IDB Public Financial Management in Latin America and the Caribbean

7/30/2019 IDB Public Financial Management in Latin America and the Caribbean

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ICGFM 27th Annual International Training Conference

Miami, Florida

May, 2013


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I. Overview Inter-American

Development Bank (IDB)

II. Assessment of PFM in the region

III.

IFMIS key component of PFMmodernization in LAC

IV. IDB support

V. Conclusions


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I. Overview Inter-American

Development Bank (IDB)


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Established in 1959

The leading source of development financingfor Latin America and the Caribbean

48 member countries, including 26 LACborrowing members, who have a majorityownership of the IDB:

Non regional 49.99%: - USA 30%, Japan 5%, Canada 4%

LAC 50.01%: Argentina 10.9%, Brazil 10.9%, Mexico 7%

Lending and grants in 2012:$11.4 billion

Source: www.iadb.or aboutus


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The IDB has the following main areas ofaction: Reducing poverty and social inequalities;

Addressing the needs of small and vulnerablecountries;

Fostering development through the privatesector;

Addressing climate change, renewable energy

and environmental sustainability; and Promoting regional cooperation and integration.



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Institutional strategy (2010 - 2015) basedin 4 sector priorities:

1. Social policy for equity and productivity;2. Institutions for growth and socialwelfare;3. Competitive regional and global

international integration; and4. Protection of the environment.



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II. Assessment of PFM in the region


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AR

BL BA

BO

BH

CH

DR

EC

ME

NIGY

HA

BR

VE

JA

SUTT

PE

PR

PN

UR

CO

ESHOCRGU

20 Countries Completed*

Source: PEFA Secretariat, November 19, 2012

26 IDB BorrowingMember Countries

+2 Countries In Process

85% of IDB countries have

completed a PEFA

assessment

* 10 countries have had repeat PEFA assessments

5 Countries - NationalPEFAsplannedfor 2013 and 2014


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0

0.5

1

1.5

2

2.5

3

3.5

4

1. Credibilidad del

presupuesto

2. Cobertura y

transparencia

3. Presupuesto

basado en

polticas

4. Predictabilidad

y control en la

ejecucin de

presupuesto

5. Nmina,

compras pblicas

y controles

internos

6. Contabilidad,

registro y reportes

7. Escrutinio

externo y auditora

ECA LAC SAS SSA

1. BudgetCredibility

2. Comprehensivenessand transparency

3. Policybased

budgeting

4. Predictabilityand controls in

budgetexecution

5. Payroll,procurementand internal

controls

6. Accounting,recording and

reporting

7. Externalscrutiny and

audit

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


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0

0.5

1

1.5

2

2.5

3

3.5

4

PI-1 Resultados del gasto

agregado en comparacin

con el presupuesto original

aprobado

PI-2 Desviaciones del gasto

presupuestario en

comparacin con el

presupuesto original

aprobado

PI-3 Desviaciones de los

Ingresos Totales en

comparacin con el

presupuesto original

aprobado

PI-4 Saldo y seguimiento de

los atrasos de pagos de

gastos

PI-5 Clasificacin del

presupuesto

ECA LAC SAS SSA

PI-1 Aggregateexpenditure out-turncompared to originalapproved budget

PI-2 Composition ofexpenditure out-turn compared tooriginal approvedbudget

PI-3 Aggregaterevenue out-turncompared tooriginal approvedbudget

PI-4 Stock andmonitoring ofexpenditure paymentarrears

PI-5 Classification of

the budget

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


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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 2.9

Resultados del gasto agregado en comparacin con el presupuesto original aprobado 3.0 3.0 3.0 4.0 3.0 1.0 2.0 4.0 3.0 4.0 3.0 3.0 2.0 3.0 2.9

esv a c o nes e gas o presupues ar o en comparac n con e presupues o or g na4.0 2.0 4.0 3.0 4.0 2.5 3.0 2.0 2.5 3.0 2.0 2.0 3.0 2.0 2.8

Desviaciones de los ingresos totales en comparacin con el presupuesto original aprobado 4.0 4.0 4.0 4.0 4.0 3.0 4.0 4.0 1.0 4.0 4.0 4.0 4.0 4.0 3.7Saldo y seguimiento de los atrasos de pagos de gastos 1.0 1.0 4.0 1.5 3.0 3.5 3.0 1.0 1.0 3.0 1.0 3.0 2.5 3.5 2.3

Clasificacin del presupuesto 2.0 4.0 4.0 2.0 4.0 3.0 2.0 2.0 2.0 4.0 4.0 3.0 3.0 2.0 2.9

1.5 2.7 3.7 3.4 3.7 2.4 3.5 3.0 1.5 2.0 2.7 3.9 2.6 3.5 2.9

Suficiencia de la informacin incluida en la documentacin presupuestaria 2.0 2.0 4.0 4.0 4.0 3.0 4.0 4.0 2.0 2.0 2.0 4.0 2.0 3.0 3.0

Magnitud de la s operaciones gubernamentales incluidas en informes presupuestales . 1.5 4.0 4.0 4.0 4.0 2.5 4.0 3.0 1.0 2.5 2.0 4.0 3.5 4.0 3.1

Transparencia de las relaciones fiscale s intergubernamentales 1.0 2.3 3.7 2.7 3.3 2.0 3.3 2.0 2.3 2.0 2.3 4.0 1.7 3.3 2.6

Supervisi n del riesgo fiscal agregado provocado por otras entidades del sector pblico 1.0 2.0 3.0 3.5 4.0 1.5 3.0 2.0 1.0 1.5 4.0 3.5 2.0 4.0 2.6

Acceso del pblico a informacin fiscal clave 2.0 3.0 4.0 3.0 3.0 3.0 3.0 4.0 1.0 2.0 3.0 4.0 4.0 3.0 3.0

2.3 1.8 3.1 3.3 3.1 2.9 2.5 2.9 1.3 3.1 2.8 3.2 2.6 2.4 2.6

Carcter ordenado y participacin en el proceso presupuestario anual 3.0 1.7 3.7 3.0 4.0 3.3 2.7 3.0 1.0 3.7 3.0 3.7 3.7 2.3 3.0

Perspectiva plurianual en materia de pl anificacin fiscal, poltica del gasto y presupuestacin 1.5 2.0 2.5 3.5 2.3 2.5 2.3 2.8 1.5 2.5 2.5 2.8 1.5 2.5 2.3

1.9 3.3 3.4 3.0 3.3 3.1 3.3 3.4 1.7 2.9 2.5 3.3 2.8 3.3 2.9

Transparencia de las obligaciones y pas ivos del contribuyente 2.5 3.3 3.7 2.7 2.7 3.7 3.0 3.7 2.3 2.7 3.0 3.3 2.3 3.3 3.0

Eficacia de las medidas de registro de contribuyentes y estimacin de la base impositiva 2.0 3.3 3.3 3.0 2.7 3.3 3.0 3.3 1.7 3.0 2.3 3.7 2.0 3.3 2.9

Eficacia en materia de recaudacin de impuestos 1.5 3.3 3.7 2.0 3.7 3.0 3.7 3.5 1.3 2.3 2.0 3.0 3.0 2.0 2.7

Certeza en l a di sponibil idad de fondos para comprometer gastos 1.0 2.7 2.7 4.0 4.0 2.7 3.7 3.0 1.7 2.7 1.7 3.3 3.3 3.7 2.9

Registro y gestin de los saldos de caja, deuda y garantas 2.5 3.7 3.7 3.3 3.7 3.0 3.0 3.3 1.3 3.7 3.3 3.3 3.3 4.0 3.2

1.3 2.5 3.7 2.8 2.6 2.1 3.4 1.8 1.3 2.4 2.0 3.4 2.1 2.4 2.4

Eficacia de los controles de la nmina 1.5 3.0 3.5 3.0 3.3 2.8 4.0 2.0 1.5 2.8 2.0 3.8 2.3 3.3 2.8

Competencia, precio razonable y controles en materia de adquisiciones 1.0 2.7 3.3 3.0 1.3 1.5 3.3 1.7 1.5 2.7 2.0 3.3 3.3 1.7 2.3

Eficacia de los controles internos del gasto no salarial 1.5 2.3 4.0 3.0 2.7 2.3 3.7 1.7 1.3 2.3 2.0 3.7 1.7 2.7 2.5

Eficacia de la auditora interna 1.0 2.0 4.0 2.0 3.0 2.0 2.7 1.7 1.0 2.0 2.0 2.7 1.3 2.0 2.11.5 2.3 3.8 3.3 3.3 3.0 3.5 2.5 1.3 3.0 2.1 2.7 2.8 2.8 2.7

Puntualida d y periodicidad de la concili acin de cuentas 2.0 3.0 4.0 3.0 4.0 3.5 3.5 3.5 1.0 4.0 1.5 3.5 3.0 3.0 3.0

Disponibil idad de informacin recursos recibidos por las unidades de prestacin de servicios 1.0 1.0 4.0 3.0 3.0 3.0 3.0 2.0 1.0 1.0 2.0 1.0 2.0 1.0 2.0

Calidad y puntualidad de los informes presupuestarios del ejercicio en curso 1.5 3.0 4.0 3.3 3.7 3.0 3.7 2.0 1.0 3.7 3.3 2.3 3.3 4.0 3.0

Calidad y puntualidad de los es tados financieros anuale s 1.5 2.0 3.3 4.0 2.7 2.7 4.0 2.3 2.0 3.3 1.7 4.0 3.0 3.0 2.8

1.3 1.9 2.7 2.7 3.4 1.9 2.3 2.4 1.7 2.4 2.8 3.1 2.6 2.3 2.4

Alcance, naturaleza y seguimiento de la auditora externa 1.0 2.7 3.0 3.0 3.7 2.7 3.0 3.0 1.0 2.7 2.7 3.3 2.3 3.0 2.6

Escrutinio legisl ativo de la le y de presupuesto anual 1.5 2.0 4.0 2.8 3.8 2.0 2.8 2.8 3.0 2.8 3.3 3.8 3.8 2.3 2.9

Escrutinio legislativo de los informes de los auditores e xternos 1.5 1.0 1.0 2.3 2.7 1.0 1.0 1.3 1.0 1.7 2.3 2.3 1.7 1.7 1.6

1.8 2.5 3.5 3.1 3.3 2.6 3.0 2.6 1.5 2.8 2.5 3.2 2.6 2.8 2.7

AV

PI-10

PI-11

PI-8

PI-9

PI-6

PI-7

Dimensiones

PI-1

PI - 4

PI-5

PI-2

PI-3

Indicators

PI-28

PI-26

PI-27

1. Credibility of the budget

2. Comprehensiveness and transparency

3. Policy based budgeting

4. Predictability and control in budget execution

5. Payroll, procurement and internal controls

PI-17

PI-14

PI-15

PI-12

PI-13

7. External scrutiny and audit

PI-18

PI-19

PI-16

PI-24

PI-25

PI-22

PI-23

PI-20

PI-216. Accounting, recording and reporting

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


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Stock and monitoring of expenditurepayment arrears

Multi-year perspective in fiscal planning,expenditure policy and budgeting

Competition, value for money and controls inprocurement

Effectiveness of internal audit

Availability of information on resourcesreceived by service delivery units

Legislative scrutiny of external audit reports



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http://www.openbudgetindex.org/

PEFA and Open Budget IndexInternational Budget Partnership



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http://www.worldbank.org/wbi/governance

PEFA and Worldwide Governance

IndicatorsWorld Bank



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III. IFMIS key component of PFM

modernization in LAC


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


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Country Procurement Payroll Asset Mgmt Warehouse PublicInvestment Taxadministration

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

Farias


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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


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CR: SAPGY: Freebalance/SmartstreamSU: Freebalance LAC

Source: www.baselinema .com


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In-house COTSInvestment Lower initial costs,

goes up in the longterm

Higher upfront cost(licenses)

Length ofimplementation Continuos development 2 3 yearsInstitutional status quo High LowSupport Internal External (licenses,

source code)

Source: Carlos Pimenta IDB- PFM Worksho for IFMIS Coordinators Ma 15 2013


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IV. IDB Support to PFM reform and

modernization in LAC


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Improve the efficiency, efficacy andaccountability of public expendituremanagement in the region, contributing tofiscal sustainability.

Scope of support Legal and institutional frameworks Expenditure management systems

Information for decision makers that is reliable andreadily available Use of country systems



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Budget, treasury, accounting, debt andpublic procurement

Integrated Financial Management Systems(IFMIS)

Results based budgeting

Electronic Government Procurement (e-GP)

Payroll

Public Investment Systems



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PROYECTO PROYECTOUS$

mill.SIAF PbR SNIPeGP Inst

NI-L1033 Modernizacin Sistema Administracin Financiera Pblica 10

PR-L1027 Programa Fortalecimiento y Modernizacin Fiscal II (PROFOMAF II) 9.5

PE-L1087 Modernizacin Sistema Administracin Financiera Pblica 20

PN-L 1066 Programa de Fortalecimiento de la Gestin Fiscal 50

JA-L1039 Fiscal Administration Modernization Programme 65

HO-L1015 Programa para Consolidacin Gestin Fiscal y Municipal 28,6

BO-L1063 Programa de Mejora de la Gestin Municipal 53

AR-L1127 Fortalecimiento Institucional Productivo y de Gestin Fiscal Provincial II 36GU-L1031 Apoyo a la Modernizacin del Ministerio de Finanzas Pblicas 8,5

RD-L1005 Programa de Modernizacin de la Administracin de Recursos Pblicos 21

ME-L1047 Programa de Apoyo al Presupuesto Basado en Resultados 25

BA-L1004 Modernization of the Barbados National Procurement System 5

BR-PROFISCO 18 Proyectos en Estados Sub-Nacionales de Brasil 493

BO-L1006 Apoyo al Sistema Nacional de Inversin Pblica 13EC-L1084 Fortalecimiento del Ciclo de Pre-inversin 40

PR0093 Programa de Pre-inversin 5

PE-L1101 Gestin de la Inversin Territorial 20

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



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Pas US$ mill Aprobacin1 Argentina 500 2006

2 Bolivia 127 2005, 2010, 2010, 2011

3 Brasil - PROCONFIS 800 2012

4 El Salvador 200 2010

5 Guatemala 200 2006, 2007

6 Haiti 25 2007, 2008

7 Jamaica 580 2008, 2010, 2010, 2010, 2011

8 Mxico 1000 2010

9 Nicaragua 60 2008, 2009

10 Per 475 2005, 2006, 2007

11 Paraguay 200 2010, 2012

12 Surinam 40 2011, 201213 Trinidad Tobago 100 2010

14 Uruguay 335 2006, 2009

Total 4.642Source: Carlos Pimenta IDB- PFM Workshop for IFMIS Coordinators May 15, 2013


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Barbados

Brazil

Rep. Dominicana

Guatemala

Jamaica

Trinidad y Tobago

El Salvador

Paraguay

Suriname

Source: Leslie Har er RICG Presentation Panama Se tember 2012


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Brazil

Guatemala Trinidadand Tobago

El Salvador

Paraguay

Bahamas

JamaicaBelize

Suriname

Nicaragua

Costa Rica

Colombia

Ecuador

Chile

Argentina

Source: Leslie Har er RICG Presentation Panama Se tember 2012


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National Treasurers Network

(FOTEGAL) Budget Directors

Heads of procurement Network(RICG) Subnational Finance Network (GEFIN)

-Brasil

IFMIS Coordinators Network



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V. Conclusions


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Public Financial Management in LACGreat 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


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Importance of public financial managment for themodernization 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 effectivenessand transparency.



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PFM Team

Fiscal and Municipal Management Division

Inter-American Development Bank

Documents

IDB Public Financial Management in Latin America and the Caribbean