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Supporting country institution building: reform successes and monitoring progress . Odo Tevi Governor Reserve Bank of Vanuatu. Brief History. Vanuatu gained independence in 1980 1991 onwards divisions within the ruling party – party divided – instability era – public financial mismanagement

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Supporting country institution building: reform successes and monitoring progress

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Supporting country institution building reform successes and monitoring progress l.jpg

Supporting country institution building: reform successes and monitoring progress

Odo Tevi

Governor

Reserve Bank of Vanuatu


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Brief History

  • Vanuatu gained independence in 1980

  • 1991 onwards divisions within the ruling party – party divided – instability era – public financial mismanagement

  • Economy is small and economic growth was a challenge

  • Macroeconomic stability achieved


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Public Financial Reform

  • 1997 adopted comprehensive reforms –focus also on public financial management

  • 1998 National Planning Office was moved to Ministry of Finance – integrate planning and budget

  • Budget approach changed from line budget to Program budget – all ministries budget based on programs and activities


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Cont’d

  • PFEM Act 1998 – i) states Gov’t responsibility; 2) accountability arrangements & compliance; 3) financial & economic reports

  • Treasury and Budget Unit set up – coordinate the design and execution of the budget process - first time a non-political control had been set up on Gov’t finances

  • Ministerial Budget Committee set up – advise the COM on the national budget


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Cont’d

  • MFEM Institutional Project – supported by AusAID – Dept. Finance

  • Team Leader & 3 advisors – budget, accounting and FMIS

  • Local counterparts provided by Gov’t

  • GFS drawn up according to IMF standards & Gov’t accounts reconciled.


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Cont’d

  • Macroeconomic frame work for budget established

  • A new Financial Management Information System established

  • Skills transfer were successful to local counterparts

  • Budget deficit reduced and last 2 years surpluses


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Cont’d

  • IMF (PFTAC) – review fiscal accounts and confirmed compliance with international standards

  • PEFA assessments – Generally good esp. in relation to MFEM Strengthening Project Areas. i) credibility of the budget (aggregate level) & expenditure composition good; ii) policy based budget – clear budget calendar; executive and Parliament involved but need to develop multi-year perspective on financial planning


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Cont’d

  • Iv) predictability and control in budget generally good v) Accounting, recording and recording good – financial accounts prepared on accrual basis and in accordance with international standards and vi) external scrutiny and audit needs to be improved

  • PEFA done every years and progress against used for conditions for future aid support


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Why Successful?

  • Reforms implemented in other areas

  • Experts have developing country experience quickly and ability to adapt to local culture

  • Strong political support and leadership

  • Continuous independent review of the Project – esp. whether it achieve its milestones

  • Strong technical local counterparts – transfer skills easy and interaction with counterparts is good

  • Innovative use of “learning agreements”


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Cont’d

  • Long-term vs. short-term – cannot achieve strengthening overnight

  • Establishing a good relationship with the central bank

  • Coordination with donors is good but donor harmonisation still a challenge


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Conclusion

  • Economy performing well – per capita income rising

  • Turn around in public financial management – budget surpluses

  • MFEM Strengthening Project successful but donor harmonisation still a challenge

  • PEFA – Recommendations needs to be implmented

  • Key - understanding local culture, building good relationships and having a strong leadership support


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