Assessment reveals shortfalls in public financial management
VIENTIANE (Vientiane Times/ANN) - Improvement of many sectors is required, especially financial management, with a Public Expenditure and Financial Accountability (PEFA) assessment showing that Laos is at the lower end of most governance indicators in Asean.
The overall object of the assessment is to provide a baseline with evidence-based Public Financial Management (PFM) performance assessment.
It aims to guide the government’s PFM reform strategy in further strengthening public financial management.
A meeting took place in Vientiane on Wednesday to hear the results of the assessment, chaired by the Minister of Finance, Mr Somdy Duangdy.
It was attended by representatives of the Ministry of Education and Sports, Ministry of Health, Ministry of Public Works and Transport, Ministry of Planning and Investment, World Bank, European Union, as well as development partners such as ADB, JICA, UNICEF, GIZ, SDC, and UNDP.
The Public Expenditure and Financial Accountability results were based on public financial management indicators such as budget reliability, transparency of public finance, management of assets and liabilities, policy-based fiscal strategy and budgeting, predictability and control in budget execution, accounting and reporting, and external scrutiny and audits.
“The Ministry of Finance in cooperation with the World Bank, EU and other development partners carried out PEFA assessments up to 2018. The assessment analysis period covers three complete fiscal years 2014-2015, 2015-2016, and 2017 with the cut-off date being August 2018,” said the Deputy Minister of Finance, Mr Bounleua Sinxayvoravong.
“The assessment focuses on public financial management at the central level and in Vientiane and Luang Prabang. It covers the entire PFM architecture on both the revenue side and expenditure side, through the budget cycle from planning through execution to control, reporting and auditing,” he added.
“Now the assessment is complete and has been accepted by the international PEFA secretary,” he said.
Based on seven indicators, the assessment shows that Laos needs to improve many sectors. The Ministry of Finance will improve the weak links between multi-year development plans, sector plans, and the annual allocation of resources through the budget and other means to indicate future financial reform.
Each indicator result will link with six plans of government budget management reform in first period from 2018-2020 and the second period from 2021-2025.
The Public Expenditure and Financial Accountability assessment is intended to assess the current state of public financial management in Laos. In this context, the government agreed at the end of 2016 to carry out an assessment to establish a diagnostic study of the public financial management system using the PEFA 2016 methodology.
The assessment was conducted jointly with the World Bank and financed by the EU Single Donor Trust Fund, administered by the World Bank.
It is expected that the PEFA exercise will give further impetus to the momentum created by the launch of the government’s public financial management reform agenda, mobilising the participating institutions on the subsequent dialogue on reform policy decisions.
The specific objectives of the 2018 PEFA assessment are to help the government prioritise its initiatives as laid out in the Vision to 2030 and the Public Finance Development Strategy 2025, focusing on the areas where basic foundations systems are required.
It also aims to build the capacity and understanding of technical staff on the underlying PFM systems and standards and practices to strengthen their ability to deliver on PFM action plans, and establish the government’s platform for measuring progress going forward and enable regular updates to the reform programme and subsequent monitoring.