1. Liberia – Duke University Program PFM reform strategy Duncan Last Public Financial Management Division March 4, 2011

2. OUTLINE OF PRESENTATION I.Recent history of PFM reforms in Liberia II.The 2009-12 reform priorities III.The draft PFM Reform Strategy for 2012-14 IV.Your views? 2

3. I. Recent history of PFM reforms in Liberia Creating the enabling environment Merger of BoB with MoF PEFA assessment work (WB/FAD/AfDB) FAD PFM progress review and action plan Work on the legal framework initiated Health Ministry financial management project Work on the PFM Law Work on accompanying financial regulations Development of PRS WB Public Expenditure Reviews (PER) Start of the IFMIS project PEMFAR (PEFA+PER) published FAD PFM review – reform priorities 2009-12 PFM Law adopted PFM regulations finalized Internal audit strategy Update of strategy - Part of planned FAD TA Input from WB – new PFM support through EGIRP II First meeting of PFM Steering Committee Key inputs from external sources Second draft of PFM strategy 2007 2008 2009 First draft of PFM strategy 2010 2011 Based on FAD/2009 + PEMFAR Internally driven Adopted in Cabinet, but left unfinished? Establishment of PFM reform coordination unit Establishment of unified accounting function Review of progress

4. II. The 2009-12 reform priorities A. Key focal areas –Implement the PFM legal framework –Strengthen the framework and institutional arrangements for accounting –Improve payroll management and controls –Introduce cash flow planning, debt management and strengthen treasury decision-making –Develop a modern internal audit function –Implement a modern IFMIS 4

5. II. The 2009-12 reform priorities B. Other areas of on-going reforms –Strengthening planning and budgeting DoB organization, MTEF, donor funding on budget –Strengthen budget execution coordination and controls Coordination between MoF and M&As, reduce LPO rejection rates, emergency spending procedures –Strengthen the procurement process C. Accompanying measures –Reform coordination, monitoring, capacity building 5

6. III. The draft PFM reforms strategy for 2012-14 Strategic objective –The overall objective of the PFM reform strategy in Liberia during the next four years is to widen and strengthen the foundation of public financial management, while at the same time pursuing concrete improvements in selected systems, procedures and resources, and in a manner to gradually develop Liberia’s own institutional, organizational, informational and human resource capacities. 6

7. III. The draft PFM reforms strategy for 2012-14 Major outcomes –appropriate laws, rules, and systems are in place throughout GoL, and increasingly observed and enforced, to produce greater fiscal discipline and integrity, closer link of resource allocation to government policy, and some improvement in operational efficiency; –the MoF and the MoPEA have the authority and ability, under the law, to enforce the rules and guide the budgeting process; –the capacity of the major line M&As as well as several county administrations is significantly improved; and –public financial accountability is strengthened, mainly through developing Parliament’s ability to perform adequately its roles of approval and oversight. 7

8. III. The draft PFM reforms strategy for 2012-14 8 ComponentMajor ObjectivesPrimary Responsibility Economic management improve GoL capacity for accurate and timely medium-term macroeconomic and fiscal forecasting MFAU, MoF Planning and public investment raise public investment efficiency and effectiveness, aligned to policy priorities and available funding MoPEA Departments Budget coverage and preparation strengthen the credibility, coverage, coherence and impact of the budget, as well as the quality of its legislative consideration and timely approval Budget Department, MoF Revenue administrationimprove the efficiency and integrity of revenue administration Revenue Department, MoF Budget execution, accounting and financial reporting reduce fiduciary risk by improving adherence to the approved budget, and foster efficiency in budget implementation Expenditure Department, MoF Procurement improve efficiency and integrity in public procurement, and strengthen monitoring and oversight capabilities PPCC Internal control and internal audit strengthen financial integrity and rule compliance throughout the GoL, focusing on simple but robust controls and building an internal audit capacity MoF, with advisory input from GAC External Audit intensify efforts to produce timely and relevant external audits and to follow up on audit findings Auditor General, GAC Legislative oversight strengthen accountability of the executive branch to the legislature in the area of public financial policy and management Legislature and its committees Capacity developmentprogressively strengthen GoL capacity to manage public finances, reducing dependence over time on external advisors and temporary contractual staff MoF, coordinated by RCU

9. IV. Your views? Do you agree with the overall objective? –If not, what should it be? Are the outcomes appropriate/relevant? –What changes should be made, if any? Do the components address current needs and directions? –What is missing? Are they adequately prioritized? Is this plan achievable by 2014? –What are the potential risks? –Is the funding level right/appropriate? 9