Tuvalu: Capacity Development for Public Financial Management

Sovereign Project | 41180-012


The objective of the TA is (i) close and ongoing management of the TA with significant in-country presence; (ii) a 3-year implementation period to allow a focus on long-term capacity building; (iii) development partner coordination mechanisms maintained throughout from TA design, particularly with the Pacific Financial Assistance Centre and the AusAID-funded budget advisor.

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Project Name Capacity Development for Public Financial Management
Project Number 41180-012
Country Tuvalu
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7161-TUV: Capacity Development for Public Financial Management
Technical Assistance Special Fund US$ 800,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector

Public sector management - Public expenditure and fiscal management

Gender Equity and Mainstreaming
Description The objective of the TA is (i) close and ongoing management of the TA with significant in-country presence; (ii) a 3-year implementation period to allow a focus on long-term capacity building; (iii) development partner coordination mechanisms maintained throughout from TA design, particularly with the Pacific Financial Assistance Centre and the AusAID-funded budget advisor.
Project Rationale and Linkage to Country/Regional Strategy The Tuvalu 2008-2010 Country Partnership Strategy (CPS) is underpinned by the 2006 joint development strategy between ADB and the Australian Agency for International Development (AusAID) and the subsequent Performance Benchmark Indicators (PBIs) formulated as a joint effort between the Government, ADB, AusAID and the New Zealand International Aid and Development Agency (NZAID) to promote improved public financial management. Tuvalu's national plan (Te Kakeega II) denotes the paramount goals of sustainable budgets and the effective use of resources to achieve public policy priorities, attainment of education and health objectives. The Government of Tuvalu (GOT) recognizes the need for correction in fiscal management and has adopted, in close coordination and consultation with the Board of the Tuvalu Trust Fund (TTF) and the development partners, a road map for greater fiscal control based on the PBIs. The PBIs adopted by the Government and agreed with ADB, AusAID, and NZAID are aimed at ensuring (i) prudent recurrent fiscal expenditures; (ii) maintenance of fiscal reserves; (iii) prudent debt management; (iv) prioritized basic education; and, (iv) improved primary health care and access. Each indicator has specific and measurable targets, which are regularly updated and linked to the objectives of the Te Kakeega II. In accordance with the CPS ADB has aligned its commitment to Te Kakeega II through a focus on improved public expenditure and financial management.
Impact The intended impact of the TA is sustained economic growth and fiscal stability, as prioritized in Te Kakeega II.
Project Outcome
Description of Outcome The expected outcome is improved Government fiscal planning and management capacity. The achievement of the expected outcome will be reflected in the Government's capacity to achieve the policy, legislative, and institutional changes to which it has committed under the proposed grant for Improved Financial Management Program.
Progress Toward Outcome The Public Enterprise Act drafted by the TA has been enacted and is in force. The Act gives power to the Public Enterprise Review Monitoing Unit to monitor the performance of all the PEs. Under the Act, all PEs are required to submit corporate plans to the Ministry of Finance and Economic Planning. The Act also empowered the Auditor General's Office in tuvalu to undertake the auditing of PEs acconts. The most important feature of the Act is the explicit focus on running PEs as commercial entities. Under the Act, Public Servants can no longer be appointed to the board of directors.
Implementation Progress
Description of Project Outputs

Component 1:

Effective management of public enterprise reforms

Component 2:

Strengthened and coherent oversight of fiscal performance and public enterprise performance

Component 3:

Strengthened management capacity in public enterprises

Component 4:

Diagnostic analysis report

Strengthen capacity in MFEP

Status of Implementation Progress (Outputs, Activities, and Issues)

The government and management of the PEs found the TA to be very helpful and relevant. With the exception of appointing new board of directors as specified in the PE Act (currently ongoing to be completed by end of October 2011), the TA has successfully achieved the following:

Output 1 - Effective management of PE reforms: (i) The Public Enterprise Review and Monitoring Unit (PERMU) is established and operating in MFED; (ii) Conducted on the job trainings for the PERMU on its role under the PE Act and on analysis of corporate plans and financial statements of PEs; (iii) Drafted a management policy and approach for displaced workers.

Output 2 - Strengthened and coherent oversight of fiscal performance and PE performance: (i) Approved strategic policy on PE governance reform; (ii) Approved PE (Performance and Accountability) Act; (iii) Completed scoping studies on the proposed merger of the two banks (National Development Bank of Tuvalu and the National Bank of Tuvalu (NBT), and privatization of the Philatelic Bureau, Travel Office and Post Office; (iv) Completed a tariff review of the Tuvalu Electricity Corporation (TEC) and the Tuvalu Telecommunications Corporation (TTC); (v)completed scoping studies on embedded businesses within the Public Works Department

Output 3 - Strengthened management capacity in PE: (i) Support the development of PE corporate plans; (ii) Conducted various workshops for PE management, ministers and potential directors on roles under the PE Act, and on reading and understanding financial reports; (iii) Trained PE staff on the use of the Mind Your Own Business (MYOB) accounting software; (iv) Approval of the Banking Commission Act; (v) Developed job description and performance appraisal methodology and; (vi)Establishment of a liquidity and debt collection policy for NBT

Output 4 - Strengthened capacity in MFED: (i) Completed the diagnostic analysis of the capacity within MFED; and (ii) Completed on-the job training on debt management, analysis of financial statement for MFED officials and workshop on MFED's role under the PE Act.

The TA is expected to be close on Decemeber 2011 as original planned.

Geographical Location Tuvalu
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design

The TA takes both a top-down and a bottom-up approach. It will develop an MTFF and create the policy and legislative environment for improving the performance of public enterprises. It will simultaneously work with enterprises to put in place management and planning tools to help them understand and improve their performance and enable the Government and its enterprises to monitor and manage performance. The TA will provide capacity building and support through the four components.

Component 1: Management Services

The TA will be supported by augmented management services from the consultant firm, providing ongoing management, liaison, and mentoring, as well as the coordination of inputs, to ensure that inputs are directed toward the agreed objectives rather than fragmented. The expected output will be effective capacity building and management of public enterprise reforms. The main activities will be to (i) support the establishment of a mechanism through which the Government can better manage enterprise monitoring, including a steering committee and a public enterprise unit; (ii) develop an overall strategy and implementation plan for the TA; (iii) coordinate all TA inputs including coordination with other externally-funded activities; (iv) help the Government review lessons in enterprise ownership and management and facilitate their application; (vi) promote positive and productive relationships with the Government, enterprises, development partners, and ADB; and (vii) provide quarterly and annual monitoring of TA progress and associated reporting.

Component 2: Strengthening Fiscal and Enterprise Management

This component will provide stronger and more coherent oversight of fiscal and public enterprise performance. The main activities will be to (i) help MFEP develop and implement an MTFF; (ii) provide training for staff of the public enterprise unit on its role; (iii) develop and implement a strategic policy on public enterprise governance reform, outlining the Government's position on enterprise ownership and options for divestment; (iv) prepare the Public Corporations Act as overarching legislation that sets out Government monitoring requirements and management and reporting requirements for all enterprises; (v) develop a regulatory framework for monitoring enterprises and a legal framework for both establishing and divesting enterprises; (vi) coordinate with the Pacific Financial Technical Advisory Center (PFTAC) regarding assistance to develop a financial institutions bill; and (vii) assess the tariffs required for the financial sustainability of the Tuvalu Electricity Corporation (TEC) and the Tuvalu Telecommunications Corporation (TTC) and provide options for how the financial requirements of these public enterprises can be balanced with the community services required of them by the Government.

Component 3: Results-Based Planning and Management Assistance for Enterprise Performance Improvement

The output of this component will be strengthened management capacity in public enterprises. The main activities will be to (i) work with general managers and boards of directors to develop and implement a corporate plan and an action plan for each enterprise, based on the Government's overarching public enterprise strategic policy and plan, and to help them meet the requirements of the Public Corporations Act; (ii) improve accounting and management by introducing basic accounting skills and disciplines to allow standardized and timely accounts to be submitted to boards and then to the public enterprise unit; (iii) provide assistance to support specific National Bank of Tuvalu policy and practice changes to improve performance; (iv) develop job descriptions for use in all enterprises, together with a performance appraisal format; and (v) support the Government's assessment of the private sector development potential in Tuvalu as a basis for decisions on appropriate private sector involvement in public enterprises.

Component 4: Capacity Building

This component will strengthen the capacity in MFEP and public enterprises to provide sustainable fiscal management, planning and monitoring, and public enterprise monitoring and management. The main activities are (i) a diagnostic analysis of MFEP capacity, building on the results of the 2007 PEFA review, and developing a framework to measure planned interventions to remedy budgeting and financial management problems (to be financed by the Government of Australia); (ii) formal training, informal on-the-job development and learning by doing, and mentoring for MFEP, the public enterprise unit, boards, and general managers; and (iii) raising public and stakeholder awareness undertaken in regard to specific issues.

During Project Implementation

The TA will finance 25.5 person-months of intermittent international consulting and 8 person-months of national. ADB will recruit a firm based on a simplified technical proposal under the quality- and cost-based selection process, using 80:20 weighting for quality and cost. The consultant team will have a (i) team leader and advisor on institutional strengthening and public enterprise development (international, 12 person-months); (ii) specialist in developing public financial management capacity (international, 2.5 person-months); (iii) public financial management advisor (international, 8 person-months), (iv) planning and human resource development advisor (international, 3 person-months), and (v) project facilitator (national, 8 person-months). International advisors will be very senior technical specialists in their field, with extensive experience in small island states, as well as skilled trainers committed to capacity building. The outline terms of reference for consultants are in Appendix 4.

TA implementation will be supported with augmented management services from a project manager working approximately 3 person-months and provided by the firm for a lump sum. The management and administrative input of the project manager will be provided intermittently but according to an agreed plan throughout TA implementation. The project manager will be responsible for developing the detailed terms of reference for the three long-term advisors and the national consultant. The consultants will be engaged in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time).

The TA will be implemented intermittently over 38 months starting in December 2008 and ending in December 2011. TA implementation will commence with a diagnostic analysis of MFEP capacity. The implementation of remaining activities will commence with an inception report prepared for ADB and the Government by the team leader within 4 weeks of the start of field activities, which will include an overall work plan for the full period and a detailed work plan for the first year. Brief quarterly progress reports will be prepared in consultation with the public enterprise unit and provided to ADB. Semiannual progress reports will be submitted throughout the TA and a draft final report submitted by 30 October 2011. The final report will be submitted within a month of the incorporation of ADB and Government comments on the draft final report. The outcomes of the diagnostic analysis will be the subject of a separate report. ADB will help the Government share all reports with other development partners.

Business Opportunities
Consulting Services The technical assistance will finance the services of a team of five consultants comprising: (i) project manager (international, lump sum, intermittent), (ii) team leader and advisor on institutional strengthening and public enterpise development (international; 12 person-months, intermittent), (iii) specialist in developing public financial management capacity (international, 2.5 person-months, intermittent), (iv) planning and human resource development advisor (international, 3 person-months, intermittent), and (v) public financial management advisor (international, 8 person-months, intermittent). There will be a project manager, who may be the team leader or a different person. The team will be engaged through a firm based on a simplified technical proposal under the quality- and cost-based selection process using, 80:20 weighting for quality and cost. This will be in accordance with ADB's Guidelines on the Use of Consultants (February 2007 as amended from time to time).
Procurement PDP Pty Australia Limited.
Responsible ADB Officer Malie Lototele
Responsible ADB Department Pacific Department
Responsible ADB Division Pacific Subregional Office in Suva, Fiji
Executing Agencies
Ministry of Finance and Economic Planning
Mr Minute Taupo
Min. of Finance and Economic Planning P O Box 33 Funafuti Tuvalu
Concept Clearance 15 Aug 2008
Fact Finding 01 Jul 2008 to 08 Jul 2008
Approval 03 Nov 2008
Last Review Mission -
PDS Creation Date 05 May 2008
Last PDS Update 14 Nov 2011

TA 7161-TUV

Approval Signing Date Effectivity Date Closing
Original Revised Actual
03 Nov 2008 03 Dec 2008 03 Dec 2008 31 Dec 2011 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
800,000.00 0.00 125,000.00 0.00 0.00 0.00 925,000.00 03 Nov 2008 850,533.94

Safeguard Documents

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Evaluation Documents

See also: Independent Evaluation

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