Posted by Jean-Luc Hélis
On October 14 and 15, 2008, on the heels of its Annual Meetings, the IMF hosted the second annual seminar and Annual General Assembly of AIST. The International Association of Public Treasury (AIST--its French acronym) is an international association of treasuries officially created in May 2007. Its objectives are as follows: (1) promoting the sharing of information and experience, and cooperation among public treasury services; (2) organizing conferences and seminars, and publishing reports, studies, and documents relating to treasury issues; and (3) developing partnerships with international organizations. The AIST is currently presided by Morocco (the president is M. Ibrahimi, General Treasurer of the Kingdom of Morocco) with the French Public Finance General Directorate holding the Secretariat. The membership is composed of treasuries from many French speaking countries in Africa, the Middle East, or Asia, but also includes treasuries from many other countries (e.g., Hungary, Ghana, Russia, Ukraine, etc.) Other countries, not yet members of the association, can be invited to participate to the AIST’s activities. The IMF, as well as the World Bank, are members.
The topic of the seminar—open to Fund and Bank staff—was the implementation of integrated financial management information system (IFMIS). It included presentations from various countries and recognized experts in that field, but also from AIST sponsors (IBM, Accenture, and Oracle.) A total of seventy participants representing 28 countries participated in the this year's seminar.
Here are links to some of the presentations: (Budget Transparency and the Role of IT in OECD Countries; Implementing Financial and Accounting Systems for Government; Setting Up for Success; Treasury and Budget Management Information System (TABMIS); Strategy & Implementation Approach for Treasury Solutions; Deployment of IT Systems; Integrated or Interfaced Systems-Latin American Countries Experiences; IT Modernization in HST: Stakes and Solutions; Implementing Financial Management Information System Projects: Selected Lessons from IFMIS Community of Practice).
Overall, the seminar was considered a success, as it provided a good opportunity to country participants to exchange their experience in designing and implementing an IFMIS, and key challenges being faced by them. The following main conclusions and messages were highlighted and discussed:
- Implementing an IFMIS has become a critical feature of public financial management reforms, in particular to: (i) respond to dynamic changes in fiscal conditions; ensure transparency and accountability; and demonstrate government results while delivering goods and services to the society; (ii) take into account the increasing amount and complexity of fiscal information governments use in their daily operations: from collecting revenues and execution expenditure supported by the budget to controlling assets and properties; from identifying program costs to evaluating sophisticated social and fiscal indicators to measure results in a performance-based budget context; and from controlling cash disbursement to manage public debt; and (iii) improve the quality and quantity of fiscal information, from which depend all efforts related to improving cash management; enlarging the coverage of the budget; introducing medium-term fiscal frameworks; producing information related to tax expenditure, fiscal risk and contingent liabilities; implementing program-based budget framework; and improving the quality of debt management. In principle, to deal with these issues the rational decision is to use a comprehensive computerized information system as a tool to support managing fiscal data.
- However, international experience in implementing government financial management information systems (IFMIS) varies immensely in terms of success and failure. One reason for failure is the authorities’ difficulty in fully understanding that the implementation of an IFMIS is a very complex, long, and costly process, and demands a large degree of organization. As a consequence of this misunderstanding, little effort has been dedicated to define and document in a previous stage the scope, objectives, and coverage of such an information system. Another reason for failure is internal and external pressure to have something in place as soon as possible without having a clear picture on the size and implications of the reform. This pressure reduces the time spent on planning, either because the authorities do not consider it necessary, or because they believe that successful solutions reached elsewhere can be easily transferred to their reality. In addition, the authorities are sometimes reluctant to develop “too transparent” tools, allowing in particular external bodies or institutions to have immediate information on the government’s activities. Limited institutional capacity to manage the complexities of IFMIS reforms (including change management), inappropriate sequencing of reforms, and difficulties with mobilizing internal and external financing to develop and maintain the system were also cited as major challenges.
- To successfully implement an IFMIS, the following main features of the reform would be necessary, if not sufficient:
- Prepare a detailed and comprehensive conceptual design. Essential to an effective integrated financial management information system is the preparation of a conceptual design that identifies the main needs and improvements (interfaced or integrated systems?) needed by the government as a whole. Time spent on conceptual design is a good investment.
- Be open minded and reform oriented. The implementation of an IFMIS is an excellent opportunity to review the business process and to improve the way government manages its resources. Don't automate bad practices—reform them to be in line with international best practice, but let the reforms of the PFM system lead the introduction of the IFMIS, not the other way around.
- Be realistic. Instead of having a Big Bang approach, experience shows that a phased implementation is better. It is more realistic in terms of the resources and capacity available.
- Be open to using systems already available in the market. There are advantages to starting a new system from scratch, but also many pitfalls. Many off-the-shelf systems are available in the market; evaluate them carefully before engaging the government in the development of complex in-house systems.
- Learn from international experience. Knowledge of successes and failures can help the government avoid the same mistakes and take advantage of good practices.
