Budget: (US$6.2m)

The objective of this component is to support the implementation of a PFM reform program, which has been developed with a vision of establishing a decentralized public financial management system in the medium term. The next phase of reform will implement this vision by 1) establishing a legal and regulatory framework with clear definitions of financial management accountability; 2) establishing decentralized budget, execution, accounting, and reporting processes and controls; 3) intensive training of vote controllers, program managers, and financial management staff, so they can perform financial management responsibilities devolved to them; and 4) implementing personnel management measures to reward performance and sanction poor management.

While the decentralized financial management system is being implemented, quick fixes of the current system can be implemented to generate reliable and timely financial management information, improve the payments system and payroll management.

This component will establish a PFM Reform Implementation Unit in MoF and finance the following activities to support the reform:

Implement quick fixes to improve the payments system, payroll management, and reporting;



Specify and acquire a new Integrated Financial Management Information System (IFMIS), initially to be set-up to replace the current FMAS in MoF;



Disseminate and build consensus on the vision for decentralized public financial management and further develop the new Government Budgeting and Accounting Bill and its regulatory framework, covering accountability arrangements, internal control requirements, information system requirements;

Design the required decentralized budget, execution, accounting and reporting processes and controls;

Organize intensive training for vote controllers, program managers, and other stakeholders on the new processes and systems;

Introduce a new Chart of Accounts in the budget and accounting system;

Set up the new IFMIS for the new decentralized financial management system and pilot the system in the Ministry of Finance and one other Ministry;

Initiate training for other line ministries for roll-out of the new IFMIS;

Establish interim Local Government financial management systems and provide intensive training for local government financial management staff;

Establish and make operational institutions created under the procurement law and provide training to all public procurement entities.


The DfID and EU will also provide technical assistance to these work streams. In addition, DfID is expected to finance three other priority areas of the PFM reform not funded by IRCBP. These include: 1) providing assistance to the Auditor-general to improve capacity and clear the audit backlogs, 2) providing assistance to Parliament to strengthen their oversight roles; 3) improving the revenue base and the operational capacity of the National Revenue Authority.

Government recognizes that effective and strategic use of public resources is a critical ingredient of its development strategy, and that transparent and accountable utilization of public resources is required to restore popular trust in government. In recent years, despite severe capacity constraint, Government has been able to gradually improve financial management. Government also recognizes that numerous weaknesses remain in public expenditure management. With the launch of the decentralization program, the PFM reform needs to address an additional major challenge, i.e., to rapidly build up the capacity of local governments to manage public resources in an inclusive, transparent, and accountable manner. Only with such capacity and commitment will political, administrative, and fiscal decentralization lead to improved efficiency in resource utilization and program implementation.  

Based on the assessment, a PFM reform program has been developed with a vision of establishing a decentralized (both to local governments and to ministries, departments, and agencies) public financial management system in the medium term. The next phase of reform will implement this vision by 1) establishing a legal and regulatory framework with clear definitions of financial management accountability; 2) establishing decentralized budget, execution, accounting, and reporting processes and controls; 3) intensive training of vote controllers, program managers, and financial management staff, so they can perform financial management responsibilities devolved to them; and 4) implementing personnel management measures to reward performance and sanction poor management.