The six PFM directives that have been modernized are the following:
- The directive on annual budget laws (Directive no. 05/97/CM/UEMOA) enacted in 1997 to fix the fundamental rules applicable in all the States of the Union, relating to the nature, content and procedures for the preparation, presentation and approval of annual budget laws, as well as the rules governing the execution and the control of State budgets;
- The directive on public accounting regulation (Directive no. 06/97/CM/UEMOA) was also enacted in 1997. It aimed to fix the fundamental rules governing accounting of monies, values and goods belonging to the State, the national and local public autonomous agencies, and lower levels of government, as well as any other structure that the law subjects to public accounting rules; it is known as the general regulation on public accounting;
- The directive on budget classification (Directive no.04/98/CM/UEMOA) was enacted in 1998 to fix the fundamental principles for the presentation of the operations of the State budget (composed of the general budget, annexed budgets and treasury special accounts);
- The directive on the chart of accounts (Directive no. 05/98/CM/UEMOA) was also enacted in 1998 to specify the accounting framework to be used in preparing accounts for the State financial operations;
- The directive on the summary fiscal table (known in French as TOFE=tableau des opérations financières de l’État) has been enacted in 1999 (Directive no. 06/98/CM/UEMOA); and
- The directive on fiscal transparency. This directive was enacted in 2000.
The six PFM directives have not been fully implemented in any of the countries. Many member States could not, or did not, transpose the directives into national law. Those that succeeded in adopting national laws did not fully implement them due, in part, to lack of political will. The initial directives themselves suffered from certain flaws: inconsistencies within and between the directives, excessive detail, obsolescence of several provisions, and omissions. In 1999 (soon after their enactment) five directives were amended to improve consistency. In addition, the main influence on key elements of the directives has undergone significant modification,2 rendering most provisions in the directives out of date and distant from good international practice.
The IMF’s Fiscal Affairs Department (FAD) has been heavily involved in providing technical assistance (TA) to the WAEMU Commission to review the directives.3 In particular, FAD participated in workshops and Monitoring Committee4 meetings during 2004–05. On the basis of a review of WAEMU PFM directives, FAD indicated the need for their complete overhaul. The need to revise the directives was acknowledged by the WAEMU Commission in 2004 and subsequently endorsed by the Monitoring Committee in 2005. The process of revision initially started in 2005, with attempts to revise the budget nomenclature and the fiscal summary table (TOFE). After a hiatus, the revision process resumed in early 2008. The aim was to prepare new directives that would promote a modern PFM system characterized by transparency, performance, stability and coherence.
At the Technical Committee (TC) meeting of February 2008 in Ouagadougou5 to re-launch the revision process, all participants agreed on the following objectives
Overhaul the complete set of directives, including the directive on transparency. The rewriting exercise would, in addition to the correction of identified inconsistencies and omissions, allow both a modernization of the PFM system and a reorganization of the directives. The new directives would emphasize the principles for good governance, including for budgetary policy, discipline and sustainability. All six directives would be revised together so as to form a high-quality, consistent and modern system of directives, stable over time and much closer to international norms and/or good practice. Leverage the directives to improve multilateral surveillance, in particular under the Union’s 1999 “Pact of Convergence, Stability, Growth, and Solidarity”. The new directives will cover the general government sector, as defined in the IMF’s Government Finance Statistics Manual 2001. The summary fiscal tables used for the WAEMU surveillance will progressively be extended to the general government sector. Incorporate modern PFM concepts and techniques under the overarching priority of ensuring the security of PFM procedures. The new directives would recommend a approach of gradually phasing in of reforms and include appropriate sequencing, for example for introducing program budgeting. It will also incorporate rules for financial management of PPPs and the introduction of medium-term budget frameworks. The transparency directive would be revised to be consistent with FAD’s revised Code of Good Practices on Fiscal Transparency. Organize the directives in a consistent architecture. The WAEMU Commission was keen to keep the directives’ current names in order to facilitate their adoption, but agreed to reshape their content and to use: (1) the transparency directive as the source of inspiration for the other directives to promote transparency and good governance; and (2) the “budget law” directive as the umbrella directive defining fundamental rules and principles, with the other four directives being more technical and specific on implementation issues. From February 2008 to May 2009, six FAD TA missions assisted the WAEMU Commission and MC in revising the Union’s six PFM directives. This happened through Technical Committee meetings and Monitoring Committee workshops in Ouagadougou, Bamako and Abidjan. The new directive on transparency was adopted by the WAEMU Council of Ministers on March 2009 and the remaining five new directives were adopted in June 2009.
Modernization has been an overarching priority in revising the directives. The new directives incorporate modern PFM concepts and techniques such as program budgeting, medium-term budget and expenditure frameworks (MTBF/MTEF), accrual accounting, delegation of the minister of finance’s power to order payments to other ministers (déconcentration de l’ordonnancement), and a treasury single account system whose main operational account is at the Central Bank. They also contain such other features as:
- Strict limitations on carry-over of unspent appropriations. Only investment spending is eligible for carry-over and then under specific defined conditions;
- Strict limitation of “estimated” appropriations. “Estimated” appropriations can be exceeded without parliamentary approval. Henceforth, only appropriations for debt service payments will be “estimated” appropriations. All other appropriations will be cash-constrained: the limits in annual budget laws constitute maximum limits that can be committed and spent;
- Strict limitation of the complementary period, to one month, exclusively devoted to accounting adjustments;
- The classification of medium- and long-term borrowing, privatization receipts and reimbursement of loans and advances as a financing item in the budget law;
- The approval of MTBFs/MTEFs by the government;
- The introduction of budget orientation debates in Parliament (around mid-year) before the parliamentary budget session (later in the year). The aim of the debate is to discuss the government’s proposed medium term perspectives and policy options;
- The provision of information to Parliament on any changes in budget appropriations (“transfers”, “virements”, “décrets d’avance”) made by the government or the minister of finance;
- The possibility to rationalize the ex-ante expenditure control system. WAEMU member States may, through national legislation, change the spending control system. based on the quality of internal control and audit, to put in place by budget managers.
The member States will require an adequately-long transitional period for the full implementation of the new directives. Transitional periods of five to seven years are foreseen for their full implementation. In the meantime, TA is being sought from donors to help the WAEMU countries in implementing them. In this context, the WAEMU Commission is submitting to donors, a detailed action plan, including for capacity building and specific TA during the transitional period to allow for the successful implementation of the new directives by all member States.
All directives are available in French on the WAEMU website:
Transparency: Directive no. 01/2009/CM/UEMOA; March 27, 2009.
Law relating to annual budgets: Directive no. 06/2009/CM/UEMOA; June 26, 2009.
Accounting regulation: Directive no. 07/2009/CM/UEMOA; June 26, 2009.
Budget classification: Directive no. 08/2009/CM/UEMOA; June 26, 2009.
Chart of accounts: Directive no. 09/2009/CM/UEMOA; June 26, 2009.
Fiscal summary table (“TOFE”): Directive no. 10/2009/CM/UEMOA; June 26, 2009.
1 The eight member States are: Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo.
2 The main influences on the directives were (1) France’s 1959 organic budget ordonnance; (2) France’s 1962 decree on pubic accounting; and (3) the IMF’s Government Financial Statistics Manual (GFSM) of 1986.
3 The IMF’s Statistic Department (STA) also provided TA, notably through its resident advisor at AFRITAC-West for the directive on the Summary Fiscal Table.
4 The Monitoring Committee was created by the WAEMU Council of Ministers (CM) to supervise all matters related to the implementation of the PFM directives. It is composed of at least three (3) representatives from each of the eight member States and representatives of the WAEMU Commission. It reports to the CM.
5 The technical committee was composed of: (1) senior staff of the department in charge of fiscal affairs of the Commission, including the director of public finance and his staff; (2) representatives of the WAEMU audit institution (“Cour des Comptes”); (3) FAD mission team; (4) AFRITAC-West mission team; and (5) the local consultants hired by the Commission to prepare draft new directives.
