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.