning
of 1
300
offic
ials
in a
ll de
partm
ents
, reg
ions
an
d di
stric
ts.
Acc
ount
ant
Gen
eral
�s O
ffic
e Ju
ly 2
001
4 m
onth
s
Switz
erla
nd
(SEC
O)
Stre
ngth
enin
g m
acro
-fis
cal a
naly
sis a
t the
M
inis
try o
f Fin
ance
.
Stre
ngth
en th
e ca
paci
ty o
f M
inis
try o
f Fin
ance
to
cond
uct m
acro
-fis
cal a
naly
sis
for f
isca
l man
agem
ent.
Trai
ning
as w
ell a
s es
tabl
ishm
ent o
f a
data
base
for a
naly
sis.
Inte
rnat
iona
l M
onet
ary
Fund
(I
MF)
May
200
0 24
mon
ths
Nor
way
M
AC
MO
D
(Mac
roec
onom
ic P
lann
ing
Mod
el).
Third
pha
se
Esta
blis
h an
d op
erat
e a
mac
roec
onom
ic m
odel
. Fo
rmul
atin
g pr
ojec
tions
for b
udge
t pr
epar
atio
n an
d im
prov
ing
capa
city
to
gene
rate
them
.
Pres
iden
t's O
ffic
e,
Plan
ning
C
omm
issi
on
Janu
ary
2000
24
mon
ths
EU/E
DF
PRB
S-re
late
d te
chni
cal
assi
stan
ce
Faci
litat
e ch
anne
ling
of
budg
et su
ppor
t thr
ough
PR
BS
Ass
ist i
n m
anag
emen
t an
d m
onito
ring
of
PRB
S fu
nds.
Min
istry
of
Fina
nce
and
othe
rs
Sept
embe
r 20
01
24 m
onth
s
EU/E
DF
Stre
ngth
enin
g of
Ext
erna
l R
esou
rce
Man
agem
ent
Esta
blis
h IF
MS
syst
em to
ca
ptur
e ex
tern
al re
sour
ce
flow
s to
the
Gov
ernm
ent
Cen
tral g
over
nmen
t, su
b-tre
asur
ies,
and
loca
l gov
ernm
ents
.
MO
F Ex
tern
al
Fina
nce
Div
isio
n Ju
ly 2
001
12 m
onth
s
- 19 -
Tabl
e 6.
Tan
zani
a (c
ontin
ued)
: Exi
stin
g an
d Pl
anne
d A
ssist
ance
in P
ublic
Exp
endi
ture
Man
agem
ent
D
onor
Pr
ojec
t Titl
e O
bjec
tive
Scop
e Im
plem
entin
g A
genc
y St
art d
ate
Dur
atio
n
EU/E
DF
Stre
ngth
enin
g G
over
nmen
t�s F
inan
cial
M
anag
emen
t and
In
tern
al A
udit
Cap
acity
To im
prov
e th
e Tr
easu
ry�s
m
onito
ring
of fi
nanc
ial
man
agem
ent i
n se
ctor
m
inis
tries
, par
ticul
arly
ex
pend
iture
com
mitm
ents
.
Esta
blis
hmen
t of
sect
or-b
ased
fin
anci
al
man
agem
ent u
nits
Acc
ount
ant
Gen
eral
�s
Off
ice
F
ebru
ary
2000
29
mon
ths
EU/E
DF
Inte
rim T
extb
ook
Prog
ram
Pr
ovis
ion
of e
duca
tiona
l m
ater
ials
to p
rimar
y sc
hool
s in
all L
GA
s thr
ough
cen
traliz
ed
and
(pilo
t) de
cent
raliz
ed
proc
urem
ent.
Mon
itorin
g of
pr
ogra
m e
xpen
ditu
re
and
phys
ical
di
strib
utio
n of
ed
ucat
ion
mat
eria
ls
at 5
6 LG
As a
nd 1
12
scho
ols.
MO
F w
ith
Min
istry
of
Educ
atio
n, a
nd
POR
ALG
June
200
0 18
mon
ths
EU/E
DF
Loca
l Gov
ernm
ent
Ref
orm
Pro
gram
Im
prov
ed d
eliv
ery
of b
asic
pu
blic
serv
ices
via
LG
As u
nder
de
cent
raliz
ed m
anag
emen
t.
Stud
ies o
n fis
cal
dece
ntra
lizat
ion,
staf
f an
d fin
ance
m
anag
emen
t
POR
ALG
, as
sist
ed b
y Pr
iceW
ater
H
ouse
Coo
per
Febr
uary
19
98-J
une
2000
. Ja
nuar
y 20
01
Ong
oing
Irel
and
Aid
D
istri
ct D
evel
opm
ent
Prog
ram
s: L
eade
rshi
p an
d A
dmin
istra
tion
To im
prov
e di
stric
t ad
min
istra
tion
and
acco
unta
bilit
y.
Intro
duct
ion
of
IFM
S. In
trodu
ctio
n of
per
form
ance
m
anag
emen
t sy
stem
s. St
aff
train
ing.
Sup
port
for
inte
rnal
aud
it.
Four
Dis
trict
C
ounc
ils
2000
O
ngoi
ng
(firs
t pha
se
3 ye
ars)
Net
herla
nds,
GTZ
, U
ND
P, a
nd
othe
r don
ors
Stre
ngth
enin
g of
fin
anci
al m
anag
emen
t at
the
loca
l lev
el
�
�
�
�
�
Wor
ld B
ank
and
othe
r do
nors
Publ
ic E
xpen
ditu
re
Rev
iew
St
reng
then
ing
of P
ublic
Ex
pend
iture
Man
agem
ent a
nd
Ann
ual R
evie
w o
f Exp
endi
ture
Tr
ends
and
Pub
lic E
xpen
ditu
re
Man
agem
ent I
ssue
s
�
Min
istry
of
Fina
nce
1998
O
ngoi
ng
(ann
ual
exer
cise
)
- 20 -
Don
or
Proj
ect T
itle
Obj
ectiv
e Sc
ope
Impl
emen
ting
Age
ncy
Star
t dat
e D
urat
ion
DFI
D a
nd
Wor
ld B
ank
Cou
ntry
Fin
anci
al
Acc
ount
abili
ty
Ass
essm
ent
Ass
essm
ent a
nd a
ctio
n pl
an fo
r st
reng
then
ing
finan
cial
ac
coun
tabi
lity
�
Min
istry
of
Fina
nce
Febr
uary
20
01
Aug
ust
2001
Wor
ld B
ank
Acc
ount
abili
ty,
Tran
spar
ency
, and
In
tegr
ity P
rogr
am
Supp
ort T
anza
nia�
s Pro
gram
of
Goo
d G
over
nanc
e, in
clud
ing
stre
ngth
enin
g fin
anci
al
acco
unta
bilit
y
�
Off
ice
of th
e C
hief
Se
cret
ary/
H
ead
of P
ublic
Se
rvic
e
2002
20
07
Wor
ld B
ank
IDF
gran
ts fo
r Pol
icy
Plan
ning
, Im
plem
enta
tion,
and
C
oord
inat
ion
�
�
�
�
�
Wor
d B
ank
Con
sulta
ncy
to N
atio
nal
Boa
rd o
f Acc
ount
ants
an
d A
udito
rs
�
�
�
�
�
Wor
d B
ank
Urb
an S
ecto
r R
ehab
ilita
tion
Proj
ect
Cap
acity
bui
ldin
g fo
r loc
al
treas
urie
s; te
chni
cal a
ssis
tanc
e an
d tra
inin
g to
val
uatio
n de
partm
ents
Urb
an C
ounc
ils
Pres
iden
t�s
Off
ice
� R
egio
nal
Adm
inis
tratio
n an
d Lo
cal
Gov
ernm
ent
1997
20
04
Wor
ld B
ank
Fina
ncia
l and
Leg
al
Man
agem
ent U
pgra
ding
Pr
ojec
t
Upg
rade
Acc
ount
ing
and
Aud
iting
Cap
aciti
es in
Priv
ate
and
Publ
ic S
ecto
r
�
OC
AG
, N
BB
A, I
FM,
IAA
1992
20
00
Sour
ces:
Eur
opea
n U
nion
and
Fun
d st
aff.
- 21 -
Action Plan: The internal budget reporting system could be made more effective by: (1) transferring electronically the entire accounting database for the remaining five votes to the central database maintained by the ACGEN�s office; (2) improving the reporting system that meets the requirements of MoF and spending agencies; and (3) promoting maximum use of IFMS-generated reports for budget management.
• Benchmark 13: Functional classification is reflected in the in-year budget reports
28. Functional classification has not been adopted by IFMS for disaggregating expenditure data. Therefore, it has not been possible to compile in-year budget reports on a functional basis.
Assessment: This benchmark is not met.
Action Plan: As noted earlier, the GFS-compliant functional classification�although developed�is not being used. The application of IFMS could be made more effective by adopting GFS-based functional classification and by generating relevant reports for economic analysis.
• Benchmark 14: Closure of the accounts is within two months after the end of the fiscal year
29. In accordance with the Public Finance Act, each Accounting Officer is required to submit prescribed accounts and financial statements to ACGEN within four months after the end of each financial year. The ACGEN is required to submit annual accounts to the C&AG within six months after the end of each financial year. Most Accounting Officers are able to submit their accounts within the limits prescribed by law.
Assessment: This benchmark can be viewed as having been met, since the accounts are submitted within the period prescribed by law.
Action Plan: With the introduction of IFMS, the formal closure of accounts can be expedited and the lag in their submission reduced to three to four months. Accounting Officers and ACGEN should be able to expedite submission of annual accounts and financial statements to the C&AG so that the latter can complete audit and report to the National Assembly on time.
• Benchmark 15: Audited accounts are presented to the legislature within 12 months of the end of the fiscal year.
30. The 2001 Public Finance Act has reaffirmed the principle that audited annual accounts be presented to the National Assembly within nine months from the end of the financial year. Over the past three years, the Office of the Controller and Auditor General has been strengthened and it has received increased budget allocations. This has led to a significant improvement in the quality of audit as well as reduction in the delays in the preparation of the audited accounts of the central government. There have also been some improvements in the timeliness of auditing the accounts of local authorities. The last Audit
- 22 -
Report, for FY 1998/99, was published in October 2000, that is, 16 months after the end of the fiscal year.
Assessment: This benchmark is not met.
Action Plan: The statutory audit needs to be further strengthened by: (1) providing resources to the C&AG for capacity building, through additional staff, skill upgrading and acquisition of equipment; (2) training audit personnel in computer use, including application of computer-assisted audit techniques; (3) developing a separate audit module for IFMS for statutory audit performed by C&AG; (4) improving the timeliness and quality of audit reports by applying modern audit techniques, as well as reporting to the National Assembly the results of value-for-money assessments; (5) empowering the oversight of parliamentary committees over the executive; (6) implementing the recommendations of the Public Accounts Committee and the Local Government Accounts Committee; and (7) initiating disciplinary proceedings against those responsible for non-compliance and financial misconduct.
Summary of the assessment of the expenditure tracking system
31. As noted earlier, the authorities have implemented a number of measures for improving PEM during the last three years. A continuation of these measures, as well as others identified below, would enable the authorities to track and report poverty-reducing expenditures.
32. This evaluation of Tanzania�s PEM system is better than the preliminary assessment carried out by the staffs of the World Bank and IMF at headquarters. The new assessment suggests that
• Budget formulation is quite good; however, further improvements are required in budget classification and account codes and in accounting donors� disbursements;
• Budget execution procedures meet most standards except in case of internal audit;
• Budget reporting is relatively satisfactory; however, improvements are required in external audit and application of GFS-compliant functional classification.
Bridging mechanism for tracking poverty-reducing expenditures
33. This assessment lists various actions for strengthening Tanzania�s PEM system (Table 2). Some of these actions could be implemented in the near term. In particular, a set of short-term actions are referred to as �bridging mechanisms� as they �bridge� a country�s evolution toward more advanced PEM systems. In the case of Tanzania, four bridging mechanisms could be implemented.
• Identify poverty reducing expenditure in the budget. These expenditures are not clearly identifiable in budget estimates. The MoF is making efforts to relate priority
- 23 -
sector spending in the PRSP with budget estimates. The first critical bridging mechanism is to refine these tables in consultation with concerned MDAs and agencies (Tables 3-5). The budget documents should include a table providing details of poverty-reducing expenditures; such a table can be included in the 2002/03 budget documents.
• Improve accounting of donor disbursements. It is important that all donor-financed projects be accounted for as suggested earlier, and on this basis, the MoF should begin preparing quarterly reports of project expenditures reconciled with donor disbursements. This will allow a comprehensive recording of donor-funded expenditures, including those in poverty-reducing activities.
• Use IFMS database for tracking poverty-reducing spending. Poverty-reducing expenditures are included in: (1) estimates of concerned MDAs, and (2) subventions to local authorities. Expenditures incurred by MDAs are already available under the IFMS database. Subventions to local authorities could also be monitored through cash releases recorded by IFMS. This would provide an interim mechanism for tracking poverty-reducing spending until quarterly expenditure reports are submitted by local governments.
• Enforce the quarterly reporting by local governments. The government has recently launched an initiative requiring local governments to submit quarterly reports on revenue and expenditure to MoF. However, a circular detailing the required reporting format is yet to be issued. MoF could design a simple reporting format in consultation with PORALG. Local governments should submit quarterly reports within fifteen days after the end of the quarter to respective Regional Administration Secretariats (RAS), with a copy to ACGEN and PORALG. RAS should also be made responsible for ensuring the timeliness and quality of these reports. The office of the ACGEN will then be able to record expenditure data against subventions on IFMS. This information should also be released to the public.
C. Ongoing and Planned Assistance to Upgrade Capacity to Track Poverty-Reducing
Expenditures
34. Donors as well as multilateral institutions have provided substantial technical assistance in public expenditure management to Tanzania. Many programs are ongoing and new ones are planned (Table 6). The annual Public Expenditure Review process, led by government with broad donor and civil society participation, provides the overall framework for monitoring progress in the implementation of public expenditure management reforms and serves as the principal coordination mechanisms for technical assistance in these areas. In addition, during FY 2000/2001, a participatory Country Financial Accountability Assessment (CFAA) was conducted with the support of the World Bank and DFID. It provides a comprehensive assessment of the financial accountability processes in both public and private sectors. DFID and World Bank are currently assisting the authorities in
- 24 -
formulating an action plan for implementing the recommendations stemming from CFAA. It is hoped that some of the above-noted actions will be incorporated in this plan.
35. The review of the ongoing and planned technical assistance compared to the Action Plan reveals no major areas of assistance remain uncovered by donors. In particular:
• The implementation of bridging mechanisms for tracking poverty-reducing expenditures is already underway. This can be successfully completed by the authorities on their own.
• On the other short-term measures, technical assistance is being provided to strengthen the IFMS; expenditure tracking surveys are already part of the authorities� and donors� work plan.
• Most medium-term measures proposed in the Action Plan are receiving or are planned to receive technical assistance from various donors.
• The areas not covered by donors are internal audit and consolidation of local government operations with those of central government. The authorities may wish to include these areas in the action plan for the implementation of CFAA.
