Limited Repeat and Sectoral PEFA 2013 Trinidad and Tobago ...eeas.europa.eu/archives/delegations/.../limitedpefavol1_20140807_0… · January 2014 . The contents of this ... FY 2009/2010,

Limited Repeat and Sectoral PEFA

2013

Trinidad and Tobago

Final Report

Volume 1 - Central Government

January 2014

The contents of this publication are the sole responsibility of ACE International Consultants and can in

no way be taken to reflect the views of the European Union

Final Report

Project No. 2013/322918/1

By

Mr Ronald Quist and Mr Charles Hegbor

Presented by

ACE, International Consultants (Spain)

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Trinidad and Tobago Limited Repeat & Sectoral PEFA 2013

CURRENCY AND EXCHANGE RATES

Currency unit = Trinidad and Tobago Dollar (TT$)

US$ 1 = TT$6.29

Euro 1 = TT$8.85

GOVERNMENT FISCAL YEAR (FY)

1 October – 30th September

PEFA ASSSESSMENT PERIOD

FY 2009/2010, FY 2010/2011, FY 2011/2012

TIME OF ASSESSMENT

December 2013

Table of contents

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Table of Contents

Acronyms and Abbreviations 7

Integrated Summary Assessment 9

I. Integrated Assessment of PFM Performance 10

A. Credibility of the budget 10

B. Comprehensiveness and transparency 11

C(i). Policy-based budgeting 13

C(ii). Predictability and control in budget execution 14

C(iii). Accounting, recording and reporting 15

C(iv). External scrutiny and audit 16

II. Assessment of the impact of PFM weaknesses 19

1. Aggregate Fiscal Discipline 20

2. Strategic Allocation of Resources 20

3. Efficient Service Delivery 21

III. Change in performance since the previous assessment 21

IV. Prospects for PFM Reforms 23

1 Introduction 25

1.1 Objective of the PFM-PR 25

1.2 Process of preparing the PFM-PR 25

1.3 Methodology 26

1.4 Scope of the assessment 27

2 Country Background Information 29

2.1 Description of country economic situation 29

2.1.1 Country context 29

2.1.2 Overall government reform programme 30

2.1.3 Rationale for PFM reforms 31

2.2 Description of budgetary outcomes 31

2.2.1 Fiscal performance 31

2.2.2 Allocation of resources 31

2.3 Legal and institutional framework for PFM 32

2.3.1 The legal framework for PFM 32

2.3.2 The institutional framework for PFM 34

2.3.3 Key features of the PFM system 37

3 Assessment of PFM Systems, processes and institutions 39

3.1 Budget credibility 39

3.1.1 PI-1 Aggregate expenditure out-turn compared to original approved budget 39

3.1.2 PI-2 Composition of expenditure out-turn compared to original approved budget 40

3.2 Comprehensiveness and transparency 41

3.2.1 PI-5 Classification of the budget 41

3.3 Policy-based budgeting 42

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3.3.1 PI-11 Orderliness and participation in the annual budget process 42

3.3.2 PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting 44

3.4 Predictability and control in budget execution 46

3.4.1 PI-15 Effectiveness in collection of tax payments 46

3.4.2 PI-19 Competition, value for money and controls in procurement 48

3.4.3 PI-20 Effectiveness of internal controls for non-salary expenditure 51

3.4.4 PI-21 Effectiveness of internal audit 53

3.5 Accounting, recording and reporting 55

3.5.1 PI-23 Availability of information on resources received by service delivery units 55

3.5.2 PI-25 Quality and timeliness of annual financial statements 55

3.6 External scrutiny and audit 57

3.6.1 PI-27 Legislative scrutiny of the annual budget law 57

3.6.2 PI-28 Legislative scrutiny of external audit reports 59

3.7 Donor practices 61

3.7.1 D-1 Predictability of Direct Budget Support 61

3.7.2 D-2 Financial information provided by donors for budgeting and reporting on project

and program aid 63

3.7.3 D-3 Proportion of aid that is managed by use of national procedures 64

4 Government Reform Process 66

4.1 Recent and ongoing reforms 66

4.2 Institutional factors supporting PFM reforms 66

Annexes 69

Annex 1: PFM Performance Measurement Framework Indicators Summary 71

5 No data to score dimension (i) 73

Annex 3: List of Stakeholders Interviewed 79

Annex 4: List of Documents Consulted 83

Annex 5a: Data used for scoring PI-2 - FY2009/2010 85

Annex 5b: Data used for scoring PI-2 - FY 2010/2011 87

Annex 5c: Data used for scoring PI-2 - FY 2011/2012 88

Annex 6: Comments to the Draft Report 90

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Acronyms and Abbreviations

AG Auditor General AGA Autonomous Government Agencies AO Accounting Officer BIR Board of Inland Revenue CBTT Central Bank of Trinidad and Tobago CF CF Consolidated Fund CoA Chart of Account CoAs Comptroller of Accounts COFOG Classifications of Functions of Government CPI Consumer Price Index CTB Centrals Tenders Board DMFAS Debt Management and Financial Accountability System EAA Exchequer and Audit Act EU European Union FDI Foreign Direct Investment FY Fiscal Year GDP Gross Domestic Product GFS Government Financial Statistics GNI Gross National Income GRAP Generally Recognised Accounting Practice HDI Human Development Index IA Internal Audit IADB Inter-American Development Bank ICT Information & Communication Technology IFMIS Integrated Financial Management Information System IHRIS Integrated Human Resource Information System IIA Institute of Internal Auditors IMF International Monetary Fund INTOSAI International Organisation of Supreme Audit Institutions LGA Local Government Authority MDA Ministries, Departments and Agencies MoFE Ministry of Finance and the Economy MTEF Medium Term Expenditure Framework NA National Assembly N/A Not Applicable NT National Treasury ODA Official Development Assistance PAC Public Accounts Committee PAEC Public Accounts Enterprises Committee PE Public Enterprise PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PETS Public Expenditure Tracking Survey PFC Policy Formulation Committee PFM Public Finance Management PFM PMF Public Finance Management Performance Management Framework PI Performance Indicator PPP Public Private Partnership PS Permanent Secretary PSIP Public Sector Investment Program PU Procurement Unit SBS Sector Budget Support SCM Supply Chain Management SNG Sub National Government SoE State Owned Enterprise T&T Trinidad and Tobago

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ToR Terms of Reference TSA Treasury Single Account TTEITI Trinidad and Tobago Extractive Industry Transparency Initiative TTTI Trinidad and Tobago Transparency Initiative VAT Value Added Tax WASA Water and Sewerage Authority

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Integrated Summary Assessment

This Public Expenditure and Financial Accountability (PEFA) assessment was sponsored by the

European Commission. It has been undertaken with the formal agreement and active support of the

Government of Trinidad and Tobago. As a consequence of the government not foreseeing any

broad based improvements, given the absence of any significant Public Finance Management

(PFM) reform implementation in the period since the last PEFA assessment in 2008, only those

indicators that scored lower than a B were reassessed. The assumption was that there would

have been no measurable deterioration in the scores of B and above. While of course this is a

reasonable assumption, it may in fact not be accurate1. However, in order to provide narrative

coherence, given the linkages between the different areas of PFM performance, this summary

assessment based some of its performance distillation analysis on performance levels measured in

2008.

The “Limited PEFA” assessment takes guidance from the widely accepted methodology of the

Public Financial Management Performance Measurement Framework (PFM-PMF) issued by the

PEFA multi-donor programme in March 2011and the Field Guide for Undertaking an Assessment

using the PEFA Performance Measurement Framework May, 2012. However, given that sixteen

indicators or less than eighteen PEFA performance indicators were assessed, according to the

current rules and practices issued by the PEFA Secretariat this “Limited PEFA” may not be termed

a PEFA Assessment.

Nevertheless, the approach taken was based upon a careful consideration of the demonstrated

observable public financial management (PFM) systems, procedures and practices in Trinidad and

Tobago at the time of the assessment as determined through direct interviews with Government

officials and the reviews of official documents and reports. It was also based upon the use of

corroborating evidence sought from a variety of independent sources where ever possible including

civil society organizations, development partners and consultants.

This PFM Performance Report presents the current status of the public financial management

system of the central government based upon sixteen indicators measured in 2013 coupled with

considerations of the status of fifteen other indicators that were measured in 2008 and scored an A,

B+ or B. It should serve to identify current areas of strength and weakness. It intentionally does not

comment upon any aspects of specific fiscal or expenditure policy, and does not comment upon

any offices or officers of PFM in Trinidad and Tobago. It has not taken into account considerations

of capacity, except to the degree implicit in the capacity to successfully carry out the assessed PFM

procedures. The objective of the assessment has not been to evaluate and score the performance

of institutions or any PFM offices or officials, but rather to assess the capacity of the PFM systems

themselves to support sound fiscal policy and financial management2.

1 The PI-1 indicator, though having been scored a B in 2008 was reassessed in 2013 and found to score an A. Further,

discussions with the Office of the Auditor General indicated that if the indicator PI-26 were to have been reassessed the

scores would indeed remain the same with indications in the narrative of areas of improvement. These two examples

provide empirical evidence in support of the assumption. 2 In essence this assessment provides a measure of whether the main necessary conditions for delivering upon sound PFM

practice have been met, rather than providing an insight into all of the sufficient conditions necessary to conclude that

sound PFM is being carried out. For example while it assesses whether the PFM systems provide a sound framework for

assessing fiscal risk arising from Public Enterprise activity, it makes no comment as to what authorities do or should do in

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This Limited PEFA performance review for Trinidad and Tobago presents a third assessment. The

first PEFA Assessment for Trinidad and Tobago was carried out in 2006; the second assessment

was carried out in 2008. It is anticipated that such PEFA assessments shall continue to be carried

out periodically and in doing so will provide a clear and accessible basis for monitoring PFM reform

progress over the long term.

It is anticipated that this Limited PEFA assessment shall support the on-going dialogue between the

government and its development partners on aid delivery modalities and arrangements for support

to PFM reform in Trinidad and Tobago. While this report, by design, neither articulates specific

recommendations for PFM improvements nor details an action plan, it is anticipated that the results,

which establish areas of both strength and weakness, shall assist the government in further

defining its PFM reform priorities and subsequent reform activity sequencing and pacing schedule.

I. Integrated Assessment of PFM Performance

In the following sections of the summary the performance of PFM systems, procedures and

practices as measured through the Limited PEFA assessment along with considerations of

indicators measured under the 2008 PEFA Assessment, are described. The description is

presented in terms of six critical dimensions of PFM as defined within the PEFA methodology.

These are credibility of the budget; comprehensiveness and transparency; policy based budgeting;

predictability and control in budget execution; accounting, recording and reporting; and external

scrutiny and oversight.

A. Credibility of the budget

When considered at the aggregate level, and restricted to an assessment of primary expenditure,

Trinidad generally performs well with respect to the credibility of the budget measured at an

aggregate level with strong performance with regards to aggregate comparison of aggregate

expenditure estimates versus outturns, revenue estimates versus outturns and expenditure arrears

management. However, weaknesses are exposed when the credibility of the budget is considered

at the level of specific line ministries. It should also be noted that while the assessment scores the

management and tracking of expenditure arrears well, there is some indication that informal

procedures are used to procure goods and services that address commitment retroactively. Such

arrears would be excluded from the expenditure arrears monitoring systems and so it is impossible

to quantify the amount. The Trinidad and Tobago Manufacturers’ Association (TTMA) membership

reports long delays in receiving payments when supplies are made to MDAs. That perspective

would include the administrative period required to verify invoices and so may not necessarily

indicate the accrual of arrears, but could well do so.

No direct measures of revenue outturns against revenue estimates were made, however

considerations of comparisons of budget estimates to budget outturn, and supplementary budgets

suggest that Trinidad and Tobago continue to achieve close matches of revenue outturns and

revenue estimates. A significant part of Trinidad and Tobago’s revenue is derived from oil and gas

proceeds. Due to the high price volatility the Budget Division adopts a “budget price” for oil and

response to the information provided by the fiscal risk assessment. Such responses may be purely political and a

comment on such would be beyond the remit or competence of a PEFA assessment.

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gas, set at conservative levels when compared to current market prices to ensure revenue (and

consequently budget) predictability.

A combination of credible revenue forecasting coupled with effective and realistic top-down

budgetary discipline along with a successful debt management strategy and effective budget

release and expenditure control has provided credibility of the budget at the most aggregate levels.

In contrast (see PI-2) the comparison of outturns to budget estimates for specific line ministries

shows very large variance. These large variances are the result of a budget preparation process

that does not include the issuance of politically backed ceilings as part of the budget call circular.

This in turn has given rise in the case of line ministry development budget requests reduced to a

bidding process based upon anticipated cuts by the Ministry of Finance and Economy. Bids over

final budgets for some ministries are as high as 300%. There are also large variances between

recurrent budget submissions and final approved budgets. This may appear paradoxical given that

payroll is predictable and is managed well in Trinidad and Tobago. Since it makes up the greater

proportion of the recurrent budget it would seem that there should be limited variance in the

recurrent budget estimates when compared to recurrent budget outturns at the line ministry level.

Yet this is not the case. As it turns out budget preparation is based upon the line ministry total

establishment rather than some estimate of the funded establishment and the difference in the two

gives rise to very significant variances.

There is another factor that can impact upon variances between budget estimates and outturns at

the line ministry level. This may arise from poorly managed budget contingencies. As it turns out

Trinidad and Tobago operate a revolving fund of 100 Million T&T$ that is only applied in the case of

emergencies. In the period assessed the size of contingency expenditure never exceed 0.23% of

total expenditure in a given year.

The aggregate expenditure out-turns matches the budget estimates quite closely. It clearly reflects

a measure of fiscal discipline exercised through a macro fiscal framework that is effectively applied

as an instrument of top-down discipline to the budgetary process (see PI-12), coupled with effective

cash and debt management (PI-17), and budget release predictability (see PI-16), as well as sound

salary management (see PI-18). The story is more mixed with respect to the effectiveness of non-

salary expenditure controls (PI-19, PI-20).

The PFM systems deliver predictable and well controlled virement procedures with well

documented and suitably controlled procedures. The low variances up and above the expenditure

deviation at the aggregate level would seem to suggest a strong coupling between the budget

formulation and preparation process, and in turn between budget estimate and implementation.

However, the absence of cabinet approved ceilings being included in the budget call circulars, have

led to budget holders submitting budget estimates that are several times the ceilings adopted by the

Budget Division and approved by the Minister of Finance. While the Exchequer and Audit Act

accommodates for a supplementary budget process, this does not appear to introduce significant

adjustments to the original budget estimates

B. Comprehensiveness and transparency

On the basis of the results of the 2008 PEFA Assessment it was found that Trinidad and Tobago

does well on all areas of comprehensiveness and transparency except with regards with the

classification of the budget.

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The government has adopted standards for the budget formulation and execution, based solely on

economic and administrative budget classifications. The Budget Division can produce consistent

documentation according to GFS/COFOG standards and does so to provide reporting to the IMF.

The budget documentation includes a table that segregates expenditure in accordance with

functional classifications. However, at this time budget execution and financial reporting remains

on an economic and administrative classification. The chart of accounts incorporates and is

consistent with the administrative and economic budget classifications.

Its performance in other areas of comprehensiveness and transparency as reported in the 2008

PEFA Assessment include:

The budget documentation is complete, comprehensible and comprehensive including the

macroeconomic assumptions, the fiscal balance along with the makeup of any deficit

financing, the debt profile and status, the financial assets, the historical budget outturns

and clear explanations on the impacts of new major revenue and expenditure policy

initiatives.

Except for relatively minor deposit accounts operated by the Ministry of Energy that arise

as a consequence of Production Share Agreements signed with oil producers, all

revenues generated directly by Departments are transferred to the Consolidated Fund

which operates as a Single Treasury Account3. Almost all expenditure is made through a

centralised payments system. This arrangement provides effective control over the extent

of extra-budgetary expenditure by the ministries that can be undertaken. The Ministry of

Finance has the capacity to oversee revenue and expenditure transactions through daily

bank reconciliations and to monitor the public entities' plans and financial management.

There are no unreported Public-Private Partnerships, nor unreported unconventional

financing instruments for addressing losses of Public Enterprises. All security agency

funds are reported on in aggregate, even if details of expenditure remain undisclosed. The

financial reports consolidation process includes a reconciliation process between sources

of funds and applications which reasonably assures that there are no significant extra-

budgetary funds outside development partner funds.

A review of the mechanisms for the vertical and horizontal allocation of resources to Sub-

national Government suggests a transparent system which incorporates parliamentary

oversight. The budget allocation process provides reliable information on the allocations to

be made to them but not before the start of their detailed budgeting processes. The budget

releases to sub-national government entities are timely and fully predictable.

Moody’s investor services assigns Baa1 to the government bond rating of Trinidad and

Tobago. There is a fairly careful risk assessment of Public Enterprise operations using a

comprehensive risk analysis framework, however at this time not all major public

enterprises are complying fully with the Investment Division’s financial reporting

requirements to make the system fully effective. There is the timely and regular audited

fiscal reporting of most Public Enterprises operations to permit effective oversight by the

Investment Division but not yet all.

The culture of transparency with regards to budget documentation is active and there is

budgetary, tax revenue and audit information that is made available in a timely fashion on

3 The account is operated as a single account with all line ministries operating directly out of that account rather than as bank

account mechanism that incorporates a master account along with subsidiary bank accounts assigned to the different line

ministries.

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the Internet through the government book shop and public and academic libraries. There

is broad transparency demonstrated with respect to public access to key fiscal information.

However, one area that remains opaque is procurement. Awarded contracts are not

published. There is also no information available on the amounts of resources received

by the front line facilities such as primary schools and primary health care facilities.

C(i). Policy-based budgeting

The budget call circular serves as the basic instrument for communicating policy to budget holders.

There is clear policy direction from the cabinet to the budget holders through the budget call

circular. However the lack of cabinet approved budget ceilings dilutes the effectiveness of the

bottom-up elements of budget preparation. This is even though the budget schedule provides

ample time for budget holders to prepare their budget. Without definite ceilings it is difficult to

systematically prioritise programmes and projects. Further the absence of politically backed ceiling

incorporated into the budget call circular has led to a culture by which line ministries intentionally

bid considerably higher that their requirements in anticipation of massive cuts possibly returning

them to actually required levels. In such a budget formulation environment it becomes difficult to

see how carefully considered strategy can survive massive cuts without huge strategic distortion

and imbalance. Almost definitely even if there were carful considerations of life cycle costing –

investment plus forward linked recurrent costs – it is unlikely that these relationships could survive

such a budgetary process.

The fiscal framework is derived with consideration of three year revenue forecasts and a three-year

pro-forma expenditure profiles developed as part of the IMF Article IV consultations. The fiscal

framework used for budget purposes however is defined within a single year framework and the

budget call circulars reflect a single budget year. Trinidad and Tobago adopts a dual budget

process with the recurrent budget process coordinated by the Budget Division within the Ministry of

Finance, and the development budget process coordinated through Public Sector Investment

Program managed through the Ministry of Planning and Sustainable Development. The fiscal

framework defines economic classifications that are linked to the annual budget ceilings.

The budget process encompasses policy input from the cabinet at the beginning and the end of the

budget process through the Policy Formulation Committee; a subcommittee of Cabinet. There are

strong institutional arrangements in place for ensuring both strong policy as well as technical review

of the budget. The budget process occurs in accordance with a definite budget calendar and is

guided by clear and timely budget call circulars that facilitate an early budget preparation process

by the budget holders. However, the budget preparation process as carried out by the budget

holders is not based upon indicative or hard budgetary ceilings. The Line Ministries have

approximately eight weeks to prepare their budget bids. Finalised ceilings authorised by cabinet

which are provided towards the end of the budget preparation cycle allow about a week for

Ministries to finalise their budgets with approved bids incorporated.

The Medium Term Policy Framework (2011 to 2014) serves as the overarching national

development framework from which sector strategies are prepared. Strategies are not developed

within realistic fiscal aggregate forecasts nor are they fully costed with both recurrent cost

implications taken into account. There are links between the sector development plans and the

budget made through annual public sector investment programmes (PSIPs). Links between

projects and programs that are entered into the PSIP are justified by the strategies but the links

remain qualitative. All projects included in the PSIP are cabinet approved. They are however not

14


developed within realistic fiscal aggregates, which is part of the strategic planning process, and

quite different and separate from the fiscal ceilings for annual budget preparation The inclusion of

PSIP projects into the development budget process is not guided by ceilings. Some Line Ministries

report that their budget submissions do not specifically include forward linked recurrent costs

emanating out of the development projects. However, the Budget Division reports that such costs

are estimated and included in the recurrent budgets as part of the reconciliation process. The

effectiveness of such an arrangement is not clear since Line Ministries report that they are not

made aware of such recurrent budget considerations being made and reflected in the approved

budgets.

Further, the absence of cabinet approved ceilings guiding the budget preparation process has

resulted in budget bids received from MDAs exceeding final approved ceilings by as high as a

factor of three in the last budget cycle. The extremely large budget reconciliation adjustments,

coupled with the very late communication of finalised budgetary allocations to the MDAs leaves no

time for them to realign their priorities with the final approved ceilings. The emphasis on

maintaining top down discipline serves the fiscal discipline objective well. However, the absence of

cabinet approved ceilings from the budget process therefore undermines the bottom up elements of

the budget process and almost certainly impacts negatively the opportunities to achieve both

technical and allocative efficiency.

Debt sustainability analysis is performed on an annual basis by the Central Bank of Trinidad and

Tobago. The debt sustainability assessment has become somewhat routine especially because of

the very low debt stock levels that are currently estimated at only 24% of GDP.

The executive typically completes its budget submissions five to six weeks prior to the start of the

fiscal year. The Parliament approves the appropriations prior to the start of the fiscal year after

review of the budget proposals except for one of the years of the review. In that year it passed the

budget within one month of the start of the fiscal year. The Exchequer and Audit Act allows for

continued spending by the executive for just the first month of the new fiscal year.

While the quantum of development partner contribution is small, its strategic and policy impact can

be substantial especially with regards to the piloting of new initiatives and the transfer of expertise.

C(ii). Predictability and control in budget execution

Predictability in budget execution is premised upon revenue adequacy, which in turn requires sound

revenue administration. Many elements of revenue administration work well and appear to have

been enhanced by the implementation of a new tax administration software system. These include

clarity of taxpayer obligations and liabilities, the legal constraints on officer discretion in the

application of penalty waivers and rates, the sustaining of vigorous tax awareness and educational

programs, the selection basis, planning and implementation of tax audits. Recent difficulties with

respect to collection of tax arrears and the timely and regular complete reconciliation of tax

assessments, tax arrears, tax collections and tax payments into the consolidated fund have been

resolved. Trinidad and Tobago implements the complete reconciliation of tax assessments,

collections, arrears and transfers of the Treasury each month before the close of the following

month.

Cash management and debt management are very well managed and facilitate highly predictable

budget releases. Trinidad and Tobago uses a centralised payments system out of the

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Consolidated Fund which beyond daily bank balance consolidation that informs and guides budget

releases facilitates effective debt management. Debt management is enhanced by having the

authority to incur loans being vested in a single authority - the Minister of Finance. Debt is

monitored using the DMFAS system and regularly reconciled and reported on with respect to stock

as well as debt service.

The government employs a manual system for non-salary expenditure management, accounting

and financial reporting4. Budget allocation and budget release discipline is strong. Commitment

control is effected through the implementation of a Vote Book expenditure control system. It is

generally effective even though there are some informal procurement arrangements that bypass the

arrangement with respect to commitments (issuance of purchase orders, referred to as invoice

orders) though not payments. There remain some issues pertaining to procurement planning and

reporting on commitments which may contribute to the end of year rush to spend unutilised funds at

the close of the year. This in turn may be part of the reason for working around procurement

procedures. Civil society elements report that there are substantial payment delays especially

towards the end of the fiscal year.

Payroll management is facilitated using a transverse computerised human resource management

and payroll system, the Integrated Human Resource Information System (IHRIS). This system

directly links three databases: the establishment of posts, the personnel database which serve as

control files, and the payroll database. Changes to these databases leave an audit trail and permit

only selected access dependent upon function. The databases are encrypted. All civil servants are

registered through IHRIS that include appropriate fields to protect against duplication. There are

effective controls with respect to the creation of new posts, that include budgetary controls, the

hiring of new employees (controlled by the posts database), and the assignment of promotions,

transfers, allowances and terminations. Further, through the use of verification procedures,

exception reports and staff surveys there is fair assurance of the integrity of the payroll

management system.

While effective controls exist for each of the main steps of the expenditure cycle (see PI-20),

procurement controls remain less than fully effective for all classes of budget expenditure. The legal

regulatory requirements do not clearly establish the Centrals Tenders Board Ordinance to extend to

special purpose companies (all of which are state owned enterprises) which operate on their own

procurement rules. Expenditure under the Infrastructure Development Fund is implemented

through these special purpose companies and this means that a substantial proportion of

development expenditure is not subject to the public procurement regulations, even though there

exists a Comptroller of Accounts Circular No.12 dated 9th November 2005. Civil society elements

state their concern for the lack of transparency and competition they experience with procurement

carried out by the special purpose companies.

Internal audit in Trinidad and Tobago remains rudimentary and does not focus on systemic issues.

The Internal Audit Units elaborate annual audit plans which when reported on are not disseminated

to the office of the Auditor General or to the Comptroller of Accounts who serves as overall

coordinator of the internal audit function. Upon specific requests made by the Auditor General they

are provided though.

C(iii). Accounting, recording and reporting

4 Such manual systems includes the application of excel worksheets for analysis, reconciliation and reporting.

16


Bank account balances are determined daily. Full bank accounts reconciliations take place

monthly, but given that it is all done manually it takes eight weeks after the close of a given month

to complete the reconciliation process. The accounting system does not facilitate advances.

Reconciliation and clearance of suspense accounts take place monthly within a month of the close

of the month (except for a few identified accounts) and are force closed as part of the end of year

procedures.

Government accounting standards that promote some disclosure are applied across all Line

Ministries consistently and are included in the annual reports that present the audited annual

financial statements. The monthly expenditure returns are comprehensive, consistent with the

budget classification and structure, and allow direct comparison of budget implementation to the

original budget. The reporting format distinguishes commitments and expenditure. The fact that

they are issued within 30 days of the close of the month has ensured their timeliness and hence

their effectiveness as a management tool. The report also includes a reconciliation of revenues, net

changes in debt position, expenditures and consolidated bank balances. This aggregate

reconciliation provides assurance as to the accuracy of the reports.

No reporting on the resources (in cash or in kind) disbursed to the front-line service delivery units

are carried out on a routine basis. There have been no Public Expenditure Tracking Surveys

(PETS) nor any other special surveys carried out in Trinidad and Tobago; nor are there any

planned to be carried out in the near future. The administrative structure of the chart of accounts

reflects entities specified to the level of primary schools and health clinics. Therefore, in principle, it

should be possible to track and report upon cash and kind resources received by such entities.

However, the accounting system being manual would make the reporting on cash and in kind

resources a considerable administrative burden.

Consolidated government accounts are prepared annually with revenue and expenditure

information as well as a statement of financial assets and liabilities. There is however no specific

reporting on non-salary expenditure returns. The annual appropriation accounts are completed

within four months after the close of the fiscal year and audited within seven months of the close of

the fiscal year.

C(iv). External scrutiny and audit

Both the position and the office of the Auditor-General (AG) meet most of the standards of

independence set by INTOSAI for supreme audit institutions. These include the legal requirements

with respect to the appointment and termination of the Auditor-General, the financing of the budget,

the hiring of staff, the auditor’s jurisdiction and the timing and extent of dissemination of audit

reports. In practice not all central government entities are audited every year. It is estimated that

three quarters of total expenditure is audited each year. A range of audits are performed, including

systems audits, financial and compliance, procurement and systems audits. Public Enterprises are

audited by private audit firms. At this time these audit reports are not disseminated to the Auditor-

General. The standards applied are those of the International Organisation of Supreme Audit

Institutions (INTOSAI).

In recent years the Office of the Auditor General has strengthened its capacity to undertake value

for money audits and increased its focus on systems audits. It is incorporating a considerably

stronger risk basis for its audit focus.

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Audit reports along with audited financial statements are submitted to the legislature within seven

months from the end of the fiscal year which is equivalent to three months from submission to the

AG. The Comptroller of Accounts prepares an aggregated financial statement based on ministry

financial statements.

The accounting officers are responsible for implementing corrective measures emanating out of the

Auditor General's findings. There is little evidence of systematic and timely follow up on external

Audit findings and it is often left to the field auditors to ensure that recommendations are followed

through as part of subsequent audits. It appears that there may be opportunities missed to

strengthen further the PFM system as the recommendations made by the Auditor-General are not

enforced through the full implementation of corrective measures.

Trinidad and Tobago is characterised by a strong democratic tradition and the parliamentary

oversight of the government’s budget processes also includes actual expenditure achievements

and the quality of expenditure management. The parliamentary debates cover fiscal policies as well

as the details of revenue and expenditure estimates. The status of parliamentarians is essentially

part-time with members reporting one day a week except for the budget period where attendance

may cover a full two-week period. Consequently there is a very limited time allocated to budget

oversight both ex-ante and especially ex-post.

The appropriations act is typically passed before the start of the financial year. The Supplementary

Budget Estimates presented by the Minister of Finance and voted by the parliament, is reviewed

once a year. This stance is consistent with the Government’s emphasis on a strong fiscal discipline

objective to its public finance management. Clear rules exist with respect to in-year budget

amendments by the executive.

A review of expenditure anomalies as identified through external audit is done through a public

accounts committee (PAC). The PAC is able to review less than 10% of audit reports, even though

reviews involve in-depth hearings when they occur. This has led to a substantial backlog of audit

reports that remain to be reviewed. At the present time PAC relies on the Auditor General to

ensure that Accounting Officers fully implement its recommendations. However there have not been

systematic or timely follow up on PAC recommendations across all Line Ministries.

18


Table 1.1 Overall summary of PFM Performance Scores

PFM Performance Indicator (PI) Scoring

Method

Dimension Ratings Overall

Rating i. ii. iii. iv.

A. PFM-OUT-TURNS: Credibility of the budget

PI-1 Aggregate expenditure out-turn compared to original approved budget M1 A A

PI-2 Composition of expenditure out-turn compared to original approved budget M1 D A D+

PI-3 Aggregate revenue out-turn compared to original approved budget M1 Not Assessed

PI-4 Stock and monitoring of expenditure payment arrears M1 Not Assessed

B. KEY CROSS-CUTTING ISSUES: Comprehensiveness and Transparency

PI-5 Classification of the budget M1 C C

PI-6 Comprehensiveness of information included in budget documentation M1 Not Assessed

PI-7 Extent of unreported government operations M1 Not Assessed

PI-8 Transparency of inter-governmental fiscal relations M2 Not Assessed

PI-9 Oversight of aggregate fiscal risk from other public sector entities M1 Not Assessed

PI-10 Public access to key fiscal information M1 Not Assessed

C. BUDGET CYCLE

C(i) Policy-Based Budgeting

PI-11 Orderliness and participation in the annual budget process M2 A D B B

PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting M2 C A D C C+

C(ii) Predictability and Control in Budget Execution

PI-13 Transparency of taxpayer obligations and liabilities M2 Not Assessed

PI-14 Effectiveness of measures for taxpayer registration and tax assessment M2 Not Assessed

PI-15 Effectiveness in collection of tax payments M1 NR A A NR

PI-16 Predictability in the availability of funds for commitment of expenditures M1 Not Assessed

PI-17 Recording and management of cash balances, debt and guarantees M2 Not Assessed

PI-18 Effectiveness of payroll controls M1 A B A C C+

PI-19 Competition, value for money and controls in procurement M2 C D D D D

PI-20 Effectiveness of internal controls for non-salary expenditure M1 B C B C+

PI-21 Effectiveness of internal audit M1 C C C C

C(iii) Accounting, Recording and Reporting

PI-22 Timeliness and regularity of accounts reconciliation M2 Not Assessed

PI-23 Availability of information on resources received by service delivery units M1 D D

PI-24 Quality and timeliness of in-year budget reports M1 Not Assessed

PI-25 Quality and timeliness of annual financial statements M1 B A C C+

C(iv) External Scrutiny and Audit

PI-26 Scope, nature and follow-up of external audit M1 Not Assessed

PI-27 Legislative scrutiny of the annual budget law M1 B B D C D+

PI-28 Legislative scrutiny of external audit reports M1 D C C D+

D. DONOR PRACTICES

D-1 Predictability of Direct Budget Support M1 A C C+

D-2 Financial info provided by donors on project and program aid M1 D D D

D-3 Proportion of aid that is managed by use of national procedures M1 A A

19


II. Assessment of the impact of PFM weaknesses

When viewed from the perspective of the three main objectives of a sound PFM system, namely

aggregate fiscal discipline, strategic allocation of resources and the efficient delivery of services;

Trinidad and Tobago scores well with respect to fiscal discipline at the most aggregate levels. In

contrast at the Line Ministry level there is a poor match of outturns to estimates. The guidance by a

multi-year fiscal framework (derived from the Article IV consultation forecasts) in setting annual

macro-fiscal parameters and the conservative posture in the specification of a budget oil price, with

a definite budget calendar that facilitates the meaningful bottom-up participation by ministries, along

with the sound cash management and debt management, and the achievement of predictable

budget releases and effective payroll management all point to efficient delivery of services.

However these positives are negatively impacted by the absence of cabinet approved ceilings at

the beginning of the budget formulation cycle, weaknesses in procurement management and the

lack of financial feedback at the end of the service delivery cycle – the receipts by the front line

facilities such as primary schools and primary health care facilities.

The main areas of PFM performance improvement since the 2008 PEFA Assessment are:

The timeliness of budgetary approval by the parliament

The reconciliation of assessments, arrears, collections and transfers for the main tax

revenues

The management of budgetary support both by way of volume and disbursement schedule

predictability

The degree of utilization of government PFM systems by Development partners

There are four main factors that colour the PFM of the central government in Trinidad and Tobago:

1. Single Treasury Account: All payments by Line Ministries are made out of a single treasury

account. Line Ministries are responsible for check reconciliations against their cash books but

only the Treasury carries out full bank reconciliations.

2. Centralized tendering procedures: All management of tenders beyond a ministerial threshold

is carried out by the Centrals Tenders Board. The Centrals Tenders Board Ordinance governs

procurement across central government and sub national government but does not cover the

procurement under the State Owned Enterprises including the Special Purpose Companies

that are employed for carrying out projects funded through the Infrastructure Development

Fund.

3. The employment of manual non-salary expenditure control and accounting systems: The

employment of manual non-salary expenditure control and accounting systems, while not

seeming to compromise on quality or basic effectiveness introduces some delay in

reconciliation and reporting.

4. The diluted role of parliament in budgetary oversight: Trinidad and Tobago has a strong

democratic tradition and has clear parliamentary rules encoded in its standing orders.

However, the one day a week attendance of parliamentarians, coupled with many of its

members being in the government constrains the time that it can garner to effectively review

budget documentation as well as audit reports.

20


1. Aggregate Fiscal Discipline

With respect to aggregate fiscal discipline, Trinidad and Tobago’s comprehensive management of

debt; effective fiscal risk assessment and oversight of public enterprises; credible fiscal forecasts

that serves as the basis for top-down budgetary discipline; and a comprehensive and effective

establishment and commitment control process all point to the ability to deliver strongly on

aggregate fiscal discipline (see PI-1, PI-2, PI-3, PI-16, PI-17 and PI-18). This is further

strengthened by a strict commitment control system supported by an effective budget release

system. There is effective external audit at the level of financial and compliance audit with some

elements of systems audit executed. The absence of significant extra-budgetary activity also

contributes to the achievement of fiscal discipline (see PI-7). However, there remain some

concerns with respect to the effectiveness of internal audit and the level of competition achieved

through procurement management.

2. Strategic Allocation of Resources

Trinidad and Tobago still needs to take a number of important steps towards achieving a budgetary

process to be fully capable of the strategic allocation of resources (see PI-5, PI-11 and PI-12). In

particular the absence of indicative fiscal aggregates in the process of developing sector strategies

undermines the likelihood of effectively translating strategic goals through the budget formulation

and budget implementation stages. Sustainability, a crucial strategic objective is undermined

because little attention is paid to life cycle costing (investment cost plus forward linked recurrent

expenditure) in the development of sector programs and projects. Even where these occur it is

unlikely that the careful balance between budgeted investments and their related forward linked

recurrent charges can be maintained given the massive cuts experienced by Line Ministries through

the budget preparation process. Without budget ceilings at the start of the budget preparation

process Line Ministries have little opportunity to prioritize their programs taking into account such

factors as life cycle costing in the preparation of their development budgets.

While there is very strong policy dialogue incorporated into the budget process, the absence of

cabinet approved ceilings at the beginning of the budget cycle leaves a vacuum for defining

priorities which has led to persistent large mismatches between budget bids and the availability of

fiscal resources. The budget classification in Trinidad and Tobago remains principally economic

and administrative and so is not directly capable of supporting a policy based budgeting process

and thus the input for achieving the strategic allocation of resources.

Although the development objectives do not rely heavily upon Development Partner inputs, there

are missed strategic opportunities that arise due to the lack of a close alignment of development

partner grants with the budget process and an almost total absence of timely reporting on project

and programme achievements consolidated into the national consolidated financial reporting

framework. Not tracking resources received by front line service delivery units such as primary

schools and primary health care facilities (see PI-23) is a missed opportunity to better manage,

coupled with an effective monitoring and evaluation framework focussed on outputs and outcomes,

the achievement of effectiveness in the strategy plans.

21


3. Efficient Service Delivery

There are areas that Trinidad and Tobago has had much success in contributing to efficient service

delivery. These include the improving collection of revenues which provides a sound basis for

achieving the efficient delivery of services; and also there have been considerable efficiency gains

that have a risen as a consequence of Trinidad’s sound cash and debt management both with

respect to efficient liquidity management, as well as with respect to the market response to sound

debt management with the subsequent reduction in the cost of money to government. The

improved performance of the tax administration offers increasing opportunity for improved revenue

collection.

However there remain some difficulties with respect to public procurement. The current legal and

regulatory framework for public procurement does not include a number of opportunities for

improving competition in public procurement. There are no requirements to prepare and publish

procurement plans; there is no requirement for the implementation of an effective, independent

public procurement complaints mechanism and there is no oversight authority to ensure operational

adherence to the public procurement procedures. Public procurement is further complicated by

the creation of special purpose companies set up as public corporations that are used to procure

goods works and services for the Line Ministries. These special purpose companies are not

required to follow the public procurement laws and regulations. However, they have some

guidelines set out by the Investments Division of the Ministry of Finance and the Economy.

Significant contributions to efficient service delivery can be made through effective monitoring of

transfers to frontline service delivery units to guide policy and inform on the efficiency of service

delivery.

III. Change in performance since the previous assessment

PI-1 was not part of the assessment remit but had to be reviewed to place the entire exercise into

context. Compared to the 2008 PEFA assessment, PI-1 improved from a B score to an A score

reflecting an improvement in aggregate fiscal discipline.

Three other Performance Indicators (PIs) improved. PI-11, which is a government indicator, moved

from a C+ to a B due to the early approval of the budget estimates by the legislature. The other two

are donor indicators; D-1 and D-3. Improvement in D-1 was due to availability of data from donors

to score, the low level of deviations from forecast disbursement and actual disbursement as well as

the weighted delays in quarterly disbursements. D-3 improved because of donors' decision to

provide both direct budget support and sector budget support using national standards, of which

more than 90% of donor support adopted country systems.

22


Table 1.2 Change in performance since 2008 PEFA assessment

PFM Performance Indicator Scoring

Method 2008 2013 Change

PI-1 Aggregate expenditure out-turn compared to original approved budget M1 B A

PI-2 Composition of expenditure out-turn compared to original approved budget M1 C D+

PI-3 Aggregate revenue out-turn compared to original approved budget M1 A Not assessed

PI-4 Stock and monitoring of expenditure payment arrears M1 B+ Not assessed

PI-5 Classification of the budget M1 C C

PI-6 Comprehensiveness of information included in budget documentation M1 B Not assessed

PI-7 Extent of unreported government operations M1 A Not assessed

PI-8 Transparency of inter-governmental fiscal relations M2 B+ Not assessed

PI-9 Oversight of aggregate fiscal risk from other public sector entities M1 A Not assessed

PI-10 Public access to key fiscal information M1 B Not assessed

PI-11 Orderliness and participation in the annual budget process M2 C+ B

PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting M2 C+ C+

PI-13 Transparency of taxpayer obligations and liabilities M2 B+ Not assessed

PI-14 Effectiveness of measures for taxpayer registration and tax assessment M2 B+ Not assessed

PI-15 Effectiveness in collection of tax payments M1 D+ NR

PI-16 Predictability in the availability of funds for commitment of expenditures M1 B+ Not assessed

PI-17 Recording and management of cash balances, debt and guarantees M2 A Not assessed

PI-18 Effectiveness of payroll controls M1 C+ C+

PI-19 Competition, value for money and controls in procurement M2 D+ D+

PI-20 Effectiveness of internal controls for non-salary expenditure M1 C+ C+

PI-21 Effectiveness of internal audit M1 C C

PI-22 Timeliness and regularity of accounts reconciliation M2 B Not assessed

PI-23 Availability of information on resources received by service delivery units M1 D D

PI-24 Quality and timeliness of in-year budget reports M1 A Not assessed

PI-25 Quality and timeliness of annual financial statements M1 C+ C+

PI-26 Scope, nature and follow-up of external audit M1 B Not assessed

PI-27 Legislative scrutiny of the annual budget law M1 D+ D+

PI-28 Legislative scrutiny of external audit reports M1 D+ D+

D-1 Predictability of Direct Budget Support M1 NS C+

D-2 Financial info provided by donors on project/program aid M1 D D

D-3 Proportion of aid that is managed by use of national procedures M1 D A

Key:

Improved Slipped Not Comparable No Change

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IV. Prospects for PFM Reforms

The Government of Trinidad and Tobago has embarked upon a number PFM reforms since 2005.

As is clearly articulated in the 2011 Budget Speech – Moving from Promises to Performance,

Trinidad and Tobago (T&T) has identified performance as an important objective for governance

and government operations. The IADB has provided Trinidad and Tobago funding to support PFM

reforms. Implementation oversight and monitoring is the responsibility of the Economic

Management Division headed by a Deputy PS. While some preliminary work is in progress a PFM

reform strategy to be implemented with appropriate institutional arrangements is yet to be initiated.

There is some indication though that consultants have completed a draft report that is currently

being considered by officials. Specific improvements are carried out by divisional heads.

There have been specific PFM reform initiatives that have been undertaken including the

development of a draft public procurement bill that is yet to be tabled before parliament. Particular

initiatives within the Office of the Auditor General are to strengthen systems audit as well as

introduce risk based audit and improve value for money audits which have been in existence since

the1980's. By way of development partner participation and support of PFM improvements, this

would require a broader dialogue within the budget formulation process of the Economic

Management Division, the Board of Inland Revenue and the Office of the Auditor-General which

serve as the main drivers of PFM improvements at this time.

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1 Introduction

1.1 Objective of the PFM-PR

The overall objective of the PEFA assessment was to assist in improving the Public Finance

Management performance in Trinidad & Tobago for central government and line ministries. The

assessment was in two fold - first, central government and second sector assessment. The PEFA

methodology requires the assessment of 31 high-level performance indicators - 28 for central

government and 3 for donors. The central government assessment was a "limited PEFA

assessment because both donors and government agreed to review the performance of

Performance Indicators (PIs) that scored C or below in the 2008 PEFA assessment. In view of this,

16 PIs were assessed.

Specifically, the central government assessment was to review progress made over time since the

2008 assessment. This required the appraisal of PFM systems, processes and procedures in

central government agencies, first from the Ministry of Finance perspective as the lead PFM

ministry looking at the top-down approach and then to some selected line ministries as

implementing agencies for the bottom-up approach. The Public Finance Management Performance

Review (PFM-PR) uses a score of A to D for rating each indicator - an A meaning a high

performance and a D meaning a low performance. In addition to the ratings, a narrative is

presented describing and supporting each score and the reasons thereon.

The country's macro-economic context, the legal and regulatory framework, and the institutional

framework supporting PFM were outlined. The PFM-PR is intended to serve as a monitoring and

evaluation tool for effective dialogue between government and donors regarding PFM reform.

As the "Strengthened Approach" which required a country/government led assessment, a donor

coordination and the availability of a common data pool for PFM reform, it turns out that there was

common understanding in this regard leading to a successful mission. The PEFA framework was

intentionally designed not to make any recommendations as part of the "strengthened approach" in

order to encourage a total and complete government led approach to PFM reform.

1.2 Process of preparing the PFM-PR

The assessment was in twofold: first to review central government PFM performance to identify

areas of weakness using the 2008 PEFA assessment as the base line; the second part of the

assessment was sector-specific driven by the EU's eligibility criteria for sector budget support.

The EU Delegation to Trinidad and Tobago in consultation with other major donors and the

Government as a key stakeholder prepared the Terms of Reference. Apart from the central

government assessment, the stakeholders agreed to conduct a sector PEFA assessment to review

the current processes supporting PFM in the selected line ministries. In view of this, five MDAs

were part of the assessment; these were the Ministry of Trade, Industry and Investment, the

Ministry of Labour and Small and Micro Enterprise Development, the Ministry of Food Production,

the Ministry of Energy and Energy Affairs and the Ministry of Environment and Water Resources. A

day's workshop on the PEFA methodology was carried out during the field mission for key

personnel of the five line ministries as well as officials from the Ministries of Planning and

Sustainable Development and Finance and the Economy. Some donor and civil society

representatives were also present.

26


As one of the key deliverables, an inception report was presented to the EU Delegation, which

included a work plan with a schedule of meetings and key MDA staff needed. The team of

consultants received an excellent cooperation from Government officials, donor partners and civil

society organisations in spite of time constraints and busy work schedules. Responses to the

consultants request with regards to official documentation as supporting evidence in addition to

additional meeting schedules were timely met. Many of the interviews required the presence of key

heads of divisions under each line ministry, namely planning, budgeting, procurement, internal

audit, accounting and payroll. The presence of Permanent Secretaries of the various line ministries

visited was very much appreciated as they stayed throughout the interview sessions to ensure the

consultants received responses to questions and the data requested. The triangulation process was

fully appreciated by each interviewee, having understood that it serves as check on the right type of

information for quality assurance.

A debriefing workshop was organised at the end of the field mission where preliminary findings

were presented to government officials and donors. The draft report was submitted to all

stakeholders for review and comments after which the final report was submitted, aimed at

improving the dialogue on PFM improvements and reform between government and donors.

Assessment team

The EU Delegation contracted ACE International Consultants, Spain for the assignment. Two PFM

experts were hired by ACE for the mission, namely Ronald E. Quist and Charles K. Hegbor.

1.3 Methodology

The field mission was carried out between November 6th 2013 and December 5th 2013. A review

of the legal and regulatory framework that governs Public Finance Management was important for

placing the exercise in the appropriate legal and regulatory framework context.

The PEFA methodology framework was adopted. This involves the use of PFM performance

measurement framework to measure the strength of PFM reforms. An effective and orderly PFM

measurement framework required these three levels of budgetary outcomes, namely:

Effective controls of the budget totals and management of fiscal risks contributing to

maintain aggregate fiscal discipline

Planning and executing the budget in line with government priorities contributing to

implementation of government's objectives, otherwise known as strategic allocation of

resources.

Managing the use of budgeted resources contributing to efficient service delivery and

value for money

Undertaking a PFM reform also requires an assessment of capacity. This is important to ascertain

the pace and extent to which PFM reform activities can be implemented. It also provides a basis for

determining a realistic program of training workshops and capacity development support.

The 2013 repeat PEFA and sectoral assessment involved the following:

Review of legal and regulatory documentation, budget documentation and financial and

audit reports;

27


Assessment of the requirements for further analysis and evaluation of PFM practice in the

central government and the three specific sectors, based upon interviews with

Government Officials in the Ministry of Finance, Central Bank of Trinidad and Tobago, the

Parliament, the Office of the Auditor-General, the Ministries of Labour and Small and

Micro Enterprise Development, Education, Works and Infrastructure, Environment and

Water Resources . Development Partners including the European Union and the Inter-

American Development Bank, among others were interviewed

Quantitative analysis of official financial and budgetary data;

Assessments of PFM procedures and systems; and

The application of professional judgment

An important consideration in developing these indicators is an appreciation of the quality,

comprehensiveness and accuracy of data that is used to determine the indicators. The reliability of

the indicators can only be as good as the accuracy of the financial data upon which they were

calculated. Emphasis was placed on the completeness and quality of financial data in determining

the PEFA indicator measures

It is important to state that due to the fact that the 2013 assessment is a 'limited' PEFA assessment,

it was not possible to compare progress over time except for those 16 indicators which were

assessed, in addition to PI-1 assessed in context of the entire performance measurement

framework:

No. Performance Indicators 2013 Assessment

PI-1 Aggregate expenditure out-turn compared to original approved budget In context)

PI-2 Composition of expenditure out-turn compared to original approved budget

PI-5 Classification of the budget

PI-11 Orderliness and participation in the annual budget process

PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting

PI-15 Effectiveness in collection of tax payments

PI-18 Effectiveness of payroll controls

PI-19 Competition, value for money and controls in procurement

PI-20 Effectiveness of internal controls for non-salary expenditure

PI-21 Effectiveness of internal audit

PI-23 Availability of information on resources received by service delivery units

PI-25 Quality and timeliness of annual financial statements

PI-27 Legislative scrutiny of the annual budget law

PI-28 Legislative scrutiny of external audit reports

D-1 Predictability of Direct Budget Support

D-2 Financial info provided by donors on project and program aid

D-3 Proportion of aid that is managed by use of national procedures

1.4 Scope of the assessment

As suggested in the PEFA guidelines, the following main PFM indicators were adopted as a guiding

framework for assessing the current status of PFM practice and performance in Trinidad & Tobago.

The assessment focuses on all public revenues and expenditures of the central government and

the institutions responsible for such. The scope of the PEFA Assessment is limited to the central

government’s public finance management and does not include the Local Governments. Nor does

28


it include an assessment of the public enterprises (commercial and non commercial, financial and

non financial). In terms of the scope of public sector expenditure covered in this assessment the

proportion of expenditure was a little in excess of 80%.

The assessment also looked into revenue sources and its expenditure, application of procurement

and contracting procedures at the national level.

As required by the Terms of Reference, three sectors under the support of the EU budget support

operations, namely environmental governance, private sector development support and

diversification from sugar production were screened using the PEFA methodology dimensions in

order to assess relevant PFM issues in those sectors. Five Ministries under the three sectors were

reviewed, namely Ministry of Food Production, Ministry of Trade, Industry and Investment, Ministry

of Energy and Energy Affairs, Ministry of Environment and Water Resources and Ministry of Labour

and Small and Micro Enterprise Development.

Paragraph 6 of the Guidance Note on Repeat PEFA Assessment released in February 2010 by the

PEFA Secretariat recommends the need to assess each of the 31 indicators in a repeat

assessment, using the previous assessment as a baseline for the repeat assessment. To buttress

this point, here is a quote from the Guidance Note on Repeat Assessment:

"It is also important to note that the assessment of each indicator should be linked to the

previous assessment i.e. that the focus is on explaining the performance trajectory by using

the earlier assessment as a starting point, rather than doing an assessment of the indicator

isolated from the previous assessment then subsequently comparing the ratings."

Therefore, it is important to state that going by the ToR, which suggests that the consultants should

assess 11 out of 31 high indicators, which ended up into assessing 14 indicators due to the fact that

three additional indicators scored 'C+' might be short of the requirements outlined in the Guidance

to Repeat Assessments. Therefore, the 2013 assessment can be described as a partial or mini

PEFA.

29


2 Country Background Information

2.1 Description of country economic situation

2.1.1 Country context

Table 2.1 below summarises the economic indicators over the last three years. Trinidad and

Tobago is a middle income Caribbean Island with a land area of 5,128 sq km. the GDP per capita

stands at US$17,934 (World Bank Source - 2012). The population is estimated at 1.5 million. The

country has had its fare share of the global economic crisis but has remained resolute to maintain

economic stability. Real GDP growth has been marginal over the last three years, recording a rate

on 0.2% in 2009/2010, a negative growth of 2.6% in 2010/2011 and a marginal increase to 0.2% in

2011/2012. The energy sector recorded positive GDP growth of 3.2% in 2009/2010 but declined to

negative 3.9% and 4.7% in 2010/2011 and 2011/2012 respectively. The non-energy sector

recorded successive negative growth rates of 1.8% and 1.6% in 2009/2010 and 2010/2011

respectively but picked up in 2011/2012 to a GDP growth rate of 3.6% in 2011/2012. Even though

the energy sector recorded negative growth in the last two years, it remains the largest contributor

to the country's economy, accounting for about 40% of GDP and 80% of total export but provides

only 5% of employment. Unemployment, according to the IMF Article IV Consultation report issued

in October 2013 stood at about 5%

The overall fiscal balance witnessed a marginal surplus of 0.1% of GDP in 2009/2010 but recorded

deficit of 0.1% and 1.1% in 2010/2011 and 2011/2012 respectively. The rate of inflation (end of

period) stood at 13.4%, 5.3% and 7.2% in 2009/2010, 2010/2011 and 2011/2012 respectively. The

Heritage and Stabilization Fund (HSF) received transfers of TT$3.03billion in 2009/2010 and

TT$2.89billion in 2010/2011. In 2011/2012 however, no transfers were made to the HSF. The total

HSF amounted to US$4.5bilion in August 2012, 18% of GDP. The gross official reserves stood at

an average of US$9.286billion over the last three years or an average of 12.97 months of import

cover. Macro-economic projections into the future suggest a GDP growth rate of 1.6% in 2012/2013

as well as a stable economic environment with the maintenance of a steady revenue inflow and

expenditure control patterns. There was a rise in foreign direct investment but this trend did not halt

the decline in capital and financial account, which recorded deficits. The current account balance

continued to remain in surplus but with steady declines as a result of higher cost of energy and non-

energy imports in spite of increases in oil and gas exports. The current account recorded a growth

of 20.3% of GDP in 2009/2010 but this declined sharply to 12.3% and 10.1% of GDP in 2010/2011

and 2011/2012 respectively.

The international rating agencies have rated Trinidad and Tobago from an "A" to an AA in

2012/2013 indicating a strong macro-economic environment and efficient debt management

strategy.

30


Table 2.1 Economic indicators (in percent of GDP, unless otherwise specified)

2009/2010 2010/2011 2011/2012 2012/2013

(estimate)

Real GDP growth (in percent) 0.2 -2.6 0.2 1.6

Energy 3.2 -3.9 -4.7 0.3

Non-energy 1/ -1.8 -1.6 3.6 2.5

Inflation (end of period) 13.4 5.3 7.2 4.0

Revenue 2/ 34.1 32.3 30.9 31.2

Energy 18.4 19.0 17.3 16.8

Non-energy 1/ 15.7 13.2 13.6 14.4

Expenditure 33.9 32.4 32.0 33.6

Current 29.0 28.0 27.7 29.2

Capital expenditures and net lending 4.9 4.4 4.3 4.5

Overall fiscal balance 0.1 -0.1 -1.1 -2.5

Overall fiscal non-energy balance -18.2 -19.1 -18.5 -19.3

External current account balance 20.3 12.3 10.1 8.8

Public sector debt 3/ 35.5 33.4 39.3 33.9

Net of HSF deposits 4/ 17.6 15.5 21.2 16.0

Gross official reserves (in US$ millions) 9,070 9,823 9,200 9,054

In months of imports 15.8 11.9 12.5 11.7

Source: IMF Article IV Country Report May22, 2013 1/ Includes VAT and Financial Intermediation Services Indirectly Measured (FISIM) 2/ Fiscal data is central government unless otherwise specified and refers to the fiscal year ending in September. 3/ Excluding debt issued for sterilization. 4/ Starting in 2013, assumes no additional contributions to the HSF

2.1.2 Overall government reform programme

The National Medium Term Policy Framework is the Government's strategic development

document that guides its developmental framework agenda. This policy replaces the Vision 2020.

The Medium Term Policy Framework covers the period 2011 to 2014. Five thematic areas form the

basis of the policy document. These are:

Crime and Law and Order

Agriculture and Food Security

Healthcare Services and Hospitals

Economic Growth, Job Creation, Competitiveness and Innovation

Poverty Reduction and Human Capital Development

Line ministries prepare their three-year strategic plan out of the Medium Term Policy Framework.

These strategies are further broken down into annual operational plans from which the budgets are

prepared.

Currently, government is engaging the major development partners on the way forward for a major

PFM reform program, which includes the development of a new chart of account in line with GFS

2001. There are efforts at improving the capacity and capability of some government institutions to

ensure greater transparency and accountability in the public sector.

31


2.1.3 Rationale for PFM reforms

As part of efforts to leverage on the successes of the existing PFM processes and procedures, as

well as to improve upon the weaknesses identified as outlined in the 2008 PEFA report,

Government priority has been to work towards attaining sound financial management across the

public sector. Major reform steps include but not limited to the development of a Medium Term

Expenditure Framework and the development of a new chart of account necessary for an integrated

financial management information system (IFMIS). Even though discussions are ongoing, the

actualisation of the major reform programs has rather been slow.

2.2 Description of budgetary outcomes

2.2.1 Fiscal performance

Oil and gas remain the main source of Government's revenue. Total revenue increased steadily

over the last three years, from TT$43.86billion in 2009/2010 to TT$50.06billion in 2011/2012, an

increase of 22.52% over the 2009/2010 figure. Revenue from energy sources contributed an

average of 56% with the remaining 44% from non-energy sources. Apart from the achievement of

budget surplus in FY2009/2010, budget deficits arose in the fiscal years 2010/2011 and 2011/2012,

thereby raising some fiscal concerns; these might be the result of increased recurrent expenditure

of which transfers and subsidies contributed an average of 48.8%. The country's total debt is well

managed due to the effective debt management strategy, which allows a sustainable fiscal

framework. Debt to GDP ratio declined from 35.5% in 2009/2010 to 33.4% in 2010/2011; however,

this increased to 39.3% in 2011/2012. Tables 2.1, 2.2A and 2.2B provide a summary of

government's fiscal performance over the last three years.

Trinidad and Tobago remains focused at attaining set objectives in the Medium Term Policy

Framework, by ensuring a steady growth in revenue generation by diversifying the economy, keep

overall expenditure under control and continue to raise debt from the international bond market in

order to free the domestic economy for competitive private sector development. The country is

further committed to maintaining and reducing debt stock for continuous macro-economic stability.

2.2.2 Allocation of resources

The current Government's development strategy is the National Medium Term Policy Framework

2011 to 2014. The Policy Framework aims, among others, to reduce crime, improve healthcare,

reduce poverty and improve economic activities. The National policy document is translated into

three-year strategic plans by line ministries with weak sector perspective. Further, the strategic

plans are operationalised annually through the budget. Both the strategy and the budget are

developed without a fiscal envelop (please, refer to PI-12).

As shown in Tables 2.2A and 2.2B below, between 85% and 87% of total government expenditure

is on recurrent within the last three completed fiscal years whiles 13% to 15% of total government

expenditure on capital and lending cost. Whiles transfers and subsidies accounted for between

48% and 52% of total expenditure, wages and salaries and expenditure on goods and services

were between 15% and 16%, and 14% and 16% respectively. Interest on government borrowings

accounted for between 6% and 7.5% of total government expenditure.

32


Table 2.2A Summary of Central Government Operations (TT$million)

2009/2010 2010/2011 2011/2012

(Art IV)

2012/2013

(Budget)

Revenue 43,863 46,972 50,057 50,700

- Energy 23,649 27,688 27,638 26,750

- Non-energy 20,214 19,284 22,419 23,950

Expenditure 43,705 47,164 53,919 58,369

Recurrent expenditure 37,347 40,729 46,305 50,906

- wages and salaries 6,711 7,205 8,482 8,636

- goods and services 6,441 6,496 9,092 9,444

- transfers and subsidies 20,904 24,342 25,318 29,015

- Interest payment 3,290 2,685 3,413 3,812

Capital expenditure & net lending 6,358 6,435 7,614 7,464

Non-energy balance -23,491 -27,880 -31,500 -34,419

Overall balance 158 -191 -3,862 -7,669

CLICO financial support 3,400 848 5,100 0

Overall balance including CLICO -3,242 -1,039 -8,962 -7,669

Total financing including CLICO 3,242 1,039 8,962 7,669

Foreign financing -1,056 51 1,854 2,556

Domestic financing 4,297 988 7,108 5,113

Transfers to Heritage and Stabilization Fund -3,027 -2,890 0 0

Source: IMF Article IV Country Report 2013

Table 2.2B: Summary of Central Government Operations (%)

Particulars 2009/2010 2010/2011 2011/2012 (Art IV)

2012/2013 (Budget)

Revenue 100.0% 100.0% 100.0% 100.0%

- Energy 53.9% 58.9% 55.2% 52.8%

- Non-energy 46.1% 41.1% 44.8% 47.2%

Expenditure 100.0% 100.0% 100.0% 100.0%

Recurrent expenditure 85.5% 86.4% 85.9% 87.2%

- wages and salaries 15.4% 15.3% 15.7% 14.8%

- goods and services 14.7% 13.8% 16.9% 16.2%

- transfers and subsidies 47.8% 51.6% 47.0% 49.7%

- Interest payment 7.5% 5.7% 6.3% 6.5%

Capital expenditure & net lending 14.5% 13.6% 14.1% 12.8%

2.3 Legal and institutional framework for PFM

2.3.1 The legal framework for PFM

The 1976 Constitution of the Republic of Trinidad and Tobago provides the underlying foundations

of the Public Finance Management (PFM) out of which the specific laws and regulations emanate.

The Exchequer and Audit Act (1959 plus Amendments up to 2012) is the main PFM law in the

country. Table 2.3 below provides a detail overview of the main PFM laws and regulation.

33


Table 2.3 Overview of the main laws and regulations governing PFM in Trinidad and Tobago

Area Description

General - Constitution The 1976 Constitution is the supreme law of the land. All other laws are rooted

in the Constitution

The roles of the three arms of government (executive, parliament and the

judiciary) are clearly articulated in the Constitution

It mandates the establishment of the Consolidated Fund out of which all public

funds are to be deposited and expended. It further established other statutory

funds for specific functions (Section 12 to 17 of the EAA and Chapter 8 Section

112 to 114 of the Constitution)

It provides for the establishment of the Office of the Auditor General and for

adequate staff to be provided. All the salaries and allowances of the Auditor

General are a direct charge to the Consolidated Fund (Section 7 to 11 of EAA

and Chapter 8 Section 117 of the Constitution)

Budget preparation and

execution

The Exchequer and Audit Act (1959 plus Amendments up to 2012) is the main

budget preparation and execution law

It provided for the function of the Minister of Finance. It empowers the Minister

of Finance to plan, budget and utilise, account and report all government

revenue and expenditure. It sets out the roles of various divisions of the Ministry

of Finance such as the Budget Division for providing leadership in macro fiscal

framework, planning and budget formulation, the Treasury Division headed by

the Comptroller of Accounts for ensuring proper accountability and reporting,

among others (Section 3 to 5 of the EAA).

It sets borrowing limits of the government

The roles and responsibilities of all government accounting officers are clearly

laid out in the EAA

A number of laws regulate the functions of the Ministry of Finance. Some of the

laws include the following:

- Heritage and Stabilisation Funds

- Finance Acts (plus amendments)

- Appropriations Acts

- Freedom of Information Act

Tax administration The Finance Act (plus amendments) governs the revenue administration in

Trinidad and Tobago. It provides for levying of Value Added Tax on goods and

services, Income tax on profit from trade and business, Pay-As-You-Earn

(PAYE) for salaried workers and Customs duties on imports and exports

Specific laws for revenue administration include:

- Customs Act 1938 + Amendments to date

- Value Added Tax Act, 1939 + Amendments to date

- Income Tax Act, 1938 + Amendments to 1980

Public sector entities Part IV Sections 31 to 40 of the Exchequer and Audit Act provides clear legal

guidelines for the establishment and management of the finances of statutory

boards. Statutory boards are mandated to maintain proper books of accounts

for public accountability and transparency in order that the Auditor General will

have complete access for external audit.

Expenditure control and

internal audit

The EAA details the role of the Minister of Finance. It provides the

responsibilities of the Treasury - headed by the Comptroller of Accounts. If

further mandates the Comptroller to ensure proper use and accountability of all

government funds by all government accounting officers.

The EAA articulates the prescription of standardised financial regulation

34


Area Description

manuals (accounting and internal audit) for use by all government accounting

officers.

External Audit Chapter 8 Sections 116 and 117 of the Constitution and Section 7 to 11 of EAA

provide the legal basis for the Office of the Auditor General. She has the power

to have complete access to all government financial and administrative records

as part of her mandate to audit the government. She prepares her own audit

plans without the influence of the Executive or any other body. She may act on

the request of the executive to audit specific entities as and when required. She

has the authority to audit statutory boards and submit all her audit reports for

both central government and statutory boards to Parliament. Currently the AG

does not audit any state-owned enterprise. In order for the AG to audit these

SoEs, the Auditor General has to be appointed by the SoE.

Legislative oversight Chapter 4 Section 39 of the Constitution establishes Parliament. Parliament is

made up two chambers, the House of Representatives (Section 40 to 45) and

the Senate (Section 46 to 52).

Section 53 to 63 details the powers of Parliament to enact laws and provide

legislative oversight on the Executive

Banking and financial

laws

Central Bank Act Chapter 79:02 (amendments 1986, 1993 and 1994) governs

the Central Bank of Trinidad and Tobago. It provides the legal framework for the

appointment of a Governor. It stipulates the relationship between the bank and

the government in terms of being the government banker as well as providing

temporary loans/advances to the government as may be agreed between the

Minister of Finance and the Bank.

It further provides the legal guidelines for regulating financial institutions (both

government and private) operating in the country.

Procurement Government procurements are in two folds, one through the Centrals Tenders

Board (CTB) and the other through Special Purpose Companies. The Special

Purpose Companies were set up to reduce the lengthy legal and administrative

procurement procedures in the CTB Ordinance.

The CTB Ordinance No 22 of 1961 regulates public procurement that are been

referred to it by the ministries, departments and agencies. Procurements values

at TT$2million or above are undertaken by the CTB.

2.3.2 The institutional framework for PFM

Legislature

The Constitution is the Supreme Law of the land. It empowers Parliament to pass laws and legal

regulations, provide executive oversight and serves as a public institution for elected people's

representative to deliberate over issues of national interest. Parliament is made of two chambers - a

41-seat House of Representatives excluding the Speaker and a 31-seat Senate including the

President of the Senate. Parliamentarians are part-time officials who attend to the business of the

House once a week. Even though the Constitution mandates Parliament to amend budget

proposals submitted by the executive, in practice, it does not occur due to the high number of

Parliamentarians supporting the government of the day. Each House has a separate set of

Standing Orders. It regulates the proceedings in the two chambers. It further empowers the setting

of various committees to oversee the business of the day. Currently, there are 5 Joint Select

Committees with oversight mandates. These are:

Public Accounts Committee - responsible for reviewing public accounts and audit reports

of the Auditor General of all government ministries, departments and agencies

35


Public Account (Enterprises) Committee - responsible for reviewing the financial

statements and audit reports of all state-owned enterprises

Joint Select Committee, Municipal Corporations and Service Commission - oversees the

activities of municipalities and operations of commissions

Joint Select Committee, Government Ministries, Statutory Authorities and State

Enterprises Group 1

Joint Select Committee, Government Ministries, Statutory Authorities and State

Enterprises Group 2

It should be noted that the Finance Committee (Committee of the Whole) of the House of

Representatives is responsible for reviewing budget estimates and macro fiscal data

Executive

There are 32 central government ministries including the office of the Prime Minister. The country is

divided into 14 municipal corporations, made up of the 2 city corporations, 3 borough corporations

and 9 regional corporations. The President is the Chief Executive Officer of the country. The Prime

Minister is the head of cabinet and the appointing authority for ministers of the various ministries.

Judiciary

The Judiciary is the third arm of government. It derives it powers from the Constitution. The

Supreme Court of Appeals is the apex of the judicial arm, followed by the High Courts and the

Magistrate Courts. Other specialised courts such as the Tax Appeals Board are setup to adjudicate

on tax disputes

Auditor-General

The Constitution and the Exchequer and Audit Act set up the Office of the Auditor General. for

auditing all government institutions and agencies. The staff of the Office of the Auditor General are

appointed by the Public Services Commission. The Office is accountable to Parliament at least

every year or as and when required. The Executive President in consultation with the Prime

Minister appoints the Auditor General. The Auditor General's salary and allowances are funded

directly from the Consolidated Fund. Her removal from office can only be done after

recommendation from a tribunal set up by the President to investigate the call for removal.

The Ministry of Finance

The Ministry of Finance and the Economy is the lead ministry for implementation of approved fiscal

policy of the government of the day. It derives its powers from the Exchequer and Audit Act. The

Finance Minister is accountable to Cabinet and Parliament referencing the day-to-day financial

management of the economy by leading and coordinating the development of the macro fiscal

framework, annual budget estimates, the activities of the line ministries, and ensuring the efficient

use, accounting and reporting of government funds in all government institutions.

The Budget Division

It is the responsibility of the Budget Division of the Ministry of Finance and the Economy to plan

government's fiscal policy. It further plans and guides the entire budget formulation and preparation

process. In conjunction with the Ministry of Planning and Sustainable Development, it ensures the

effective planning and implementation of the Public Sector Investment Program (PSIP) and other

Public Private Partnerships (PPPs) ventures.

Comptroller of Accounts

36


The Comptroller of Accounts is the head of the Treasury Division of the Ministry of Finance and the

Economy. She is responsible for proper accountability of all government funds including the

Consolidated Fund and the Infrastructure Development Fund. She is also responsible for

authorising any banking arrangement, developing and managing the chart of account, development

of international accepted accounting and internal audit standards and policies and ensures their

compliance thereon.

The Economic Management Division

It is a division of the Ministry of Finance and the Economy, responsible for debt management,

macro fiscal forecasting and policy development.

The Centrals Tenders Board

This is a unit under the Finance Ministry for carrying out government procurement above

TT$2million. It provides technical assistance to procurement officers in the various ministries,

departments and agencies on procurement procedures. It is the “sole and exclusive authority in

inviting, considering and accepting or rejecting offers for the supply of articles or for the undertaking

of works or any services necessary for carrying out the functions of Government or any statutory

bodies, and to dispose of surplus or unserviceable articles belonging to the Government or any

statutory bodies.”

Financial Systems

IHRIS (Integrated Human Resource Information System) -Payroll and Human Resource

Management at national and provincial levels

Revenue administration and tax collection (using GENTEX software); and

Customs administration using ASYCUDA World)

IFMIS - ongoing discussions for the development of a new chart of accounts and a rollout

of the integrated financial management and information system (IFMIS)

Ministries, Departments and Agencies

Line ministries are the implementing agencies of government policies. A Minister of State is the

political head of the line ministry, followed by the accounting officer or administrative head -

Permanent Secretary who is a public servant. . The Minister is responsible for setting policy

initiatives and ensuring their achievements. The Permanent Secretary is responsible for the

management and implementation of the budget and accountable to the Comptroller of Accounts

and Parliament.

Public Enterprises

A number of public enterprises exist in Trinidad and Tobago for the provision of public services in

the area of transport, communication, construction, energy, and agriculture and food production,

among others. Some of the public enterprises are non-profit entities. The Public Investment Division

of the Ministry of Finance is responsible for supervising the State-Owned Enterprises (SoEs) and

ensures the risk portfolios are within limits. SoEs are required to submit their annual corporate

operational and financial plans to the National Treasury. The audit reports are sent to Parliament.

There are also Special Purpose Companies (autonomous public entities) who principally provide

services for the line ministries.

The Central Bank of Trinidad and Tobago

The Constitution establishes the Central Bank of Trinidad and Tobago (CBTT). It is the government

banker. It facilitates international banking transactions for the government as well as providing

domestic financial market services such as Treasury Bills on behalf of the government. It monitors

37


all government borrowings, both domestic and foreign. It publishes quarterly fiscal statistics and

annual economic reports.

Table 2.4 below provides an overview and responsibilities of the main actors in Public Finance

Management

Table 2.4 Overview of the role and responsibility of the main PFM players

Institution Main role and responsibility in PFM

Parliament Parliament is Constitutionally mandated to review government budget estimates as well as

the macro fiscal framework supporting the estimates. It is also mandated to perform an

oversight role by reviewing all audit reports submitted to the legislature by the Auditor

General

Auditor

General's

Department

It is a government agency with the legal mandate to perform annual statutory financial audit

of all government agencies and statutory boards. The audit reports thereof must be

submitted to Parliament

Internal Audit Currently, there is no independent government agency superintending over internal audit

functions. The Comptroller of Accounts is the administrative head of internal audit

MOFE It is the lead government ministry in providing financial, economic, fiscal and debt

management services for the government. It oversees the implementation of government

fiscal policy

Comptroller of

Accounts

The Comptroller of Accounts heads the Treasury Division of the Ministry of Finance and the

Economy. Her main role is to coordinate the implementation of government fiscal policies by

ensuring strict compliance of all financial regulations in the relevant public finance

management laws and regulations

Board of Inland

Revenue,

Customs and

VAT

The BIR is the main revenue collection agency of the government. It is a division of the

Ministry of Finance and the Economy. Both tax and non-tax revenue are collected and

deposited into the Central Bank of Trinidad and Tobago. The Board is headed by a

Chairman. The day-to-day administration of the Board is headed by two Comptrollers -

Comptroller of Customs and Comptroller of Inland Revenue (Income Tax and VAT)

Main central

government

agencies

Line ministries are the implementing agencies of government fiscal policies. There are about

69 main expenditure heads captured by the 2011/2012 budget. The core role of these

ministries departments and agencies are centred on the five medium term policy priorities;

these are crime and law and order, agriculture and food security, health care services and

hospitals, economic growth, job creation, competitiveness and innovation and poverty

reduction and human capital development

Central Bank of

Trinidad and

Tobago

The Central Bank of Trinidad and Tobago is the government banker. It serves as depository

of government funds from all sources, be it tax revenue, non-tax revenue, domestic or

foreign loans, grants from donors, proceeds from securities and bonds, among others.

2.3.3 Key features of the PFM system

Both central government and local governments have the same financial year, that is, 1st October

to 30th September. The annual budget process begins with the issuance of a budget circular

between late February and early March with a two-month window for MDAs to complete and submit

their estimates to the Ministry of Finance. Officials of various ministries claim their internal

processes begin a month earlier prior to receiving the circulars from the Ministry of Finance and the

Economy. The executive, over the last three completed fiscal years, submitted the budget by the

first week of September except for the FY 2011/2012 where budget submissions were made in the

first week of October. Consequently, the Appropriations Acts for 2011/2012 were passed 21 days

after the end of the fiscal year 2010/2011. The Exchequer and Audit Act allows a 30-day funds

38


withdrawal period to run government operations in the event Parliament delays in passing the

Appropriations Act.

The country operates a Treasury Single Accounts held at the Central Bank. Revenues are

deposited into the Treasury bank account and payments are made out of the Exchequer account.

Payroll is managed centrally through the Integrated Human Resource Information System (IHRIS).

The system links the establishment database to the personnel database and the payroll database.

Controls and audit trails are inbuilt to give access and monitor entry into the IHRIS. Each ministry

has access to the IHRIS for changes of establishment or personnel database. The accounting

standard is cash accounting operated using the manual system chart of accounts. Each ministry

churns out monthly expenditure returns following the monthly cheque return reconciliation process

between each MDA and the Treasury and the use of manual vote books.

External audit and oversight of the executive is provided for by the Office of the Auditor General

and Parliament. The Office of the Auditor General is a government agency with legal foundation set

out in the Exchequer and Audit Act; the remuneration of the Auditor General is a direct charge to

the Consolidated Fund. The Auditor General and/or her representative are given full access to

public records. Her audit reports are submitted to the Parliament. Only audit reports on public

accounts are currently on the website The EAA places the financial responsibilities on each

accounting officer within the various MDAs and is required to implement PAC recommendations

and actions out of the Auditor General's reports.

The standings orders of both chambers of Parliament provide detail and clear guideline on

legislative procedures. The practice in the budget review process by the legislature has been

overtaken by tradition where limited time is used in the actual review process. The entire budget

review process from executive submissions to legislative approval takes three weeks. While the

legislative review processes are allowed 7 days, the legislative process usually takes 3 to 4 days in

each House to debate the Appropriation Bill for the budget. However, for the debate on

Supplementary and/or Variation of Appropriation Bills the time could be as short as 1 day in each

House which is clearly inadequate.

39


3 Assessment of PFM Systems, processes and institutions

3.1 Budget credibility

3.1.1 PI-1 Aggregate expenditure out-turn compared to original approved budget

It is important to state that, PI-1 does not qualify under this assessment remit (based on the Terms

of Reference) for the fact that it scored a 'B' in 2008. However, in order to place specific PFM

performance indicators within the context of current overall aggregate measure, it was deemed

appropriate to measure this indicator. Further, it was useful for performance of internal PI

measurement consistency checks.

The Government fiscal year remains the same, still operating a fiscal calendar beginning 1st

October and ending 30th September each year. At the aggregate level, Trinidad and Tobago has

achieved budget discipline coupled with an effective bottom-up expenditure commitment control.

There is however deficiency with the top-down perspective, which involves political engagement

with respect to providing firm ceilings for budget preparations at all levels.

Table 3.1 below details the performance of primary expenditure outturn compared with primary

original expenditure estimates. In two of the three completed fiscal years 2009/2010 and

2011/2012, aggregate expenditure deviations were below 5% of original approved primary

estimates (2.1% and 0.03% respectively). In 2010/2011 the deviation was 7.7%.

Table 3.1 Comparison of Budget estimates against Actuals (primary expenditure, TT$)

2009/2010 2010/2011 2011/2012

Primary original expenditure estimates 43,796,407,028 48,446,684,382 54,723,399,192

Primary expenditure outturn 44,701,924,505 52,154,204,269 54,738,504,571

Aggregate expenditure deviation 905,517,477 3,707,519,887 15,105,379

Aggregate expenditure deviation,% 2.1% 7.7% 0.03%

Source: MOFE

PI Dimension Score

2008

Score

2013

Justification for 2013 score

PI-1 Aggregate expenditure out-

turn compared to original

approved budget

B A In one of the three completed fiscal years, the

aggregate expenditure deviation was 7.7%; this

was an improvement from the 2008 PEFA

assessment of 10% in one of the three years -

2004/2005. Actual deviations for the last

completed fiscal year were 2.1%, 7.7% and

0.03% for 2009/2010, 2010/2011 and

2011/2012 respectively

Change in performance:

Score is comparable. There was an improvement when compared to the 2008 PEFA where in one of the three

years - 2004/2005, the expenditure deviation was 10% as compared to 7.7% in 2010/2011

40


3.1.2 PI-2 Composition of expenditure out-turn compared to original approved budget

This indicator compares primary expenditure, budgeted and actual, at a sub-aggregate level across

the main administrative headings. The first dimension measures the extent to which reallocations

between budget heads during execution have contributed to variance in expenditure composition

without the contingency vote. The second dimension assesses the share of the actual expenditure

made of contingency vote. The assessment is made for the central government and is based on the

last three completed fiscal years FY (2009/2010, 2010/2011, 2011/2012).

(i) Extent of variance in expenditure composition

Table 3.2 below provides a measure of the extent of variance in expenditure composition of

government ministries, departments and agencies. The practice where budget estimates are

prepared without any firm fiscal ceilings, results in budget cuts by the Ministry of Finance and the

Economy. Further, it encourages ministries, departments and agencies to budget for as many

projects and programs as possible having in mind the degree of cutbacks by the Finance Ministry.

As depicted in Table 3.2, budget reallocations across ministries, departments and agencies ranged

between 17.4% and 19.5% within the last three completed fiscal years. The explanations are that

these reallocations occur either due to underutilisation of budgetary allocations of some ministries

as well as the additional allocations during the supplementary budget process mid-year. Further,

the expenditure deviations, which are mainly from the recurrent budget, arose as a result of payroll

estimates prepared on the basis of the establishment database which might not be necessarily

occupied by new staff recruitments. It is obvious that these reallocations can affect project

implementations in line ministries

(ii) The average amount of expenditure actually charged to the contingency vote

Article 115 of the Constitution and Section 16 of the Exchequer and Audit Act provide for the

establishment of a contingency fund to be approved by parliament. Currently, Trinidad and Tobago

has a statutory contingency fund of TT$100miilion; this can be increased by a Parliamentary

resolution. This fund is reserved for purposes of unforeseen events both natural and manmade.

The Exchequer and Audit Act further prohibits MDAs from budgeting for any contingencies. The

Minister of Finance and the Economy has the sole authority, with the approval of cabinet to utilise

the contingency fund as and when required. Comparatively, the entire statutory contingency fund

represents only between 0.18% and 0.23% of the total primary expenditure estimates between

2009/2010 and 2011/2012 fiscal years. Available evidence suggests the efficient and prudent

usage of the contingency fund. The average contingency share of total primary expenditure was

0.07% over the last three completed fiscal years.

Table 3.2 Primary expenditure composition variance of (%)

2009/2010 2010/2011 2011/2012

Total expenditure variation i.e. PI-1 1.9% 7.4% 0.04%

Composition variance i.e. PI-2(ii) 17.5% 17.4% 19.5%

Contingency share of budget i.e. PI-2(ii) 0.11% 0.0% 0.11%

Average contingency share 0.07%

Source: Author’s calculations derived from the Appropriations Acts and Auditor general Reports on Public Accounts for

2009/2010, 2010/2011, 2011/2012. Data used for the calculations is presented in Annexes 5a to 5c

41


PI Dimension Score

2008

Score

2013


PI-2 Composition of expenditure

out-turn compared to

original approved budget

C D+ Scoring method M1

(i) Variance in expenditure

composition excluding

contingency items

NA D The reallocation of ministerial votes over the

last three completed fiscal years were 17.8%

each for 2009/2010 and 2010/2011 and 20.4%

for 2011/2012.

(ii) Average amount of

expenditure actually

charged to the contingency

vote

NA A The average percentage of actual expenditure

charged to the contingency vote over the last

three completed fiscal years was 0.07%. The

charge for each of the years was 0.11%, 0%

and 0.11% for 2009/2010, 2010/2011 and

2011/2012 respectively

Comparability of scores and performance change:

(i) The scores are not comparable due to the change in the PEFA methodology.

(ii) The scores are not comparable due to the change in the PEFA methodology.

3.2 Comprehensiveness and transparency

3.2.1 PI-5 Classification of the budget

Trinidad and Tobago's national budget is based on administrative and economic classification. The

revenue budget is segregated into tax type, revenue source, i.e. tax and non-tax and then into

recurrent and capital revenues. The expenditure budget is in two volumes, one for recurrent funded

from the consolidated fund and the second for development program which has two sources of

funding - consolidated fund and infrastructure development fund. Budget circulars over the last

three completed fiscal years have continued to instruct ministries, departments and agencies to

prepare their budget in the normal line item format with the inclusion of corporate and business

plans as a preparatory phase towards moving to output-based budgeting. It should be noted that

even though the current budget classification is not fully GFS/COFOG 2001 compliant, the use of

mapping tables allows for such classification into functional and sub-functional classification for

reporting to the International Monetary Fund (IMF).

Further, in-year budget reports are consistent with the administrative and economic classification of

the annual budget estimates and institutional practices and arrangements. This allows for fairly

easy statistical and variance analysis.

42


Table 3.3 Synthesis of the classification of the 2011/2012 Budget

Categories FY 2011/2012 Remarks

Budget

preparation

Budget

execution

Central

Govt

budget

reporting

Administrative yes yes yes 69 Votes/Head for Ministries Departments &

Agencies

Economic yes yes yes Revenue:

Tax;

Non-tax;

Other;

Grants.

Expenditure:

Item 1 – Personnel emoluments;

Item 2 – Goods & Services

Item 3 – Minor equipment purchases

Item 4 – Current transfers and subsidies

Item 5 - Acquisition of physical assets

Item 6 - Current transfers to statutory boards

Functional

(COFOG)

No No no The use of mapping tables allows for sub-functional

classification and reporting to IMF

PI Dimension Score

2008

Score

2013


PI-5 Classification of the budget C C Over the last three years, Trinidad and

Tobago's national budget is classified into

administrative and economic headings; further

the classification allows for consistent budget

execution and reporting even though this is not

fully GFS 2001 compliant


Scores are comparable; there is no change since 2008 PEFA

Ongoing reforms

Work is ongoing with IADB referencing revision of chart of account to fully comply with

GFS 2001

Discussions on implementation of IFMIS but very slow as budget division and treasury

have not agreed on structure of chart of account

3.3 Policy-based budgeting

3.3.1 PI-11 Orderliness and participation in the annual budget process

(i) Existence of and adherence to a fixed budget calendar

The Ministry of Finance around February each year normally issues a budget call circular. The

circulars are clear. Available evidence attests to the fact that the Ministry of Finance and the

43


Economy provided budget circulars to government ministries and department for the preparation of

annual budget estimates between February and March each year as shown in Table 3.4 below. The

circular clearly indicates the budget calendar referencing the submission of estimates from

ministries, followed by an indication for justification of these estimates. Officials from government

ministries and departments confirmed that budget estimates were submitted on or before the

deadline indicated in the circulars, that is by the 30th April.

Ministries, Departments and Agencies prepare their budget estimates, derived from the annual

operational plans out of their three to five-year strategic plans, linked to the national policy

framework, without any knowledge of their fiscal envelop or ceilings during the review period.

Available evidence suggests that estimates emanating from these central government agencies are

as much as between five and seven fold higher than the approved allocations from the Finance

Ministry.

The current practice of preparing budget estimates without considering any fiscal space has often

led to budget cuts by the Ministry of Finance and the Economy. In order to obtain a reasonable

level of guarantee for resource allocations, Ministries Departments and Agencies (MDAs) seek

cabinet approval particularly for projects under the Public Sector Investment Program (PSIP) for

such projects valued at TT$2million and above. Interestingly, the Ministry of Finance and the

Economy may not fully fund those projects budgeted for by MDAs even with cabinet approval.

Consequently, this has led to the stage where everyone scrambles for resources beforehand.

Table 3.4 Budget Preparation and Approval Calendar

FY2009/2010 FY2010/2011 FY2011/2012

Budget Circular issued by MOFE 20th February 2009 5th March 2010 3rd March 2011

Budget proposals from MDAs due 30th April 2009 30th April 2010 30th April 2011

Budget estimates submitted to Parliament 7th Sept 2009 8th Sept 2010 10th Oct 2011

(ii) Clarity/comprehensiveness of and political involvement in the guidance on the preparation of

budget submissions

There is an absence of direct political involvement at the beginning of the budget preparation

process. No cabinet approved ceilings are provided in the call circulars. The bottom-up perspective

which involves ministries, departments and agencies preparation and submissions of budget

estimates is not guided by a top-down approach which involves the setting up of firm fiscal ceilings

indicating the resource envelop available to each ministry. Ministries, in desperation to accomplish

their projects and plans, tend to seek cabinet approval individually particularly for PSIP projects

prior to budget submissions. Cabinet approval however does not prevent the Ministry of Finance

from undertaking its 'cutback' policy. In addition, ministries are forced to provide an over-bloated

budget estimate in order that any cutbacks will have minimal effect on their approved resource

envelop; nonetheless, MDAs have indicated that their annual budget allocations are about a third of

their submissions. Further, the current practice has necessitated the preparation and submission of

supplementary budget estimates mid-year, thereby becoming an annual ritual, availing ministries

the opportunity to make justification for additional resources.

(iii) Timely budget approval by the legislature or similarly mandated body

Tabling the national budget estimates by the Minister of Finance and the Economy and the

Parliamentary approval of those estimates occur with three weeks between September and

October each year. Table 3.5 provides the exact dates the legislature received the budget

estimates and the date of approval. In two of the last three completed fiscal years, 2009/2010 and

2010/2011, the legislature approved the budget prior to the start of the new fiscal year. In

44


2011/2012 however, the estimates were approved three weeks after the end of the fiscal year. It

should be noted that Article 114 of the Constitution permits the withdrawal of funds from the

Consolidated fund for government business by the Minister of Finance thirty days following the

expiration of the fiscal year in the event that Parliament is unable to pass the Appropriation Act of

the ensuing year.

Table 3.5 Timeliness of Parliamentary approval of Budget Appropriations

Fiscal Year Date Parliament Received

Budget

Date Parliament Approved

Budget

2009/2010 7th Sept 2009 25th Sept 2009

2010/2011 8th Sept 2010 23rd Sept 2010

2011/2012 10th Oct 2011 21st Oct 2011

Source: Clerk to the Senate

PI Dimension Score

2008

Score

2013


PI-11 Orderliness and

participation in the annual

budget process

C+ B Scoring method (M2)

(i) Existence of and adherence

to a fixed budget calendar

A A Clear and fixed budget calendar exist. These

are contained in the budget circular issued by

the Finance Ministry between February and

March each year; these dates are followed.

(ii) Clarity/comprehensiveness

of and political involvement

in the guidance on the

preparation of budget

submissions

D D There is very little political involvement in the

budget preparation process. There are no

budget ceilings in the budget circulars issued

by the Finance Ministry to serve as a top-down

fiscal discipline.

(iii) Timely budget approval by

the legislature

C B In the last three completed fiscal years, the

legislature has approved the annual budget

before the start of the next fiscal year in two of

the three years under this assessment


Scores are comparable; there has been an improvement since 2008. The improvement was as a result of

dimension (iii)

Ongoing reforms

No planned reforms

3.3.2 PI-12 Multi-year perspective in fiscal planning, expenditure policy and budgeting

(i) Preparation of multi -year fiscal forecasts and functional allocation

At present, the budget does not consider multi-year fiscal forecast. The budget document only

presents actual outturns for the second year before the current fiscal year, original, revised and

adjusted estimates for the first year before the current year, and the approved estimates for the

current fiscal year. The budget document does not make projections for the two outer years.

Discussions are far advanced for the government to consider adopting a multi-year perspective

towards budget preparation. The budget estimates are based on administrative and economic

45


classifications. The government with respect to forecast figures following discussions and

consultations with Article IV IMF team adopts a conservative posture. The annual budget estimates

are derived from annual operation plans emanating from the three to five-year strategic plan from

each ministry. The estimates are prepared without any fiscal frame or ceilings, leaving these

ministries to prepare virtually a 'wish list' and then be faced with arbitrary cutbacks from the Ministry

of Finance.

(ii) Scope and frequency of debt sustainability analysis

Officials say no substantial change has occurred to the DSA analysis since the last PEFA

assessment in 2008. Government's continued efforts at diversifying funding instruments through the

issue of bonds on the international market has seen positive strides in the management of

government debt. The instruments have been largely long term with good interest cost which do not

have significant risk on government macro fiscal stability. The debt management strategy continues

to yield the required result in terms of government debt ratio to GDP even though there are

concerns referencing the rising debt portfolio, which averages 36% of GDP within the last three

completed fiscal years. The Central Bank still carries out the Debt Sustainability Analysis each year

for both foreign and domestic debt and reviewed by the IMF Article IV team. It does so with officials

of the Debt Management Unit within the Ministry of Finance in order to build the capacity of the

newly created and functional Debt Management Unit of the Finance Ministry.

(iii) Existence of sector strategies with multi-year costing of recurrent and investment expenditure

It should be noted that Trinidad and Tobago has no sector strategies, let alone costed sector

strategies. Individual ministries, departments and agencies do prepare strategies that are linked to

the national development policy. Interactions with officials from ministries, departments and

agencies suggest that even though there are no sector strategies, there is fairly some level of

interactions among ministries that have commonalities and inter-linkages, during the budget

preparation stage in order to reduce overlapping and/or repetitive projects. In spite of these, some

MDAs had reservations regarding the effective collaborations with some government agencies.

These strategies are rolling strategies between 3 to 5 years but these are not fully costed. The

investment part of the strategies, which dovetails into the PSIP, do have cost projections; however,

there are no forward linked recurrent expenditure neither for the current year nor on a multi-year

perspective.

(iv) Linkages between investment budgets and forward expenditure estimates

The Vision 2020 which was formally launched in 2006 and operationalised between 2007 to 2010,

has been replaced with a Medium Term Policy Framework spanning 2011 to 2014. The overall

goals of the Medium Term Policy Framework is to ensure lasting and sustainable leaving conditions

of all nationals of Trinidad and Tobago, reduce crime, attain food security, improve healthcare and

generate economic activities through the diversification from oil and gas, which is currently the main

backbone of the economy.

The Policy Framework envisages the development and growth of the entire Republic segmented

into the North Coast, Southern, Eastern, Central and the North East. It is a requirement for all

ministries' strategies to be aligned to the National Medium Term Policy Framework; as the lead

ministry involved in monitoring and evaluation, the Ministry of Planning and Sustainable

Development ensures all project strategic plans submitted by each ministry conform to national

priorities in order to qualify for inclusion into the PSIP. Further, for inclusion of ministries' projects

into the PSIP, the Planning Ministry ensures that these projects have cabinet approval. The projects

46


are not fully costed in term of investment cost and forward linked recurrent expenditure. Officials

from the Planning Ministry intimated that even though there are linkages between the Medium Term

Policy Framework and the ministries strategies, one cannot see a direct one-to-one mapping of the

projects to the national policy.

PI Dimension Score

2008

Score

2013


PI-12 Multi-year perspective in

fiscal planning, expenditure

policy and budgeting

C+ C+ Scoring Method M2

(i) Multi-year fiscal forecast

and functional allocations

C C The budget estimates have no forecast figures

for the two outer years. The estimates are by

economic and administrative classifications.

(ii) Scope and frequency of

debt sustainability Analysis

A A A debt sustainability has been carried out in

each of the last three completed fiscal year

2009/2010, 2010/2011 and 2011/2012

(iii) Existence of costed sector

strategies

D D There are no sector strategies, let alone costed

sector strategies. Nonetheless, there is some

level of collaboration during the preparation

stage of the annual budget

(iv) Linkages between

investment budgets

B C Major government projects have weak

sectorlinkages with some level of recurrent cost

estimates


Scores are comparable; there are no changes.

Ongoing reforms:

No reforms

3.4 Predictability and control in budget execution

3.4.1 PI-15 Effectiveness in collection of tax payments

(i) Collection ratio for gross tax arrears

It is important to state that the assessment team were unable to gather data on tax collection in

order to calculate the tax collection ratio needed to score this dimension during the field visit, which

ended on the 5th of December 2013. A draft report was submitted to the Ministry of Finance and

the Economy as a follow-up measure for data collection but to no avail, therefore the inability of the

assessment team to score this dimension.

Interactions with officials of the Board of Inland Revenue suggest a high tax collection ratio or in

other words a low tax debt ratio to total annual tax collection.

Table 3.6 Collection of tax arrears TT$

2009/2010 2010/2011 2011/2012

Customs

Valued Added Tax

47


2009/2010 2010/2011 2011/2012

Income Tax

Total

Source: Revenue Authorities.

(ii) Effectiveness of transfer of tax collections to the Treasury by the revenue administration

The Board of Inland Revenue (BIR) oversees the operations of both Customs and the Inland

Revenue, which is made up Value Added Tax (VAT) and Income Tax. The Comptrollers of

Customs and Inland Revenue head the Customs and the Inland Revenue divisions of the Ministry

of Finance and the Economy respectively.

The duties and taxes collected by the Customs division are paid directly into commercial banks

nearest to the Customs duty stations daily. The commercial banks transfer the funds directly to the

Treasury account designated for Customs deposit account. Similarly, the Inland Revenue has

Treasury deposit account held by the Central Bank of Trinidad and Tobago (CBTT) into which all

income taxes are deposited. Commercial banks are used as collection banks particularly for remote

areas outside Port of Spain. Daily transfers are made to the CBTT for all cleared cheques and

cash. It is important to state that the cheque clearing system could take between 2 to 4 days and

therefore funds from commercial banks are only transferred to the CBTT upon clearance of

cheques. Cash payments and electronic transfers are done within 24 hours of the commercial bank

receiving the taxpayers funds.

iii) Frequency of complete accounts reconciliation between tax assessments, collections, arrears

records and receipts by the Treasury

GENTAX system is the software used by the Board of Inland Revenue (Customs and Inland

Revenue - VAT & Income tax) for tax administration. The software captures tax assessed and tax

collected. The system generates reports on tax arrears arising out of the tax assessments and tax

collected. Transfers to the CBTT are recorded in the software through the centralised electronic

cash book. The integration of GENTAX allows for automatic reconciliation between tax assessed,

tax collected, tax transferred to the Treasury and tax arrears. The full reconciliation is done every

month with 4 weeks following the end of the month.

PI Dimension Score

2008

Score

2013


PI-15 Effectiveness in collection of

tax payments

D+ NR

(i) Collection ratio for gross tax

arrears, being percentage of

tax arrears at the beginning

of a fiscal year, which was

collected during that fiscal

year

D NR No data to score

(ii) Effectiveness of transfer of A A Transfers from commercial banks for cleared

48


PI Dimension Score

2008

Score

2013


tax collections to the

Treasury by the revenue

administration

cheques and cash are made within 24 hours of

their receipt from taxpayers.

(iii) Frequency of complete

accounts reconciliation

between tax assessments,

collections, arrears records

and receipts by the Treasury

D A The tax software GENTAX generates monthly

reports. Full reconciliation of tax assessed, tax

collected, tax transferred to the Treasury and

tax arrears are done with one month after the

end of the month.


Ongoing reforms

Introduction of ASSYCUDA for Customs

Use of IT in tax offices across the country as part of integration of all tax offices

Recruitment of more tax field staff for improved collections

Improvements in tax audit

Use of banks to collect tax from taxpayers for a service fee

3.4.2 PI-19 Competition, value for money and controls in procurement

(i) Transparency, comprehensiveness and competition in the legal and regulatory framework

Central Government procurement practices adopt two separate approaches, one through the

Centrals Tenders Board (CTB), the other through the use of Special Purpose Companies - state

owned companies. The Centrals Tenders Board is governed by the Centrals Tenders Board

Ordinance No 22, 1961. Article 20 of the Centrals Tenders Board Ordinance requires the Board to

“invite members of the public in general” for carrying out procurement and in so doing establishes

open competition as the default procurement method. There are specific thresholds for each level

of procurement committee. Permanent Secretaries may decide to adopt internal systems without

the Centrals Tenders Board for projects and consultancy services of up to TT$1miilion and

TT$0.5million respectively. Goods and Services above this threshold and up to TT$2million must

adopt the Ministerial Tender Committee - the ministerial tender committee is supposed to be

chaired by the director of contracts of the Centrals Tenders Board but for the past three years has

been chaired by either of the two Acting Assistant Directors of Contracts. Further, the Centrals

Tenders Board oversees the procurement processes for all procurements above TT$2million

provided MDAs decide to use the Board. MDAs have the choice to use special purpose companies

if they so wish, having their own legislative procurement procedures. Special Purpose Companies

were introduced as resolve to the long legal and bureaucratic procurement rules and procedures

under the CTB Ordinance.

As shown in table 3.7 below, only three of the six standards elements of legal and regulatory

framework were met by the CTB Ordinance No. 22 of 1961.

Table 3.7: Elements of legal and regulatory framework of the CTB Ordinance

Number of

requirements

met

Elements of the legal and regulatory framework for procurement Availability

Three out of six

elements met

Be organised hierarchically and precedence is clearly established. √

Be freely and easily accessible to the public through appropriate means. √

49


Number of

requirements

met

Elements of the legal and regulatory framework for procurement Availability

Apply to all procurement undertaken using government funds. X

Make open competitive procurement the default method of procurement and

define clearly the situations in which other methods can be used and how

this is to be justified.

√

Provide for public access to all of the following procurement information:

government procurement plans bidding opportunities, contract awards, and

data on resolution of procurement complaints.

X

Provide for an independent administrative procurement review process for

handling procurement complaints by participants prior to contract signature.

X

(ii) Use of competitive procurement methods

Section 5 of the Centrals Tenders Board Ordinance No. 22 of 1961 (Amended) provides the

structure and composition of the Board. There are 8 members. The President of the Republic

appoints five public servants in addition to 3 private sector officials with depth of experience in the

area of procurement to be undertaken as follows:

Director of Contracts of CTB – Chairman of the Board

Deputy Director of Contracts of CTB – Deputy Chairman of the Board

Permanent Secretary, Ministry of Trade, Industry and Investment - Member

Comptroller of Accounts - Member

Chief State Solicitor - Member

3 Private Sector Officials

The ex officio members, i.e. those appointed by the President shall hold office as pleased by the

President, in accordance with Section 7(1) of the CTB Ordinance. Section 7(2) of the Ordinance

stipulates a two-year office term of Board Members from the private sector but with a perpetual

number of reappointment as stated by Section 7(3).

The default procurement method is open competition. The use of sole sourcing and restricted

tender needs justification by each MDA and approval from the CTB. Table 3.8 below provides some

data on the type of procurement adopted but fails to provide the value of such contracts. Further,

the CTB Ordinance does not provide clear criteria for justification referencing sole sourcing or

restricted tender.

Civil Society Organisations have lamented on the current procurement legal framework, which tend

to provide unfair competition with the public sector even with the use of CTB procedures on one

hand and more importantly with the involvement of State-owned Special Purpose Companies. This

is further buttressed by the 2012 Transparency International Corruption Perception Index Report

ranking Trinidad and Tobago 80 out of 174 countries, a drop of 8 points from the 2008 report.

(iii) Public access to complete, reliable and timely procurement information

Public access to complete, timely and reliable procurement information is limited to access to the

CTB Ordinance No. 22 of 1961 on the Ministry of Finance website and Government Printer as well

as copies of the Information Booklet published in April 2008. The booklet provides information on

membership of the CTB, the financial limit of tenders to be submitted to CTB, the evaluation

process, procurement method and cycle, among others. Standardised tender documents are used

50


for any form or type of procurement. The instructions to bidders may have some similarities

depending on the nature of the project but technical specifications are different for each project.

There is no formal training programs for procurement officers within the various MDAs even though

a one-on-one mechanism is sometimes used when MDAs submit tender requests.

The CTB Ordinance does not mandate MDAs to publicise their annual procurement plans for the

benefit of the general public and in particular, the suppliers and contractors who may wish to

engage in government business; further, the absence of MDAs full procurement plans has the

tendency of providing unfair competition as it is likely to have leakage of insider information. The

only stage the public is aware of any government tender is through the print and electronic media.

The public is notified when a contract is awarded but this occurs for open competitive procurement

methods and some restrictive tenders only; referencing sole sourcing, there is no public awareness.

Access to complaints resolution is very limited only to the aggrieved bidder; there is no independent

complaints body. Table 3.8 below provides summary of contracts awarded using the CTB

procedures.

Table 3.8: Contract awarded

FY Sole Sourcing

(with justification)

Selective/Restricted

Tenders

Open Tenders Total

2009/2010 2 9 228 239

2010/2011 8 19 347 374

2011/2012 3 4 245 252

Total 13 32 820 865

Source: Centrals Tenders Board

(iv) Existence of an independent administrative procurement complaints system

The CTB Ordinance No. 22 of 1961 does not provide for the establishment of an independent

complaints body or mechanism to superintend over any complaints received from any dissatisfied

bidder in the procurement process. Further, there is no window of opportunity in terms of days or

weeks between the contract award date and the contract signing date for aggrieved bidder(s) to file

a complaint. Table 3.9 below indicates the existence of no independent complaints mechanism.

It should be noted that aggrieved bidders can officially notify CTB on their grievances. CTB does

provide reasons for disqualification of bidders in accordance with the Freedom of Information Act,

which requires that all decisions for rejecting or awarding the contract to a particular bidder be

made available. Even though decisions of these processes are not public, the CTB officially notifies

the Ministry of Public Administration

Table 3.9: Complaints Review Process

Complaints are reviewed by a body which:

(i) is comprised of experienced professionals, familiar with the legal framework for

procurement, and includes members drawn from the private sector and civil society as

well as government.

No

(ii) is not involved in any capacity in procurement transactions or in the process leading to

contract award decisions.

No

(iii) does not charge fees that prohibit access by concerned parties. No

(iv) follows processes for submission and resolution of complaints that are clearly defined

and publicly available.

No

51


Complaints are reviewed by a body which:

(v) exercises the authority to suspend the procurement process. No

(vi) issues decisions within the timeframe specified in the rules/regulations. No

(vii) issues decisions that are binding on all parties (without precluding subsequent access

to an external higher authority).

No

Centrals Tenders Board

PI Dimension Score

2008

Score

2013

Justification for 2013score

PI-19 Competition, value for

money and controls in

procurement

n/a D Scoring Method M2

(i) Transparency,

comprehensiveness and

competition in the legal and

regulatory framework

n/a C The Centrals Tenders Board Ordinance No 22,

1961 meets three of the six legal requirements

stated in Table 3.7 above

(ii) Use of competitive

procurement methods

n/a D Some data is generated by CTB on the type of

procurement method used but fails to include

the value of those contracts as well as the total

value of all government contracts.

(iii) Public access to complete,

reliable and timely

procurement information

n/a D Information available to the public is very

limited. MDAs do not provide information on

procurement plans with bidding opportunities.

Complete data on contracts awarded as well as

complaints resolved is not available

(iv) Existence of an

independent administrative

procurement complaints

system

n/a D There is no independent administrative

procurement complaints mechanism provided

for under the CTB Ordinance No. 22 of 1961


Scores are not comparable; the PEFA methodology was revised in January 2011

Ongoing reforms

There have been attempts to enact a new procurement law but has been in indeterminate state

since 2006. A legislative proposal has been prepared to guide the executive towards the enactment

of the new procurement law and this has been on the table since 2006. Civil Society Organisations

have made proposals towards this process but is yet to see the light in the tunnel.

3.4.3 PI-20 Effectiveness of internal controls for non-salary expenditure

52


(i) Effectiveness of expenditure commitment controls

After the approval of the national budget through the passing of the Appropriation's Act by

Parliament, the Ministry of Finance requires each ministry to submit an annual implementation or

activity plan together with a pro-forma cash flow. It should be noted that the activity implementation

plan takes into account the project or program implementation cycle that informs the cash flow

projections; however, it fails to indicate the procurement method to be adopted. A manual vote

book records the approved expenditure estimates under each heading for the management and

control of expenditure commitment and payment. The Ministry of Finance issues a quarterly general

release memorandum for recurrent expenditure that allows for commitment of expenditure. Further,

the Ministry of Finance issues a monthly cash release warrant to each ministry for payment of

goods and services. With regards to the Infrastructure Development Fund projects, the Finance

Ministry issues specific warrants only upon receipt of verified and approved supplier or contractor

invoice. Ministries do not commit for expenditure without receiving a general release warrant from

the Finance Ministry even though officials admit there are occasional informal practices particularly

at the district or agency level in anticipation of cash release warrants. Permanent Secretaries of

MDAs are allowed to vire funds from recurrent expenditure votes except for specific recurrent

expenditures that require the approval of the Budget Director or the Minister of Finance and the

Economy such as in the case of "official overseas travel".

(ii) Comprehensiveness, relevance and understanding of other internal control rules/ procedures

The Exchequer and Audit Act provides clear legal framework governing financial administration. It

further provides regulation as to the application of the laws. The Comptroller of Accounts as the

Head of Central Treasury has issued accounting and internal audit manuals for use by public

officials, the latter being a draft yet to be finalised.

Expenditure emanates from the head of the spending unit by issuing the purchase requisition,

followed by a purchase order approved by the Accounting Officer, having ensured that the

expenditure has a budget line and the necessary cash releases. Quotations are sought from at

least three vendors for simplified procurement or the necessary procurement method applied if it

requires the Ministerial Tender Committee or the Centrals Tenders Board. Payment for goods and

services are made only when the appropriate invoices are submitted by the supplier. Officials

intimated that the internal control procedures are clear and fairly simply. There are however

occasional minor compliance issues.

(iii) Degree of compliance with rules for processing and recording transactions

Section 4 of the Exchequer and Audit Act gives powers to the Treasury to ensure that all public

funds are properly receipted and accounted by all manner of person. Each accounting officer must

ensure full compliance with all financial management rules and procedures for the proper use,

recording and reporting of government funds. Interactions with accounting officers suggest the

occasional breaches to procurement rules and procedures, proper supporting documentation for

expenditure commitment and payments, among others. Some of the reasons for these occasional

breaches are due to high staff turnover - requiring constant training and supervision, others being

deliberate to fast-track transaction procession.

53


PI Dimension Score

2008

Score

2013


PI-20 Effectiveness of internal

controls for non-salary

expenditure

C+ C+ Scoring Method M1

(i) Effectiveness of expenditure

commitment controls

B B A manual vote book is used to manage and

control expenditure commitment. For most

expenditures, no commitments are made

without the commitment and/or cash release

warrants. There are minor cases of expenditure

commitments without the necessary releases.

(ii) Comprehensiveness,

relevance and

understanding of other

internal control rules/

procedures

C C Internal control procedures in the Treasury

accounting manual are fairly simple and

understood by accounting officers; however,

there are occasional minor breaches

(iii) Degree of compliance with

rules for processing and

recording transactions

B B Generally, the level of compliance with internal

control procedures are high; however, there are

occasional breaches as a way to simplify and

fast-track the processes


Scores are comparable; there are no changes

3.4.4 PI-21 Effectiveness of internal audit

The Internal Auditor derives his or her powers from the Exchequer and Audit Act 1959 Chapter

69:01, Regulations 13 sub-section 4 and 65 sub-section 3 and Paragraphs 3, 4 and 105 of the

Financial Instructions1965, which specifies that each accounting unit of a ministry, department or

agency shall establish an independent internal audit section occupied by a check staff. Beyond

these clauses in the Financial Regulations, there is no other specific legal framework governing the

internal audit unit.

(i) Coverage and quality of the internal audit function

Overall, the functions of the internal audit unit are weak and do not meet professional international

standards. Much of its functions are limited to compliance audit with limited time allotted to systems

audit of central government activities. Audit work plans are prepared by established internal audit

units and approved by the Permanent Secretaries of the various ministries; this occurs in larger

ministries. The Comptroller of Accounts has an accounting manual that governs financial

management within central government. Paragraph 2.4.1 of the 2011 Accounting Manual details

internal audit procedures prior to approving all payments. There is a draft internal audit manual,

which is still a 'work-in-progress' document aimed at providing internal audit guidelines to all internal

audit staff across government agencies in line with Institute of Internal Auditors standards; it is

foreseen to be completed by the first quarter 2014. In recent times, some effort is been made

towards value-for-money audits across board but this is still rudimentary with limited effect. The

frequency of ministerial realignments, in most cases affect the efficient running of the internal audit

units due to frequent reshuffles as well as the re-creation of entirely new internal audit units.

Available evidence suggests insufficient human resource capacity in the established internal audit

units across central government ministries and departments.

54


(ii) Frequency and distribution of reports

Even though ministries, departments and agencies prepare quarterly and ad-hoc internal audit

reports, such reports are only submitted to the Permanent Secretaries of the various ministries

within a month following the end of the quarter. There are no formal arrangements to periodically

and systematically submit similar reports to the Comptroller of Accounts, the Minister of Finance nor

the Auditor General even though those reports are made available on request to the Comptroller of

Accounts and the Auditor General during their routine visits and external audit work. Consequently,

less reliance is placed on the work of the internal auditor due to the weaknesses in the internal

audit mechanism.

(iii) Extent of management response to internal audit findings

Available evidence suggests limited action taken by management referencing recommendations

emanating from internal audit reports. Most of the issues raised in these audit reports appear to

reoccur in many instances, particularly on compliance of rules and regulations on financial

management. Interactions with the Auditor General revealed significant concerns regarding

management follow-ups on general audit findings and recommendation; as it turns out,

recommendations made by the Auditor General several decades ago have not been actualised and

still remain relevant in these present times.

PI Dimension Score

2008

Score

2013


PI-21 Effectiveness of internal

audit

C C Scoring Method M1

(i) Coverage and quality of the

internal audit function

C C Many central government ministries and

departments have internal audit units but with

limited human resource capacity. Focus of

internal audit is on compliance with limited time

on systemic audit not meeting international

professional standards.

(ii) Frequency and distribution

of reports

C C Quarterly audit reports are prepared within one

month after the end of the quarter and

submitted only to the Permanent Secretaries of

the various ministries. Copies are only made

available on request to the Auditor General and

the Comptroller of Accounts of the Ministry of

Finance and the Economy.

(iii) Extent of management

response to internal audit

findings

C C Limited management action is seen on follow-

up of internal audit recommendation, the result

of which is the continuous flouting of financial

regulations and procedures


The scores are comparable; there are no changes.

Ongoing reforms

No major reforms on change from more compliance to systems audit but the internal audit manual

is been updated to improve

55


3.5 Accounting, recording and reporting

3.5.1 PI-23 Availability of information on resources received by service delivery units

Government accounting systems and methodology has seen no change since the last PEFA

assessment conducted in 2008. The chart of account remains unchanged and inconsistent with

Government Financial Statistics (GFS) 2001. Consequently, it is not possible at this present stage

to track amounts received both in cash and in kind by primary service delivery units such as primary

schools and primary health care facilities across the country. An attempt to put together such an

expenditure tracking report will be burdensome to staff, taking into cognisance the manual

accounting system currently in use in Trinidad and Tobago.

It should also be noted that within the last three completed fiscal years 2009/2010, 2010/2011 and

2011/2012, no Public Expenditure Tracking Survey (PETS) nor Public Expenditure Review (PER)

has been conducted, as well as any other specialised surveys to track public expenditure and

resources received by primary health care facilities and primary schools.

PI Dimension Score

2008

Score

2013


PI-23 Availability of information on

resources received by

service delivery units

D D No PETS nor PER has been conducted with

the last three completed fiscal years

2009/2010, 2010/2011 and 2011/2012. Further,

the chart of account at its current state is

unable to track resources both cash and in kind

received by primary healthcare facilities and

primary schools across the country


Scores are comparable; there has been no change since the 2008 PEFA

Ongoing reforms

Discussions are ongoing between government and development partners for the development of a

chart of account to conform with GFS 2001 as well as capable of providing additional statistical and

fiscal report and analysis for government use.

3.5.2 PI-25 Quality and timeliness of annual financial statements

(i) Completeness of the financial statements

In Trinidad and Tobago, a centralised payment system uses the Treasury Single Account for the

payment of all central government expenditures. Ministries, Departments and Agencies do not keep

individual bank accounts, with the exception of some MDAs such as the Ministry of Energy and

Energy Affairs which maintains an own revenue collection bank account at the Central Bank for

royalties, for collection of licence fees on oil and gas concessions and other internally generated

revenue sources. The Exchequer and Audit Act - Section 13(c), backs the opening of deposit bank

account with the Central Bank. Each ministry, having been allocated their annual approved budget,

prepares an activity implementation schedule and a pro-forma cash flow forecast to the Ministry of

Finance based on which quarterly general warrant and monthly cash release warrants are issued.

Manual vote books are used to control commitment of expenditure in line with actual cash release

warrants received from the Ministry of Finance. No commitments for expenditures are made without

the cash warrant but with occasional minor breaches leading to informal practices; for instances

56


where commitments are made without cash, a special official request is sought from the Ministry of

Finance prior to making the said commitment. Therefore, there is an effective mechanism for

monitoring and reporting outstanding commitments. Each ministry submits a daily expenditure

return to the Comptroller of Accounts followed by a monthly reconciliation sheet from the Treasury

to the individual spending ministries within two weeks after the end of the month. The Treasury

prepares a consolidated financial statement, which is an aggregation of all central government

transaction and submits same to the Auditor General. An account is said to be consolidated when a

"Financial information in which assets, equity, liabilities and operation accounts of a firm and its

subsidiaries are combined, after eliminating all inter-firm or inter-agency transactions" Table 3.10

below summarises information contained in the Treasury financial statements; it shows that the

financial statements are complete with the exception of few items.

Table 3.10 Information Contained in the Treasury Financial Statements

Financial heading Sub-financial heading Presence in Financial Statements

Revenue Direct tax Yes

Indirect tax Yes

Non-tax revenue (incl. IGF) Yes

Grants Yes

Expenditure & transfers Personnel Emolument Yes

Administration Yes

Service Yes

Investments Yes

Statutory payments Yes

Subsidies Yes

Retained IGF No

DP funded projects Yes

Assets Cash & Bank balances Yes

Advances Yes

Public loans (receivable) Yes

Equity & other investments Yes

Revenue arrears No

Liabilities Public debts (domestic) Yes

Public debts (foreign) Yes

Statutory obligations Yes

Outstanding commitments Yes

Expenditure arrears No

(ii) Timeliness of submission of the financial statements

Section 24 (1) (a) of the Exchequer and Audit Act Chapter 69:01 (Amendment 1998) mandates the

Comptroller of Accounts to prepare and submit consolidated financial statements to the Auditor

General within four months following the expiration of fiscal year. In all the last three completed

fiscal years, the Treasury has complied with the legal requirements as shown in Table 3.11 below.

As part of the compliance check referencing the timely submissions of annual financial statements,

the Auditor General tabulates all the statutory annual financial statements and the corresponding

actual date of their receipt.

57


Table 3.11 Timeliness of Submission of Annual Financial Statements by Comptroller to Auditor General

Financial Year Financial Statements for: Date of Submission to Auditor

General

FY2009/2010 Consolidated Fund 31st January 2011



Source: Audit General Department

(iii) Accounting standards used

Central government financial statements are prepared using the cash accounting standards which

are generally accepted; the standards are disclosed. These standards have been consistently

applied over time. The financial reports are prepared in a consistent format in line with the budget

estimates and allow for fairly easy statistical and financial analysis. Financial assets and liabilities

are disclosed both in the financial statements and in the notes to the account.

PI Dimension Score

2008

Score

2013


PI-25 Quality and timeliness of

annual financial statements

C+ C+ Scoring method M1

(i) Completeness of the

financial statements

B B The annual financial statements prepared by

the Treasury are an amalgamation of the MDAs

financial positions. The financial statements are

complete except for the exclusion of

expenditure arrears and revenue arrears

(ii) Timeliness of submission of

the financial statements

A A The Treasury prepares annual financial

statements and submits to the Auditor General

four months after the end of the fiscal year in

accordance with Section 24 (1) (a) of the

Exchequer and Audit Act

(iii) Accounting standards used C C The financial statements are prepared on cash

accounting basis and are consistent over time

with some disclosure of the accounting

standards


Scores are comparable; no change since 2008

Ongoing reforms

Discussions are underway for the development of a new chart of account

3.6 External scrutiny and audit

3.6.1 PI-27 Legislative scrutiny of the annual budget law

The budget estimates submitted to the legislature is scrutinised on the basis of Articles 63 and 64 of

the Constitution.

58


(i) Scope of the legislature’s scrutiny

In Trinidad and Tobago, the budget estimates are considered 'secret documents' until they are laid

before Parliament. Once laid, the revenue and expenditure estimates are reviewed but less

thoroughly. The extent of review is so limited that parliamentarians have very little questioning

space. As it turns out, the ruling government of the day always has the majority in the legislature

and therefore proceedings are rushed through. The legislative review also covers macro fiscal

policies supporting the budget estimates but is generally weak. The legislature has Constitutional

powers to amend the budget estimates presented by the Minister of Finance; however, these

powers have never been exercised since majority of the parliamentarians are from the ruling

government.

(ii) Extent to which the legislature’s procedures are well-established and respected

The House of Representatives and the Senate have separate standing orders that govern the

parliamentary procedures of both Houses. Clear rules and procedures exist in laying 'money bills'

in both houses and are generally respected. However, parliamentarians have raised concerns

regarding the limitations to questions asked during debates. In most cases, proceedings are cut

short and motions put to vote which eventually get passed or approved by the house due to the

numbers of parliamentarians supporting the executive.

(iii) Adequacy of time for the legislature to provide a response to budget proposals

Within three weeks, the entire legislative budget review process is completed, from the date the

budget is first laid in the House of Representatives and then the Senate to the approval of the

estimates by the Senate. In practice, the Finance Committee of the House of Representatives uses

a day to review the budget estimates as opposed to 7 days allotted. The Senate debates the

Appropriation Bill . However, for the debate on Supplementary and/or Variation of Appropriation

Bills the time could be as short as 1 day in each House. In two of the last completed fiscal years

2009/2010 and 2010/2011, the legislature approved the budget prior the beginning of the new fiscal

year; in fiscal year 2011/2012 the estimates were passed 21 days after the start of the new fiscal

year.

(iv) Rules for in-year amendments to the budget without ex-ante approval by the legislature

Around April or May each year, the executive reviews the performance of the economy and the

level of execution of the budget. At this stage, the Minister of Finance presents a supplementary

budget, which goes through the same process as the main budget in terms of rules and procedures

governing 'money bills'. It must however be noted that, over the years, the supplementary budget

process has become an ex-post event as it turns out that the executive might have made

expenditure and payment commitments prior to seeking parliamentary approval, thereby using

parliament as a 'rubber stamp'. Ministries, Departments and Agencies have all relied on the

supplementary budget process to secure additional funding for their projects and programs; in view

of this, there are numerous budgetary reallocations resulting in huge administrative deviations in

budgetary outturns (refer to PI-2).

59


PI Dimension Score

2008

Score

2013


PI-27 Legislative scrutiny of the

annual budget law

D+ D+ Scoring method M1

(i) Scope of the legislature’s

scrutiny

C B Both revenue and expenditure estimates are

reviewed but only when they are laid before the

legislature. Review of macro fiscal policies

takes place but this is weak as proceedings are

rushed.

(ii) Extent to which the

legislature’s procedures are

well-established and

respected

C B Both the House of Representative and the

Senate have standing orders, which provide

clear rules and procedures for budget debates.

Although generally respected, there are

concerns regarding the limit to questions and

the rush for approving bills in general and

budget estimates in particular

(iii) Adequacy of time for the

legislature to provide a

response to budget

proposals (time allowed in

practice for all stages

combined)

D D A maximum of three weeks is used for laying

and approving the budget which is clearly

inadequate

(iv) Rules for in-year

amendments to the budget

without ex-ante approval by

the legislature

A C There are rules for supplementary budget

processes that are followed, however with

extensive administrative reallocations.

Parliament has become a 'rubber stamp' entity

as the executive might have committed

expenditure prior to legislative approval.


Scores are comparable. There is no change in overall score but there is a decline in dimension (iv) from A to C

due to the fact that parliament has become a 'rubber stamp' entity approving ex-post events

Ongoing reforms

3.6.2 PI-28 Legislative scrutiny of external audit reports

Parliament derives its powers from Chapter 4, Parts 1 to 3 of the Constitution, the current revision

dating 2007 . Powers to summon ministers, scrutinise the budget otherwise known as "money bill"

as well provide oversight of government fiscal and financial management are all derived therein

(i) Timeliness of examination of audit reports by the legislature

A member of the opposition party chairs the Public Accounts Committee. Due to the limited number

of meetings (at most 7 times in a year but on average 4 times in a year), there remain huge backlog

of Auditor General reports yet to be reviewed by PAC. The table below provides details of the

timely examination of audit reports from the Auditor General. These delays in reviewing Auditor

General's report has resulted in weak implementation of recommended action by the executive.

Table 3.12 Timeliness of Examination of Audit Reports by Parliament

60


Date Parliament

Received Auditor

General Report

Date Auditor

General Report

was Laid in

Parliament

House of

Representative

Date Auditor

General Report

was Laid in the

Senate

Date Parliament

Approved PAC

Reports on

Auditor General

Report

FY2009/2010

Consolidated Fund (Central Government and MDAs) audit report 28th April 2011 12th May 2011

3rd May 2011

Yet to be

approved

FY2010/2011


1st May 2012

Yet to be

approved

FY2011/2012


14th May 2013

Yet to be

approved

Source: Parliament

(ii) Extent of hearings on key findings undertaken by the legislature

The structure of the Parliament of the Republic of Trinidad and Tobago is such that

Parliamentarians work as part-time officers, attending to the chamber once a week. It should

however be noted that various committees, including the Public Accounts Committee (PAC) could

meet more than once a week and for longer hours. On the average, there are 76 central

government entities under the purview of PAC and a maximum of 7 meetings per session. In

practice, there are 4 sittings a year; the Public Accounts Committee meets once a month for public

hearings on the Auditor General's report of public accounts. This should translate into 12 meetings

a year but practically, only 4 meetings are held mainly due to ministerial responsibilities of some

PAC members as well as the formation of a quorum. The result of these limited meetings of PAC

has resulted in a backlog of un-reviewed Auditor General's report dating back 2007/2008 fiscal

year. As part of measures to be up-to-date, PAC has decided to review Auditor General's report

from fiscal year 2008/2009. During public hearings, accounting officers of some key ministries and

departments are invited to answer audit queries contained in the Auditor General's audit report.

(iii) Issuance of recommended actions by the legislature and implementation by the executive

It turns out that the limited time with which the PAC meets has had a significant negative effect on

the issuance of recommendations from the review of Auditor General's reports submitted to

Parliament as well as a follow-up on the implementation of these recommended actions by the

executive, even where PAC proffers some remedial actions thereof. Clearly, the accountability

framework on the executive is weak which then places no responsibility on the part of accounting

officers, thereby weakening the external scrutiny duties of the Auditor General. It is important to

state that there could be a demand or pull effect of the activities of the PAC as a result of the

incidence of the Public Accounts (Enterprises) Committee that has undertaken to write officially to

public enterprises demanding a report on the implementation of PAEC recommended actions.

61


PI Dimension Score

2008

Score

2013


PI-28 Legislative scrutiny of

external audit reports

D+ D+ Scoring method M1

(i) Timeliness of examination

of audit reports by

legislature (for reports

received within the last

three years)

D D Even though the Auditor General is up-to-date

with regards to issuance of audit report on the

financial statements of central government,

Parliament and for that matter PAC is unable to

perform its oversight role by reviewing these

audit reports in a timely manner. There are

huge backlogs of un-reviewed audit reports

dating back 2007/2008.

(ii) Extent of hearings on key

findings undertaken by

legislature

C C Accounting officers of key ministries with

adverse audit findings are invited to the limited

sittings of PAC during public hearings.

(iii) Issuance of recommended

actions by the legislature

and implementation by the

executive

C C PAC issues recommended actions on those

audit reports reviewed but there is little

evidence suggesting follow-up of those actions

for executive implementation, thereby

weakening the scrutiny responsibility of the

Auditor General


The scores are comparable; there is no change since 2008 PEFA

Ongoing reforms

No reform

3.7 Donor practices

3.7.1 D-1 Predictability of Direct Budget Support

(i) Deviation of actual budget support from the forecasts

It turns out that two main donors were actively involved in budget support to the Government - the

Inter-American Development Bank (IADB) and the European Union (EU). The IADB provides

policy-based loans (direct budget support) and sector-specific budget support disbursed or

triggered by the attainment of set targets through the National Treasury. The EU on the other hand,

provides grants (sector budget support) through the Treasury system, agreed upon in the

Financing Agreements, which incorporates disbursement schedules. The EU funds are disbursed at

a time when the Government meets the agreed targets.

Predictability of direct budget support plays a major role in a government's cash management

framework particularly where such support forms a significant part of the government's revenue

flows for expenditure commitments and payments. In Trinidad and Tobago, however, total direct

budget supports represents just about 0.15% of total national budget and may not have

ramifications in terms of unpredictability; nonetheless, it is best practice to know at forehand the

timely disbursement of donor support as well as the level of deviation between forecast

disbursements and actual flows. During the last three completed fiscal years, deviations from donor

62


forecasts were 65.29% in 2009/2010, -1.23% in 2010/2011 and 11.04% in 2011/2012. (Please,

refer to Table 3.13 below)

Table 3.3 Direct Budget Support Performance for the Period 2009/2010- 2011/2012 (US$, million)

FY 2009/2010 FY 2010/2011 FY2011/2012

Forecast Disbursed Forecast Disbursed Forecast Disbursed

GBS forecast transmit No date No date No date

GBS amount (IADB) 0.00 0.00 15.90 15.90 37.36 37.36

GBS amount (EU) 0.00 0.00 0.00 0.00 0.00 0.00

Total GBS 0.00 0.00 15.90 15.90 37.36 37.36

Annual Deviation 0.00 0.00 0.00

Annual Deviation (%) 0% 0% 0%

Sector BS amount (IADB) 4.57 5.98 5.46 2.97 10.96 4.10

Sector BS amount (EU) 12.66 0.00 60.87 64.37 13.79 13.79

Total Sector BS 17.23 5.98 66.33 67.34 24.75 17.89

Annual Deviation (US$ m) 11.25 (1.01) 6.86

Annual Deviation (%) 65.29% (1.52%) 27.72%

Total BS amount 17.23 5.98 82.23 83.24 62.11 55.25

Annual Deviation (US$ m) 11.25 (1.01) 6.86

Annual Deviation (%) 65.29% (1.23) 11.04%

Source: IADB & EU: Exchange rate: US$1=TT$6.29; EUR1=TT$8.85

(ii) In-year timeliness of donor disbursements

The budget execution framework entails the timeliness and the reliability of cash releases from

governments own resources and development partner support. A country with significant donor

budget support is likely to suffer from delays in disbursement of funds by the donors. It turns out

that, the ratio of donor budget support in Trinidad and Tobago to total national expenditure is about

0.15% and therefore may not have serious consequences to efficiency in budget execution;

nonetheless, it is an important element to the entire national developmental agenda. Further, there

is a lost opportunity for effective donor participation in improving donor-government dialogue on

PFM reform. The Financing Agreements from the two major donors do indicate an annual

disbursement schedule consequence to the achievement of agreed milestone, but a

comprehensive quarterly disbursement schedule is not prepared and agreed with the government,

particularly in the case of IADB contrary to the EU having a quarterly disbursement plan. As

presented in the table below, more than 50% of forecast disbursements delayed in 2009/2010 fiscal

year.

Table 3.14: Donor Budget Support (USD million)

2009/2010 2010/2011 2011/2012

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

IADB

Forecast 0.00 0.00 0.00 4.57 0.00 0.00 0.00 21.36 0.00 0.00 0.00 48.32

Disbursed 0.00 0.00 0.00 5.98 0.00 0.00 0.00 18.87 0.00 0.00 0.00 41.46

EU

Forecast 0.00 0.00 0.00 12.66 0.00 18.33 0.00 42.54 0.00 0.00 0.00 13.79

Disbursed 0.00 0.00 0.00 0.00 20.23 0.00 0.00 44.14 0.00 0.00 0.00 13.79

Total forecast 0.00 0.00 0.00 17.23 0.00 18.33 0.00 63.90 0.00 0.00 0.00 62.11

Total disbursed 0.00 0.00 0.00 5.98 20.23 0.00 0.00 63.01 0.00 0.00 0.00 55.25

Weighted delay 65.29% 1.39% 11.04%

63


PI Dimension Score

2008

Score

2013


D-1 Predictability of Direct Budget Support NS C+ Scoring method M1

(i) Annual deviation of actual Budget

Support (BS) from the forecasts

provided by the donor agencies at

least 6 weeks prior to the government

submitting its budget proposals to the

legislature

NS A In one out of the last three completed fiscal

years, direct budget support deviated by less

than 5%. Actual deviations were 65.29%,

-1.23% and 11.04% in FY2009/2010,

FY2010/2011 and FY2011/2012 respectively

(ii) In-year timeliness of donor

disbursements (compliance with

aggregate quarterly estimates)

NS C Whiles the EU prepares a quarterly

disbursement schedule, the IADB does not.

More than 50% of forecast disbursements

delayed in one out of the last three completed

fiscal years


Scores are comparable; there has been an improvement

3.7.2 D-2 Financial information provided by donors for budgeting and reporting on project and program

aid

(i) Completeness and timeliness of budget estimates by donors for project support

Donors adopt different kinds of aid modalities to assist governments in their developmental agenda.

Apart from the two main aid modalities, namely direct budget support (as well as un-earmarked

sector budget support) and earmarked sector budget support, donors provide development

assistance through the provision of special projects and programs, paid directly by the donors;

some of these could be technical assistance and assistance in kind. The budget, as an annual

operational policy document of a government, should be able to provide complete revenue and

expenditure estimates for efficient service delivery.

The practice, however, is that all the major donors do not provide complete budget estimates on

program and project aid in a timely manner to the Ministry of Finance. Government has no

information whatsoever as regards the forecasts for any donor support on technical assistance or

aid both in cash and in kind for inclusion into the national budget. It should be recognised that

although some level of engagement does occur at the ministerial level, it is insufficient to warrant

the determination and inclusion of the donor fiscal estimates into the ministries, departments and

agencies budget estimates for consolidation into the national budget.

(ii) Frequency and coverage of reporting by donors on actual donor flows for project support

The major donors in Trinidad & Tobago (IADB and EU) provide technical assistance to the

government in some selected ministries, departments and agencies. In order for the government to

ascertain its complete financial position in terms of revenue and expenditure, it is imperative for all

forms of revenue and expenditure to be included in governments' financial statement in accordance

with the national fiscal reporting calendar and the budget classification. At present, none of the

active donors provides quarterly financial reports in national formats and accounting standards

within two months following the end of the quarter, nor do they provide annual project/program aid

financial statements to the government.

64


PI Dimension Score

2008

Score

2013


D-2 Financial information

provided by donors for

budgeting and reporting on

project and program aid

D D Scoring Method M1

(i) Completeness and

timeliness of budget

estimates by donors for

project support

D D All major donors do not provide budget

estimates on program and projects to

government in any of the last three completed

fiscal years

(ii) Frequency and coverage of

reporting by donors on

actual donor flows for

project support

D D No quarterly or annual financial reports are

provided by donors to government referencing

actual disbursement made on project or

program aid


Scores are comparable; there are no changes

3.7.3 D-3 Proportion of aid that is managed by use of national procedures

Donors agreed during the Paris Declaration 2005, the Accra Agenda for Action 2008 and the Busan

Action Plan 2011 to use country systems in providing development aid to countries aligned to

national strategies. The use of country systems and procedures is defined as adopting the use of

national procurement laws and procedures, disbursement of funds through the national treasury

system, accounting and reporting for the use of these funds through national accounting policies

and procedures, and auditing the use of these funds by adopting national auditing standards and

procedures.

Available evidence suggests the two main donor partners - IADB and EU have considerably

improved with regards to the use of national systems in aid modality. During the three years under

review, whiles IADB provided policy-based loans and sector budget support, the EU's budget

support was more sector driven; nonetheless, all disbursements from both donors were made to the

national treasury. Admittedly, both the IADB and the EU provided Technical Assistance, the cost of

which were paid using the donors' systems. In spite of this, more than 90% of total aid to Trinidad

and Tobago used national PFM systems. (Please, refer to Table 3.15 below)

65


Table 3.15 Use of country PFM and Procurement Systems

Total Direct

BS (USD

million)

Total

program/proj

ect (USD

million)

Use of country systems

Total Aid

(USD

million)

Procurement Budget

execution

Financial

reporting

Audit Weighted

average

2009/10

IADB 5.98 0.00 5.98 5.98 5.98 5.98 5.98

0.00 0.10 0.10 0.00 0.0 0.00 0.00

EU 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.54 0.54 0.00 0.00 0.00 0.00

Total 5.98 0.64 6.62 5.98 5.98 5.98 5.98 90.33%

2010/11

IADB 18.87 0.00 18.87 18.87 18.87 18.87 18.87

0.00 0.10 0.10 0.00 0.00 0.00 0.00

EU 64.37 0.00 64.37 64.37 64.37 64.37 64.37

0.00 0.35 0.35 0.00 0.00 0.00 0.00

Total 83.24 0.45 83.69 83.24 83.24 83.24 83.24 99.46%

2011/12

IADB 41.46 0.00 41.46 41.46 41.46 41.46 41.46

0.00 0.10 0.00 0.00 0.00 0.00 0.00

EU 13.79 0.00 13.79 13.79 13.79 13.79 13.79

0.00 1.03 1.03 0.00 0.00 0.00 0.00

Total 55.25 1.13 56.28 55.25 55.25 55.25 55.25 98.17%

Source: IADB & EU: Exchange rate US$1=TT$6.29; EUR1=TT$8.85

PI Dimension Score

2008

Score

2013


D-3 Overall proportion of aid funds to

central government that are

managed through national

procedures

D A More than 90% of donor funds are managed through

the Trinidad & Tobago's national systems. The actual

weighted averages are 90.33%, 99.46% and 98.17%

for FY2009/2010, FY2010/2011 and FY2011/2012

respectively


Score are comparable; there has been an improvement

66


4 Government Reform Process

4.1 Recent and ongoing reforms

Trinidad and Tobago is considering undertaking a comprehensive integrated PFM reform program.

While there has been considerable discussion, there is not yet a cabinet approved PFM reform

strategy. Officials indicate that there is currently a draft PFM reform strategy that is being

considered and will be submitted to Cabinet in 2014. Some initiatives being considered include the

introduction of a multi-year fiscal framework, the introduction of performance based budgeting; the

introduction of decentralised public procurement , the implementation of an integrated financial

management information system (IFMIS).

The main PFM reform initiatives currently being pursued have taken a longer than expected time to

materialise. These include but not limited to the following:

A New Public Procurement Law - this process began in 2006 and it is still on the table yet

to receive the necessary cabinet and legislative approvals. Civil Society Organisations

have raised concerns referencing the current state of the draft bill and the pace of

executive action to ensure the smooth passage of the law

Development of a medium term macro-fiscal framework (MTMF) leading to the

development of a medium term expenditure framework (MTEF)

Development of a new chart of account to be consistent with GFS2001 and capable of

producing statistical reports for government use

The introduction of IFMIS which is largely dependent on the development of a new chart of

account

The PSIP being developed to have a multi-year perspective, going forward

Finalisation of the draft internal audit manual and revision of the existing accounting

manual

The amendment of some PFM laws to accommodate changes in PFM processes such as

IFMIS

The standardisation of the debt management software (CS-DRMS)

The training and capacity building of the Auditor General Department to undertake

specialised audits such as Value-for-Money (VFM) audits.

Empowerment of the Public Accounts Committee and Public Enterprises Account

Committee to effectively perform its external oversight role on government and state-

owned entities as required by law through capacity building and the provision of support

office and staff with technical acumen

The Government, according to officials, is committed to ensuring advancing the current and on-

going reform program.

4.2 Institutional factors supporting PFM reforms

Over the years, there has been strong political and civil society commitment towards the

advancement of PFM reform. There has however been a drawback in pursuing some important

PFM reforms, seen in the public domain as critical to improving transparency and accountability.

The 2008 PEFA identified major weaknesses in the PFM procedures and processes; this has been

highlighted by the 2013 assessment as well.

67


Some key PFM institutions such as the Ministry of Finance, the Office of the Auditor General and

Parliament, all realise the importance of these PFM reforms in order to accelerate the quest for

greater transparency.

Development Partners have been at the forefront of providing some financial and technical

assistance in that direction. There is the need to deepen the existing dialogue environment between

donors and government with the participation of civil society groups to fasten the PFM reform

agenda.

69


Annexes

71


Annex 1: PFM Performance Measurement Framework Indicators Summary

No. Indicator Score

2008

Score

2013

Justification for 2013 score Comparability of scores and explanation of

change since previous assessment

A. PFM OUT-TURNS: Credibility of the budget

PI-1 Aggregate expenditure out-turn

compared to original approved

budget

B A In one of the three completed fiscal years, the

aggregate expenditure deviation was 7.7%; this was

an improvement from the 2008 PEFA assessment of

10% in one of the three years - 2004/2005. Actual

deviations for the last completed fiscal year were

2.1%, 7.7% and 0.03% for 2009/2010, 2010/2011

and 2011/2012 respectively

Scores are comparable. There was an improvement

when compared to the 2008 PEFA where in one of

the three years - 2004/2005, the expenditure

deviation was 10% as compared to 7.7% in

2010/2011

PI-2 Composition of expenditure out-turn

compared to original approved

budget

C D+ The overall of D+ is as a result of change in scoring

methodology. If compared on the basis of the

original methodology, there is an improvement

Scores not comparable due to change in

methodology

(i) Variance in expenditure composition,

excluding contingency items

n/a D The reallocation of ministerial votes over the last

three completed fiscal years were 17.8% each for

2009/2010 and 2010/2011 and 20.4% for

2011/2012.


methodology

(ii) The average amount of expenditure

actually charged to the contingency

vote

n/a A The average percentage of actual expenditure

charged to the contingency vote over the last three

completed fiscal years was 0.07%. The charge for

each of the years was 0.11%, 0% and 0.11% for

2009/2010, 2010/2011 and 2011/2012 respectively


methodology

B. KEY CROSS-CUTTING ISSUES: Comprehensiveness and transparency

PI-5 Classification of the budget C C Over the last three years, Trinidad and Tobago's

national budget is classified into administrative and

economic headings; further the classification allows

for consistent budget execution and reporting even

though this is not fully GFS 2001 compliant

Scores are comparable; there is no change since

2008 PEFA

72


No. Indicator Score

2008

Score

2013



C. BUDGET CYCLE

C(i) Policy-based Budgeting

PI-11 Orderliness and participation in the

annual budget process

C+ B The dimension (iii) has improved resulting in overall

improvement in the score

Scores are comparable. There has been an

improvement since the 2008 PEFA

(i) Existence of and adherence to a

fixed budget calendar

A A Clear and fixed budget calendar exist. These are

contained in the budget circular issued by the

Finance Ministry between February and March each

year; these dated are followed.

Scores are comparable; there is no change

(ii) Guidance on the Preparation of

budget submissions.

D D There is very little political involvement in the budget

preparation process. There are no budget ceilings in

the budget circulars issued by the Finance Ministry

to serve as a top-down fiscal discipline.


(iii) Timely budget approval by the

legislature

C B In the last three completed fiscal years, the

legislature has approved the annual budget before

the start of the next fiscal year in two of the three

years under this assessment

Scores are comparable. There has been an

improvement in this dimension

PI-12 Multi-year perspective in fiscal

planning, expenditure policy and

budgeting

C+ C+ No change in overall score even though dimension

(iv) deteriorated from B to C due to poor linkages

between investment and forward linked recurrent

expenditure

Scores are comparable; there is no change in

overall score even though there was a slippage in

dimension (iv)

(i) Multi-year fiscal forecast and

functional allocations

C C The budget estimates have no forecast figures for

the two outer years. The estimates are by economic

and administrative classifications.


(ii) Scope and frequency of debt

sustainability Analysis

A A A debt sustainability has been carried out in each of

the last three completed fiscal year 2009/2010,

2010/2011 and 2011/2012


(iii) Existence of costed sector strategies D D There are no sector strategies, let alone costed

sector strategies. Nonetheless, there is some level

of collaboration during the preparation stage of the

annual budget


(iv) Linkages between investment B C Major government projects have weak sector Scores are comparable; there is a slippage in this

73


No. Indicator Score

2008

Score

2013



budgets linkages with some level of recurrent cost estimates dimension

C(ii) Predictability and control in Budget Execution

PI-15 Effectiveness in collection of tax

payments

D+ NR 5 No data to score dimension (i) Scores are comparable; there is a slippage in overall

score due to non availability of data to rate

dimension (i)

(i) Collection ratio for gross tax arrears,

being percentage of tax arrears at

the beginning of a fiscal year, which

was collected during that fiscal year

D NR No data to score Scores are comparable; there is a slippage due to

non availability of data to rate dimension (i)

(ii) Effectiveness of transfer of tax

collections to the Treasury by the

revenue administration

A A Transfers from commercial banks for cleared

cheques and cash are made within 24 hours of their

receipt from taxpayers.


(iii) Frequency of complete accounts

reconciliation between tax

assessments, collections, arrears

records and receipts by the Treasury

D A The tax software GENTAX generates monthly

reports. Full reconciliation of tax assessed, tax

collected, tax transferred to the Treasury and tax

arrears are done with one month after the end of the

month.

Scores are comparable; there is an improvement in

score.

PI-19 Competition, value for money and

controls in procurement

D+ D Using the old methodology, there has been a

slippage in overall score


methodology

(i) Transparency, comprehensiveness

and competition in the legal and

regulatory framework

n/a C The Centrals Tenders Board Ordinance No 22, 1961

meets three of the six legal requirements stated in

Table 3.7 above


methodology

(ii) Use of competitive procurement

methods

n/a D Some data is generated by CTB on the type of

procurement method used but fails to include the

value of those contracts as well as the total value of

all government contracts.


methodology

(iii) Public access to complete, reliable

and timely procurement information

n/a D Information available to the public is very limited.

MDAs do not provide information on procurement

plans with bidding opportunities. Complete data on

contracts awarded as well as complaints resolved is

not available


methodology

74


No. Indicator Score

2008

Score

2013



(iv) Existence of an independent

administrative procurement

complaints system

n/a D There is no independent administrative procurement

complaints mechanism provided for under the CTB

Ordinance No. 22 of 1961

PI-20 Effectiveness of internal controls for

non-salary expenditure

C+ C+ No change Scores are comparable; there is no change

(i) Effectiveness of expenditure

commitment controls

B B A manual vote book is used to manage and control

expenditure commitment. For most expenditures, no

commitments are made without the commitment

and/or cash release warrants. There are minor

cases of expenditure commitments without the

necessary releases.


(ii) Comprehensiveness, relevance and

understanding of other internal

control rules/ procedures

C C Internal control procedures in the Treasury

accounting manual are fairly simple and understood

by accounting officers; however, there are

occasional minor breaches


(iii) Degree of compliance with rules for

processing and recording

transactions

B B Internal control procedures in the Treasury

accounting manual are fairly simple and understood

by accounting officers; however, there are

occasional minor breaches


PI-21 Effectiveness of internal audit C C No change Scores are comparable; there is no change

(i) Coverage and quality of the internal

audit function

C C Many central government ministries and

departments have internal audit units but with limited

human resource capacity. Focus of internal audit is

on compliance with limited time on systemic audit

not meeting international professional standards.


(ii) Frequency and distribution of reports C C Quarterly audit reports are prepared within one

month after the end of the quarter and submitted

only to the Permanent Secretaries of the various

ministries. Copies are only made available on

request to the Auditor General and the Comptroller

of Accounts of the Ministry of Finance and the


75


No. Indicator Score

2008

Score

2013



Economy.

(iii) Extent of management response to

internal audit findings

C C Limited management action is seen on follow-up of

internal audit recommendation, the result of which is

the continuous flouting of financial regulations and

procedures


C(iii) Accounting, Recording and Reporting

PI-23 Availability of information on

resources received by service

delivery units

D D No PETS nor PER has been conducted with the last

three completed fiscal years 2009/2010, 2010/2011

and 2011/2012. Further, the chart of account at its

current state is unable to track resources both cash

and in kind received by primary healthcare facilities

and primary schools across the country


PI-25 Quality and timeliness of annual


C+ C+ No change Scores are comparable; there is no change

(i) Completeness of the financial

statements

B B The annual financial statements prepared by the

Treasury are an amalgamation of the MDAs

financial positions. The financial statements are

complete except for the exclusion of expenditure

arrears and revenue arrears


(ii) Timeliness of submission of the


A A The Treasury prepares annual financial statements

and submits to the Auditor General four months after

the end of the fiscal year in accordance with Section

24 (1) (a) of the Exchequer and Audit Act


(iii) Accounting standards used C C The financial statements are prepared on cash

accounting basis and are consistent over time with

some disclosure of the accounting standards


C(iv) External Scrutiny and Audit

PI-27 Legislative scrutiny of the annual

budget law

D+ D+ No change in overall score but for some

improvement in dimensions (i) and (ii) but a slippage

in dimension (iv)

Scores are comparable; there is no change in

overall score even though there was an

improvement in dimensions (i) and (ii) and a

slippage in dimension (iv)

76


No. Indicator Score

2008

Score

2013



(i) Scope of the legislature’s scrutiny C B Both revenue and expenditure estimates are

reviewed but only when they are laid before the

legislature. Review of macro fiscal policies takes

place but this is weak as proceedings are rushed.

Scores are comparable; there is an improvement

(ii) Extent to which the legislature’s C B Both the House of Representative and the Senate

have standing orders, which provide clear rules and

procedures for budget debates. Although generally

respected, there are concerns regarding the limit to

questions and the rush for approving bills in general

and budget estimates in particular


(iii) Adequacy of time for the legislature

to provide a response to budget

proposals (time allowed in practice

for all stages combined)

D D A maximum of three weeks is used for laying and

approving the budget which is clearly inadequate


(iv) Rules for in-year amendments to the

budget without ex-ante approval by

the legislature

A C There are rules for supplementary budget processes

that are followed, however with extensive

administrative reallocations. Parliament has become

a 'rubber stamp' entity as the executive might have

committed expenditure prior to legislative approval.

Scores are comparable; there is a slippage

PI-28 Legislative scrutiny of external audit

reports

D+ D+ No change Scores are comparable; there is no change

(i) Timeliness of examination of audit

reports by legislature (for reports

received within the last three years)

D D Even though the Auditor General is up-to-date with

regards to issuance of audit report on the financial

statements of central government, Parliament and

for that matter PAC is unable to perform its oversight

role by reviewing these audit reports in a timely

manner. There are huge backlogs of un-reviewed

audit reports dating back 2007/2008.


(ii) Extent of hearings on key findings

undertaken by legislature

C C Accounting officers of key ministries with adverse

audit findings are invited to the limited sittings of

PAC during public hearings.


77


No. Indicator Score

2008

Score

2013



(iii) Issuance of recommended actions

by the legislature and

implementation by the executive

C C PAC issues recommended actions on those audit

reports reviewed but there is little evidence

suggesting follow-up of those actions for executive

implementation, thereby weakening the scrutiny

responsibility of the Auditor General


D. DONOR PRACTICES

D-1 Predictability of Direct Budget

Support

NS C+ Availability of data from donors resulted in the

scoring of both dimensions and saw significant

improvement

Scores are comparable; there is an improvement in

overall score as a result of improvements in

dimensions (i) and (ii)

(i) Annual deviation of actual BS from

the forecasts provided by the donor

agencies at least 6 weeks prior to the

government submitting its budget

proposals to the legislature

NS A In one out of the last three completed fiscal years,

direct budget support deviated by less than 5%.

Actual deviations were 65.29%,

-1.23% and 11.04% in FY2009/2010, FY2010/2011

and FY2011/2012 respectively


(ii) In-year timeliness of donor

disbursements (compliance with

aggregate quarterly estimates)

NS C Whiles the EU prepares a quarterly disbursement

schedule, the IADB does not. More than 50% of

forecast disbursements delayed in one out of the

last three completed fiscal years


D-2 Financial information provided by

donors for budgeting and reporting

on project and program aid

D D No change Scores are comparable; there is no change

(i) Completeness and timeliness of

budget estimates by donors for

project support

D D All major donors do not provide budget estimates on

program and projects to government in any of the

last three completed fiscal years


(ii) Frequency and coverage of reporting

by donors on actual donor flows for

project support

D D No quarterly or annual financial reports are provided

by donors to government referencing actual

disbursement made on project or program aid


D-3 Overall proportion of aid funds to

central government that are

managed through national

D A More than 90% of donor funds are managed through

the Trinidad & Tobago's national systems. The

actual weighted averages are 90.33%, 99.46% and


78


No. Indicator Score

2008

Score

2013



procedures 98.17% for FY2009/2010, FY2010/2011 and

FY2011/2012 respectively

79


Annex 3: List of Stakeholders Interviewed

Name Organisation Position Email

Ministry of Finance and the Economy

Eric James MoFE Permanent Secretary [email protected]

Narine Charran MoFE Senior Economist [email protected]

Michelle Durham-Kissoon MoFE Assistant Director, Economic Management Division [email protected]

Roselyn Ramdin-Doobraj MoFE Comptroller of Accounts [email protected]

Narine Charran MoFE Senior Economist [email protected]

Joycelyn Vialmosa MoFE Ag Senior Treasury Accountant [email protected]

Karen Seeboron-Timothy MoFE Ag Treasury Director [email protected]

Cherryann Le Gendre MoFE Ag Director of Budget [email protected]

Savitree Seepersad MoFE Director, Treasury - Pensions Management [email protected]

Yvonne Neemacharan MoFE Director, Treasury Management [email protected]

Catherine Laban MoFE Deputy Comptroller of Accounts [email protected]

Yvette Babb MoFE Senior Business Analyst [email protected]

Feroza Matthew MoFE Research Officer [email protected]

Eunice Walton MoFE Deputy Permanent Secretary [email protected]

Denis Cox MoFE Senior Investment Analysts

Board of Inland Revenue

Errol Ramsubeik BIR Ag Commissioner - Legal & Administration [email protected]

Charles Cudjoe BIR Ag Commissioner, Collections and Enforcement [email protected]

Nayak Ramdahin BIR Commissioner, Audit & Compliance [email protected]

Trevor Lalai BIR Commissioner, Reform, Objections and Planning [email protected]

Allison Raphael BIR Ag Chairman, BIR [email protected]

Ministry of Food Production

Myrna Thompson MoFP Permanent Secretary [email protected]

Yvonne Davidson-Mc

Kenzie

MoFP Director, Planning [email protected]

Beena Persad MoFP Planning Officer II [email protected]

Kamal Ragbir MoFP Auditor II

Geraloine Ferdinand MoFP Accounting Executive II [email protected]

Indra Arjoon MoFP Accountant II

Oswald Wright MoFP Project Analyst [email protected]

Parliament

Senator Colm Imbert Parliament Chairman PAC [email protected]

Keiba Jacob Parliament Clerk, PAC [email protected]

Julien Ogilvie Parliament Clerk of Committees [email protected]

Subhass Ramkhe Lawan Parliament Chairman, JSC - Municipal Corporation Services [email protected]

Nataki Atiba-Dilchan Parliament Clerk to the Senate [email protected]

Senator Dr. Victor Wheeler Parliament [email protected]

Ministry of Planning and Sustainable Development

Arlene Mc Comle MPSD Permanent Secretary [email protected]

Samantha Sharma MPSD Associate Professional [email protected]

Marion Lewis MPSD Assistant Program Coordinator - EDF Unit [email protected]

Marilyn Joseph MPSD Administrative Officer [email protected]

80



Marlene Nicholas MPSD Administrative Officer [email protected]

Zelmina James MPSD Auditor II [email protected]

Karlene Roach MPSD Director, Planning [email protected]

Joanne Deoraj MPSD Assistant Director [email protected]

Ayleen Ovid MPSD Director [email protected]

Ministry of Environment and Water Resources

David Persand MoEWR Environmental Manager [email protected]

Praimatee Chandoo MoEWR Administrative Manager [email protected]

Ajodia Rattansingh MoEWR Manager, Human Resource [email protected]

Rhoda Gunnesslal MoEWR Ag Accountant II [email protected]

Sara Randass-Maharaj MoEWR Ag Clerk II (Payroll) [email protected]

Allan Elder MoEWR Ag. Accounting Assistant [email protected]

Donors

Gregory Dunbar IADB Financial Expert [email protected]

Julian Belgrave IADB Operations Specialist [email protected]

Terhi Karvinen EU Program Coordinator [email protected]

Solomon Ioannou EU Program Coordinator [email protected]

Lydga Mohammed EU Cooperation Assistant [email protected]

Kathrin Renner EU Program Coordinator [email protected]

Civil Society Organisations

Afra Raymond JCC President [email protected]

Rishi P. A. Dass TTTI Member [email protected]

Ronald Ramcharam TTTI Director, Treasury [email protected]

Lorraine Rostant TTTI Director, Communications [email protected]

Stacey Honore TTCIC Trade & Research Economist [email protected]

Camille Sear-Carter Wells TTCIC [email protected]

Jerome Chambers TTCIC [email protected]

Auditor General's Department

Sharnan Ottley AGD Auditor General [email protected]

Majeed Ali AGD Ag Deputy Auditor General [email protected]

Jaiwantie Ramdass AGD Assistant Auditor General [email protected]

Gary Peters AGD Assistant Auditor General [email protected]

Gaitrie Maharaj AGD Assistant Auditor General [email protected]

Lorelly Pujadas AGD Assistant Auditor General [email protected]

Ministry of Labour and Small and Micro Enterprise Development Small and Micro Enterprises Development

Carl Francis MOLSMED Permanent Secretary [email protected]

Allisa Francis MOLSMED District Coordinator [email protected]

Shanmabee Singh Sang MOLSMED Director, Research & Planning [email protected]

Clement Ragoobar Singh MOLSMED Auditor II [email protected]

Susan Jaglal-Beharry MOLSMED Ag Accounting Executive [email protected]

Michael Gordon MOLSMED Manager, Enterprises Development Division [email protected]

Ministry of Education

Jennifer Daniel MoE Permanent Secretary [email protected]

Vidya Rambharose- MoE Deputy Permanent Secretary [email protected]

81



Heeraman

Chanwati Sookra MoE Ag Deputy Permanent Secretary [email protected]

Anjasie Samasoo MoE Auditor III [email protected]

Kristy Mahato Maharaj MoE Director, M & E [email protected]

Lemor Baptiste-Simmons MoE Director, Educational Planning [email protected]

Central Bank of Trinidad & Tobago

Marie Borely CBTT Chief Financial Officer [email protected]

Christopher Subryan CBTT Assistant Manager, Finance & Accounting [email protected]

Ministry of Trade, Industry and InvestmentIndustry and Investments

Joycelyn Hunte MTII Ag Permanent Secretary [email protected]

Sharla Codrington MTII M & E Specialist [email protected]

Janice Piarris MTII M & E Specialist [email protected]

Troy Chuerw MTII Senior HR Officer

Leeza Nondalal MTII Ag Accountant II

Ramzan Hosein MTII Coordinator [email protected]

Pamela Job MTII Administrator [email protected]

Brennan Guwin MTII M & E Specialist

Randall Karim MTII Director [email protected]

Ministry of Works & Infrastructure

Isaac James MoWI Permanent Secretary [email protected]

Sonia Francis-Yearwood MoWI Deputy Permanent Secretary [email protected]

Marissa Chattergoon MoWI Auditor III [email protected]

Parbatu Bachan MoWI CAS [email protected]

Lisa Balkaran MoWI CPI [email protected]

Wayne Kuyless MoWI Senior Economist [email protected]

Kamal Lewis MoWI Accountant II

Ramroop Maharaj MoWI Accounting Expert II

Elizabeth Roach MoWI Accounting Executive I

Ministry of Energy & Energy Affairs

Selwyn Lashley MEEA Ag Permanent Secretary [email protected]

Richard Oliver MEEA Deputy Permanent Secretary [email protected]

Heidi Wong MEEA Ag Deputy Permanent Secretary [email protected]

Grace Corneal MEEA Senior Audit Analyst [email protected]

Cindy Roopchand MEEA Planning Officer [email protected]

Poorandi Ramjitsingh MEEA Ag Accountant II [email protected]

Azizah Baksh-Backredee MEEA Senior Chemical Engineer [email protected]

Richard Jeremie MEEA Chief Technical Officer [email protected]

Barbara Nelson MEEA Auditor II [email protected]

Hazra Parasramsingh MEEA Ag Auditor V [email protected]

Marc Rudder MEEA Senior Petroleum Engineer [email protected]

Randy Maurice MEEA Senior Planning Officer [email protected]

Monty Beharry MEEA Director of Minerals [email protected]


Shamdaye Singh-Ramdial CTB Ag Assistant Director of Contracts [email protected]

Jenepha Khan CTB Ag Assistant Director of Contracts [email protected]

Ministry of Health

Ramesy Gooster MoH Auditor II [email protected]

82



Veronica Pedro MoH Accounting Executive I [email protected]

Andy Thomas MoH Senior Health Economist [email protected]

Sarita Ghouralal MoH Auditor II [email protected]

Dave Francois MoH Procurement Specialist [email protected]

Geeta Maharaj MoH Director, Finance & Accounts [email protected]

83


Annex 4: List of Documents Consulted

Legislation, Regulations

Constitution of the Republic of Trinidad and Tobago 1976 (Amendments to 2007)

Exchequer and Audit Act (EAA), 1999 + Amendments

Customs Act 1938 + Amendments to date

Value Added Tax Act, 1939 + Amendments to date

Income Tax Act, 1938 + Amendments to 1980

Centrals Tenders Board Ordinance

Central Bank Act

Appropriations Act 2009/2010, 2010/2011 and 2011/2012

Financing Agreements

Support to the National Sugar Adaptation Strategy

Support to Enabling Competitive Business (plus addendum)

Support to Environmental Governance

Budget and Planning Documents

Public Sector Investment Programme

Supplementary Public Sector Investment Programme

Budget statements of Trinidad & Tobago

Estimates of Revenue for 2009/2010, 2010/2011 and 2011/2012

Details of Estimates of Expenditure 2009/2010, 2010/2011 and 2011/2012

Mid Term Policy Framework 2011-2014, National Performance Framework and Annual Performance Report 2012

Open Budget Index

Use of contingency fund 2009/2010, 2010/2011 and 2011/2012

Treasury

Public Accounts of the Republic of Trinidad and Tobago Volumes 1 and 2 for 2009/2010 , 2010/2011 and 2011/2012

Board of Inland Revenue

Guidelines relating to discretionary powers of the Commissioner

Taxpayer information materials

Auditor-General Office

Auditor General’s Reports for 2009/2010 , 2010/2011 and 2011/2012

Capacity assessment of Trinidad & Tobago's Auditor General's Department, November 2011

Central Bank of Trinidad and Tobago

Central Bank periodic reports on the economy 2009/2010 to 2011/2012

National Assembly

Standing Orders

Reports of Public Accounts Committee and Public Accounts (Enterprises) Committee

Report on the Joint Select Committee of Parliament on legislative proposals to provide public procurement and disposal of public property and the repeal and replacement of the Centrals Tenders Board Act

A study of parliamentary scrutiny and existing parliamentary practices in Trinidad & Tobago

Internal Documentation and Log Books

Budgetary mapping tables

84


Monthly expenditure returns

Internal Audit Plans

Log of receipt of monthly expenditure returns

Draft Internal Audit manual from the Comptroller of Accounts

Accounting Manual 2011

Copies of the chart of accounts

Reconciliation sheets for suspense accounts

Reconciliation sheets for revenue transfers to the Treasury Account

Sample quarterly request for cash releases

Sample Cash flow statement

Sample activity progress report

Other publications

Trinidad and Tobago, Country Profile 2012, Economist Intelligence Unit

Strengthening Macro fiscal Capacity and Introducing a Medium Term Framework, IMF 2008-10-14

Reform of the Public Sector Procurement Regime, Progress Reports

EU Delegation PFM annual reports

Status report: PFM reform process by George Bindley-Taylor

Inception and Governance report with respect to PFM reform consultancy, July 2012 by George Bindley-Taylor

Integrity Commission Annual Reports

Heritage & Stabilisation Fund reports

State Enterprises Performance Monitoring manual

State Enterprises Investment Programme

Investment opportunities in Agriculture

Agric incentive programme

National Food Production Action Plan 2012-2014

Trinidad and Tobago Extractive Industries Transparency Initiatives Report 2010/2011

85


Annex 5a: Data used for scoring PI-2 - FY2009/2010

Source: Budget Estimates, Auditor General's Report and Appropriations Act 2009/2010

Data for year = 2009/2010

MDA Total budget Total actual adjusted budget deviation absolute deviation percent

Tobago House of Assembly 1,771,500,000.00 1,757,931,379.00 1,808,126,845 -50,195,466 50,195,466 2.8%

Ministry of Finance 6,012,622,000.00 9,051,361,612.00 6,136,936,634 2,914,424,978 2,914,424,978 48.5%

Pensions and gratuities 2,226,475,000.00 1,858,567,231.00 2,272,508,731 -413,941,500 413,941,500 18.6%

National Security 4,792,834,850.00 4,637,331,031.00 4,891,929,639 -254,598,608 254,598,608 5.3%

Ministry of Food Production, Lands and Marine Affairs 740,439,598.00 613,765,847.00 755,748,639 -141,982,792 141,982,792 19.2%

Ministry of Education 3,952,851,967.00 3,780,132,553.00 4,034,579,597 -254,447,044 254,447,044 6.4%

Ministry of Health 3,903,191,200.00 3,746,215,325.00 3,983,892,063 -237,676,738 237,676,738 6.1%

Ministry of Labour, Small and Micro Enterprises Dev 191,170,300.00 177,012,996.00 195,122,863 -18,109,867 213,232,730 111.5%

Ministry of Public Administration 1,337,767,000.00 347,080,718.00 1,365,426,150 -1,018,345,432 1,018,345,432 76.1%

Ministry of Public Utilities 2,734,483,500.00 2,515,467,826.00 2,791,020,617 -275,552,791 275,552,791 10.1%

Ministry of Energy & Energy Affairs 1,546,958,420.00 1,438,999,780.00 1,578,942,731 -139,942,951 139,942,951 9.0%

Ministry of Local Government 1,970,719,147.00 1,723,876,374.00 2,011,464,970 -287,588,596 287,588,596 14.6%

Ministry of Works and Transport 2,713,254,900.00 2,477,359,456.00 2,769,353,103 -291,993,647 291,993,647 10.8%

Ministry of Science, Technology & Tertiary Education 2,306,536,177.00 2,412,131,702.00 2,354,225,222 57,906,480 57,906,480 2.5%

Ministry of People and Social Development 2,436,542,510.00 2,696,032,541.00 2,486,919,515 209,113,026 209,113,026 8.6%

Ministry of Housing and Environment - 241,381,838.00 0 241,381,838 241,381,838 100%

Ministry of Trade and Industry 308,952,410.00 437,736,377.00 315,340,190 122,396,187 122,396,187 39.6%

Ministry of Planning, Housing and Environment 1,260,777,400.00 1,060,055,638.00 1,286,844,743 -226,789,105 226,789,105 18.0%

Judiciary 47,000,000.00 322,912,111.00 47,971,754 274,940,357 274,940,357 585.0%

Ministry of Community Development 613,011,600.00 504,546,666.00 625,685,989 -121,139,323 121,139,323 19.8%

All Other Votes (Residual) 2,929,319,049.00 2,902,025,504.00 2,989,884,510 -87,859,006 87,859,006 3.0%

approved total budget expenditure 43,796,407,028.00 44,701,924,505.00 44,701,924,505 0 7,835,448,596

contingency 100,000,000.00 49,065,120.00

total expenditure 43,896,407,028.00 44,750,989,625.00

overall (PI-1) variance 1.9%

composition (PI-2) variance 17.5%

contingency share of budget 0.11%

Budget Actual

87


Annex 5b: Data used for scoring PI-2 - FY 2010/2011

Source: Budget Estimates, Auditor General's Report and Appropriations Act 2010/2011


MDA Total budget actual adjusted budget deviation absolute deviation percent

Tobago House of Assembly 1,959,507,638.00 1,978,347,218.00 2,109,464,515.9 -131,117,297.9 131,117,297.9 6.2%

Ministry of Finance 6,923,414,601.00 11,014,183,369.00 7,453,248,533.8 3,560,934,835.2 3,560,934,835.2 47.8%

Pensions and gratuities 2,374,860,000.00 2,019,920,926.00 2,556,602,895.1 -536,681,969.1 536,681,969.1 21.0%

National Security 3,277,808,627.00 3,242,388,021.00 3,528,652,226.0 -286,264,205.0 286,264,205.0 8.1%

Ministry of Food Production, Lands and Marine Affairs 1,045,554,291.00 1,032,139,282.00 1,125,568,297.7 -93,429,015.7 93,429,015.7 8.3%

Ministry of Education 4,311,442,062.00 4,076,067,389.00 4,641,387,390.4 -565,320,001.4 565,320,001.4 12.2%

Ministry of Health 3,943,457,510.00 3,848,296,611.00 4,245,241,777.1 -396,945,166.1 396,945,166.1 9.4%

Ministry of Labour, Small and Micro Enterprises Dev 207,283,630.00 172,986,273.00 223,146,597.5 -50,160,324.5 50,160,324.5 22.5%

Ministry of Public Administration 1,934,194,859.00 879,591,118.00 2,082,214,604.8 -1,202,623,486.8 1,202,623,486.8 57.8%

Ministry of Public Utilities 2,484,707,500.00 2,545,573,743.00 2,674,856,786.5 -129,283,043.5 129,283,043.5 4.8%

Ministry of Energy & Energy Affairs 1,597,015,370.00 1,502,670,802.00 1,719,231,499.3 -216,560,697.3 216,560,697.3 12.6%

Ministry of Local Government 1,841,157,130.00 1,673,366,613.00 1,982,056,899.7 -308,690,286.7 308,690,286.7 15.6%

Ministry of Works and Transport 3,103,714,124.00 3,876,891,708.00 3,341,234,647.5 535,657,060.5 535,657,060.5 16.0%

Ministry of Science, Technology & Tertiary Education 2,775,864,225.00 2,696,949,365.00 2,988,295,105.4 -291,345,740.4 291,345,740.4 9.7%

Ministry of People and Social Development 3,357,097,340.00 3,739,105,834.00 3,614,008,732.6 125,097,101.4 125,097,101.4 3.5%

Ministry of Housing and Environment 1,602,791,350.00 1,851,710,323.00 1,725,449,502.6 126,260,820.4 126,260,820.4 7.3%

Trinidad & Tobago Police Service 1,484,234,300.00 1,479,989,050.00 1,597,819,538.2 -117,830,488.2 117,830,488.2 7.4%

Ministry of Trade and Industry 291,413,850.00 276,444,813.00 313,715,121.1 -37,270,308.1 37,270,308.1 11.9%

Ministry of Planning, Economic and Social Restructuring 180,361,820.00 109,613,403.00 194,164,519.7 -84,551,116.7 84,551,116.7 43.5%

Judiciary 412,939,340.00 363,087,434.00 444,540,693.8 -81,453,259.8 81,453,259.8 18.3%

All Other Votes (Residual) 3,337,864,815.00 3,774,880,974.00 3,593,304,384.1 181,576,589.9 181,576,589.9 5.1%

approved total budget expenditure 48,446,684,382.00 52,154,204,269.00 52,154,204,269.0 0.0 9,059,052,814.8

contingency 100,000,000.00 -





Budget Actual

88


Annex 5c: Data used for scoring PI-2 - FY 2011/2012

Source: Budget Estimates, Auditor General's Report and Appropriations Act for 2011/2012


MDA Total budget actual adjusted budget deviation absolute deviation percent

Tobago House of Assembly 2,180,038,000.00 2,076,532,056.00 2,180,639,759.0 -104,107,703.0 104,107,703.0 4.8%

Ministry of Finance 9,418,823,996.00 11,471,380,644.00 9,421,423,887.6 2,049,956,756.4 2,049,956,756.4 21.8%

Pensions and gratuities 2,382,136,000.00 2,183,625,072.00 2,382,793,544.4 -199,168,472.4 199,168,472.4 8.4%

National Security 3,474,459,700.00 3,062,678,640.00 3,475,418,760.1 -412,740,120.1 412,740,120.1 11.9%

Ministry of Food Production, Lands and Marine Affairs 1,285,881,075.00 1,080,319,152.00 1,286,236,018.6 -205,916,866.6 205,916,866.6 16.0%

Ministry of Education 4,585,941,618.00 4,017,166,637.00 4,587,207,482.1 -570,040,845.1 570,040,845.1 12.4%

Ministry of Health 4,237,732,552.00 3,905,770,765.00 4,238,902,299.4 -333,131,534.4 333,131,534.4 7.9%

Ministry of Labour, Small and Micro Enterprises Dev 202,438,032.00 170,577,295.00 202,493,911.3 -31,916,616.3 31,916,616.3 15.8%

Ministry of Public Administration 1,738,657,220.00 945,530,184.00 1,739,137,144.1 -793,606,960.1 793,606,960.1 45.6%

Ministry of Public Utilities 3,101,633,700.00 2,281,163,965.00 3,102,489,848.4 -821,325,883.4 821,325,883.4 26.5%

Ministry of Energy & Energy Affairs 2,054,778,573.00 2,063,449,732.00 2,055,345,756.5 8,103,975.5 8,103,975.5 0.4%

Ministry of Local Government 2,033,726,000.00 1,778,653,233.00 2,034,287,372.3 -255,634,139.3 255,634,139.3 12.6%

Ministry of Transport 1,157,571,332.00 1,100,158,350.00 1,157,890,858.1 -57,732,508.1 57,732,508.1 5.0%

Ministry of Works and Infrastructure 2,297,403,899.00 3,063,810,873.00 2,298,038,054.7 765,772,818.3 765,772,818.3 33.3%

Ministry of Science, Technology & Tertiary Education 2,806,400,985.00 1,663,293,346.00 2,807,175,639.9 -1,143,882,293.9 1,143,882,293.9 40.7%

Ministry of People and Social Development 3,540,230,995.00 3,458,000,056.00 3,541,208,210.1 -83,208,154.1 83,208,154.1 2.3%

Ministry of Housing and Environment 1,739,999,130.00 2,697,974,283.00 1,740,479,424.5 957,494,858.5 957,494,858.5 55.0%

Trinidad & Tobago Police Service 1,696,042,900.00 1,604,226,288.00 1,696,511,061.2 -92,284,773.2 92,284,773.2 5.4%

Ministry of Trade and Industry 404,781,500.00 548,931,865.00 404,893,232.4 144,038,632.6 144,038,632.6 35.6%

Ministry of Planning, Economic and Social Restructuring 244,857,640.00 112,386,097.00 244,925,228.4 -132,539,131.4 132,539,131.4 54.1%

Judiciary 445,137,620.00 352,895,113.00 445,260,492.0 -92,365,379.0 92,365,379.0 20.7%

All Other Votes (Residual) 3,694,726,725.00 5,099,980,925.00 3,695,746,585.8 1,404,234,339.2 1,404,234,339.2 38.0%

approved total budget expenditure 54,723,399,192.00 54,738,504,571.0 54,738,504,571.0 0.0 10,659,202,761.0

contingency 100,000,000.00 60,625,663.00





Budget Actual

89


90


Annex 6: Comments to the Draft Report

FWC Lot 11 – Macro economy, Statistics, Public Finance Management

This document summarises the way and the extent to which the expert team responded to the comments received from the client on the first draft report.

Project Reference 2013/322918/1

Project Title Limited Repeat & Sectoral PEFA assessment 2013 - Trinidad & Tobago

Status of Report Final report - Volume 1 - Central Government and Volume 2 – Sectors

Names of the different Team Members

and their position in the Team

Ronald E. Quist (team leader), Charles K. Hegbor ( Expert 2)

Section or

Indicator

Comments Response from Team

Central Tenders Board

Page 21 under Efficient Service Delivery - Central

Government (Volume 1)

Insert:

"These companies however have some guidelines set out by

the Investments Division of the Ministry of Finance and the

Economy"

Sentence inserted

Page 35 under Executive - Central Government (Volume 1)

Insert:

"...which includes the Regional Corporations, Borough

Corporations and the Port of Spain and San Fernando City

Corporations."

Phrase inserted

91


Section or

Indicator


PI-19 (i) page 48 - Central Government (Volume 1)

Revise sentence to include:

"The Ministerial Tenders Committees have been chaired by

both the two (2) Ag Assistant Directors of Contracts for the

past three (3) years"

Sentence revised

Table 3.7 page 48 - Central Government (Volume 1)

Insert under item 5 of the elements:

"All contracts awarded are published in the Trinidad and

Tobago Gazette and on Ministry of Finance website. It has

the name of the project, the name of the Ministry/Department,

date of award, name and address of contractor/firm and

contract sum"

The insertion of this sentence is irrelevant as it fulfils only part of the

requirements of the fifth element. Please, note that data on procurement

complaints are not available and therefore renders the fifth element unavailable.

Central Government (Volume 1)

PI-19(iii) page 49 - Standardized tender documents are used

for any form or type of procurement; the tender documents fail

to consider the type of item to be procured; for instance tender

documents for IT infrastructure with all the technical

specifications are the same for tender for the supply of

stationery.

"Definitely not ! The instructions to tenderers may have some

similarities depending on the nature of the project but

technical specifications are different for each project."

Sentence revised to reflect the accurate position

Table 3.9 page 50 - Central Government (Volume 1)

"If there is no established body to review complaints, do all

these questions apply? And although there is no established

body all complaints at the Central Tenders Board are

addressed. If there are legal matters involved, the Chief State

For purposes of complying with the PEFA framework, those questions are

relevant. Further, the last paragraph under PI-19(iv) has taken note of the fact that

CTB receives and addresses bidders' complaints.

92


Section or

Indicator


Solicitor's Office is consulted before replies are issued."


PI-19(iii) - Justification for the Score

"As indicated on page 48 contracts awarded are made public.

As to complaints resolved- not all contractors would want

their information viewed by John Public e.g. A firm may

complain about not being considered for a project when they

submitted all the required documents. If the firm has doctored

an Income Tax Clearance Certificate and submitted it with

their tender, would they want anyone to know that they are

unethical?"

In accordance with the PEFA framework, there should be an independent

administrative complaint body for complaint resolution. The resolutions must be

made public irrespective of whether they favour the bidder(s) or not.

Auditor General's Department

Page 23 under Prospects for PFM Reforms - Central


VFM Audits conducted since 1980’s. Formal risk-based

approach for financial audit being introduced.

Sentence rephrased accordingly

Page 33 Table 2.3 - Central Government (Volume 1)

Only salary and allowances of AG are a direct charge on the

Consolidated Fund

Sentence rephrased accordingly


'Section 41 refers to audit of accounts of AGD by Treasury'

Correction effected


'Refers to statutory boards as against state-owned enterprises

registered under the Companies Ordinance'

Correction effected


Proper books of account should be maintained for public

accountability and transparency

Correction effected

Page 34 Table 2.3 - Central Government (Volume 1) Correction effected

93


Section or

Indicator


'Authority to audit statutory boards. AG would have to be

appointed by shareholders with respect to audit of accounts for

SoEs registered under the Companies Ordinance. AG does not

currently audit any SoEs.'

Page 35 under Auditor General - Institutional Framework

for PFM - Central Government (Volume 1)

AGD not fully independent. Staff appointed by Public Service

Commission. Funding subject to Ministry of Finance

procedures.

Correction effected

Page 35 under Auditor General - Institutional Framework

for PFM - Central Government (Volume 1)

Only salary and allowances of the Auditor General are direct

charges on the Consolidated Fund.

Correction effected

Page 36 under Public Enterprises - Institutional

Framework for PFM - Central Government (Volume 1)

AG does not audit SoEs registered under the Companies Act

nor does she appoint private accounting firms to conduct

audits on her behalf.

Correction effected


AGD not fully independent. Also VFM audits conducted

under section 9(2)(c ) of the Exchequer and Audit Act re

“avoidance of waste and extravagance

Correction effected

Page 38 under Key Features of PFM Systems - Central


'Only salary and allowances of AG are a direct charge on the

Consolidated Fund'

Correction effected

94


Section or

Indicator


'Only audit reports for public accounts are on the website

currently.'

Page 56 under Completeness of Financial Statement -


This explanation could give the wrong impression concerning

Treasury Accounts. Not aware of any “netting off”.

Definition rephrased

Consolidated Financial Statement is defined as:

"Financial information in which assets, equity, liabilities and operation accounts

of a firm and its subsidiaries are combined, after eliminating all inter-firm

transactions".


Dates Auditor General audit reports were laid in the House or

Representative and the Senate

Correction effected

European Union Delegation - Trinidad & Tobago

Please correct throughout the document - Central Government

(Volume 1):

Ministry of Trade, Industry and Investment

Ministry of Labour and Small and Micro Enterprise

Development


Correction effected

Page 31scoring table - Ministry of Environment (Sector PEFA

- Volume 2)

Ministry of environment is a new ministry…does this take

into account the new composition of the ministry, which may

explain some of the high variance?

Yes, it does

Page 44 PI-12(iii) - Ministry of Trade Industry and Investment

The MTII strategic plan is still pending approval. It is not

finalised.

Sentence rephrased to include the word "draft"

95


Section or

Indicator


Ministry of Finance - Budget Division

Page 13 under Policy-based Budgeting

"They are however not developed within fiscal frames"

Not sure what this means. This point needs to be elaborated.

Sentence rephrased

Page 15 under Predictability and Control in Budget Execution

Expenditure under the Infrastructure Development Fund is

implemented through these special purpose companies and so

means that a substantial proportion of development

expenditure is not subject to public procurement

regulations

It should be noted that there is a Comptroller of Accounts

Circular which provides the operational guidelines to be followed

under the I.D.F.

Sentence rephrased to reflect the existence of Comptroller of Accounts circular

No. 12 dated 9th November 2005

Page 42 under Existence and Adherence to a Fixed Budget

Calendar

The Ministry of Finance around February each year normally

issues budget call circulars.

Only one Call circular is issued each fiscal year

Correction effected

Page 47 under Effectiveness of transfer of tax collection to

Treasury by tax authorities

The Comptrollers of Customs and Inland Revenue head the

Customs and the Inland Revenue divisions of BIR respectively.

This should read “Ministry of Finance and the Economy”

Correction effected

Page 52 under Effectiveness of internal controls Correction effected

96


Section or

Indicator


The Ministry of Finance issues a quarterly general release

warrant

The releases for recurrent expenditure are issued via a

memorandum not a Warrant. Warrants are only issued for

withdrawals from the special funds.

Page 52 under Effectiveness of internal controls

MDAs are allowed to vire having obtained the necessary approvals from

either the Budget Director of the Ministry of Finance or the Minister of

Finance depending on the level of virement.

Permanent Secretaries have delegated authority to vire funds from votes

under recurrent expenditure except for those which specifically require

the approval of the Budget Division or in the case of “Official overseas

travel” – the approval of the Minister of Finance

Sentence rephrased

Page 59 under scoring table for PI-27: Comparability of scores

There is no change in overall score but there is a decline in dimension

(iv) from A to B

What is the correct score for 2013 for dimension (iv) B or C which is

stated in the table?

Correction effected; the correct score is C

Pages 38 and 58 under Key Features of PFM and Adequacy of time

for the legislature to provide response to budget proposals

respectively

"....... but this takes place within a day each for both houses"

The legislative process usually takes 3-4 days in each house to debate

Correction effected

97


Section or

Indicator


the Appropriation Bill for the budget. However, for the debate on

Supplementary /Variation of Appropriation Bills the time could be as

short as 1 day in each place

Parliament

Page 34 under Institutional Framework for PFM: Legislature

(Volume 1 - Central Government)

The House of Representatives has 41 seats but 42 members

because of the Speaker.

The Senate has 31 members inclusive of the President of the

Senate

Correction effected

Page 35 under Institutional Framework for PFM: Executive


The 14 municipal corporations are made up of the 2 city

corporations, 3 borough corporations and 9 regional corporations

Correction effected

Page 43 under Timely budget approval by the legislature or

similarly mandated body (Volume 1 - Central Government)

Minister of Finance tables the Estimate as required by law and on

behalf of the Cabinet. (See section 113 of the Constitution of

TT)

Correction effected

Page 58 under Adequacy of time for the legislature to provide a

response to budget proposals (Volume 1 - Central Government)

The Senate has limited powers with money bills. There is no

finance committee or provision like the House of Representatives

for it to review in detail the estimates.

The Senate debates the Appropriation Bill.

Correction effected

Page 59 under PI-28 Legislative scrutiny of external audit reports


Correction effected

98


Section or

Indicator


Is this reference being made to the implementation of the

Republican Constitution ? Act No. 4 of 1976? Assented March

29, 1976

We continually revise parts of the Constitution when necessary.

The last revision being in 2007.

Page 60 under Extent of hearings on key findings undertaken by

the legislature (Volume 1 - Central Government)

Sittings..that is plenary ( chamber ) debates average once a week

per House. Committees meet sometimes earlier that day or on

another day averaging once a month. Length of Committee

meetings are on average 4 hours

Correction effected