Kiribati: Strengthened Public Financial Management

Sovereign Project | 43418-012

Summary

The Government of Kiribati expressed a need for technical assistance (TA) on public financial management (PFM) in 2010 to address priority areas of weaknesses identified in the Public Expenditure and Financial Accountability (PEFA) assessment. Based on the assessment, the Government with assistance from the European Union (EU), put together a draft Public Financial Management Plan (PFM Plan) to provide guidance on reform activities in a coherent and coordinated manner. The PFM plan indicated three priority areas: (i) improving accounting practices; (ii) strengthening revenue management and policy and; (iii) building capacity within the Ministry of Finance and Economic Development (MFED). Discussion between the Asian Development Bank (ADB), government and development partners determined a focus by ADB on improving accounting practices through an integrated capacity building program would complement the ongoing ADB TA efforts in assisting the Government of Kiribati.

Latest Project Documents

Title Document Date
Strengthened Public Financial Management Dec 2011

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Project Name Strengthened Public Financial Management
Project Number 43418-012
Country Kiribati
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7995-KIR: Strengthened Public Financial Management
Technical Assistance Special Fund US$ 800,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Public sector management - Public expenditure and fiscal management
Gender Equity and Mainstreaming No gender elements
Description

The Government of Kiribati expressed a need for technical assistance (TA) on public financial management (PFM) in 2010 to address priority areas of weaknesses identified in the Public Expenditure and Financial Accountability (PEFA) assessment. Based on the assessment, the Government with assistance from the European Union (EU), put together a draft Public Financial Management Plan (PFM Plan) to provide guidance on reform activities in a coherent and coordinated manner. The PFM plan indicated three priority areas: (i) improving accounting practices; (ii) strengthening revenue management and policy and; (iii) building capacity within the Ministry of Finance and Economic Development (MFED). Discussion between the Asian Development Bank (ADB), government and development partners determined a focus by ADB on improving accounting practices through an integrated capacity building program would complement the ongoing ADB TA efforts in assisting the Government of Kiribati.

A TA fact finding mission visited Kiribati from 24 May-2 June 2011. It reached an understanding in discussions with the Government and other stakeholders on the impact, outcome, outputs, implementation arrangements, cost, financing arrangements, and terms of reference for consulting services. The TA design and monitoring framework is in Appendix 1.

Project Rationale and Linkage to Country/Regional Strategy

The TA supports the Government's strategies to demonstrate commitment to fiscal prudence and refrain from unnecessary over-spending, and strengthen public financial management as set out in the Kiribati National Development Plan 2008-2011 through three outputs:

Output 1: An effective and more efficient MFED. Based on the capacity assessment of MFED carried out under the ongoing TA7166, this output supports the formulation and the implementation of an institutional strengthening program in MFED. The program will consider the current structure of MFED, official's job descriptions and on-the-job-training requirements in light of MFED's role in supporting PFM. The program will focus on strengthening the Budget Division within the National Economic and Planning Office (NEPO) and the Accounting Division. Recognizing the risk of staff turnover, the program will also identify a small team from NEPO and the Accounting Division which will be trained on the core functions of the two departments. Having such a team in NEPO and the Accounting Division will ensure sustainability of capacity building efforts and continuity within MFED. TA funds will focus primarily on building capacity on the job with direct assistance from the TA consultants.

Output 2: Strengthened budget management, monitoring and evaluation. The focus will be on strengthening financial reporting between line ministries and MFED. The TA consultants will work closely with the Accounting Division, the Budget Division and the Accountants in the line Ministries to develop tools and procedures to improving financial reporting. To improve monitoring and evaluation of the budget performance - commitment recording will be introduced, and the fund control features in the Attache' system will be developed to prevent expenditures and commitments from exceeding appropriations. The TA team will work closely with the Revenue and Expenditure committees which the Government has set up to monitor and evaluate budget performance. This output will also ensure better linkages between the MTFF and the new national development strategy that is currently being developed by the Government.

Output 3: Strengthened capacity in the Accounting Division. Improving the capacity of staff in the accounting department in MFED is vital to support ongoing and future PFM reform programs. This will focus on the implementation of a training program for staff from the Accounting Department, accountants from line ministries and staff from the auditor General's office on the Attache' system basic functions. A more comprehensive training on the Attache' advance functions will be conducted for a core group from the accounting department (which has already been identified) to enable them to train staff. A capacity building program will also be implemented to ensure that staff have the capacity to resolve issues highlighted by the Auditor General in his previous reports.

Impact Strengthened fiscal discipline and strategic allocation of resources in Kiribati national budget
Project Outcome
Description of Outcome Enhance budget management and monitoring processes in MFED
Progress Toward Outcome The TA has restructured NEPO along sector rather than functional lines, this will improve budget management and monitoring. The TA has also trained Accounting Section staff on the use of the Attache software which had improved the monitoring of the budget.
Implementation Progress
Description of Project Outputs

An effective and more efficient NEPO

Strengthened budget management, monitoring and evaluation within the Budget Division

Strengthened capacity in Accounting Department

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

The TA has made good progress and achieved the following:

(i) In collaboration with the Pacific Financial and Technical Advisory Centre (PFTAC) and the government, the TA has initiated the restructuring of the National Economic and Planning Office (NEPO) along sector rather than functional lines. Under the new structure each NEPO staff member works across all functions but within a sector. This provides each line ministry with a single point of contact within NEPO for all matters pertaining to planning, budgeting and donor coordination;

(ii) Stand-alone Attach software has been installed in all Ministries to enable staff to monitor commitment and expenditure control. Staff have been trained in the use of the software to enable them to detect errors, clean the data and run reports. This will allow NEPO staff to better monitor the budget. The chart of accounts (COA) has been modified and was used for both the 2014 recurrent and development budgets. This makes possible, for the first time, meaningful analysis of total central government expenditure (recurrent plus development).

(iii) A training program is being implemented including development of animated computer training materials with i-Kiribati voice-overs, and training of key Attach users.

At the request of the Government, the TA was extended unti 31 March 2015 to allow the completion of pending tasks.

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

This output will focus on ensuring that staff can use the Attache' functionalities on fund control (procedures to prevent expenditures or commitments from exceeding appropriations), commitment control, automated reconciliation, automated check writing (the checks would be printed by the system to ensure that amounts, recipients, and dates correspond to information in the Attache' system), produce regular reports arraying data according to GFS reporting categories and such other reports as may be required for the preparation of financial statements, producing and storing electronic copies of transaction documentation for each transaction in Attache'; and redesigning Attache' screens for greater similarity and ease of use so that users see clearly how forms and screens relate.

A number of assumptions are important to the success of the TA. Key is government's sustained commitment to PFM reforms. The greatest risks to the TA's success are that counterpart staff are not provided or key operational staff are not retained. To mitigate this, the TA will train a larger pool of staff within MFED instead of focusing on smaller groups. A weakening of political support would place TA outcomes at risk. The TA success is also based on the assumption that Government will improve IT connectivity between MFED and line Ministries. However, if connectivity is not resolved the TA will ensure that the Attache' is configured to allow for offline inputting of financial transactions. This is already part of the Attache Specialist terms of reference.

During Project Implementation

MFED will be the Executing Agency, while implementing agencies will include MFED, line Ministries and the Auditor General's Office. Under the EA, a TA focal point will be appointed, who will oversee the activities of, and maintain information exchange with, the consultant team. The consultants will, with the TA focal point, also liaise with relevant development partner programs/projects, so as to promote coordination and complementarity in activities. Government is planning to form the PFM Plan steering committee (comprising of representatives from the Budget department, Accounting Department, and the National Economic and Planning office chaired by the Secretary for MFED) to help coordinate PFM related activities. To avoid duplications, the TA will use this committee to oversee the implementation of the TA. Training, Seminar and conferences will be administered by the TA team.

The TA will be implemented from 1 April 2012 to 30 April 2014 and is expected to finance 16 person-months of intermittent international consulting and 7 person-months of national consulting services. The consultant team will have a (i) team leader and Treasury Specialist (international, 10 person-months); (ii) a Budget Specialist (international, 3 person-months), (iii) an Attach system specialist (International, 3 person-months), and (iv) local facilitator (national, 7 person-months). International consultants will be senior technical specialists in their field with extensive experience in small island states. The Consultants will be selected and engaged through a firm based on a simplified technical proposals under the quality-and-cost-based selection process, using a 90:10 weighting for quality cost. The consultants will be engaged according to ADB Guidelines on the Use of Consultants (2010, as amended from time to time). Appendix 3 gives the outline terms of reference. Proceeds of the TA will be disbursed in accordance with Technical Assistance Handbook (2010 as amended from time to time).

The team leader will produce a concise inception report outlining the work program and milestones for the duration of the CDTA, and a final report summarizing the achievements, issues, lessons learned, and next steps. Throughout the CDTA, the team leader will submit (by e-mail) brief monthly progress reports summarizing TA activities, progress, issues, and constraints. Team members will produce inputs (reports) on their respective activities for the team leader's progress and final reports. The team leader's final report will be submitted in draft form at least 5 weeks prior to the end of the assignment, and the final report within 2 weeks of receipt of comments from the Government and ADB.

Progress of the TA will be monitored using intended outcomes and outputs described in the design and monitoring framework attached as Appendix 1. ADB will assist Government in sharing all reports with other development partners. This will be disseminated through round table meetings, radio interviews and through the ADB website.

Business Opportunities
Consulting Services

The TA will be implemented intermittently by a team of three international consultants for a total of 21 person-months and one national consultant for 7 person-months. The international consultants team will comprise a treasury specialist and team leader (10 person-months); a budget specialist (8 person-months); and an Attache trainer (3 person-months). These will be joined by a local facilitation specialist (national, 7 person-months intermittent).

An inception report will be prepared for ADB and the Government by the team leader within 8 weeks of the start of field activities. It will include the capacity development roadmap. Half-yearly progress reports will be submitted throughout the TA, and a draft final report completed by December 2013. The final report is to be submitted within a month of the incorporation of ADB comments on the draft final report.

Procurement Consultant services will support the three components of this technical assistance (TA). The team leader (also a treasury specialist) will supervise all components of TA and lead the work on output 2 and 3. It is expected that the consultants will collaborate closely to keep the implementation of the TA on track and in line with its scope and objectives.
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 DevelopmentMr Atanteora Beiatau, Secretary of Finance and Economic Developmentps@mfep.gov.kiP.O. Box 67 Bairiki, Tarawa Kiribati
Timetable
Concept Clearance 20 Jul 2011
Fact Finding 24 May 2011 to 02 Jun 2011
MRM -
Approval 14 Dec 2011
Last Review Mission -
Last PDS Update 25 Feb 2015

TA 7995-KIR

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Dec 2011 09 Jan 2012 09 Jan 2012 30 Apr 2014 31 Mar 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
800,000.00 0.00 0.00 0.00 0.00 0.00 800,000.00 14 Dec 2011 1,496,281.01
Title Document Type Document Date
Strengthened Public Financial Management Technical Assistance Reports Dec 2011

Safeguard Documents

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Evaluation Documents

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