Oil Revenue Management Workshop. By Francisco Carneiro, The World Bank Luanda, 16-19 de Maio de 2006. Quasi-Fiscal Expenditures and Compensation Mechanisms. Objectives of the Presentation. Brief description of the public finance management system in Angola.
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By Francisco Carneiro, The World Bank
Luanda, 16-19 de Maio de 2006
Quasi-Fiscal Expenditures and Compensation Mechanisms
Brief description of the public finance management system in Angola.
Highlight what has been done and what remains to be done to strengthen it.
1. Fiscal Performance
2. Public Expenditure Management
3. Financial Accountability
4. Relation between Planning, Policies, and Budget
5. Credibility and Transparency in the Management of Public Funds
1. Legal and institutional frameworks
2. Budget preparation
3. Budget execution and monitoring
4. Public Accounting
5. Internal control
6. External fiscal control
7. Legislative monitoringMain Topics Covered in the PEMFAR
In 2002, quasi-fiscal deficit of 6% of GDP and extra-budgetary expenditures of 14,7% of GDP.
INSUFFICENT BUDGETARY FUNDING
EXTRA-BUDGETARY EXPENDITURES; QUASI-FISCAL DEFICITS; DISCREPANCIES
Led by Sonangol.
Transactions outside of SIGFE
Other quasi-fiscal expenditures
Responsible for some 11% of total expenditures in 2002.
Led by DNT.
Transactions registered in the SIGFE.
Tax Retentions, Profit Oil
Informal mechanisms of compensation (MINFIN e Sonangol)
Blurs transparency and accountability channels
Weakens the budgetary process
Creates uncertainty about the actual fiscal stance
Situation in 2004
·Co-existence of conventional and unconventional public spending system.
·Compensation mechanism between Sonangol and MINFIN.
· Growing fiduciary risk and weak supervision.
·BNA not acting as monetary authority in control of foreign exchange
· Ongoing reforms in Sonangol, MINFIN, and BNA.
·Identify expedient mechanisms.
·Eliminate fuel price subsidies.
·Identify Sonangol’s quasi-fiscal activities and transfer them to appropriate institutions.
·Implement a debt management strategy, reduce the need for oil-backed loans.
·Capacity building in MINFIN, MINPET, BNA.
·Respect fully the Lei Quadro do Orçamento.
·Respect fully the Lei Quadro do Banco Central.
· Transfer Sonangol’s concessionaire functions to MINPET.
Strengthen the conventional system
Expand and strengthen the credibility and the effectiveness of the budget
Respect the Lei Quadro do Orçamento
Gradual elimination of the non-conventional system
Reduce Sonangol’s treasury-like operations
Transfer these activities to MINFIN
Strengthen the monitoring role of the Tribunal of AccountsThe PEMFAR Recommendations to Restore “Normality”
Establish clear reporting mechanisms among Sonangol, MINFIN and BNA
Strengthen internal control mechanisms (MINFIN e Sonangol) to ensure that treasury-like operations respect fiscal policy objectives and acceptal public finance practices
Improve accounting procedures to allow DNC to receive the necessary information to prepare quarterly budget execution reports
Public Accounting and Monitoring
Public Accounting and Monitoring
Deal with Conflicts of Interest
Conflicts of interest
Decisions about acquisitions (“Local Content”)
Ring-fencing? Transfer to Ministry of Petroleum?
Clarify functions as a state enterprise
Focus on core activities
Internal control and financial accountability