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September 25, 2012

Views from the Field No. 1 – AFRITAC South

Posted by Vijay Ramachandran and Jean-Luc Helis

AFS1
The PFM blog is launching a new series of “Views from the Field”, aimed at presenting the experience and views of PFM advisors and government officials working in developing countries and regions. We anticipate that the series will be of special interest to practitioners in the field.  The first post in the series is written by the two resident PFM Advisors in AFRITAC South (AFS): Vijay Ramachandran (VR) and Jean-Luc Helis (JLH).  AFS, based in Mauritius, is the IMF’s regional technical assistance center (RTAC) covering 12 countries in Southern Africa.  The countries use three different official languages—English, French, and Portuguese—which adds to the practical challenges of working in the region but also to the variety and richness of the working environment.

Vijay and Jean-Luc were interviewed recently by FAD’s Richard Allen (RA).

RA:  What are the main strengths and challenges of PFM in the region?

VR/JLH:  The region has focal points of excellence like South Africa and Mauritius which provide opportunities for peer-to-peer exchanges. AFS member countries are able to provide regular updates on rudimentary cash based revenue and expenditure information. Member countries are also able to appropriate annual budgets in accordance with constitutional provisions.  The main PFM challenges being addressed in the region are risks related to mineral and customs union revenues; legal frameworks that require updating; weak medium-term policy perspectives; obsolete and non-functional IT systems; fluctuating ownership of reforms;  and weak capacity for implementing reforms.

RA:  What is AFS’s strategy for PFM work in Southern Africa?  Are you giving some countries priority attention? 

VR/JLH: Based on the demand from member countries, AFS is focusing its PFM work on eight areas, namely: PFM reform strategy and action plan; PFM legal and regulatory frameworks; medium-term macro-fiscal and budget frameworks; commitment, cash, and expenditure management; ex-ante internal control procedures; accounting and financial reporting; and  regional harmonization of PFM reform practices. Limitation of time and manpower during the start-up period resulted in a further prioritization of activities to smaller countries in the region most urgently in need of assistance.

RA:  Is AFS trying to do certain things differently than other RTACs?

VR/JLH:  AFS is instituting a capacity building program aimed to provide opportunities for officials of the AFS member countries (who are not on the IMF roster of experts) to participate in the center’s technical assistance (TA) missions as trainees. Currently three officials have been selected in the PFM area and will join as trainees in upcoming PFM missions. AFS has also followed the practice, initiated by AFE, of using South African Treasury PFM staff as resource persons in seminars. Efforts are being made to place member country staff on secondment with the South African Treasury for hands-on experience. During its first year of existence AFS has agreed with donors and IMF HQ on a results-based reporting framework in which the measurement of progress is linked mainly to internationally accepted PEFA indicators. AFS’s first annual report was presented in this format.

RA:  What have been your main achievements in the last 18 months?

VR/JLH:  Since its establishment AFS has provided tangible TA products to eleven of the twelve member countries. PFM reform strategies have been updated for Angola, Comoros, Mauritius, Namibia, and Swaziland. PFM legal and regulatory frameworks are at an advanced stage of finalization for Mauritius, Seychelles, Swaziland and Zimbabwe. Ownership of, and commitment to, the proposed frameworks and strategies was facilitated by an inclusive approach to the drafting of proposals and engagement with a wide range of stakeholders. TA provided in the area of medium-term macro-fiscal and budget frameworks included development of an implementation strategy (Angola); strengthening linkages with the annual budget process (Lesotho and Mozambique); and recommendations on the structure and costing of spending programs (Namibia). AFS assistance to Botswana, Comoros, and Mozambique on cash management included capacity building workshops and proposals for a detailed cash management manual. Assistance was provided to improve ex-ante control procedures to manage arrears (Lesotho); manage commitments (Comoros, Zambia); improve the structure and costing of programs (Namibia, Mozambique). Accounting and reporting reforms were facilitated in Mauritius, Seychelles, Swaziland, and Zimbabwe. An AFS workshop on fiscal institutions promoted a regional approach towards managing fiscal risks.

RA:  What have been the challenges experienced in setting up a new operation in Mauritius?

VR/JLH:  With efficient support from the government of Mauritius the administrative and logistical support for TA operations moved into place very quickly. Current visa arrangements sometimes hamper the expeditious delivery of TA. Suggestions have been made to the member countries to consider issuing longer duration multiple entry visas to the long term experts based in Mauritius. AFS has, with some success, been able to coordinate PFM TA activities in member countries with donors to avoid overlap and to complement mutual efforts, but these coordination arrangements could be taken further. PFM advisors have been chosen with language skills in the three main languages in the region, namely, English, French, and Portuguese.

RA:  How do you coordinate your work program with HQ?  Does this create any challenges?

VR/JLH:  Like other RTACs the AFS technical delivery model combines strategic TA advice from HQ with local expertise and on-the-ground capacity building. Coordination between the AFS PFM work program and that of HQ is ensured through the RAP (Resource Allocation Plan) which comprises HQ missions and AFS missions. After some initial hiccups the coordination is working well and the IT systems supporting RAP are now well understood by AFS assistants. There are still some delays related to the quality control processes in HQ but these are being resolved through on-going dialogue.

RA:  What are AFS’s plans for PFM work in the remainder of FY13 and FY14?

VR/JLH:  Donor commitment to PFM reform in the region has facilitated the hiring of an additional Portuguese speaking PFM advisor with expertise in macro-fiscal issues. This will enable AFS to provide much needed TA to member countries on macroeconomic analysis and fiscal risks. AFS is also planning TA in the management of risks associated with the inflow of mineral revenues which is a concern of many countries in the region. A seminar has been scheduled for early 2013 to address substantial gaps in the understanding of accounting and reporting implications of performance-based budgeting (PBB). Finally, AFS is working on developing generic products such as a cash management manual, a manual on PBB, and guidance on charts of accounts adapted to the needs of member countries. This work will facilitate regional harmonization and peer-to-peer learning.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy. 

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