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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

Supporting country institution building: reform successes and monitoring progress

Odo Tevi

Governor

Reserve Bank of Vanuatu

brief history
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
public financial reform
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
cont d
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
cont d5
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.
cont d6
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
cont d7
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
cont d8
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
why successful
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”
cont d10
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
conclusion
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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