A PFM reform action plan is the result of a process that a country undertakes to ensure it clearly documents its PFM reform priorities, preferably based on objective diagnostic tools such as the PEFA, carefully sequences these and assigns a timeline for implementation and monitoring. While it is important that the plan be guided by diagnostic tools, it should also ensure that country specific issues are strongly reflected. The plan may change over time, reflecting the dynamic nature of the planning, implementation and review process.
A low rating in an area of PEFA is a good indicator of the need for improvement; however, the plan should also consider local issues such as capacity, corresponding reforms and sequencing of the reforms. The plan should be part of an overall process of managing the reform agenda, and developing the plan occurs at the beginning of the reform cycle. Implementing the plan with the support of development partners requires both review of the plan and monitoring of the results of the specific interventions.
A good country example is Saint Vincent and the Grenadines (STVG). It has been implementing a PFM Reform Action Plan since early 2009. The authorities developed the Plan based on a PEFA diagnostic process. The European Commission subsequently provided funding for the activities identified in the plan. STVG has a PFM Reform Steering Committee which includes the CARTAC PFM Advisor and convenes approximately quarterly to review progress made during the last quarter and to plan for interventions and actions during the next quarter and beyond. These meetings are guided by the planned activities and interventions defined for the next 12 months.
Since May 2009, STVG has improved its budget preparation process, reformed the operations of the Accountant General’s Department, established a more independent internal audit unit, reviewed its IT processes and state-owned enterprises, updated legislation, and convened a number of development activities for officials, including permanent secretaries.
To date, seven Caribbean countries have developed PFM Reform Action Plans, most with the support of CARTAC. The process document CARTAC uses to develop PFM Reform Action Plans is attached.
Download Developing a PFM Action Plan
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[1] CARTAC is a regional resource, based in Barbados, which provides technical assistance and training in core areas of economic and financial management at the request of its participating countries. CARTAC operates as a UNDP project with the International Monetary Fund serving as the executing agency. The priorities of CARTAC are set by a Steering Committee consisting of six representatives from the participating countries, four from the bilateral and multilateral agencies, and one each from CARICOM and the Caribbean Development Bank.
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