Republic of South SudanMinistry of Finance and Economic PlanningPublic Financial Management Action PlanProgress Report for November 2011- June 2012September 20121
ContentsMinistry of Finance and Economic Planning PFM Action Plan Status Report. 1Introduction . 3Background . 3Action Plan Objectives . 3Action Plan Structure & Monitoring . 3Highlights of Achievements and Challenges . 5Assessment of Performance by Priority Area . 9Area 1: Budget Execution Control and Cash Management . 9Area 2: Procurement. 12Area 3: Accounting and Reporting . 14Area 4: Macroeconomic Management and Sustainable Use of Oil Revenue . 16Area 5: Non-oil Revenue Improvements . 19Taxation. 19Customs. 20Area 6: Budget Planning and Preparation . 22Area 7: Aid and Debt Management . 25Area 8: Fiscal Decentralisation and Sub-national PFM . 27Area 9: Strengthening Institutional Capacity in MoFEP . 29Conclusion . 302
IntroductionBackgroundIn order to respond to the new challenges of functioning as a national Ministry of Finance, theMinistry of Finance and Economic Planning (MoFEP) developed a strategic Ministry Action Planduring its Senior Management retreat held in October 2011. This action plan sought to address keychallenges faced by the Ministry in strengthening public financial management (PFM) and economicmanagement within South Sudan. Following an internal consultative process the MoFEP Action Planwas finalised and formally endorsed in November 2011.This report provides a status update of the activities undertaken since the development of theMinistry action plan in November 2011. The report sets out cumulative performance in theimplementation of key activities, and identifies the key challenges faced in implementing the actionplan. While this report is largely a self-assessment by the ministry, it takes into account findings of arecent1 IMF-led technical assessment of PFM in South Sudan. The report is intended to provide abasis for updating the MoFEP action plan to reflect important changes in underlying circumstancesand priorities.Action Plan ObjectivesThe Objective of the MoFEP Action plan is threefold: Deliver a credible budget through an effective budget control framework that ensures thatMoFEP has aggregate fiscal control and ensures predictability while gradually transferringresponsibility and accountability of budget execution to spending agenciesEnsure sustainable management of oil resources, mobilisation of non-oil and aid resources,which are allocated and spent in an equitable, efficient and transparent manner, in line withthe national policy objectiveExpand and update roles and responsibilities of the MoFEP to respond to the new fiscalresponsibilities and economic challenges of the RSSAction Plan Structure & MonitoringThe Action Plan is comprised of 9 priority areas aimed at addressing the key institutional and PublicFinancial Management (PFM) challenges identified by the Ministry. The Action Plan is set out withina framework of priority reforms over a two year period, with key actions identified against eachreform measure. A reporting and monitoring framework was established in conjunction with theAction Plan.The specific objectives of this monitoring and evaluation framework are to: ensure that the plandelivers the planned PFM Reform objectives; and to assess progress, including identifying significantdeviations from plans to ensure that actions are taken to address these. In line with this, a numberof directorates within the Ministry prepare reports on progress on a regular basis – these arepresented to senior management for review.1An IMF led mission, consisting of PFM experts from the IMF Fiscal Affairs Department (FAD), the ODI- BudgetndStrengthening Initiative, and the World Bank, conducted an assessment of PFM between August 22 andthSeptember 5 2012.3
The present report is prepared on the basis of these and is a first step towards a more transparentmonitoring and review process. It is also intended to provide a reference point for updating theMinistry’s PFM reform strategy, taking into account lessons coming out of regular action planimplementation reports and policy or situational changes with important implications on previouslyenvisaged plans. In order to ensure transparency regarding our success in meeting the Ministry’sPFM reform objectives, this report is made publicly available.4
Highlights of Achievements and ChallengesThe table below provides an overview of progress towards implementation of key measures acrossthe nine priority areas. The rest of the section provides a summary of key issues emerging from theprogress report. Finalisation of this action plan half year review consisted of an initial selfassessment by the MoFEP; following the recent IMF-led PFM technical assessment, this report wasthen updated to ensure consistency with the PFM mission’s findings.Status %11%Activity implemented/completedOn Planned activities are on track for target completion date9%17%26%Activities started but behind schedule15%28%28%Activities started/not started and significantly behind schedule21%4%2%Activities not scheduled to startSince the adoption of the MoFEP Action Plan in November 2011, there has been mixed progress inimplementation of set priority reforms. The need to produce three budgets in a short period of timebecause of the change in fiscal year and the oil shutdown, as well as the pressing challenge ofdealing with the oil shutdown, required that resources were diverted to address these demands. Inaddition, weaknesses in institutional capacity within government remain a challenging reality toimplementing the PFM reform action plan.Nonetheless, the challenges identified in the MoFEP action plan remain relevant, and notableprogress has been achieved in many areas particularly where considerable technical assistance wasinvolved. Key achievements in addressing the Challenges are set out in the table below:ChallengeOverall2StatusHighlights of Progress1.On Track Budget Execution Control and CashManagement: Ensuring robust and efficientcontrols during budget execution to (i)avoid budget overruns, (ii) avoidunauthorized expenditure, (iii) ensure cashpredictability for spending agencies, and(iv) prevent the further emergence ofarrears; (v)strengthening control inprocurement management PFMA Act is now in place and supportingregulations for its implementation underdraft.IFMIS fully reconfigured and used toestablish controls in expenditure in linewith the appropriated budget andmonthly expenditure limits.Monthly expenditure limits established asth1/12 of FY12/13 budget for eachspending agencyNew, automated payment proceduresestablished to improve expenditurecontrol2“Overall Status” indicates a weighted average of the status of progress towards implementation of prioritymeasures under each of the nine priority areas of the action plan.5
ChallengeOverall2StatusHighlights of Progress2.Off TrackMinor Procurement:Strengtheningtheprocurement process, so that it isfunctional, transparent and competitiveand delivers value for money. 3.4.Accounting and Reporting: Producingtimely and comprehensive in-year and endof-the-year fiscal reports/accounts toinform decision making and enhancetransparency and accountability, includingin the use of oil revenues;On TrackMacroeconomicmanagementandSustainable Use of Oil Revenue:Developing macro analytical capacity andspecifying the rules, procedures andmechanisms for achieving the stabilizationand saving objectives (as stated in theInterim Constitution) in the use of oilrevenue over a medium to longer term;Off TrackMinor 5.Non-OilRevenueImprovements:Reforming tax and customs policy andadministration to reduce dependence on oilrevenues and accelerate the dismantling ofthe economically destructive system ofrevenue extraction from checkpoints androadblocks.On Track ProcurementReformTaskForceestablished for implementation of reformactivitiesStakeholder Consultation held on draftPublic procurement BillFinal draft Procurement Bill forwarded toministry of Justice for legal editingChart of accounts reviewed andimplementedIFMIS configured to record all necessarydata for financial statement preparation.Expenditures recorded daily and reportsmade available to spending agenciesupon request.Petroleum Revenue Management Bill waspassed by the CoM and currently underamendment to incorporate feedbackfrom the Assembly.Implemented the use of the HydrocarbonEconomic Analysis tool (HEAT) model forforecasting long term oil revenues inorder to inform development ofsustainable fiscal policy1 Quarterly macroeconomic briefing wasdisseminated within MoFEP to improveawareness of the economic situation.Several high quality policy notes on theimpact of the oil shutdown and theimplications of the revenue managementlaw were prepared largely with thesupport of technical assistants. However,there was not much discussion/feedbackon these within MoFEP.Policy on centralized collection andallocation of taxes between national andstate government developed withimplementation underway.Amendment to Tax Act 2009 forexpanded Business Profits Tax approvedby the Assembly.MoU between the Directorate of Taxationand Customs Services, setting forthagreement on streamlined revenuecollection and reporting procedures,developed.Public education campaigns conducted toimprove businesses and public awarenessof on-going revenue reforms.Modernizationplansandrevisedorganizational structures for Customs andTax services developed.Significantimprovementsintaxcollections have been realized over the6
Challenge6.Budget Planning and Preparation: Toimprove the realism of the budget;strengthen the link between the budgetand sectoral policies in the NationalDevelopment Plan; and establish betterproceduresformanagingcapitalinvestment programmesOverall2StatusOn TrackHighlights of Progress 7.Aid and debt policy Management:Strengthening aid coordination appraisal,reporting and accountability requirementsand encouraging donors to channel tinginstitutionalstructures to manage debt.Off TrackMinor 8.Fiscal Decentralisation: Developing aframework on decentralization and ruleand need-based criteria for allocatingtransfers aligned with this framework;On Track past year largely owing to reforms in taxadministration as well as recording andtracking processes.Budget formulation process automated,with the Budget Planning System used byall spending agencies in the preparationof the delayed FY11/12 and the FY12/13budgets, and the printing of budgetdocuments.A National Budget Plan, compiled on thebasis of sector budget strategies, waspresented alongside the FY2012/13 draftbudget in June 2012.A budget calendar was developed in linewith the PFMA and will guide FY12/13budget processImproved emphasis on greater politicalengagement achieved for the FY12/13planning and budget processes.Budget officers trained to record multiyear agency commitments to ensuremore realistic budgeting in future years.Budget execution reports highlightingoverspending are currently presented toMoFEP senior rocessesincluding;organization of Quarterly GovernmentDonor Forums, establishment of a taskforce to coordinate the High-LevelPartnership Forum, regularizing reportingof aid information on AIMS – for FY12/13budget, AIMS data provided basis forpreparation of sector aid financing plans(SAFPs)Coordination mechanisms for LocalServices Support Aid Instruments inEducation, Health and Community BasedInfrastructure established.A Fiduciary Risk Management Strategydesigned and in placeImplementation of the New Deal goals forengagement in fragile states currentlyunderwayDraft debt managementstrategydeveloped and is due to be finalized laterin the year.ToR for a loans and debt committeewithin MoFEP developed.Intergovernmental technical workinggroup (IGTW) established to coordinatethe intergovernmental transfers reformagenda. TW developed new formula for7
ChallengeOverall2Statusstrengthen State & County PFM systems;and develop MoFEP capacity to developpolicy on fiscal decentralization andeffectively oversee and monitor State &County PFM performance.Highlights of Progress 9.Strengthening Institutional Capacity inMoFEP: Ensuring that the PFM reformagenda, including the support receivedfrom various development partners, iscoordinated and managed effectively toavoid potential overlap and inconsistenciesand to bridge critical gaps, as and whenthey arise;Off TrackMajor allocation of transfers, based on percapita distribution.County Development Grant allocated on aper capita basis in FY12/13 draft budgetSub-national PFM Technical Workinggroup has been formed to coordinate &support sub-national PFM reforms.Design of a Local Government PFMmanual d.Ministry structural document developedon the basis of individual directorate/departmental structural and functionalproposals.Developed TOR for support in structuralreview and institutional capacity building.A recent IMF-led PFM mission noted thata full restructure would require significantresources and therefore not advisable atthistime.Themissionratherrecommended that the MoFEP undertakeonly a minor reorganization of some keyfunctions to enhance implementation ofPFM reform.Established framework for monitoringand reporting against action plan.However to date, there was limitedinvolvement by the senior managementin overseeing implementation of the plan.Going forward, a number of challenges still remain. Among these, is a need to finalize the legalframework for procurement; enforce fiscal discipline and abate the ad-hoc nature of budgetexecution by ensuring improved compliance with the established regulatory framework andsupporting systems and processes; develop a sustainable fiscal strategy taking account of bothfuture and current generations’ needs; finalize a national debt management strategy; establish anappropriate role for internal audit; devlop an improved communication strategy both within MOFEPand with spending agencies; and institute effective internal coordination structures within MoFEPand strengthen the ministry’s institutional capacity to manage interventions in order to ensure thesustainability of PFM reforms.8
Assessment of Performance by Priority AreaArea 1: Budget Execution Control and Cash ManagementBudget execution reforms set out in the action plan are fundamentally aimed at establishing robustand efficient controls during budget execution to (i) avoid budget overruns, (ii) avoid unauthorizedexpenditure, (iii) ensure cash predictability for spending agencies, and (iv) prevent the furtheremergence of arrears; and (v) strengthen control in procurement management.The table below summarizes the status of progress towards implementation of priority measures setout in this area:Status ofProgressPriority Measure CompleteOn Track Off TrackMinorOff TrackMajor Develop a rolling expenditure plan within the annual appropriation, that isbased on the annual budget submitted to the Legislative Assembly, and usethis as the basis to set monthly expenditure limits of the spending agenciesImplement a system of controlsSpecify controls at all stages of the budget execution processPilots for expanded IFMIS functionality including expenditure controlsTake stock of all outstanding payment arrears as at end June 2011Identify areas in the PFMA Bill that require transitional steps and to finaliseregulations and procedures to support the implementation of the PFMA Law,once the bill is passedImprove cash management by strengthening the Treasury Single AccountSystemNotStartedSince the action plan was adopted progress has been made in establishing the legal framework:-The PFMA Bill was enacted by the National Legislative Assembly (NLA). This forms a solidfoundation for strengthening Public Financial Management in RSS.-With support from the Capacity Building Trust Fund (CBTF), instructions, currently servingthe role of regulations, have been drafted to underpin implementation of the PFMA Act–further review and amendments to these are planned.In line with the core plan objectives, significant efforts have been directed towards implementingexpenditure controls and the development of procedures for processing payment claims. The mainprogress in budget execution control and cash management has been as follows:-A framework for establishing monthly expenditure limits have been established, initiallyusing 1/12th of the annual budget appropriation for each spending agency. Given theuncertainty of the fiscal situation, cash plans have not been prepared, but the level ofexpenditure limits will be reviewed based on the availability of cash during the financialyear.9
-The IFMIS has been fully reconfigured and will be used to establish controls in expenditure inline with the appropriated budget and monthly expenditure limits, on the basis of the newchart of accounts. Interim annual and monthly controls were established on the IFMIS forthe Austerity Budget period – the last quarter of 11/12 - and were largely enforced, withspending kept within budgeted levels.-A strategy has been developed to improve cash management by strengthening the TreasurySingle Account system, as provided in the PFMA Act.-At the end of FY2011/12 efforts were made to identify unpaid claims and validateoutstanding obligations. Moving forward, unpaid claims will be continually examined toidentify valid obligations at the outset, which will consequently allow monitoring of arrears,if these are not paid.-To support implementation of these and other reforms being instituted commencingFY2012/113, comprehensive training for key system users and other stakeholders withinMoFEP and at spending agency level was undertaken in May and June 2012.The box below provides an overview of the Budget execution reforms that will be implementedin 2012/13Snapshot of Budget Execution Reforms in FY 2012/13Budget execution control procedures are being strengthened in line with the Public FinanceManagement & Accountability Act (PFMAA), to ensure that: Only claims which have been properly approved by accounting officers and directors generalwithin the approved monthly expenditure limits will be paid; All required contracting procedures have been followed, including advance approval by theMinistry of Justice and MoFEP; Cheques will be printed directly from IFMIS and the manual transfer letter system iseliminated; and Payments will be made only to vendors who have delivered the goods or services in thecontract. In line with new payment procedures, with effect from the 1st of July 2012,vendors will be paid directly and transfer of large amounts of money to spending agencybank accounts terminated.All of these reforms are consistent with international good practice and are a significant stepforward since the last year. However, they have only recently been put in place and it is still too earlyto tell if they will work. Successful implementation of these reforms will largely depend on thepolitical will to enforce fiscal discipline and ensure that agencies adhere to allocated budget ceilings.The challenges faced in implementing the key actions in this priority area have been:-Political interference that overrides the reforms, undermining the MoFEP’s credibility andformal lines of authority.-Poor compliance and capacity weakness issues within spending agencies.10
-No comprehensive accounting of all government arrears has been conducted and equally, nospecific provisions have been made for arrears in the austerity budget and yet thesecontinue to accrue.-Lack of proper reconciliations of revenue and expenditures since the Bank of South Sudan(BSS) is running manual systems and no bank statements have been received since July 62011. This undermines the quality of fiscal reports generated from the IFMIS.-11
Area 2: ProcurementTwo core objectives govern reforms envisaged in this area. These are: to strengthen theprocurement process, so that it is functional, transparent and competitive and delivers value formoney; to address the weak institutional capacities within the Procurement Policy unit in the MoFEPand among procurement staff within spending agencies which pose significant challenges toefficiency in procurement.The table below summarizes the status of progress towards implementation of priority actions setout in this area:Status ofProgressPriority MeasureComplete On Track Off TrackMinor Off TrackMajor Identify direct support, recruit and strengthen institutional capacities forpublic procurement including reviewing institutional responsibilities anddeveloping relevant skills in MoFEP and spending agencies in line with thelawImplementing basic rules to increase transparency and integrity in theprocurement processUndertake consultation with key stakeholders on the draft procurement billand follow-up on the enactment of the legislationClarify processes and prepare regulations in order to implement the newprocurement legislationNotStartedSince the action plan was adopted progress has been made in the following areas:-A Procurement reform implementation committee has been established to oversee andcoordinate the implementation of reforms in this area.-The draft Procurement Bill has been finalized and presented to the Ministry of Justice forreview, with support from the MDTF and in consultation with various stakeholders. It isenvisaged that the Bill will be laid before the Assembly for enactment in the third quarter of2012. The law provides for a centralized system but allowing for gradual decentralization ofprocurement functions to spending agencies once base capacity requirements have beenestablished.-Development of supporting regulations commenced in the second quarter of 2012 and is oncourse for completion later in the year.-Standard tender documents, forms and guidelines have been prepared for entities tofacilitate implementation of the new procurement legislation.Other main achievements have been as follows:-Skills audit surveys have been issued to spending agencies and an audit report prepared toassess the existing skills gap.12
-Training modules based on interim regulations have been prepared for Procurement Officerswithin spending agencies in order to strengthen in-house capacity.-A seminar for private goods and service providers was conducted as part of efforts toimprove their understanding of, and adherence to procurement procedures.-Targeted training has been provided to the roads sector engineers to strengtheninstitutional capacities for public procurement.-Guidelines for establishment of procurement committees and units have been issued to allspending agencies and some follow up on their implementation conducted – by the end ofJune however, limited progress had been made on this front.-A Procurement Technical Assistant commenced work in November 2011 to support thestrengthening of procurement management capacity within MoFEP and spending agencies.The advisor supported the review of directorate functions and continues to provide on-thejob training to enable Procurement Officers develop relevant job competencies.The major challenges faced in implementation of the key Public procurement reforms have been:-Absence of an enabling Public Procurement law has meant that some procurement entitiescontinue to act without due regard to dictates of the provisional regulatory framework.-This is exacerbated by the limited capacity of staff in procurement entities to supportimplementation of existing policies and regulations, as well as MoFEP’s limited capacity toexercise procurement oversight responsibilities. It is crucial therefore that ongoingmonitoring and enforcement programs are intensified to ensure that agencies adhere toprocedures prescribed in the existing procurement legislation.-The absence of a computerized procurement information management system to interfacewith budget and accounts presents significant challenges to the establishment of propercontrol and accurate tracking of procurement activities and contractual obligations.Nonetheless, discussions with the Directorates of Treasury and Budget, are underway tooperationalize an existing module in Freebalance to strengthen control in procurementmanagement.-Current constraints in funding also limit the scale of training activities intended to enhanceprocurement management capacity.13
Area 3: Accounting and ReportingThe overarching objective of priority measures undertaken within this area is to produce timely andcomprehensive in-year and end-of-the-year fiscal reports/accounts to inform decision making andenhance transparency and accountability, including in the use of oil revenues.The table below summarizes the status of progress towards implementation of priority actions setout in this area:Status ofProgressPriority Measure Complete Undertake a comprehensive review of the chart of accounts to ensurecompliance with GFSM 2001 and meets the accountability and otherreporting requirements of all stakeholders for implementation in 2012/13Identify the sources of data for preparation of financial statements andconfigure the IFMIS to capture all such data and use them for preparing theannual financial statements.On TrackOff TrackMinorOff TrackMajor Provide monthly reports to spending agenciesDevelop and implement non-oil revenue collection and recording proceduresPrepare monthly reconciled statements of oil revenue receipts, their transferto various accounts (including stabilization and reserve fund accounts) andbalances in these accounts and revenue recorded in IFMISPrepare quarterly fiscal accounts that provide a comparison of outturn withbudget estimates of revenue and expenditure and include information onfinancing of deficit/surplus and work towards public dissemination of thesereports by beginning of 2012/13NotStartedIn the period since the action plan was adopted, progress has been made on the following fronts:-The Chart of Accounts was revised to ensure compliance with GFSM 2001, and otherbudgeting, control, reporting and accountability requirements of all government agenciesand various stakeholders. This was implemented during preparation of the 2012/13 budget.-Expenditures are currently recorded daily and reports are made available on a timely basisto facilitate improvements in oversight of the use of public resources and to ensureinformed decision making by the MoFEP and spending agencies’ leadership.-Equally at the state level, more training and systems support has been provided, improvingexpenditure recording and reporting.-The IFMIS has been fully configured to capture all financial data necessary for preparingannual financial statements and to prepare quarterly fiscal accounts that provide acomparison of outturn with budget estimates of revenue and expenditure and includeinformation on financing of deficit/surplus.-Draft non-oil revenue collection and recording procedures have been developed andcirculated to all State Ministries of Finance to support improvements in non-oil revenue14
collection. However, comprehensive revenue reporting is yet to be achieved as a proportionof collections is used to finance expenditures of some of the collection agencies.On-going challenges in implementing envisaged reforms in this area are:-Whilst many the foundations for quarterly fiscal reporting have been laid on the MoFEP side,the lack of bank statements from the Bank of South Sudan (BSS), means MoFEP has beenunable to undertake bank reconciliations, which limits the quality of financial data.-The shutdown of oil production and lack of bank statements has meant that preparation ofmonthly reconciled statements of oil revenue receipts has not been possible.15
Area 4: Macroeconomic Management and Sustainable Use of Oil RevenueReforms in this area were intended to strengthen macro analytical capacity in MoFEP, increase thevisibility and engagement of the macro function within the budg
Ministry of Finance and Economic Planning (MoFEP) developed a strategic Ministry Action Plan during its Senior Management retreat held in October 2011. This action plan sought to address key challenges faced by the Ministry in strengthening public financial management (PFM) and economic management within South Sudan. .
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South Sudan: Mapping the Supply Chain for Solar Lighting Products 10 2. COUNTRY CONTEXT3 2.1 ECONOMY AND KEY DEVELOPMENT INDICATORS The Republic of South Sudan gained independence on 9 July 2011. It is a post-conflict state, which is embarking on the process of building its government and economy to foster growth and -) 3
ME – Ministry of Economics MES – Ministry of Education and Science MEPRD – Ministry of Environmental Protection and Regional Development MF – Ministry of Finance MH – Ministry of Health MI – Ministry of the Interior MJ – Ministry of Justice MRDLG – Ministry of Regional Development and Local Government MT – Ministry of Transport
Sudan in the global economy 9 Issues of regional integration 10 Sudan's assets 11 . 1 Growth Identification and Facilitation Framework at a glance 5 3.1 Sanctions, war, trade, and macroeconomic conditions 23 . 8.1 Combating desertification through public-private partnerships: The Kubuqi business model 78 Figures 1.1 Sudan, East Africa .
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DEPARTMENT OF BOTANY Telangana University Dichpally, Nizamabad -503322 (A State University Established under the Act No. 28 of 2006, A.P. Recognized by UGC under 2(f) and 12 (B) of UGC Act 1956)