(1) Public Financial Management (PFM) Reform

1           About PFM
1.1        What is PFM

Public financial management (PFM) is critical to basic economic governance and essential in establishing the performance, legitimacy and accountability of Government. Public financial management has to do with the effective administration of funds collected and spent by Government. (https://www.international.gc.ca)

The Republic of the Marshall Islands (RMI) has established a PFM Roadmap that sets out a program of actions to be taken over the medium-term to improve PFM Systems in RMI.

The PFM Roadmap was developed through detailed discussions with the key divisions of the Ministry of Finance and related stakeholders including the Chief Secretary, Public Service Commission, Parliamentary Committees, Auditor General, line ministries, local governments, NGOs and civil society.

As a result of the detailed discussions and consultations, the PFM Roadmap Working Group formulated a comprehensive PFM reform plan comprising thirty components. Twenty-eight of the reform components represent elements of the Government’s PFM framework that could be further strengthened and improved, and the last two components – PFM reform project governance and a reform program communications and training strategy – are considered to be critical to support the implementation of the key reform components

1.2        PFM Governance Structure

The Republic of Marshall Islands (RMI) has formed a PFM Reform Steering to lead, co-ordinate and monitor overall progress of the Roadmap.  The Steering Committee is chaired by the Chief Secretary and includes the Finance Secretary, Auditor General, the Chair of the Public Service Commission, the Attorney General, and representatives from the Office of the President and EPPSO. Line ministry representatives from the Ministry of Education, Ministry of Health, Ministry of Foreign Affairs and Ministry of Internal Affairs are co-opted as needed. The MOF provides the Secretariat support to the Steering Committee.

This Committee meets quarterly and:

  • Reviews progress reports from the PFM Working Group
  • Advises on policy issues, problems and constraints raised by MoF PFM Reform Working Committee (MOF PFMRWC)
  • Reviews recommendations put forward by the MOF PFMRWC
  • Approves amendments and future phases of the PFM Roadmap
  • Provides guidance and support to the MOF PFMRWC to enable achievement of the Roadmap objectives
  • Assists in identifying additional resources for implementation as required
  • Ensures the reform work is clearly integrated into, and supportive of, any restructuring and reform programs of government.

A PFM Reform Working Committee chaired by the Secretary of MOF is responsible for managing the implementation of the PFM Roadmap.  The Working Committee consists of Assistant Secretary of Budget/OIDA, Assistant Secretary for Tax/Customs/Revenue and Assistant Secretary for Accounting, line ministry representatives from the Ministry of Education and Ministry of Health with relevant consultants/ subject matter experts and other MOF staff co-opted as necessary.

The Committee meets monthly and:

  • Defines the actions required for implementation of the PFM Roadmap
  • Maintains work plans and schedules
  • Coordinates access to resources, including facilitating peer review on technical matters as necessary
  • Evaluates the work of consultants
  • Co-ordinates training needs associated with reforms
  • Disseminates information to all stakeholders regarding the PFM Roadmap
  • Monitor progress by implementing agencies and advise on action to overcome problems
  • Establish and monitor work of Sub-Working Committee’s should they be substantive reform projects.
  • Ensures cohesion and consistency between various initiatives and the effective use of external support to the Roadmap process.

 

1.3        Acronyms

COA Chart of Accounts
DIDA Division of International Development Assistance
EPPSO Economic Policy Planning and Statistical Office
FM Financial Management
FMIS Financial Management Information System
HRMIS Human Resources Management Information System
MTBF Medium Term Budget Framework
PEFA Public Expenditure and Financial Accountability
PFM Public Financial Management
SOE State Owned Enterprise