PEFA SUCCESS STORY
The Government of Liberia’s ambitious development strategy ‘Agenda for Transformation’ identifies effective management of public finances as one the key pillars of development, along with rebuilding of the country's infrastructure, establishing the rule of law, and economic recovery and growth. To strengthen its public financial management (PFM) system, the government has designed a PFM reform strategy with responsible ministries and agencies undertaking the management of PFM action plans.
Liberia has been using PEFA assessments to streamline its PFM reform program. The first PEFA assessment of Liberia’s PFM performance was carried out in 2007, followed by the IMF led assessment in 2012. In September 2013, following the 2012 assessment, the government together with its development partners reviewed the PFM reform priorities and readjusted them in line with PEFA results. To make the reform program long-term focused, the government decided to carry out a PEFA self-assessment in 2014. This also allowed the government to track the progress made since the last assessment in 2012.
“PEFA self-assessment helped us gather evidence-based information across different aspects of PFM to pinpoint key challenges as well to understand where we have made progress. These created important learning loops for us that we were able to feed back into the design of our PFM reform program,” explained Bernard Jappah, Public Financial Management Reforms Coordinator at the Ministry of Finance and Development Planning of the Republic of Liberia.
The results of the self-assessment showed significant improvements compared to the 2012 assessment. The positive results had been achieved as a consequence of the continued strong political commitment to the PFM reform strategy and the determination in implementing reforms despite the human resource constraints coupled with scarce economic resources.
Importantly, the self-assessment also revealed what PFM areas need to be strengthened. These included internal controls, revenue mobilization, medium-term budgeting, cash management, commitment controls, and fiscal decentralization. Consequently, the government has made important steps in reforming its PFM system in line with the assessment findings, including rolling-out the IFMIS to additional ministries and agencies, and strengthening the external audit performance.
“Doing a PEFA self-assessment meant we had to train our staff not only in PEFA methodology but consequently also in different aspects of PFM. This has led to increased staff capacities across different PFM institutions,” said Herbert Soper, Financial Management Specialist at the PFM Reforms Coordination Unit at the Ministry. “Focusing on staff training has helped us develop technically proficient staff and eased the process of PFM reforms”, added Mr. Jappah.
“PEFA has given us a realistic check of how we have been performing and where the areas of PFM improvement remain,” said Mr. Jappah and added: “You do not know about the leakages in your pipeline until you pour water into it. And the same is with the PFM system. Until you perform a diagnostics of your system you cannot plan how you are going to improve it.”
“Another interesting feature of the PEFA assessment process was that it created peer pressure among different PFM stakeholders based on the scores received. That served as a motivation to improve and prioritize our work,” stressed Mr. Soper.
New PEFA assessment will be carried out in Liberia in 2016, funded through the IPFMRP and with the guidance of the IMF Fiscal Affairs Department staff. The assessment results will be used to identify the areas of improvement and update the PFM reform strategy and action plan(s) that expire in June 2016.