Nauru: Public Financial Management Reform Program
A strong public financial management system is crucial to ensuring that Nauru will be able to meet its fiscal needs, given its current capacity and resources to generate revenues. At appraisal, the country had narrow fiscal space, with tax-based revenues mainly depending on a small economic base and with no legislation authorizing the taxation of businesses or households. Consequently, with the limited financial resources at hand, the country is highly dependent on external assistance to meet its essential needs and reforms. The country’s public financial management system system was weak and had major shortcomings that included poor internal controls, inadequate regulatory framework for procurements, and unsustainable debt levels.
To address these shortcomings, the government formulated a public financial management action plan, prepared under an Asian Development Bank technical assistance to reform the system. Subsequently, ADB approved the Public Financial Management Reform Program to support the government’s effort in strengthening its public financial management system and to improve service delivery. The program was designed to assist the government improve its fiscal performance, strengthen the government and the performance of key state-owned enterprises, and bolster the legal and policy framework for equitable access to social services. Reforms under the program were envisaged to improve the efficiency of public and financial management, leading to better delivery of services particularly health and education services, which would result in better development outcomes in Nauru.
This report validates the completion report’s assessment of the program. IED overall assessment: Successful.