ICGFM 27th Annual International Training Conference Miami, Florida May, 2013

I.

II.
III.

IV. V.

Overview Inter-American Development Bank (IDB) Assessment of PFM in the region IFMIS key component of PFM modernization in LAC IDB support Conclusions

I.

Overview Inter-American Development Bank (IDB)

Established in 1959
The leading source of development financing for Latin America and the Caribbean

48 member countries, including 26 LAC borrowing members, who have a majority ownership of the IDB:
Lending and grants in 2012:$11.4 billion

Non regional 49.99%: - USA 30%, Japan 5%, Canada 4% LAC 50.01%: Argentina 10.9%, Brazil 10.9%, Mexico 7%

Source: www.iadb.org/aboutus

The IDB has the following main areas of action:

Reducing poverty and social inequalities; Addressing the needs of small and vulnerable countries; Fostering development through the private sector; Addressing climate change, renewable energy and environmental sustainability; and Promoting regional cooperation and integration.

Source: www.iadb.org/aboutus

Institutional strategy (2010 - 2015) based in 4 sector priorities: 1. Social policy for equity and productivity; 2. Institutions for growth and social welfare; 3. Competitive regional and global international integration; and 4. Protection of the environment.

Source: www.iadb.org/aboutus

II.

Assessment of PFM in the region

ME
BL JA GU HO ES NI CR PN

BH

HA DR

BA TT

26 IDB Borrowing Member Countries

VE
CO

85% of IDB countries have completed a PEFA assessment

GY

SU

EC PE BR BO CH PR

20 Countries Completed* +2 Countries In Process

AR

UR

5 Countries - National PEFAs planned for 2013 and 2014

* 10 countries have had repeat PEFA assessments

Source: PEFA Secretariat, November 19, 2012

1. Credibilidad 1. Budget del presupuesto Credibility

4

7. External 7. Escrutinio scrutiny and externo y auditora audit

3.5
3 2.5 2 1.5 1 0.5 0

2. Cobertura y 2. Comprehensiveness transparencia and transparency

6. 6. Accounting, Contabilidad, recording and registro y reportes reporting

3. Presupuesto 3. Policy basado en based polticas budgeting

Nmina, 5.5. Payroll, procurement compras pblicas and y internal controles controls internos
ECA LAC SAS

4. Predictabilidad 4. Predictability

and controls y control en la in budget ejecucin de execution presupuesto

SSA

Source: Analysis carried out by Carlos Pimenta IDB, with information from PEFA Secretariat, 2012

PI-1Aggregate Resultados del gasto PI-1 agregado en comparacin expenditure out-turn compared to original con el presupuesto original approved budget aprobado
4
3.5 3 2.5 2

PI-2 Desviaciones del gasto PI-2 Composition of presupuestario en expenditure outcomparacin con turn compared to el original approved presupuesto original budget aprobado

PI-5 Clasificacinof del PI-5 Classification presupuesto the budget

1.5 1 0.5 0

PI-4 Stock and PI-4 Saldo y seguimiento de monitoring of los atrasos de pagos de expenditure payment arrears gastos
ECA LAC SAS

PI-3 Aggregate PI-3 Desviaciones de los

revenue Ingresos out-turn Totales en compared tocon el comparacin original approved presupuesto original budget
aprobado

SSA

Source: Analysis carried out by Carlos Pimenta IDB, with information from PEFA Secretariat, 2012

Indicators

Dimensiones

1. Credibility of the budget

PI-1 PI-2 PI-3 PI - 4 PI-5 PI-6 PI-7 PI-8 PI-9 PI-10 PI-11 PI-12 PI-13 PI-14 PI-15 PI-16 PI-17 PI-18 PI-19 PI-20 PI-21 PI-22 PI-23 PI-24 PI-25 PI-26 PI-27 PI-28 Res ultados del ga s to a grega do en compa ra cin con el pres upues to origina l a proba do Des via ciones del ga s to pres upues tario en compa ra cin con el pres upues to origina l a proba do Des via ciones de los ingres os totales en compa ra cin con el pres upues to origina l a proba do Sa ldo y s eguimiento de los a tra s os de pagos de ga s tos Cla s ifica cin del pres upues to

BE BO BR CO CR DR EL GU HA HO JA PE PR TT 2009 2009 2009 2009 2010 2012 2009 2010 2012 2009 2007 2009 2008 2008 2.8 2.8 3.8 2.9 3.6 2.6 2.8 2.6 1.9 3.6 2.8 3.0 2.9 2.9 3.0 4.0 4.0 1.0 2.0 1.5 2.0 1.5 1.0 1.0 2.0 2.3 3.0 1.5 1.9 2.5 2.0 1.5 1.0 2.5 1.3 1.5 1.0 1.5 1.0 1.5 2.0 1.0 1.5 1.5 1.3 1.0 1.5 1.5 1.8 3.0 2.0 4.0 1.0 4.0 2.7 2.0 4.0 2.3 2.0 3.0 1.8 1.7 2.0 3.3 3.3 3.3 3.3 2.7 3.7 2.5 3.0 2.7 2.3 2.0 2.3 3.0 1.0 3.0 2.0 1.9 2.7 2.0 1.0 2.5 3.0 4.0 4.0 4.0 4.0 3.7 4.0 4.0 3.7 3.0 4.0 3.1 3.7 2.5 3.4 3.7 3.3 3.7 2.7 3.7 3.7 3.5 3.3 4.0 4.0 3.8 4.0 4.0 4.0 3.3 2.7 3.0 4.0 1.0 3.5 4.0 3.0 4.0 1.5 2.0 3.4 4.0 4.0 2.7 3.5 3.0 3.3 3.0 3.5 3.0 2.7 3.0 2.0 4.0 3.3 2.8 3.0 3.0 3.0 2.0 3.3 3.0 3.0 3.3 4.0 2.7 3.0 2.8 2.3 3.1 3.0 4.0 4.0 3.0 4.0 3.7 4.0 4.0 3.3 4.0 3.0 3.1 4.0 2.3 3.3 2.7 2.7 3.7 4.0 3.7 2.6 3.3 1.3 2.7 3.0 3.3 4.0 3.0 3.7 2.7 3.4 3.7 3.8 2.7 3.3 1.0 2.5 3.0 3.5 3.0 2.4 3.0 2.5 2.0 1.5 3.0 2.9 3.3 2.5 3.1 3.7 3.3 3.0 2.7 3.0 2.1 2.8 1.5 2.3 2.0 3.0 3.5 3.0 3.0 2.7 1.9 2.7 2.0 1.0 2.6 2.0 3.0 4.0 3.0 2.0 3.5 4.0 4.0 3.3 3.0 3.0 2.5 2.7 2.3 3.3 3.0 3.0 3.7 3.7 3.0 3.4 4.0 3.3 3.7 2.7 3.5 3.5 3.0 3.7 4.0 2.3 3.0 2.8 1.0 3.0 4.0 2.0 4.0 1.0 2.0 3.0 4.0 3.0 2.0 2.0 4.0 2.9 3.0 2.8 3.4 3.7 3.3 3.5 3.0 3.3 1.8 2.0 1.7 1.7 1.7 2.5 3.5 2.0 2.0 2.3 2.4 3.0 2.8 1.3 2.6 3.0 2.5 1.0 1.0 2.0 1.5 2.0 1.0 2.3 1.0 1.0 1.3 1.0 1.5 1.7 2.3 1.7 1.3 1.7 1.3 1.3 1.5 1.5 1.3 1.0 1.3 1.0 1.0 1.0 2.0 1.7 1.0 3.0 1.0 1.5 4.0 3.0 4.0 3.0 4.0 2.0 2.0 2.5 2.0 1.5 2.0 3.1 3.7 2.5 2.9 2.7 3.0 2.3 2.7 3.7 2.4 2.8 2.7 2.3 2.0 3.0 4.0 1.0 3.7 3.3 2.4 2.7 2.8 1.7 2.8 3.0 2.0 4.0 1.0 4.0 2.7 2.0 2.0 2.3 4.0 3.0 2.8 3.0 2.5 2.5 3.0 2.3 2.0 1.7 3.3 2.0 2.0 2.0 2.0 2.0 2.1 1.5 2.0 3.3 1.7 2.8 2.7 3.3 2.3 2.5 3.0 2.0 4.0 3.0 3.0 3.9 4.0 4.0 4.0 3.5 4.0 3.2 3.7 2.8 3.3 3.3 3.7 3.0 3.3 3.3 3.4 3.8 3.3 3.7 2.7 2.7 3.5 1.0 2.3 4.0 3.1 3.3 3.8 2.3 3.2 2.0 3.0 4.0 2.5 3.0 2.6 2.0 3.5 1.7 2.0 4.0 2.6 3.7 1.5 2.8 2.3 2.0 3.0 3.3 3.3 2.1 2.3 3.3 1.7 1.3 2.8 3.0 2.0 3.3 3.0 2.6 2.3 3.8 1.7 2.6 3.0 2.0 4.0 3.5 2.0 3.5 3.0 4.0 3.3 4.0 3.0 2.4 2.3 2.5 3.3 3.3 3.3 2.0 3.7 4.0 2.4 3.3 1.7 2.7 2.0 2.8 3.0 1.0 4.0 3.0 2.3 3.0 2.3 1.7 2.8

AV 2.9 2.9 2.8 3.7 2.3 2.9 2.9 3.0 3.1 2.6 2.6 3.0 2.6 3.0 2.3 2.9 3.0 2.9 2.7 2.9 3.2 2.4 2.8 2.3 2.5 2.1 2.7 3.0 2.0 3.0 2.8 2.4 2.6 2.9 1.6 2.7

2. Comprehensiveness and transparency

Suficiencia de la informa cin incluida en la documentacin pres upues taria Ma gnitud de la s opera ciones guberna mentales incluida s en informes pres upues tales . Tra ns pa rencia de la s rela ciones fis ca les intergubernamentales Supervis in del riesgo fiscal agregado provoca do por otra s entida des del s ector pblico Acces o del pblico a informa cin fis ca l cla ve

3. Policy based budgeting

Ca r cter ordena do y pa rticipa cin en el proces o pres upues tario a nua l Pers pectiva plurianual en ma teria de pla nifica cin fis ca l, poltica del ga s to y pres upues tacin

4. Predictability and control in budget execution

Tra ns pa rencia de la s obliga ciones y pa s ivos del contribuyente Efica cia de la s medida s de regis tro de contribuyentes y es tima cin de la ba s e impos itiva Efica cia en ma teria de recaudacin de impues tos Certeza en la dis ponibilida d de fondos pa ra comprometer ga s tos Regis tro y ges tin de los s a ldos de ca ja , deuda y ga ra nta s

5. Payroll, procurement and internal controls

Efica cia de los controles de la nmina Competencia , precio ra zona ble y controles en ma teria de adquisiciones Efica cia de los controles internos del gasto no salarial Efica cia de la auditora interna

6. Accounting, recording and reporting

Puntua lida d y periodicida d de la concilia cin de cuentas Dis ponibilida d de informa cin recursos recibidos por la s unidades de pres tacin de s ervicios Ca lida d y puntua lida d de los informes pres upues tarios del ejercicio en curs o Ca lida d y puntua lida d de los es tados fina ncieros a nua les

7. External scrutiny and audit

Al ca nce, na tura leza y s eguimiento de la auditora externa Es crutinio legis la tivo de la ley de pres upues to a nua l Escrutinio legislativo de los informes de los a uditores externos

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

Stock and monitoring of expenditure payment arrears Multi-year perspective in fiscal planning, expenditure policy and budgeting Competition, value for money and controls in procurement Effectiveness of internal audit Availability of information on resources received by service delivery units Legislative scrutiny of external audit reports

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

PEFA and Corruption Perceptions Index

Transparency International

http://www.transparency.org/policy_research/surveys_indices/cpi
Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

PEFA and Open Budget Index

International Budget Partnership

http://www.openbudgetindex.org/
Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

PEFA and Worldwide Governance Indicators

World Bank

http://www.worldbank.org/wbi/governance
Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

III.

IFMIS key component of PFM modernization in LAC

Source: Fiscal Institutions of Tomorrow. IDB 2012 prepared by Carlos Pimenta and Pedro Farias

Country

Procurement

Payroll

Asset Mgmt

Warehouse

Public Investment

Tax administration

Source: Fiscal Institutions of Tomorrow. IDB 2012 prepared by Carlos Pimenta and Pedro Farias

Key factors: Complexity of PFM processes Funcionalities and platform COTS vs Inhouse development Local market of IT suppliers Number of users and entities to be covered Service level (on-line, query times, transaction volumes) Interoperability

Source: Carlos Pimenta IFMIS in LAC Presentation September 2012

CR: SAP GY: Freebalance/Smartstream SU: Freebalance

LAC

Source: www.baselinemag.com

In-house Investment Lower initial costs, goes up in the long term

COTS Higher upfront cost (licenses)

Length of implementation Institutional status quo Support

Continuos development 2 3 years High Internal Low External (licenses, source code)

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

IV.

IDB Support to PFM reform and modernization in LAC

Improve the efficiency, efficacy and accountability of public expenditure management in the region, contributing to fiscal sustainability.
Scope of support
Legal and institutional frameworks Expenditure management systems Information for decision makers that is reliable and readily available Use of country systems

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

Budget, treasury, accounting, debt and public procurement Integrated Financial Management Systems (IFMIS)

Results based budgeting

Electronic Government Procurement (e-GP) Payroll Public Investment Systems

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

PROYECTO

PROYECTO

US$ SIAF PbR SNIP eGP Inst mill.

NI-L1033
PR-L1027 PE-L1087 JA-L1039 BO-L1063

Modernizacin Sistema Administracin Financiera Pblica

Programa Fortalecimiento y Modernizacin Fiscal II (PROFOMAF II) Modernizacin Sistema Administracin Financiera Pblica Fiscal Administration Modernization Programme Programa de Mejora de la Gestin Municipal

10
9.5 20 50 65 28,6 53

PN-L 1066 Programa de Fortalecimiento de la Gestin Fiscal HO-L1015 Programa para Consolidacin Gestin Fiscal y Municipal

AR-L1127
RD-L1005 BA-L1004 BO-L1006 EC-L1084 PR0093 PE-L1101

Fortalecimiento Institucional Productivo y de Gestin Fiscal Provincial II

Programa de Modernizacin de la Administracin de Recursos Pblicos Modernization of the Barbados National Procurement System Apoyo al Sistema Nacional de Inversin Pblica Fortalecimiento del Ciclo de Pre-inversin Programa de Pre-inversin Gestin de la Inversin Territorial

36
8,5 21 25 5 493 13 40 5 20

GU-L1031 Apoyo a la Modernizacin del Ministerio de Finanzas Pblicas ME-L1047 Programa de Apoyo al Presupuesto Basado en Resultados BR-PROFISCO 18 Proyectos en Estados Sub-Nacionales de Brasil

US$ 410 millones LAC + US$ 493 millones PROFISCO-BR: Promedio US$ 26 millones (LAC), US$ 27 millones (PROFISCO-BR)

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

Pas 1 Argentina 2 Bolivia 3 Brasil - PROCONFIS 4 El Salvador 5 Guatemala 6 Haiti 7 Jamaica 8 Mxico 9 Nicaragua 10 Per 11 Paraguay 12 Surinam 13 Trinidad Tobago 14 Uruguay Total

US$ mill 500 127 800 200 200 25 580 1000 60 475 200 40 100 335 4.642

2006 2005, 2010, 2010, 2011 2012 2010 2006, 2007 2007, 2008 2008, 2010, 2010, 2010, 2011 2010 2008, 2009 2005, 2006, 2007 2010, 2012 2011, 2012 2010 2006, 2009

Aprobacin

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

Jamaica

Rep. Dominicana

Barbados
Guatemala El Salvador Brazil Trinidad y Tobago

Suriname

Paraguay

Source: Leslie Harper RICG Presentation Panama September 2012

Bahamas Belize Guatemala El Salvador

Jamaica
Trinidad and Tobago Suriname Brazil

Nicaragua
Costa Rica Colombia Ecuador Chile Paraguay

Argentina

Source: Leslie Harper RICG Presentation Panama September 2012

National Treasurers Network (FOTEGAL)

Budget Directors
Heads of procurement Network(RICG) Subnational Finance Network (GEFIN) -Brasil IFMIS Coordinators Network

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

V.

Conclusions

Public Financial Management in LAC

Great variation across countries (from Chile to Haiti)

Progress over recent decades but also stagnation very

country specific. In general, challenges remain:

Budget management and the linkages between medium-term fiscal management and budget; Treasury management; Arrears recording and management Budget transparency and upgrading of accounting standards. Sector level PFM operations Other areas: investment, performance budgeting, revenue Subnational dimension

Source: World Bank PEFA in LAC Seven Years of Implementation EuropeAid Workshop December 2012

Importance of public financial managment for the modernization of public management as a whole. Transformational moment in LAC and other regions (accounting, technology, interoperality, TSAs etc) Need for comprehensive reform strategies

IFMIS is a key strategic component in modernization.

Knowledge and innovation in PFM (synergies: academia, international organizations, countries and the private sector) Contribution to a greater governmental effectiveness and transparency.

Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013

PFM Team Fiscal and Municipal Management Division Inter-American Development Bank