I. Budget reliability
Scores by Dimension
Overall Indicator Score
1. Aggregate expenditure outturn
A
Notes:
1.1 Aggregate expenditure outturn
A
Notes:
2. Expenditure composition outturn
C+
Notes:
2.1 Expenditure composition outturn by function
C
Notes:
2.2 Expenditure composition outturn by economic type
B
Notes:
2.3 Expenditure from contingency reserves
A
Notes:
Notes:
3.1 Aggregate revenue outturn
D
Notes:
3.2 Revenue composition outturn
B
Notes:
II. Transparency of public finances
Scores by Dimension
Overall Indicator Score
4. Budget classification
C
Notes:
4.1 Budget classification
C
Notes:
Notes:
5.1 Budget documentation
B
Notes:
6. Central government operations outside financial reports
C+
Notes:
6.1 Expenditure outside financial reports
B
Notes:
6.2 Revenue outside financial reports
B
Notes:
6.3 Financial reports of extrabudgetary units
D
Notes:
7. Transfers to subnational governments
A
Notes:
7.1 System for allocating transfers
A
Notes:
7.2 Timeliness of information on transfers
A
Notes:
8. Performance information for service delivery
C+
Notes:
8.1 Performance plans for service delivery
C
Notes:
8.2 Performance achieved for service delivery
C
Notes:
8.3 Resources received by service delivery units
B
Notes:
8.4 Performance evaluation for service delivery
C
Notes:
9. Public access to fiscal information
D
Notes:
9.1 Public access to fiscal information
D
Notes:
III. Management of assets and liabilities
Scores by Dimension
Overall Indicator Score
10. Fiscal risk reporting
D+
Notes:
10.1 Monitoring of public corporations
C
Notes:
Only 3 of 11 audited/financial statements of PEs are published.
10.2 Monitoring of subnational governments
D
Notes:
The financial reports from SNAs are received by the central government. No audited or unaudited financial reports of SNAs are published.
10.3 Contingent liabilities and other fiscal risks
D
Notes:
Part of contingent liabilities is quantified and quarterly reported.
11. Public investment management
D+
Notes:
11.1 Economic analysis of investment proposals
C
Notes:
The investment projects funded by national budget are upgraded and rehabilitated investment projects that have been studied economic analysis financed and managed by donors and the studies are available for more than 25 percent of the major projects selected.
11.2 Investment project selection
D
Notes:
The process of project preparation and appraisal begin early, the final approval of investment projects is after the annual budget law. However, there is a clear lack of PIM legal and regulatory requirements for investment project selection. No standard of criteria is presented. The central entity bases on the broad policy criteria in the annual budget circular. The budget is approved first then the LMs prepare the project.
11.3 Investment project costing
D
Notes:
The investment project costing includes a consolidated amount for estimated capital costs but does not systematically include recurrent expenditure and a breakdown by projects and projections for the forthcoming year linked to the budget.
11.4 Investment project monitoring
C
Notes:
Progress of the major investment projects is monitored and reported monthly based on LMs’ internal SOPs. In some case the Inter-Ministerial Committee meeting will conduct to review the financial and physical progress reports.
12. Public asset management
C
Notes:
12.1 Financial asset monitoring
C
Notes:
The RGC maintains a record of its holding assets, which are recognized at fair value.
12.2 Nonfinancial asset monitoring
C
Notes:
Asset information is recorded in their own MAs and submit to the MEF; however, this information is not consolidated yet and not available for the categories other than vehicle, and IT equipment.
12.3 Transparency of asset disposal
C
Notes:
There are rules and procedures for transfer or disposal of nonfinancial assets. Revenue from asset disposal is included in revenue report and transfers of nonfinancial asset are found in the financial report.
Notes:
13.1 Recording and reporting of debt and guarantees
C
Notes:
A reconciliation process is performed annually. Data on total domestic and external debt stocks and flows is accurate and reliable and an overall picture of its composition is available on a quarterly basis or on demand.
13.2 Approval of debt and guarantees
A
Notes:
The MEF is a single entity that has right to borrow, issue new debt and provide state guarantee. PDMS 2019-2023 and SOP for PDM are main documents used as guidance to borrow, undertake debt related transaction and monitor debt management transaction. Annual borrowing is approved by parliament in the annual budget law.
13.3 Debt management strategy
A
Notes:
PDMS 2019-2023 is published on the website of the MEF GDICDM. Twice a year the MEF prepares public debt management reports that are submitted to the RGC and parliament on the overall in-year progress and against the PDMS objectives on performance public debt management.
IV. Policy-based fiscal strategy and budgeting
Scores by Dimension
Overall Indicator Score
14. Macroeconomic and fiscal forecasting
C+
Notes:
14.1 Macroeconomic forecasts
B
Notes:
The MEF prepares forecasts of key macroeconomic indicators and provides assumptions and forecasts for year N-1, N and N+1 as well as forecast year N+2, N+3 and keeps updating these figures annually. After Prime Minister approved the annual MFPF, the MEF submits to the National Assembly.
Notes:
The annual MFPF contains three-year forecasts of fiscal aggregates prepared annually by main economic categories, sectors, and high-level administrative heads.
14.3 Macrofiscal sensitivity analysis
C
Notes:
The annual MFPF prepared by MEF include a macrofiscal sensitivity analysis with a qualitative assessment of the impact of alternative macroeconomic assumptions, based mostly on fiscal data and external factors.
Notes:
15.1 Fiscal impact of policy proposals
C
Notes:
The annual MFPF formulation requires the MEF to collect information from all LMs and revenue collecting agencies to prepare estimates of the fiscal impact of all proposed changes in revenue and expenditure policies for the upcoming budget year; however, only the aggregates at sector level for the annual budget submitted for approval.
15.2 Fiscal strategy adoption
C
Notes:
The MFPF is a fiscal strategy with some qualitative and quantitative fiscal policy targets approved by the RGC for the annual budget. It is the basis for the macroeconomic policy framework and the consolidated fiscal policy used for the annual budget preparation from the references of the RMS and the NSDP.
15.3 Reporting on fiscal outcomes
B
Notes:
The RGC submits the draft budget settlement law and annex (detailed by economic classification and main head administrative classification) along with a budget statement explaining the previous budget outturn against the fiscal framework of the previous budget as well as policy actions to address the deviations, for the scrutiny of the National Assembly.
16. Medium-term perspective in expenditure budgeting
D+
Notes:
16.1 Medium-term expenditure estimates
D
Notes:
Three-year estimates of expenditure are prepared as a stage of the annual budget preparation in the BSP aligned consistent with the MFPF, but not presented with the annual budget which provides a breakdown by economic classification and capital expenditure aligned to the MFPF and BSP framework only for the annual budget year.
16.2 Medium-term expenditure ceilings
C
Notes:
For 2020 annual budget, the RGC adopted the annual MFPF and a pilot MTBF 2020-2022, applied to current revenue for main heading administrations and PAEs.
16.3 Alignment of strategic plans and medium-term budgets
C
Notes:
Medium-term strategic plans are prepared for all major ministries but only the education sector and (to a large extent) the health sector have fully costed strategic plans aligned with fiscal aggregates. The rest of the sectors have strategic plans but without full and consistent costing. Overall, more than 25 percent but less than the majority of expenditure proposals in the annual budget estimates are fully aligned with the strategic plans.
16.4 Consistency of budgets with previous year’s estimates
D
Notes:
The variation between the first medium-term budget year (2019-2021) and second medium-term budget (2020-2022) is more than 13% and lack of explanation on the differences or expenditure policy changes.
17. Budget preparation process
B+
Notes:
Notes:
The RGC issues two circulars subsequently. Circulars are clearly defined the prioritized policies, guidance for budget preparation and provide enough time to LMs. Both stages (BSP and annual budget preparation) include indicative (soft) ceilings approved by the RGC.
17.2 Guidance on budget preparation
C
Notes:
According to Circular on Annual Budget Preparation, top-down ceilings are imposed for overall expenditure (separately for current and capital) and for the four sectors in terms of percentage of GDP (indicative). The RGC set the soft ceiling for recurrent expenditure to line ministries.
17.3 Budget submission to the legislature
A
Notes:
The RGC has submitted the annual budget proposal to the legislature more than two months before the start of fiscal year in each of the last three years.
18. Legislative scrutiny of budgets
C+
Notes:
18.1 Scope of budget scrutiny
C
Notes:
The legislature reviews details of expenditure and revenue of detailed budget proposals. However, no substantial changes to the draft have been made in recent years.
18.2 Legislative procedures for budget scrutiny
C
Notes:
Legislative body has its procedures to review budget proposals; however, technical support needs to further strengthen by establishing budget office.
18.3 Timing of budget approval
A
Notes:
The legislature has approved the annual budget before the start of the year in each of the last three fiscal years.
18.4 Rules for budget adjustment by the executive
A
Notes:
The adjustments to the annual budget appropriations are regulated through an amended annual budget law, or by sub-decrees in some case by prakas and/or circulars, issued by heads of ministries. The rules for in-year budget amendments without prior legislative approval are clear and respected, and do not allow for expansion of the overall amount of expenditure (even in case of excess revenue collection).
V. Predictability and control in budget execution
Scores by Dimension
Overall Indicator Score
19. Revenue administration
C+
Notes:
19.1 Rights and obligations for revenue measures
A
Notes:
The GDT and GDCE representing more than 75 percent of 2019 annual revenue collection use multiple channels to provide taxpayers with easy access up-to-date information on the main tax obligation areas and on their rights and there is an effective redress and appeal procedure system. 19.2. Revenue risk management B Tax and Customs
19.2 Revenue risk management
B
Notes:
Tax and Customs administrations have their own risk assessment system to identify and monitor major compliance risks for their large revenue payers and major taxes, representing at least 50% of the revenue collected.
19.3 Revenue audit and investigation
D
Notes:
GDT and GDCE collecting most revenue undertake audits and fraud investigations have established compliance risk-based audit plans. However, they could not provide comprehensive information on the systems in place to monitor and report their audits and fraud investigations’ activities or evidence of a documented compliance improvement plan.
19.4 Revenue arrears monitoring
D*
Notes:
Data on the stock of revenue arrears at the end of 2019 could not be calculated and there is no detailed ageing balance of the stock of arrears registered for GDT and non-tax revenues.
20. Accounting for revenue
C+
Notes:
20.1 Information on revenue collections
A
Notes:
The GDNT central agency responsible for revenue data consolidation receives and reports revenue data from all entities collecting revenue at central government level on a daily basis.
20.2 Transfer of revenue collections
A
Notes:
Entities collecting most central government revenues transfer the collections directly into TSA controlled by GDNT on daily basis.
20.3 Revenue accounts reconciliation
C
Notes:
Entities collecting most of government revenue undertake a complete reconciliation within two months of the end of the year.
21. Predictability of in-year resource allocation
C+
Notes:
21.1 Consolidation of cash balances
C
Notes:
All TSAs’ balances are consolidated on daily basis, except other accounts that account for 10 percent of the total revenue collected and are consolidated on a monthly basis.
21.2 Cash forecasting and monitoring
B
Notes:
Annual cash flow forecasts are prepared and updated quarterly based on actual past cash inflows and outflows.
21.3 Information on commitment ceilings
B
Notes:
LMs can prepare their expenditure programs on a quarterly basis.
21.4 Significance of in-year budget adjustments
C
Notes:
In-year adjustments are significant in amount and frequent but are undertaken with some transparency and can be partially traced.
22. Expenditure arrears
D+
Notes:
22.1 Stock of expenditure arrears
D
Notes:
There are no salary arrears. However, expenditure arrears on debt interest and penalties are 10.30% of total expenditure in 2019.
22.2 Expenditure arrears monitoring
C
Notes:
Data maintained on the FMIS can be extracted to generate Excel reports and data on stock and composition of arrears is monitored by GDNT on a regular basis and reported annually. However, the definition of arrears is not aligned to the international definition used in the PEFA methodology.
Notes:
23.1 Integration of payroll and personnel records
B
Notes:
Each month’s payroll is supported by full documentation for changes made, and LMs check that the month’s total payroll reconciles with the previous month’s total and the total of changes made for the month.
23.2 Management of payroll changes
B
Notes:
Personnel records and payroll are updated at least quarterly and require a few (more than 10 but less than 25 percent) retroactive adjustments to the payroll.
23.3 Internal control of payroll
B
Notes:
Authority for changes to personnel records and payroll are clear and adequate.
Notes:
There is no comprehensive payroll audit that has been taken place during the last three years. The MCS partial verifications have resulted in adjustments up to 2 percent of the annual payroll.
Notes:
24.1 Procurement monitoring
D
Notes:
The GDPP maintains records with data on what have been procured, value of the procurement and who has been awarded the contract for all contracts above thresholds but cannot evidence the materiality of these contracts against the total procurement methods for goods, services and works as there is no integrated system to monitor procurement values and records.
24.2 Procurement methods
D
Notes:
The value of total contracts awarded using competitive methods is less than 60% of the total value of awarded contracts in 2019.
24.3 Public access to procurement information
D
Notes:
Only three of six elements of public procurement information are made available to the public in a complete, reliable and timely manner and the materiality of the procurement operations involved cannot be confirmed.
24.4 Procurement complaints management
A
Notes:
The criterion (1) is met and other 5 criteria are met.
25. Internal controls on nonsalary expenditure
C
Notes:
25.1 Segregation of duties
C
Notes:
There is a clear segregation of duties as well as responsibilities for expenditure controls within spending agencies and the MEF; however, in practice there still overlap n functions between levels in LMs and between GDB FAD (Financial controllers) and GDNT (Public Accountants) for reviewing payment orders.
25.2 Effectiveness of expenditure commitment controls
C
Notes:
Expenditure commitment control procedures exist and are effective to keep commitments within cash availability and approved budget allocations. However, not all revenue and expenditure are covered.
25.3 Compliance with payment rules and procedures
C
Notes:
The majority of payments are compliant with regular payments procedures and majority of exceptions are duly authorized or justified.
Notes:
26.1 Coverage of internal audit
A
Notes:
Internal audit function covers all government agencies, PAEs and PEs. They have formal procedures aligned with the international standards including annual work programmes, definition, and maintenance of audit documentation, follow up on recommendations.
26.2 Nature of audits and standards applied
B
Notes:
Internal audit activities are focused on financial compliance and the adequacy and effectiveness of internal controls.
26.3 Implementation of internal audits and reporting
C
Notes:
Internal audit departments of LMs/institutions implement the majority of their annual audit programs as evidenced by their distribution to the LMs/institutions’ senior management.
26.4 Response to internal audits
C
Notes:
In the assessed sample and as per GDIA feedback, managements in LMs/institutions provide partial response to the audit recommendations received from their internal audit unit, and percentage of achievement of audit recommendations is within 50%.
VI. Accounting and reporting
Scores by Dimension
Overall Indicator Score
27. Financial data integrity
C+
Notes:
27.1 Bank account reconciliation
B
Notes:
TSA is reconciled on a daily basis and other Treasury-managed accounts and commercial banks’ accounts are reconciled monthly within four weeks.
Notes:
Even though the verification and clearing of suspense accounts with collecting agencies is taking place on a daily and monthly basis, a remaining uncleared amount is in suspense accounts after the year-end closure.
Notes:
Advance accounts are settled annually within two months of the end of the year. Some advances can be cleared with delay. When the implementation is delayed, the advance is carried over, budgeted for and cleared in the next year budget.
27.4 Financial data integrity processes
B
Notes:
There is a clear separation of responsibility from entry data to recording in the business process of FMIS which provides information on any access to records and changes to data entry, and results in an audit trail. However, there is no operational unit in charge of the integrity of the system.
28. In-year budget reports
C+
Notes:
28.1 Coverage and comparability of reports
C
Notes:
Monthly TOFE reports allow a direct comparison to the original budget and provide information for the main administrative headings.
28.2 Timing of in-year budget reports
B
Notes:
Reports are prepared and issued and published generally within four weeks of each month on website of MEF.
28.3 Accuracy of in-year budget reports
C
Notes:
There are minor concerns about accuracy as some records are delayed (both revenue and advances) or not included (externally-funded and PAEs and PEs) in the TOFE execution reports but the usefulness of the reports is not compromised and the data captures expenditure at payment stage.
29. Annual financial reports
D+
Notes:
29.1 Completeness of annual financial reports
C
Notes:
Financial reports for the RGC are prepared annually, and are comparable with approved budget, which include revenue, expenditure, and cash balance.
29.2 Submission of reports for external audit
D
Notes:
The financial reports are submitted for the NAA more than 9 months from the fiscal year end.
29.3 Accounting standards
B
Notes:
The standards used to prepare all government financial reports by GDNT are CPSAS-based and in line with cash-basis IPSAS and the financial statements are prepared and are consistent with the majority of international accounting standards and disclosed in the annual financial reports.
VII. External scrutiny and audit
Scores by Dimension
Overall Indicator Score
Notes:
NU
30.1 Audit coverage and standards
NU
Notes:
NU
30.2 Submission of audit reports to the legislature
NU
Notes:
NU
30.3 External audit follow-up
NU
Notes:
NU
30.4 Supreme Audit Institution independence
NU
Notes:
NU
31. Legislative scrutiny of audit reports
NA
Notes:
NA
31.1 Timing of audit report scrutiny
NA
Notes:
NA
31.2 Hearings on audit findings
NA
Notes:
NA
31.3 Recommendations on audit by the legislature
NA
Notes:
NA
31.4 Transparency of legislative scrutiny of audit reports
NA
Notes:
NA