RWANDA: TRACKING POVERTY-REDUCING SPENDING SECOND ... · and the issues arising from the program of decentralization. ... • To create an action plan to ... Auditor-General (OAG)

RWANDA: TRACKING POVERTY-REDUCING SPENDING: SECOND ASSESSMENT AND ACTION PLAN (AAP)

Prepared by Fund/Bank staff1

in collaboration with the Rwandan authorities

July 2004

1 The mission comprised Kene Ezemenari (Team Leader), Guido Rurangwa, and Raju Kalidindi (AFTP3 World Bank), and Duncan Last (AFRITAC-East and International Monetary Fund).

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Assessment of Capacity to Track Poverty-Reducing Expenditures

I. Overview This assessment reports on the central government capacity to track pro-poor spending, and the issues arising from the program of decentralization. The assessment focuses on the three main areas of budgeting that were evaluated in the Board paper—budget preparation, budget execution, and budget reporting. The aim of the assessment is as follows:

• To assess the existing public expenditure management systems;

• To create an action plan to redress risks; and

• To clarify what additional technical assistance should be provided to support the action plan.

The 2001 assessment was based on 15 benchmarks. Overall Rwanda met 8 benchmarks—5 covering budget formulation, 1 budget execution, and 2 budget reporting. In relation to 23 other countries also assessed at that time, Rwandan was viewed as requiring some “upgrading” of its PEM systems. Accordingly, the assessment identified a number of actions aimed at achieving this goal in the short and medium term, to be supported by different partners. Following the 2001 assessment, Rwanda began implementing agreed PEM reforms embedded in its action plan. The reforms in MTEF implementation has continued with continued capacity building support to ministries and district. The Financial Accountability Review and Action Plan (FARAP), with time bound and monitorable indicators has been prepared and adopted, with strong consultation among all stakeholders. The FARAP is currently under implementation. For example, the Office of Auditor-General (OAG) had conducted 30 audit missions of key ministries including defense in 2002, and 60 in 2003, which included a number of districts. Professional audit standards have been embraced. However, the FARAP had identified that the legal framework establishing the OAG hampers oversight contributions of OAG’s work. To address this issue, the revision of the Audit Act is under consideration with the aim of ensuring the Auditor General’s independence in accordance with the provisions of the Constitution. The Draft Organic Budget Law has been revised and has recently been adopted by Cabinet (along with the new Procurement Law), and will shortly be submitted to the Parliament. In addition, the law establishing the Office of the Ombudsman has been enacted. Government has agreed a harmonized budget support framework, with development partners engaged in budget support that will lead to better coordination of external funding of the budget.

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The 2004 assessment is in response to the request of the World Bank and the IMF Executive Boards for another comprehensive assessment of all HIPC countries. Such a reassessment should help determine progress made in strengthening PEM systems since 2001. Well-functioning PEM systems should contribute to reducing reporting requirements by donors and provide assurance to both domestic taxpayers and development partners that funds are being used for their intended purposes. They also enhance the efficiency in the use of public resources. Given the need to sustain donor support for achieving the MDGs by 2015, a strengthening of PEM systems in the short to medium term is critical. As in the previous assessment, Rwanda meets 8 benchmarks, overall. However, one previously met benchmark (extra-budgetary sources) is now no longer met, and one previously missed benchmark (audits) is now met. In addition, two indicators (classifications and arrears) have been downgraded, but with no impact on benchmarks. The 2004 assessment includes an additional indicator on procurement, which was not separately treated in the 2001 assessment. The change in rating between the last and current assessment is in part a reflection of the increased precision in the guidelines. Therefore, the letter ratings may not be strictly comparable to previous years. The mission is encouraged by the commitment of the Government of Rwanda to ongoing reforms in procurement and internal audit. In addition, the government continues to work to integrate the development and recurrent budgets, and improve budget tracking and reporting. The upgraded SIBET (central budget management system) will also facilitate improved reporting, particularly of donor funded projects. However, the assessment notes that the issue of public accounting practices remains a matter of urgent concern. Establishment of strong accounting practices from the point of view of accountability and transparency is critical. Despite the fact that there exists a system for tracking expenditures on a payment order basis, GoR should move quickly to mandate consistent and regular financial reporting from ministries, agencies, and sub-national governments. This is critical given the new requirements for reporting in the Organic Budget Law that is about to be submitted to Parliament. The assessment highlights a number of immediate actions that can be taken to improve accounting standards and practices, and it stresses that the government continue to work to build capacity in this area. The mission recognizes that SIBET II, which is soon to be launched, will have an accounting module that will also help to address these concerns. The assessment also notes that while the situation of arrears prior to 2000 is being dealt with in a systematic manner, there is still some annual accumulation of arrears, which undermines budget performance. This second comprehensive assessment was prepared by the World Bank and the IMF, in collaboration with Rwandan authorities. Prior to the mission, the authorities provided staff with a self-assessment of the progress made since 2001.2 The mission is 2 To assist the authorities, a copy of guidelines for appraising existing systems in terms of 16 benchmarks, along with the questionnaire, was sent about 8 weeks prior to the mission.

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grateful to the authorities for their excellent cooperation and assistance in preparing this assessment. It would also like to thank the staff of the Ministry of Finance for facilitating discussions and the sharing of preliminary findings with other key stakeholders in the Government. The mission’s assessment of the government of Rwanda’s public expenditure management systems against each of the sixteen benchmarks are reviewed below and summarized in Table 1.

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Standard 2001 2004Benchmark Assessment Assessment

FORMULATIONCOMPREHENSIVENESS

1 Fiscal reporting adequately covers the Government Finance Statistics definition of the general government sector

A B B

2 Government activities are not funded through inadequately reported extrabudgetary sources to a significant degree

A A B

3 Budget outturn data are quite close to the original budget B B B4 Fiscal reports include grants projected to be provided by donors A B B

CLASSIFICATION5 Budget expenditures are classified on an administrative, economic, and detailed functional or

programmatic basisB A B

6 Poverty-reducing expenditures are clearly defined A A A

PROJECTION7

Multi-year expenditure projections are integrated into the budget formulation processA A A

EXECUTIONINTERNAL CONTROL

8 There exists a small stock of expenditure arrears, with little accumulation of arrears over the previous year

A B C

9 Internal control is effective A B B10 Tracking surveys are in use, or are unnecessary B B B

RECONCILIATION11 Satisfactory reconciliation of fiscal and banking records is undertaken routinely A C C

REPORTINGIN-YEAR REPORTING

12Internal fiscal reports are received within four weeks of the end of the relevant period

B B B

13 Fiscal reports present spending on a functional basis A B B

FINAL AUDITED ACCOUNTS14 Routine transactions are entered into the main accounting system(s) within two months of the

end of the fiscal yearA A A

15 An audited record of the financial outturn is presented to the legislature within twelve months of the end of the fiscal year

B C B

NEWPROCUREMENT

16 The procurement system supports efficiency and effectiveness in the expenditure of public funds through clear and enforceable rules that promote competition, transparency and value for money.

A B

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Table 1: Public Expenditure Management AAP Indicators in Rwanda

ASSESSMENT

TOTAL NUMBER OF BENCHMARKS MET

Notes: Please shade cells in cases where the assessed indicator meets or exceeds the standard benchmark level

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II. Coverage of the Institutions to be Assessed In line with the assessment guidelines, inter-governmental transfers are not covered since these are less than 10% of total government expenditures. However, the mission notes that GoR has continued to make progress in decentralization, compared to the situation during the 2001 assessment. Inter-governmental transfers are applied for local service provision and to support local governments’ capital investments. In the case of recurrent costs, the government transfers 1.5 percent of the previous year’s domestic revenue to the Districts. This has been increased to 3 percent. Capital investments, and infrastructure are financed by small transfers from the Districts’ operating budgets to the development budget, or by parallel donor funding that does not enter into District budgets. Government is also planning to channel grants for capital or development projects through the Common Development Fund (CDF), which was established in May 2002. All donors are encouraged to administer their funds through the CDF for community based development. In 2002, 2.5 percent of central tax receipts were transferred to the Districts through the CDF. This figure doubled to 5 percent in 2003. Given the government’s long term goal of devolution to district level, the mission notes that increased capacity building is needed at the district level. Currently, the central government lacks effective mechanisms for monitoring district level budgets, revenue collection and expenditure. The National Tender Board and the Office of the Auditor General, two key good governance institutions, are not adequately represented at local government level. As a result, it is difficult to provide the needed capacity at the local level. Local governance institutions have not internalized their roles and responsibilities for ensuring transparency and accountability. There is also a problem with attracting and retaining appropriately qualified personnel in accounting and auditing. Technical staff in service delivery sectors (e.g. agriculture, education) for most Districts are not integrated into local government budgets and management schedules. As a result, technicians are not accountable to the District Leadership, and this has been detrimental to service delivery at the district level.

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III. The Assessment for 2004

1. Budget Preparation

Indicator 1: Coverage of the budget or fiscal reporting entity. Question: How well does the coverage of fiscal information match the Government Finance Statistics (GFS) definition of the general government sector? Benchmark: (A) Very close fit: Fiscal reporting covers the GFS definition of the general government sector, i.e., including central, regional, and local governments, and all government operations, whether funded through the budget or not. Assessment: (B ) Fiscal information, based on actual revenue and expenditure data, is not readily available from a range of General Government units, including semi-autonomous agencies, extra-budgetary funds, and districts. This benchmark is not met.

Ex-post fiscal reports prepared by MINECOFIN cover only the central government budget. The reports include the transfers made to semi-autonomous agencies of central government, as well as the central government transfers to the districts (both the recurrent budget support and the CDF project support). The fiscal reports specifically exclude the following elements:

• Own revenues (excluding those collected and transferred by central government) of semi-autonomous agencies and extra-budgetary funds of central government (excluding the Social Security Fund of Rwanda – CSR), some of which fund poverty reducing spending3, which are estimated to be between 2.5% and 3% of the total general government revenues excluding CSR;

• The CSR4, whose revenues are estimated to be around 5% of general government revenues;

• the local taxes, other revenues (including external grants), and borrowing of districts, estimated at 5% of total general government revenues excluding CSR;

• and the actual detailed expenditures of provinces, semi-autonomous agencies of central government, extra-budgetary funds, including CSR, and local

3 Poverty reducing spending semi-autonomous agencies and extra budgetary funds include: various hospitals and health facilities, AIDs Commission, National Malaria Eradication Program, and Road Fund 4 CSR operates as a defined benefit scheme; benefits are based on last salaries, length of service, and similar criteria; CSR benefits are fully guaranteed by the government.

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governments (districts) are not included in the fiscal reports, only the transfers that are made to them.

In brief, between 12.5% and 15% of general government revenues are not captured in the fiscal reports, and over 25% of general government expenditures is not covered, or adequately detailed, in the fiscal reports. In addition, ex-post reporting of donor funds, in particular bilateral grants, is weak and often not accurately reported in the fiscal reports. As part of the process of preparation of the monthly fiscal reports, the MINECOFIN collects information from bank accounts at the BNR to supplement/reconcile gaps in revenue and expenditure information, which is a very rough estimate. For ex-ante reports, the central government budget provides full detail for central government ministries, provinces, transfers to semi-autonomous agencies under the ministries, and debt service. The budget also contains aggregate allocations for special funds (e.g. Common Development Fund, Victims of Genocide Fund, Road Maintenance Fund), some of which are funded out of earmarked revenues.5 The development budget, which is largely externally funded and comprises about 1/3 of the total budget, is budgeted at the aggregate program and project level. District budgets include transfers from central government as well as their own revenues, and where known, donor funding of district projects. These budgets are reported to MINALOC with a time lag. MINECOFIN does not produce a consolidated general government budget, which is of concern since the GoR decentralization policy calls for significant resources to be transferred to districts in due course. The recent restructuring of GoR operations calls for MINECOFIN to establish an intergovernmental fiscal unit, in line with recommendations of a 2003 FAD report6, which will be responsible for collecting and consolidating the district budgets and accounts. The recurrent and development budgets of the GoR are prepared separately, although both of them use the same program structure, as well as the same economic classification. As part of its on-going budget reform efforts, the MINECOFIN is considering merging the two budgets to provide a more consistent and comprehensive integrated statement of individual budget user operations. This change will be facilitated by the transfer to responsibility for development budget preparation from the CEPEX to the Budget Department, planned for this year under the GoR restructuring. In conclusion, key components of general government revenues and expenditures, as mentioned above, are either missing or not adequately reported in the ex-post fiscal reports—i.e CSR, and actual revenues (including from donors), and spending from provinces, districts and semi-autonomous agencies. .The benchmark is therefore not met. 5 The Fund for the Victims of the Genocide (FARG) is financed by the allocation from the earmarking of revenues equal to 5 percent of domestic resources, plus mandatory contributions from companies and employees, with additional support from external donors. The Road Maintenance Fund is financed primarily from a fuel levy (5.5%), transit tolls for heavy goods vehicles, and fines imposed by the traffic police for damage to roads. 6 Rwanda: Managing Fiscal Decentralization, R. Gillingham, D. Last, R. Neumann, R. Robinson, August 2003, IMF/FAD.

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Action Plan Short term measures

• Issue a formal instruction to all semi-autonomous agencies of central government (including CSR) to submit monthly reports on revenues and expenditures to the Budget Department of MINECOFIN for consolidation in the fiscal reports.

• Urgently establish the intergovernmental fiscal unit in the MINECOFIN to collect and consolidate district budgets, as well as monthly reports on their total revenues and expenditures.

• Prepare a consolidated general government fiscal report on a monthly basis, to be published at least on a quarterly basis.

• Ensure all appropriate regulations are prepared and issued under the Organic Budget Law (currently before Parliament), and that mechanisms are put in place to enforce adherence, particularly in regards to obligations to report, as well as OBL restrictions on authority to borrow as well as invest surpluses.

• Merge the recurrent and development budget for the 2005 budget documents.

Medium term measures

• Include a general government fiscal table in the GoR’s routine fiscal reporting.

Indicator 2: Degree of spending being funded by inadequately reported extrabudgetary sources. Question: To what degree are general government activities funded through inadequately reported extrabudgetary sources? Benchmark: (A) Not significant: Government activities are not funded through inadequately reported extrabudgetary sources to a significant degree (3 percent or less of total spending). Assessment: (B) Significant resources remain outside of the budget and are inadequately reported. This benchmark is not met.

Central government expenditures from domestic resources are largely accounted for, including those from non-tax revenues. This was not the case two years ago, when non-tax revenues (fees and charges) were spent directly by ministries and agencies. The shift occurred when Rwanda Revenue Authority took on the responsibility for collection of

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non tax revenues, in addition to tax revenues. However, some funds (e.g. the National Forestry Fund, Road Maintenance Fund, and Common Development Fund) directly receive earmarked resources that are recorded in the budget as transfers. However, these funds do not report back to MINECOFIN on their spending of these transfers, nor do they report on their own revenues. This latter issue also applies to semi-autonomous agencies. These institutions retain accounts at the BNR, yet their expenditures are not integrated in the consolidated fiscal report, neither as budget nor as actuals. This area has been covered in more detail under indicator 1. The rating arises from the size of transfers received that are inadequately reported, along with the existence of own revenue generated by some of these institutions, which is estimated at between 7.5% to 10% percent, excluding the CSR, and between 12.5% and 15% including the CSR . Therefore, this benchmark is not met.

Action Plan In addition to measures listed under indicator number 1 concerning semi-autonomous agencies the following measures should also be adopted to address the issue of extra-budgetary sources. Short term measures

• make inventory of all extra-budgetary resources

• improve decision making concerning budget levels requirements of semi-autonomous agencies

• establish accounting provisions and standards the reporting of expenditures and own revenues of semi-autonomous agencies


• establish system for capturing and monitoring reporting of semi-autonomous agencies.

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Indicator 3: Reliability of budget as a guide to the future. Question: How would you describe the level and composition of the budget outturn at an administrative or functional level relative to the original budget’s appropriations? Benchmark: (B) Budget outturns are quite close to the original budget. Assessment: (B) Budget outturns have been quite close to the original budget during the 2001-2003 period. This benchmark is met.

Expenditures are generally kept close to original appropriations. The government was able to keep the variation between the original budget and the budget outturn less than 10 percent for three consecutive years and the average variation for the period 2001-2003 was only 6 percent. At the aggregate level, the variation was 2 percent in 2001, 10 percent in 2002, and 6 percent in 2003. Also, there was no systematic under budgeting at the aggregate level. On the contrary, in all three years during 2001-2003, budget outturns were less than the original budgets. Even for recurrent expenditure, the variation average was about 4.3 percent only during this period. There was no systematic under budgeting issues for recurrent expenditure. The main reason for the reduction in variation in the budget, and improved execution was due to several factors: i) transition out of post-conflict to a more stable economy and institutions following the war; ii) the introduction of the MTEF in 2000; iii) the use of a cash budgeting system.7 Some weaknesses, however, remain. For example, the variation for capital expenditure was less promising than recurrent expenditure. The average variation was about 13 percent (10 percent in 2001, 4 percent in 2002, and 24 percent in 2003). The performance in 2003 was less encouraging mainly because of some implementation problems of some infrastructure projects which were closely tied with unmaterialized donor funds. Within the recurrent spending, the performance was uneven. For example for salaries, at the aggregate level, the variation was less than 5 percent in each of the three years, but the variation was as much as 30 to 40 percent for some ministries. For goods and services at the aggregate level, the variation was less than 5 percent in 2001 and 2002, but in 2003, the outturn exceeded the original budget by 19 percent, which was mainly due to underestimation of transitional expenditures, as in the case of the general elections. Unlike in many countries, Rwanda did not have systematic under budgeting problems since budget outturns exceeded original budgets during 2001-2003. The problem in Rwanda is different. Rwanda relies heavily on donor funding for both capital and recurrent expenditure. Unpredictability of donor funding and weaknesses in budget

7 For example, the 2002 public expenditure review found that the executed to approved budget ratio for recurrent expenditures increased from 92 to 95 percent from fiscal year 1998 to 2001. Similarly, the execution ratio for capital spending increased from 46 to 88 percent over the same period.

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preparation are two major reasons for the variations between original budgets and budget outturns. Even though the aggregate variance is close to meeting the criterion required for answer (a), at the functional level, the average variance exceeded 10 percent in two out of three years. Based on the performance described above, the criteria needed for answer (b) is met, which is also the benchmark. Action Plan Short term measures

• Strengthen coordination between the Ministry of Finance and line ministries. Regular and structured meetings would improve the quality of the budget preparation.

• Improve unit cost analysis and link inputs and outputs more closely during the budget preparation.

Medium term measures • Set up a focal point among bilateral donors who can coordinate with the budget department and CEPEX on a regular basis, which would improve predictability of donor funding. Table 2: T o t a l e x p e n d i t u r e : r a t i o o f b u d g e t o u t t u r n t o o r ig i n a l b u d g e t ( in p e r c e n t )

( m in i s t r i e s a n d p r o v in c e s ) 2 0 0 1 2 0 0 2 2 0 0 3

0 1 A N 9 2 .1 7 3 .5 4 8 .90 2 P R E S IR E P 1 1 7 .4 8 3 .1 9 3 .30 4 P R IM A T U R E 9 5 .1 4 8 .4 7 5 .20 5 C O U R S .S U P 9 4 .0 4 1 .7 7 7 .80 6 M IN A D E F 1 0 4 .0 1 1 2 .6 1 0 2 .10 7 M IN IN T E R 9 2 .5 8 4 .7 1 0 4 .90 8 M IN A F F E T 8 6 .3 8 2 .4 9 6 .10 9 M IN A G R I 9 4 .9 6 4 .5 6 4 .01 0 M IN IC O M 9 8 .8 7 6 .8 7 3 .51 2 M IN E C O F IN 7 6 .2 7 4 .3 1 0 9 .81 3 M IN IJ U S T 1 0 2 .1 8 9 .3 5 6 .41 4 M IN E D U C 1 0 9 .6 1 0 8 .5 1 1 1 .71 5 M IJ E S P O C 9 5 .6 7 7 .1 8 3 .21 6 M IN IS A N T E 1 0 1 .5 1 1 4 .4 8 6 .11 8 M IN IN F R A S T 1 5 5 .8 1 3 3 .1 7 0 .81 9 M IG E P R O F 1 0 5 .3 4 8 .8 4 1 .72 0 M IF O T R A 7 3 .5 8 0 .7 6 3 .42 2 M IN IT E R E 1 0 0 .5 7 2 .7 2 8 .82 3 M IN A L O C 1 0 5 .2 7 4 .9 7 7 .72 4 M IN E R E N A 1 3 2 .0 3 3 .9 0 .8P r o v in c e s 0 .0 9 0 .4 9 5 .5T o t a l E x p e n d i t u r e 9 7 .5 8 9 .6 9 4 .0R e c u r r e n t e x p e n d itu r e 9 7 .7 8 9 .3 1 0 0 .2

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ndicator 4: Inclusion of donor funds

uestion: Are donor funds included in central and local governments’ budget(s)

enchmark: (A) Budgets and/or fiscal reports at all levels of government include,

.

ssessment: (B) Donor funded expenditure remain incomplete in both the budget

I Qand/or fiscal reports? Bwithout exception, grants projected to be provided by donors, and the investment and recurrent expenditure of all multilateral and bilateral donor-funded activities Aand the fiscal reports. This benchmark is not met.

n the aggregate level, projections for donor-financed government projects are well

owever, there have been serious difficulties in performing this role as the flow of

upport to provinces is captured through the national budget, as is an amount of support

get

Ocaptured for both recurrent budget support and project financing. All donor assistance to the recurrent budget is captured by budgetary support and is reported for each donor in the financial law. A semi-autonomous unit (CEPEX), affiliated to MINECOFIN, is responsible for the monitoring of donor-financed projects, as well as the timing at which funds are expected to arrive and subsequently be used and project implementation. Hinformation between donors, line ministries –under which projects management units operate- and CEPEX has been prone to being incomplete and lagged. There are in fact many recurrent expenditures within the development budget due to incoherent reporting of donor-funded projects. This has meant that beyond an aggregate figure for donor support to the capital budget, it is difficult to identify exactly where and how well these funds are being spent. There is an ongoing dialogue with donors to improve this situation and consultants are working on the integration of the capital and recurrent databases, the creation of a standardized projects reporting format, as well as overall budget integration. Sto districts. This comes through the Common Development Fund (CDF), a transfer to the districts from the central budget, which is indirectly supported by donors through their overall recurrent budget support8. However, programs in the districts also receive a degree of funding from donors, especially NGO’s, which is recorded in the district budget but not the national budget. In addition, in-kind assistance is included in budprojections, but not always in outturn data. It is intended that by 2006, district budgets will be annexed in the finance law presented to parliament. In conclusion, budgets

8 The CDF is now equivalent to 3% of the previous year’s domestic revenue, so is not directly supported by donors, but is indirectly supported through their overall budget support.

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reports include all donors funds, but fiscal outturns do not show all donor funded expenditures. The benchmark is therefore not met. Action Plan

hort term measures

• CEPEX to collect and consolidate information on all donor funds, regardless

• Issue instructions asking all ministries to provide standardized monthly reports on


• Government to engage a continuous dialogue with all donors, including bilateral

dicator 5: Classifications

uestion: What types of classifications apply to the budget and budget

enchmark: (B) Administrative, economic and functional (to subfunctional level)

ssessment: (B) Budget expenditures are classified on an administrative, used,

S

where they will be spent (central, local, or through other channels).

donor-funded projects implemented under their authority.

ones, on the necessity to provide information timely on planned assistance and onactual data.

In Qexpenditures? Bor administrative, economic, and programmatic basis. Aeconomic, and programmatic basis. Functional classification has also beenbut not consistently. This benchmark is met.

ince 2002, the GoR budget has been prepared using administrative, programmatic and

s

ams are his

he MINECOFIN is considering upgrading their classifications from the GFS 1986 to

the

Seconomic classifications (GFS 1986 based). Functional classification (COFOG 1986) haalso been used, but not in a consistent manner. Economic and programmatic classifications are printed in the annual financial law. Programs and subprogrmapped into functional classification, allowing budget information to be presented in tformat too, as evidenced in the annual budget documents. However, the recurrent and the development budget are still prepared separately. TGFS 2001 framework. As they are not contemplating moving towards accrual accounting, this change will be relatively straightforward, though it will requiresignificant effort and training, and should therefore be carefully considered given

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capacity limitations9. The effort required to update the functional classification to COFOG 1999 (which is adopted in GFS 2001) is much less demanding. The 2001 assessment gave the GoR a top score for this indicator. However, the practice over the last 3 years indicates that the functional classification has not been routinely used for reporting, apart from a summary table in the annual Budget documents, and only provided on demand in reports. The implementation of the programmatic classification, while used by some ministries to identify objectives, outputs and outcomes, remains at an early stage of development. Some of this information is provided in annex documents submitted to the Parliament, but monitoring and follow up during the year remains ineffective. The current assessment, therefore, considers that although the benchmark is met, there is still much to be done to encourage greater use of functional and programmatic classifications in the management and analysis of the budget. Action Plan Short term measures

• Complete the implementation of the functional classification, by mapping past expenditures to functions, thereby creating a time series for analytical use. Include a functional table in the monthly fiscal reporting;

• Strengthen the use of programs in budget management to achieve the purpose of making them the key mechanism for translating government priorities, especially those aimed at reducing poverty and achieving the millennium development goals, into real budgetary allocations with clear objectives, outputs/outcomes, and indicators by which to measure them;

• Review the desirability and advantages of upgrading the classifications to the 2001 GFS framework, and establish a realistic timeframe for its implementation;


• Upgrade the classifications to the GFS 2001 framework.

9 The authorities should consult the GFS 2001 Companion Manual, which describes changes from GFS 1986 to GFS 2001.

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Indicator 6: Identification of poverty-reducing spending Question: What is the principle means for tracking poverty-reducing spending? Benchmark: (A) Use of the existing budgetary classification system or through a so-called Virtual Poverty Fund. Assessment: (A) Poverty reducing expenditures are identified as priority programs in the budget. A mapping table is used to establish specific line items that are included. This benchmark is met.

The GoR defines as priority programs, those key sector programs directly derived from the priority areas of the PRSP. These programs are clearly identified in the government budget. Priority programs are occasionally reclassified, as new priorities emerge, or old ones become less pressing. An example of a recent priority program is the extension of free education to three years beyond primary education. These priority programs are protected from expenditure cuts in the budget. Under the IMF’s PRGF agreement, Rwanda committed itself to a 0.1% increase in allocation (over the previous year’s GDP) to these programs. Since 2001 when these types of expenditures were identified and defined, Rwanda has continually met this target in budget execution, without any significant incidence of overspending. Currently, the 0.1% annual increase in GDP pertains only to the recurrent budget, pending the integration of the development and recurrent budget. Since priority program allocations and expenditures are clearly identified in the budget, the mission assesses that this benchmark is met.

Indicator 7: Integration of medium-term forecasts Question: How would you describe the application of out-year estimates (medium- term) for spending? Benchmark: (A) Integrated: Multi-year expenditure projections are integrated into the budget formulation process. Assessment: (A) The MTEF provides multiyear forecasts at a program level, which are used as the starting point of subsequent budgets. This benchmark is met.

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A medium-term expenditure framework (3 year rolling), which was introduced at end-2000, has been integrated into the budget process beginning with the budget for 2001. The framework includes both recurrent and development expenditure. The MTEF development process has been led by the Ministry of Finance under a plan of action endorsed by the Cabinet. Training manuals were developed and extensive training workshops have been conducted for the staff in line ministries and provinces. The World Bank/DIFD provided sufficient long-term/short-term technical assistance and prepared two public expenditure reviews with focus on the MTEF process.

Implementation of the MTEF during the last three years has made significant progress towards improving the policy, planning and budgeting stages of the annual budget process. This planning and budget preparation calendar under the MTEF process has become a year-round activity. By late summer (August), the Cabinet approves draft expenditure ceilings and distribute the Call Circular. Provinces finalize and submit their respective draft MTEFs and start consultations with the Ministry of Finance. Clearly, medium term expenditure projections on detailed basis are fully integrated with the annual budget process. The improved central budget management system (SIBET2), which is expected to be released in a few months, made improvements to further institutionalize the integration of medium term projections with the budget process.

The PRSP emphasized the MTEF as the key instrument for implementing its poverty reduction strategy. The framework is clearly and sufficiently detailed to identify by code aggregate poverty reducing program outlays. After the interim debt relief which started from 2001, poverty spending has increased steadily from 4 percent of GDP in 2000 to 6.5 percent of GDP in 2003. Medium term poverty focused spending based on PRSP priorities has been incorporated in the MTEF for the period 2002-2004. Poverty reducing spending on average increased 4.1 percent during 1999-2001 to 6.9 percent during 2002-2004.

The quality of outer year projections by ministries, provinces, and agencies remains quite uneven, but is improving. Although at aggregate level in line ministries, budget figures are quite close to outer year projections, individual spending items can be significantly different.

At local government level, planning exercises at the cellule and district level are weak due to a lack of clear guidance on the budget envelope. There are plans to consolidate the MTEF planning (from cellule to district levels) into a coherent system of resource allocation coordinated by Community Development Committees (CDCs). These decentralized MTEFs would then feed into the central government’s MTEF. However, the risk is that these plans will overwhelm the central level. One approach being discussed with the government in the context of the PRSC is to provide technical assistance on piloting block grants to districts tied to agreement against certain key results. Clearly, medium-term projections under the MTEF process are good guidance for annual budgets and fully integrated into the budget formulation process. Outer year projections,

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although uneven, are reliable and create sound basis for annual budgets. As a result, the benchmark is met.


• Strengthen the use of the Design and implementation Group (DIG) during the preparation of the MTEF.

Medium term measures • Integrate recurrent and development budget. • Improved and regular staff training of the MTEF exercise in line ministries and provinces, which under perform in submitting reliable MTEF projections.

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2. Budget Execution

Indicator 8: Evidence of budget execution problems–Arrears Question: What do you estimate as the level of the stock of expenditure arrears at the end of last financial year? Benchmark: (A) Very few or none: Small stock of expenditure arrears, with little accumulation of arrears over the previous year. Assessment: (C) Significant stocks of arrears exist related to before and immediately after the genocide period. There is also a smaller stock of annual arrears, arising mainly from the uncertainties of timing of external budget support funds, which are cleared in the subsequent year. This benchmark is not met.

Evidence of end of year arrears is readily available from the Treasury Department, as received but unpaid request for payment from budget users. These have increased over the last 3 years from a low of around FRw 3 billion in 2001, to FRw 8 billion in 2002, and FRw 11 billion in 2003. These arrears are generally cleared in the subsequent budget year. The significant arrears of 2002 and in particular 2003 were in part explained by the late disbursement of budget support funds from donors, in part due to the spending pressures of the election year. There is no evidence of accumulation of additional arrears at the level of budget users, due in part to the effective system of commitment control in Rwanda, and in part to the hardened stance of some of the GoR’s key creditors such as ElectroGaz and RwandaTel. Past arrears, however, are significant, split between claims arising from the period before 1994, and claims from the period between 1994 to 2000. So far, the submitted claims amount to some FRw 40 billion, of which FRw 27 billion have been validated by the OAG, the rest having been rejected by OAG due to lack of supporting evidence. The deadline for submitting old claims has now been definitively set for July 31st 2004, after which the final stock will be established and verified. Part of this stock of arrears have been paid in successive budget starting in 2001. In the 2004 budget, for example, a sum of FRw 7 billion has been set aside for the old stock of arrears. Separately, the GoR owes some FRw 55 billion of non-payment of social security contributions (including interest) to the CSR, accumulated since the 1970’s. This debt was acknowledged in 2000 in a memorandum of understanding between GoR and the CSR, after pressure from government pensioners, whose pensions were being held up due to the non-payment of these contributions. Under this initial settlement, the GoR agreed to pay off the debt at the rate FRw 800 million per year, pending a comprehensive agreement. This comprehensive agreement was recently concluded, but not yet signed, under which the GoR is now committed to paying off the debt at a rate of FRw 5 billion

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per year starting in 2004. For these arrears, it can be said that they are about to be rescheduled, effectively turning them into part of the GoR’s domestic debt. Finally, arrears related to the non-payment of matured treasury bills were settled in 1997 under an agreement to turn the debt into government bonds to be repaid over 15 years. These arrears have effectively been turned into rescheduled debt, and should therefore no longer be considered as arrears. In summary, the current stock of outstanding arrears is estimated to exceed FRw 80 billion, representing around 24% of the 2004 budget. Once the agreement is reached with the CSR, the pending arrears will be reduced to some around 7.5% of the 2004 budget, a figure which will be revised upwards once the full stock of claims has been established and verified. On the positive side, the arrears have on the whole been identified and their age profile established. The GoR also has clear strategies to settle each category of arrears, and has been gradually paying them off through the annual budgets. The annual accumulation of new arrears, however, remains a matter of concern. This benchmark is not met. Action Plan Short term measures

• Complete the inventory and validation of past arrears arising from the period prior to 1994. Prepare a plan for settlement of these arrears;

• Continue to include a provision for the clearance of arrears in the annual budgets, until such time as all arrears are paid off or converted to debt;

• Take steps to ensure that causes of late disbursements of budget support funds do not reoccur, including meeting donor requirements for disbursement on the one hand, and establishing realistic agreements for the timing of disbursements of these funds on the other hand;


• Maintain adequate financial controls to ensure that arrears do not continue to build up, and, where this is unavoidable, to ensure that they are known, and effectively tracked at MINECOFIN, especially once decentralized accounting is implemented as envisaged under the new Organic Budget Law.

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Indicator 9: Effectiveness of the internal control system Question: How would you describe internal control system? Benchmark: (A) Effective: Internal control is effective. Assessment: (B) Internal auditors are present in line ministries, provinces and districts, but their roles and responsibilities remain unclear, with the result that internal control is often not effective. This benchmark is not met.

Each line ministry, government agency, province, and district now has an internal auditor, although due to limited human resource availability and staff mobility, positions may sometimes not be filled. The development of their roles and responsibilities is still on-going, and is complicated by the presence of numerous financial inspection services whose activities often overlap with those of the internal auditors. In addition, the workload assigned to internal auditors in some institutions (e.g. provinces) is beyond the capacity of a single individual, yet there are no moves to increase staffing levels. Recent evaluations of the internal audit function by the General Inspector of Finance (IGF) of MINECOFIN point to lack of training and lack of awareness/appreciation of the internal auditor’s role among the senior managers that they are supposed to serve. Despite these capacity problems, many internal auditors are preparing routine reports highlighting deficiencies in financial management and recommending actions to be taken by management to address them. These reports are further strengthened by periodic inspection reports of both IGF and MINALOC financial inspectors, which also highlight problems and actions that management should take to improve their performance. These reports are considered important by the Office of the Auditor General, which consults the internal auditors when making their annual audit of institutions. Typical problems identified in the sample of internal audit and inspection reports that were shared with the mission include:

• Lack of adequate accounting documentation for some transactions; • failure to abide by financial procedures, including the recording of commitments

at the time of payment; • failure to follow tender procedures correctly; • absence of bank account reconciliation and maintenance of bank ledgers; • unrecorded revenues and expenditures.

The reports indicate actions to be taken for each problem identified, including, in some cases but not always, a time delay for correcting them. It should be emphasized that many of the problems identified by auditors and inspectors are due to limited capacity among financial management staff, many of whom are not adequately trained. Access to financial procedures has recently been improved through the issuance of financial procedures manuals for both central and local governments.

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• Review staffing needs of those institutions with workloads requiring more than one internal auditor, and prepare a plan for increasing the number of internal auditors.

• Prepare and implement an on-going training program for internal auditors.

• Review the respective roles and responsibilities of the internal auditors and the various financial inspection units.


• Develop the internal audit function more towards systems auditing, and prepare manuals and training to improve internal auditing capacity in this area.

Indicator 10: Tracking surveys are in use Question: Is internal control supplemented by public expenditure tracking surveys (PETSs) that follow funds to the ultimate service provider or beneficiary? Benchmark: (B) Yes, PETs have been tried, and are in the process of becoming a regular feature of the PEM system, or an alternative PEM system that can reliably track resource transfers (as defined in a) is being put in place. Assessment: (B) PETs have been completed in the education and health sectors. An upcoming PET is already in advanced planning stages, to be implemented in 2005. This benchmark is met.

The first PETs in Rwanda were conducted by the Strategic Planning and Monitoring Department (SPPMD), in the Ministry of Finance and Economic Planning (MINECOFIN) in 2000. The surveys covered fiscal years 1998 and 1999 for the Ministries of Education and Health, with a focus on Province, Districts, and service facilities –i.e. schools and health centers. The timing of the PETs allowed for collection of information to coincide with budgetary reforms which were initiated in 1998. Coverage of the PETs was representative of facilities in the education and health sectors. The PETs results found that there was a lack of capacity, especially in financial management, which was compounded by a high turn over of staff. This led to a loss of

22

institutional memory. Since then, there has been a move to improve financial management capacities at the District level, although, capacity issues still exist. One weakness of the previous PETs is that it did not track salaries and wages which account for over 80% of recurrent costs in these sectors. Also, the results of the last PETs were not widely disseminated among stakeholders in Rwanda, to facilitate feedback into reforms. The PETs to be implemented in 2005 will cover salaries and wages. This benchmark is met. Action Plan Short term measures

• Institutionalize PETs and fund it in the budget with a clearly identified item

• Incorporate measures to publicize the results widely, and particularly to Parliament

• Institute measures for proper accounting and record keeping at the Ministerial, Provincial, District and facilities level (which will be critical for success of next PETs in tracking flow of funds)


• Include PETs as a rountine part of the GoR’s budgetary management and monitoring processes.

Indicator 11: Quality of fiscal information Question: Is there a regular reconciliation of all government bank accounts (those held in the central bank and the commercial banks) with government’s accounting records? Benchmark: (A) It occurs satisfactorily in a timely and routine way. Assessment: (C) Bank reconciliation of the main treasury account is undertaken on a monthly basis, but no accounting evidence of this is generated. Bank reconciliation statements are not in general use at budget users and general government units. In local governments, however, bank reconciliation has been formally established under the new financial management procedures established for them. This benchmark is not met.

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The 2002 Report on the Public Sector Bank Accounts10 lists 1,468 bank accounts opened in the name of various government institutions and projects. The underlying reality of the current operations indicate that many payments made by the Treasury Department are made to government institutions bank accounts, including ministries, and not to final beneficiaries. Of particular concern is the fact that these intermediate transactions are treated as final payments by the Treasury Department, with no return of accounting information showing how the benefiting institution has settled its accounts. Furthermore, most projects operate their own bank accounts which receive funds from both the Treasury Department and directly from donors, and provision of accounts and bank reconciliation statements from these projects is very weak. These issues were highlighted again in a recent East AFRITAC report on treasury management, which also outlined a strategy and action plan for implementing reforms in this area. The main treasury account is reconciled manually on a monthly basis, but surprisingly no bank reconciliation statement is produced. There is a similar absence of routine bank reconciliation statements in line ministries and semi-autonomous government agencies. For local governments, however, bank reconciliation statements have been included as part of the monthly accounting procedures. The Treasury does not routinely monitor balances on accounts outside its control, and is therefore not able to manage the government’s overall cash position effectively. Combined with the lack of accounting mentioned above, it comes as no surprise that the Government has significant difficulties in reconciling its fiscal and monetary accounts. To-date, the main fiscal management system operational is the central budget management system (SIBET) at the MINECOFIN. Most, but not all, payments from the main treasury account are initiated from SIBET. However, some operations are handled outside SIBET, such as revenues, which are handled directly by Rwanda Revenue Authority, domestic debt operations, which are handled by the central bank on standing instructions, and external debt operations, which are handled directly by the Debt Department. Hence, full reconciliation of bank account movements with the information in SIBET is not possible, given that significant transactions are undertaken outside SIBET. A further obstacle to the reconciliation of the monetary and fiscal accounts concerns the timing with which expenditures are recorded in the SIBET system. A transfer to a particular ministry to cover fuel, for example, is recorded as a completed expenditure in the SIBET system at the time the funds are transferred to the ministry’s account at the BNR. The actual spending of these funds, however, takes place over a longer period of time, making the reconciliation of the monetary and fiscal accounts problematic. A final issue concerns the fact that the various ministerial accounts are not closed at end-year. The government does undertake an aggregate level reconciliation exercise, however, and has initiated measures to eliminate the extra ministerial accounts. 10 Rapport de l’Etude sur les Comptes Bancaires du Secteur Public, GN & Partners, for MINECOFIN, October 2002.

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To improve on the monthly accounting procedures, the Government has recently decided to extend its SIBET system to include an accounting module. The new integrated system, called SIBET II, has a number of new features in addition to the accounting module, which will include the recording of budget user spending from own bank accounts, the establishment of an on-line link to the BNR, and the recording of transactions of the development budget, particularly the externally finance spending of projects. The deficiencies in the system highlighted above are recognized by MINECOFIN, which has been tasked by the Government to prepare and implement reforms to address them, starting in 2004. AFRITAC is providing technical assistance to the Government to address some of these issues. Pending implementation of these changes, however, the mission concludes that this benchmark is not met. Action Plan Short term measures

• Enforce the use of a bank reconciliation statement as part of the monthly accounting procedures to be followed by all general government units, starting as soon as possible with the reconciliation of the main treasury account;

• Strengthen the monitoring of non-Treasury bank account balances;

• Implement SIBET II starting January 1st, 2005;

• Continue to eliminate dormant or unnecessary GoR bank accounts;


• Enforce monthly bank reconciliation, as regulations under the new Organic Budget Law, for all general government units. Bank reconciliation statements to accompany monthly accounts from these units;

• Move towards the implementation of Single Treasury Account for all budget users initially, followed by gradual extension to semi-autonomous agencies and extra-budgetary funds.

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3. Budget Reporting

Indicator 12: Regularity of timely internal fiscal reporting Question: When are the budget-tracking reports from line ministries, other spending units and the treasury received by the central financial authority? Benchmark: (B) They are received between two weeks and four weeks of the relevant period. Assessment: (B) The flash reporting system of the MINECOFIN generally produces a fiscal report on government expenditures on a monthly basis within a month after the end of the month. It is however based on information available from the Central Government budget, and from bank accounts of spending units at the central bank, rather than information collected from budget users, semi-autonomous agencies, and local governments. This benchmark is met.

Budget tracking (including information on commitments) is carried out through the centralized budget management system (SIBET) maintained in the MINECOFIN. This expenditure information is supplemented by revenue information, external support flows, and debt service information to produce the monthly flash report. These reports do not, however, reflect information on the externally funded components of the development budget.

Because of the centralized nature of the budgetary management system, for recurrent expenditures, the reports do not depend on data collected from budget users, as most payments are settled directly through the Treasury. However, budget users do receive limited monthly cash advances, usually not exceeding 10% of their goods and services budgets, to cover travel, fuel, small incidental purchases, and utility bills. For the purposes of the fiscal reports these cash advances are treated as expenditures, with no reconciliation accounts presented to the MINECOFIN by budget users. Instead, MINECOFIN tracks budget user spending through the central bank (BNR), which provides the Treasury with summarized balances showing individual budget user spending. This bank account information is used to adjust the monthly fiscal reports, ensuring a closer match between monetary and fiscal accounts. Provinces, which are a deconcentrated arm of central government, also receive cash advances from the Treasury. However in the case of Provinces, execution reports are in principle sent to MINECOFIN on a monthly basis.

The situation of development budget expenditures, on the other hand, is entirely different, as each project has its own bank account, given that the greater part of development budget spending is externally financed that does not pass through the main Treasury account. Quarterly development budget execution reports are prepared by CEPEX, but

26

with some delay. To compensate for this lack of data, the Treasury resorts to tracking movements on project bank accounts as a means of determining aggregate spending.

The fiscal reports only capture budgetary transfers to semi-autonomous government agencies, and extra-budgetary funds, and no expenditure reports are received in-year from these entities. The only reporting available is their annual accounts which are sent to the Office of the Auditor General (OAG) for audit. These annual accounts are sent to the responsible line ministry, but they are not consistently collected and consolidated by MINECOFIN. Local governments are supposed to report on a monthly basis through MINALOC to MINECOFIN, although so far, the coverage is incomplete and the reporting untimely. Regular data on local government taxes, on the other hand, are readily available from the RRA. The current legal framework is inadequate to enforce monthly reporting. The new draft Organic Budget Law, however, has full provisions for routine reporting to the MINECOFIN from all general government units.

The central government flash reports are mostly available within one month of end of period. For central government spending, therefore, given the small amount of unreported spending by budget users mentioned above, the mission concludes that the benchmark is met.

Action Plan

Short term measures

• In preparation for the implementation of the new Organic Budget Law, initiate an awareness campaign among general government budget users on the importance of regular fiscal reporting;

• Take steps to ensure recording in SIBET of budget user spending from own bank accounts, including spending on development budget;

• Establish an intergovernmental fiscal unit in MINECOFIN responsible for collecting and consolidating in-year fiscal reports from local governments;


• Implement the monthly reporting provisions of the new Organic Budget Law for all central government budget users;

• Establish regular monthly reporting from local governments to MINECOFIN.

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Indicator 13: Regular fiscal reports track poverty-reducing spending Question: What in-year reports are published for tracking budget expenditure by function? Benchmark: (A) Good quality functional classification or virtual poverty fund is presented. Assessment: (B) Poverty related tracking reports are produced in-year, using a mapping arrangement to budgetary votes. However there is concern over the quality and in particular the comprehensiveness of such tracking, given the limited implementation of functional classification. This benchmark is not met. Reports in a functional classification can be produced for in-year reports through the SIBET system to allow for a functional analysis of recurrent outlays. In-year reports on the development budget, however, are not so readily available, as development project expenditure is not currently recorded on the SIBET system, as most projects are externally financed and they operate their own bank accounts. Although the Poverty Progress Report is produced on an annual basis, in-year PRS reports are limited to information available on the SIBET system, and are therefore incomplete. To date, no regular in-year reports based on functional classification have been produced, owing to an apparent lack of demand. Because the development budget uses the same program structure as the recurrent budget, and the functional classification is derived through a cross-walk procedure from the program structure, (at least on an aggregate level) a functional analysis of the development budget should be possible, in principle. It is not clear, however, whether the data base system for the development budget as currently managed can readily provide this in-year information. Moreover, incomplete tracking of development expenditures is an issue due to unpredictable and incomplete reporting on donor financed projects. In Brief, although poverty reducing programs are presented separately in the budget, the ability to produce regular in-year reports is limited. Therefore, this benchmark is not met. Action Plan Short term measures

• Complete upgrade of SIBET with modules to allow for linking outputs to expenditure

• Complete PETs in 2004 to examine flow of funds to facilities given decentralization, with particular focus on wages and salaries

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• PETS institutionalized as one of a set of measures for monitoring transfer of funds to providers until such time that a comprehensive monitoring system has been fully implemented

• Initiate implementation of an output focused MTEF

• Full integration of the development and recurrent budget.

Indicator 14: Transactions are recorded in the accounts in a timely fashion. Question: What is the longest period between the end of the fiscal year and the routine booking of transactions? Benchmark: (A) Routine transactions are entered into the main accounting system(s) within two months after the end of the fiscal year. Assessment: (A) Closure of the transactions on the main treasury account occur in a timely manner at the end of the financial year. However, significant resources remain on bank accounts controlled by budget users which are carried over into the next year for consumption outside the budget. This benchmark is met.

Despite the problems experienced in preparing the public accounts, the Treasury Department of the MINECOFIN closes all accounts related to internal spending on the 31st of December each year. Transactions received after that time are recorded in the following year’s accounts.

It should be noted, however, there are serious weaknesses in the preparation of public accounts, with no accounts prepared between the early 1990’s and 2002. The 2002 accounts were only completed and submitted to the Office of the Auditor General in December 2003.

This absence of annual accounts complicates the task of ensuring adherence to end-of year procedures. In practice, the SIBET system, which tracks all spending from the budget, has provided a close substitute for the accounts, through which end of year discipline is managed. In line with the annual Finance Law,11 ministries have to close 11 The Finance Law is the annual budget law. As currently no overarching finance or budget law exists, the Finance Law contains certain general financial management provisions, including those for the closure of accounts.

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commitments against budget appropriations by November 15, and payments by December 15. Thus, no payment from the Treasury account should be initiated after December 15, and payments exceptionally authorized should only be posted against the current year only if they are effected before December 31.

Remaining balances in most GoR bank accounts, including for ministerial accounts at the BNR, are not transferred at year end to the main treasury account, leaving the funds for line ministries to consume the following year as unbudgeted carry over resources. The annual accounts, as reflected in the SIBET system, shows any such residual funds as spent by December 31st. Although the financial management unit of each line ministry receives project related funds coming from external sources, the remaining balances are also carried over to the next year by the line ministry. Recently the Treasury Department has begun monitoring balances on budget user accounts more closely, as part of its cash management improvement actions. However effective Treasury control over these accounts has yet to be implemented. This benchmark is met with respect to the main treasury account, through which the bulk of central government transactions are processed. However, to maintain this rating for the next period government should begin the practice of returning all year end balances on GoR accounts to the main treasury as part of the end of year procedures. Action Plan Short term measures

• Return end of year balances on all GoR accounts to the main treasury account as part of the end of year procedures;

• Strengthen the monitoring of idle balances on budget user accounts, and improve the GoR’s banking arrangements to eliminate idle balances, initially on a pilot basis;


• Move towards a Treasury Single Account approach for all government spending, including, progressively, the spending of semi-autonomous agencies and extra-budgetary funds;

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croehler

to “close bank balances”?

Indicator 15: Timeliness of audited financial information Question: How soon after the end of the relevant year is the audit report on the annual accounts (either short form audit report accompanying the final accounts or as part of loi de règlement) presented to the public and/or the legislature? Benchmark: (B) An audited record of the financial outturn should be presented to the legislature within twelve months of the end of the fiscal year. Assessment: (B) Over the last 2 years, the Office of the Auditor General (OAG) has submitted audit reports on GoR budget institutions to the Parliament within 12 months. For the audit of the 2003 accounts,the OAG will submit the audit of the consolidated government accounts, the first time since before 1990, very close to the limit prescribed by the new Constitution, i.e. 6 months. The audit of the budget institutions is expected in October 2004. This benchmark is met.

The new constitution voted in June 2003 stipulates that annual accounts are to be presented to the Office of the Auditor General and to Parliament within 3 months after the end of the financial year, and that the audit report should be completed, and submitted to Parliament, within 6 months after the end of the financial year. The annual consolidated accounts were prepared for the 2002 financial year (these were the first accounts prepared and submitted for audit since before 1990), and submitted to the OAG in December 2003. However the OAG has declared that the accounts submitted were impossible to audit, due to serious inconsistencies, absence of an opening balance, and absence of accompanying accounting reports from budget institutions. The OAG prepared a review of these accounts, and made a number of written recommendations to the Minister of Finance on how they should be improved. There was therefore no audit of the consolidated 2002 accounts. The OAG, however, did prepare separate audit reports for FY 2002 for each line ministry and associated agencies, which were then consolidated and submitted to Parliament in December 2003, i.e. within one year of the end of the fiscal year. The consolidated accounts for FY 2003 were prepared and submitted to the OAG on March 31st 2004, as prescribed by the Constitution. The OAG was expected to submit the audit report on the 30th of June 2004, also as prescribed by the new Constitution. The individual audits of the line ministries and associated agencies are still in progress, with the OAG consolidated report to Parliament expected in October 2004. The 2003 audit reports of line ministries, agencies and provinces indicate some encouraging improvements over the 2002 audit findings. It does however reveal continuing serious concerns over lack of adherence to financial procedures (including procurement), weakness in management oversight, accounting skills, and internal control and audit, and a few of cases of outright fraud. In the area of accounting, the OAG report finds that books and journals are not adequately maintained, transactions are recorded

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long after the event, budgetary limits are not observed, and bank reconciliation is infrequent or often non-existent. The letter to the Minister of Finance on the 2002 accounts is severely critical of the product delivered for audit, and notes key issues that make the audit impossible to carry out, including, among others, the absence of a bank reconciliation statement on the main treasury account, the lack of accounting reports from budget users from which the consolidated reports were prepared, the absence of balances on GoR bank accounts outside the control of the Treasury, and the presence of a huge balance for assets ‘to be identified and classified’. The 2003 OAG report notes that actions have been taken on the recommendations made in the 2002 report. In addition, action has already been taken on cases of fraud and mismanagement arising out of the 2003 report. These follow up actions are an encouraging sign that the oversight role of the OAG is effective. These brief highlights of the audit reports of 2002 and 2003 show that the public accounting system remains in serious difficulties, despite 3 years of assistance in preparing a new chart of accounts, and the accounting regulations and procedures, provided by the AfDB during 2001-02 and EC in 2003. During the same period, financial management assistance was provided to the 106 newly formed districts, many of which are now preparing regular accounts for their own councils on a regular basis. The mission cannot overemphasize the urgency with which the situation in public accounting in central government must be redressed, given that it is seriously undermining the GoR’s efforts to establish accountability, transparency and good governance. The efforts that have been made to meet the deadlines for submission of audit reports to the Parliament are commendable. The mission concludes that this benchmark is met. Action Plan Short term measures

• Continue to act upon all issues raised by OAG in the 2002 and 2003 audit reports, especially the ones related to financial management procedures, accounting procedures, reporting, and internal control;


• Strengthen accounting capacity and oversight at all levels, in both line ministries and the MINECOFIN. It should be stressed that this is key to the successful decentralization of accounting responsibility, which will come into force once the new Organic Budget Law is adopted and implemented;

• Continue to meet the deadlines for submission of annual accounts to OAG, as well as the deadlines for OAG to submit the audit report to Parliament.

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4. Public Procurement System

Indicator 16. Efficiency and effectiveness of the public procurement system Question: To what extent does the public procurement system provide for efficient and effective use of public funds? Benchmark: (A) An efficient and effective public procurement system exists: The procurement system promotes efficiency and effectiveness in the expenditure of public funds through clear and enforceable rules that promote competition, transparency, and value for money. Assessment: (B) The current environment for public procurement provides for a competitive tendering process, but it is undermined by a weak governance environment that lacks adequate internal controls to enforce the rules. The benchmark is not met. The creation of the National Tender Board has introduced the principles of good practice in the public procurement system. When the NTB procedures are used, government goods and services are generally procured through a competitive and transparent process. The NTB has recently made significant efforts to overcome the delays in the processing dossiers related to the volume of files submitted to the NTB resulting from the relatively low threshold level of FRw 3,000,000 (USD 6,000) for tenders sent to the NTB. The current processing delays for straightforward tenders has now been reduced to 2 weeks, although more complex tenders may still take several months. Further efficiencies in processing are expected with the proposed raising of the threshold to FRw 40,000,000 (USD 80,000) for central government and FRw 20,000,000 (USD 40,000) for districts. As a result of its current workload, the NTB acknowledges weaknesses in the area of post tender monitoring, which it is not able to perform. Recent internal management improvements at the NTB include the introduction of follow up sheets for each tender being processed. As part of its management improvement drive the NTB is also considering an external evaluation of its operations. A new procurement law, which establishes clear and enforceable procurement rules and calls for decentralization of the tender process, has just been adopted by Cabinet and will be submitted to Parliament shortly. The new law will reorientate the function of the NTB towards monitoring, providing regulatory oversight, and training. It also introduces an efficient appeals process. Although the establishment of the NTB has generally improved transparency and accountability in the GoR tendering process, serious management weaknesses in budgetary institutions have undermined these improvements. The Auditor General’s audit

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of government institutions for FY 2002 cites numerous and widespread occurrences of failure to abide by tendering procedures. Such failures include non-submission to NTB for tenders over FRw 3,000,000, splitting of tenders to avoid NTB procedures, and failure to ensure competitive tendering. This is in part due to inadequate awareness of the regulations and availability of training and manuals. In addition, many institutions are still not preparing annual tender plans, as required by the regulations. The authorities have recently completed a Country Procurement Assessment and Action Plan (CPAR), in collaboration with the World Bank. The mission’s report, which will be released shortly, will include a number of recommendations to further improve the procurement environment in conformity with international standards. These include:

• Establish a legal and regulatory framework; • Development standard bidding documents; • Clarify respective roles and responsibilities; • Establish a procurement curriculum in two training institutions; • Establish an independent appeals mechanism; • Establish sanctions and penalties for procurement fraud under criminal law;

This benchmark is not met. Action Plan Short term measures

• Enforce annual submission of tender plans to NTB by all institutions.

• Raise the threshold of tenders to be sent to NTB to a more realistic level.

• Strengthen the training of staff involved in tenders and ensure full and adequate manuals for staff to follow.

• Adopt and implement the new procurement law.

• Follow up on the recommendations of the recently completed CPAR report.


• Provide on-going training for staff involved in tenders.

• Strengthen the NTB’s monitoring role.

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IV. Action Plan The following tables include an update on the action plan from the 2001 HIPC Assessment report (Table 3), a table showing the current and planned PEM related activities of development partners (Table 4), the action plan proposed by the present mission (Table 5). The government’s own PEM action plans are reflect in the FARAP table attached for convenience in Appendix I. The action plan proposed by the present mission reiterates many of the actions already identified in the FARAP plans. For this reason a link to the FARAP table is provided in Table 5.

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Relates to Timing Status DateIndicator² (S/M)³ (FI/II/NS)* Achieved**

1

Improve classification through strict GFS definition in the next budget cycle. Develop and implement basic budgeting and reporting systems for the districts that is consistent with consolidation into general government budgets. 1 M II

Will include District budgets as an annex in 2005 Financial Law and will be included in the Public Books database

2Improve coverage of expenditures financed from fees and other revenues of ministries and other government agencies. 2 S II

Some improvement made in 2004 Finance Law.

3 Improve forecasts of flows of external assistance 3 M IINeeds better coordination between donors and Government.

4

Improve monitoring and reporting on receipt of donor support and project implementation. Develop reporting framework on projects with direct input from donors. 4 M II

Needs better coordination between donors and Government.

5

Refine the program /sub-program, including with a view to achieving consistency across ministries.

5 II FI

Work is ongoing to avoid duplication of activities through sector strategies and clusters.

6

Review the performance/outcomes of each priority program each year and, given the performance, revise the program according to the PRSP prioritization criteria.

6

S

II Made considerable progress.

7

Improve macroeconomic forecasting capacity

7

M

FI March '03Macro consistency model to be fully developed, by June '04

N

1 Pay off existing arrears and improve cash management 8 M II

2

Rationalize the role and strengthen the capacity of the office of the Inspection Generale et Audit (IGA) in MINECOFIN and the internal audit units of line ministries. 9

M

II Ongoing Internal Auditors are being trained and employed in all line ministries

3Carry out regular tracking surveys of the operations of line ministries and local authorities. 10

MII Ongoing

Government needs to carry out PETS more regularly.

4 Identify and rationalize all appropriate government bank accounts. 11

S

II Ongoing

Banks accounts being rationalised (detailed in AFRITAC Action Plan of Treasury Management).

N

1Provide monthly monitoring reports of budget operations. Produce a concise monthly report of key revenue and expenditures for broad dissemination. 12 S II

2

Capacity building and systems for budget reporting and accounting in provinces and districts.

12 M II Ongoing

Public Books will be starting for 2005 Budget, tested from end April 2004 and will include decentralised entities

3

Improve reporting through SIBET/ Public Books.

13 S II

Public Books will be starting for 2005 Budget, tested from end April 2004 and will include decentralised entities.

4

Expand computerization of the budget system to allow easy reporting by provinces and districts in a system integrated with the current system.

13 M II


5

Design a full chart of accounts and the implementation of initial procedures to account and report in line with it.

15 S FI


6

Strengthen the capacity at the Public Accounts Division (PAD) of MINECOFIN to enable it meet, in 2003, its goals of producing annual and quarterly accounts of government operations. 15 S II Needs progress.

7 Strengthen the capacity of the Office of the Auditor General. 15 M II Needs progress.N

N

team should update the status for all other actions)**Date achieved for FI reflects the action status in the March 2003 Board Paper.

¹Actions reflect the descriptions held by FAD-PREM in the March 2003 Board Paper and should relate to the earlier action plans developed in prior AAPs.² Show to which of the 16 indicators from the AAP the action chiefly relates.³ S=Short term action (within 12 months of action); M=medium term action.* FI=fully implemented, II=Implementation initiated, NS=Not started (FI in blue reflects status as FI at the time of March 2003 board paper. Mission

Actions to strengthen budget formulation

Actions to strengthen budget execution

Actions to strengthen financial reporting

Actions to strengthen public procurement

Table 3: Implementation Status of Actions to Strengthen Tracking of Poverty-Reducing Public Spending: Rwanda

# Actions¹ Comments***

36

- 37 -

Donor/ Provider**RECENT*/ONGOING assistance by major project PLANNED assistance by major project

Description Description

TA on FARAP Public Sector Capacity Building

PHRD Grant for the preparation of the PRSC: support to MTEF, PETS and benefit incidence analysis Procurement

Organic Budget Law Financial RegulationsTreasury Reforms Treasury Reforms - on-going

Public AccountingProject Accounting

Public Accounting Public AccountingSponsor of TA in tax division Implementing Financial Regulations

Sponsor of FARAP Costing Exercise

SIDA Auditor General

Local Government Financial Management

Local Government Financial Management

Support for the MTEF project within the Budget department.

Dates Dates

WORLD BANK 2002-2003 2004-7

2004 2004-5

IMF/ 2003 2004East AFRITAC 2004 Jun-05

AfDB 2001-22004-5

EU 2003 2004-62002-2004 2004-5Q1 2004

2002-5

Netherlands

USAID 2001-4

DFID 2000+

* Within the last 12 months

Table 4: Overview of Technical and Donor Assistance in Public Expenditure Management in Rwanda

37

No.

ActionRelates to indicator

FARAP/ PFM

reference TA Provider No. ActionRelates to indicator

FARAP/ PFM

reference TA Provider

S.1 Issue a formal instruction to all semi-autonomous and autonomous agencies of central government (including CSR) to submit monthly reports on revenues and expenditures to the Budget Department of MINECOFIN for consolidation in the fiscal reports

1 2 M.1 Include a general government fiscal table in the GoR’s routine fiscal reporting 1

S.2 Urgently establish the intergovernmental fiscal unit in the MINECOFIN to collect and consolidate district budgets, as well as monthly reports on their total revenues and expenditures

1 M.2 Establish system for capturing and monitoring reporting of semi-autonomous and autonomous agencies

2

S.3 Prepare a consolidated general government fiscal report on a monthly basis, to be published at least on a quarterly basis

1 M.3 Set up a focal point among bilateral donors who can coordinate with the budget department and CEPEX on a regular basis, which would improve predictability of donor funding

3

S.4 Ensure all appropriate regulations are prepared and issued under the Organic Budget Law (currently before Parliament), and that mechanisms are put in place to enforce adherence, particularly in regards to obligations to report, as well as OBL restrictions on authority to borrow as well as invest surpluses

1 2 M.4 Government to engage a continuous dialogue with all donors, including bilateral ones, on the necessity to provide information timely on planned assistance and on actual data

4 8

S.5 Merge the recurrent and development budget for the 2005 budget documents 1 7

S.6 Make inventory of all extra-budgetary resources 2

S.7 Improve decision making concerning budget levels requirements of autonomous and semi-autonomous agencies

2 4

S.8 Establish accounting provisions and standards of the reporting of expenditures and own revenues of semi-autonomous and autonomous agencies

2 2,13

S.9 Strengthen coordination between the Ministry of Finance and line ministries. Regular and structured meetings would improve the quality of the budget preparation

3 4

S.10 Improve unit cost analysis and link inputs and outputs more closely during the budget preparation

3 5

S.11 CEPEX to collect and consolidate information on all donor funds, regardless where they will be spent (central, local, or through other channels)

4 7

S.12 Issue instructions asking all ministries to provide standardized monthly reports on donor-funded projects implemented under their authority

4 7

S.13 Complete the implementation of the functional classification, by mapping past expenditures to functions, thereby creating a time series for analytical use. Include a functional table in the monthly fiscal reporting

5 10 M.5 Upgrade the classifications to the GFS 2001 framework 5 10

S.14 Strengthen the use of programs in budget management to achieve the purpose of making them the key mechanism for translating government priorities, especially those aimed at reducing poverty and achieving the millennium development goals, into real budgetary allocations with clear objectives, outputs/outcomes, and indicators by which to measure them

5 10 M.6

S.15 Review the desirability and advantages of upgrading the classifications to the 2001 GFS framework, and establish a realistic timeframe for its implementation

5 10

S.16. Strengthen the use of the Design and implementation Group (DIG) during the preparation of the MTEF

7 4 M.7 Integrate recurrent and development budget 7 4

M.8 Improved and regular staff training of the MTEF exercise in line ministries and provinces, which under perform in submitting reliable MTEF projections

7 4

Com

preh

ensi

vene

ssC

lass

ifica

tion

Proj

ectio

n

Table 5. Action plan to upgrade PEM capacity in Rwanda

SHORT-TERM MEASURES (Within next 12 months) MEDIUM-TERM MEASURES (12 months to 3 years)

FORMULATION

- 38 -

38

No.


FARAP/ PFM


FARAP/ PFM


S.17 Complete the inventory and validation of past arrears arising from the period prior to 1994. Prepare a plan for settlement of these arrears

8 M.9 Maintain adequate financial controls to ensure that arrears do not continue to build up, and, where this is unavoidable, to ensure that they are known, and effectively tracked at MINECOFIN, especially once decentralized accounting is implemented as envisaged under the new Organic Budget Law

8

S.18 Continue to include a provision for the clearance of arrears in the annual budgets, until such time as all arrears are paid off or converted to debt

8 M10 Develop the internal audit function more towards systems auditing, and prepare manuals and training to improve internal auditing capacity in this area

9 19,20

S.19 Take steps to ensure that causes of late disbursements of budget support funds do not reoccur, including meeting donor requirements for disbursement on the one hand, and establishing realistic agreements for the timing of disbursements of these funds on the other hand

8 M11 Include PETs as a rountine part of the GoR’s budgetary management and monitoring processes

10

S.20 Review staffing needs of those institutions with workloads requiring more than one internal auditor, and prepare a plan for increasing the number of internal auditors

9 20 M.12 Enforce monthly bank reconciliation, as regulations under the new Organic Budget Law, for all general government units. Bank reconciliation statements to accompany monthly accounts from these units

11 13

S.21 Prepare and implement an on-going training program for internal auditors 9 19,20 M.13 Move towards the implementation of Single Treasury Account for all budget users initially, followed by gradual extension to semi-autonomous agencies and extra-budgetary funds

11 9

S.22 Review the respective roles and responsibilities of the internal auditors and the various financial inspection units

9 19

S.23 Institutionalize PETs and fund it in the budget with a clearly identified item 10

S.24 Incorporate measures to publicize the results widely, and particularly to Parliament 10

S.25 Institute measures for proper accounting and record keeping at the Ministerial, Provincial, District and facilities level (which will be critical for success of next PETs in tracking flow of funds)

10 13

S.26 Enforce the use of a bank reconciliation statement as part of the monthly accounting procedures to be followed by all general government units, starting as soon as possible with the reconciliation of the main treasury account

11 13

S.27 Strengthen the monitoring of non-Treasury bank account balances 11 9

S.28 Implement SIBET II starting January 1st, 2005 11 10

S.29 Continue to eliminate dormant or unnecessary GoR bank accounts 11 9

Inte

rnal

Con

trol

s and

Rec

onci

liatio

n

EXECUTION



- 39 -

39

No.


FARAP/ PFM


FARAP/ PFM


S.30 In preparation for the implementation of the new Organic Budget Law, initiate an awareness campaign among general government budget users on the importance of regular fiscal reporting 12 3

M.14 Implement the monthly reporting provisions of the new Organic Budget Law for all central government budget users

12 1,2,3S.31 Take steps to ensure recording in SIBET of budget user spending from own bank

accounts, including spending on development budget 12 10M.15 Establish regular monthly reporting from local governments to MINECOFIN

12S.32 Establish an intergovernmental fiscal unit in MINECOFIN responsible for collecting and

consolidating in-year fiscal reports from local governments 12M.16 Initiate implementation of an output focused MTEF

13 4S.33 Complete upgrade of SIBET with modules to allow for linking outputs to expenditure

13 10M.17 Full integration of the development and recurrent budget

13 7S.34 Return end of year balances on all GoR accounts to the main treasury account as part of

the end of year procedures14 9,13 M.18 Move towards a Treasury Single Account approach for all government spending,

including, progressively, the spending of semi-autonomous agencies and extra-budgetary funds

14 9

S.35 Strengthen the monitoring of idle balances on budget user accounts, and improve the GoR’s banking arrangements to eliminate idle balances, initially on a pilot basis

14 9 M.19 Strengthen accounting capacity and oversight at all levels, in both line ministries and the MINECOFIN. It should be stressed that this is key to the successful decentralization of accounting responsibility, which will come into force once the new Organic Budget Law is adopted and implemented

15 14-Nov EC

S.36 Continue to act upon all issues raised by OAG in the 2002 and 2003 audit reports, especially the ones related to financial management procedures, accounting procedures, reporting, and internal control

15 M.20 Continue to meet the deadlines for submission of annual accounts to OAG, as well as the deadlines for OAG to submit the audit report to Parliament

15 14-Nov

S.37 Enforce annual submission of tender plans to NTB by all institutions 16 21 WBM.22 Provide on-going training for staff involved in tenders 16 21 WB

S.39 Raise the threshold of tenders to be sent to NTB to a more realistic level

16 21 WB

M.23 Strengthen the NTB’s monitoring role

16 21 WBS.40 Strengthen the training of staff involved in tenders and ensure full and

adequate manuals for staff to follow 16 21 WBS.41 Adopt and implement the new procurement law 16 21 WBS.42 Follow up on the recommendations of the recently completed CPAR

report 16 21 WB

NEW: PROCUREMENT

Fina

l Aud

ited

Acc

ount

s

Note: FARAP/PFM is the Government of Rwanda's PEM reforms program

REPORTING

In-y

ear

repo

rtin

gPr

ocur

emen

t



- 40 -

40

- 41 -

Appendix

Statut Problèmes Prioritaires Assistance requise

1 Mise en place des nouveaux textes

Loi organique : en discussion au sein du Gouvernement. Suggestions FARAP sur le contenu ont été intégrées

Relecture (quelques aspects techniques à affiner), Etablir la hiérarchie des textes

AFRITAC (8 semaines d’expert disponibles pour la LOB et les autres textes)

Instructions financières doivent être rédigées.

Manuels pratiques à prévoir

Un manuel de procédure élaboré mais selon l’ordonnance de 1979. Nécessite révision et compléments notamment comptables

3 Formation A préparer et à réaliser Apprendre aux fonctionnaires à travailler selon les nouvelles règles.

AT, identification des besoins, préparation du programme de formation, du matériel pédagogique, plus formation des formateurs’ formation résidentielle et formation des agents des districts sur le terrain

4 Tirer les leçons du processus CDMT

Ressortit à une action continue de mobilisation de la part des responsables des services et à la formation du personnel d’exécution.

5 Instaurer une culture de centres de coûts (rec 5)

Idem

6 Meilleure coexistence du CDMT et du cash budgeting

Le FMI a proposé des mesures d’amélioration de la gestion des liquidités

Résoudre la remise en cause du CDMT du fait de pénuries périodiques de trésorerie

AFRITAC et le FMI ont proposé une assistance. Voir rec. 9

AT en place sur financement (BAD). Fin des travaux mars 2005.

La direction du Budget a créé des points focaux sectoriels coordonnant des représentants du CEPEX et des ministères techniques.

En cours Partnership Framework vise à harmoniser l’approche des bailleurs d’aide budgétaire. Participation des bailleurs dans l’élaboration des stratégies sectorielles et du CDMT

Par le FRPC le FMI est étroitement impliqué dans le processus budgétaire.

Appendix I. GoR PEM Action Plan -- FARAP -- Status as of March, 2004RecommandationCadre légal et institutionnel

2 Résolution des incertitudes Rédaction des textes en cohérence avec les pratiques rwandaises dans le domaine des finances publiques. Utilisation des travaux existants. Manuels de comptabilité selon les normes IPSAS

AT juriste expert en finances publiques (en plus de la prévision AFRITAC), puis publication et diffusion des textes à tous les agents concernés et formation.

Gestion du budget et de la dépense

7 Meilleure coordination entre CDMT et CEPEX

En cours Intégration des dépenses de fonctionnement et de développement dans un cadre comptable unique fidèle reflet de la première année du CDMT. Meilleure information sur le budget de développement entre le Budget, CEPEX, les ministères techniques et les bailleurs de fonds.

8 Plus grand rôle des bailleurs de fonds dans le processus du budget

Augmenter la fiabilité du budget par une meilleure prévision des contributions d’appui budgétaire.

41

- 42 -

Statut Problèmes Prioritaires Assistance requiseEn cours Partnership Framework vise à harmoniser l’approche des bailleurs d’aide budgétaire. Participation des bailleurs dans l’élaboration des stratégies sectorielles et du CDMT

Par le FRPC le FMI est étroitement impliqué dans le processus budgétaire.

L’OTR n’a pas le contrôle ou accès à la liquidité dans les nombreux comptes de l’Etat. Pas de gestion prévisionnelle de la trésorerie. Etablir un compte unique de l’Etat auprès de la BNR tout en laissant la gestion des fonds aux agences budgétaires.

Créer une Cash Monitoring Unit au sein du Trésor pour préparer des projections annuelles et trimestrielles..

Nomenclature du budget selon GFS

AT complémentaire et formation

Nomenclatures adoptées et utilisées. A consacrer par la loi organique

Besoins en informatique

En principe les CDMT des Districts sont élaborés selon la même nomenclature que le budget général

Le système informatique SIBET est en cours de révision sur financement Rwandais pour inclure les données de recettes, du CEPEX, du CDF et de la BNR.

11 Consolidation sur un périmètre croissant des comptes de l’Etat, audit et présentation au Parlement

Comptes 2002 produits et envoyés l’OAG. Arrêté des comptes 2003 fin mars 2004. (Les formats de sortie selon la liste de la rec 11 restent à faire). Audit sera fait et présenté au Parlement

Solder le passé de comptabilité mal tenue et mal justifiée. Etablir balance d’entrée « en l’état » par une loi.

AT plus formation

En cours. Définition précise du dispositif comptable d’ensemble

Les instructions financières prévoiront les procédures de clôture (écritures d’inventaire) de l’année

Assurer progressivité de la maîtrise des comptes :

- homogénéiser moyens informatiques

- former et tester au niveau central (ministères et entités)

- former et tester au niveau province

13 Renforcement des procédures comptables

Manuel de procédure : Voir ci-dessus la rec 2, intégrera normes IPSAS

14 Amélioration du projet de règlement général de comptabilité publique

Voir ci-dessus rec 2

12 Amélioration de la comptabilité de caisse. Passage progressif à une comptabilité patrimoniale simplifiée.

Voir rec 1

10 Développement des nomenclatures et reconfiguration du système SIBET

A achever et mettre en pratique au niveau de tous les comptables

Comptabilité publique et reporting.

9 Réforme du système de gestion de la liquidité

Un plan d’amélioration de la liquidité a été préparé avec l’aide d’AFRITAC

AFRITAC propose une expertise de 8 semaines.

8 Plus grand rôle des bailleurs de fonds dans le processus du budget

Augmenter la fiabilité du budget par une meilleure prévision des contributions d’appui budgétaire.

Appendix I. GoR PEM Action Plan -- FARAP -- Status as of March, 2004Recommandation

42

- 43 -

Statut Problèmes Prioritaires Assistance requiseTransfert effectué par la constitution de 2003. Amendement de la loi de l’OAG en cours.Formation des parlementaires proposée dans le projet d’amélioration des capacités de la Banque Mondiale

16 Publication du rapport de l’AG Rapport 2003 sera disponible en papier et sur le web au moment de la soumission au Parlement.

AT Suède et Pays Bas, s’élevant à environ 3millions € pour la période 2003-06

17 Clarification des rôles de la Chambre des Comptes et de l’OAG

La constitution de 2003 a supprimé la Chambre des Comptes

18 L’AG audite les comptes de l’Etat dès qu’ils sont disponibles

Sera fait sur les comptes 2003

AT et Formation

Préparer documents de méthodes et procédures

20 Introduction d’audit interne dans les Ministères techniques

Proposition de l’IGA en cours de discussion

Créer les structures de contrôle interne et les faire fonctionner efficacement. Personnel déjà en place mais non en fonction. A former

AT et formation préparer documents de méthodes et procédures

21 Promulgation du code des marchés

Approbation du code des marchés attendue avant fin 2004.

22 Promulgation du cadre juridique du bureau de l’Ombudsman

A été fait

23 Code de conduite des fonctionnaires

A faire.Conditions d’ouverture et de fermeture, objets et statuts, règles de gestion des comptes spéciaux non définies

25 Harmonisation des manuels et plans comptables

Travaux en cours (atelier d’octobre 2003)

Les manuels (rec 2) fixeront les règles à observer

AT et formation

26 Mise en oeuvre stratégique des systèmes dans un cadre de responsabilité correctement préparé.

Décentralisation

24 Critères pour la création ou la fermeture d’institutions autonomes ou semi-autonomes

Décision quant à l’inclusion dans la LOBB ou les instructions budgétaires.

19 Transformation du rôle de l’IGA en supervision de l’audit interne

Proposition en discussion au MINECOFIN

L’IGA coordonnera et supervisera techniquement les travaux des auditeurs internes. Il peut également effectuer des inspections inopinées et faire des recommandations au MINECOFIN

15 Transférer l’OAG au Parlement et formation des membres du Comité du Budget

Appendix I. GoR PEM Action Plan -- FARAP -- Status as of March, 2004Recommandation

43

Documents

RWANDA: TRACKING POVERTY-REDUCING SPENDING SECOND ... · and the issues arising from the program of decentralization. ... • To create an action plan to ... Auditor-General (OAG)