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September 27, 2010

PIFMA 5: The Evolution of a Strategic Decision-Making Body

Posted by Suhas Joshi, PFM Resident Advisor at the IMF’s Pacific Financial Technical Assistance Center (PFTAC)

The Pacific Islands Financial Manager’s Association (PIFMA), which has recently held its 5th meeting (PIFMA 5) in Vanuatu, has become a major forum for debating and promoting sound public financial management and fiscal transparency in the Pacific region. PIFMA started in a small way with its first meeting in Suva in 2006. Over the years, meetings have been held in salubrious surroundings: the Cooks Islands (2007), Palau (2008), the Cooks again in 2009, and PIFMA 5 was held last month, at Vanuatu. PIFMA 5 is proof of the progress achieved over the last five years.

Over the last two years in particular, PIFMA’s nature has changed significantly. Where successive PIFMA meetings were held on specific topics in the past, an additional need was felt for a top level institution which would guide the PFM process in the Pacific. The 2007 PIFMA 3 decided that PIFMA should be linked to the Forum Economic Ministers (FEMM) meetings and participation would only be at the level of Finance Secretaries of the various member countries. This now allows PIFMA, which is held a day before the FEMM, to feed into the FEMM deliberations and seek guidance from it.

The 2009 PIFMA 4 meeting saw a significant increase in the level of participation, with the Finance Ministers of Tuvalu, Cook Islands, Kiribati, Palau, Samoa and Tuvalu being in attendance. The trend has continued this year, despite logistics dictating that PIFMA5 be held separately from the FEMM meeting, with the Finance Minister of Samoa actively participating.

Participating countries are now willingly paying a higher share of PIFMA costs, which shows increased ownership and the usefulness of PIFMA in the eyes of Pacific countries. Organizationally, PIFMA had initially operated with the PFTAC PFM Advisor acting as its Secretariat and PFTAC paying for all associated costs of organizing and holding PIFMA meetings. The 2009 PIFMA at Cooks changed this significantly and since then the costs met by PFTAC have been restricted only to accommodation and event holding costs. PIFMA 5 changed that even more and it was agreed that members would actively work with the PFTAC Advisor to organize future PIFMA meetings. This would mean that both the past PIFMA host, and the future host, would both nominate one person each to work with the PFTAC Advisor to organize the next PIFMA meeting. This will enable even greater ownership of the process and steadily pass on the administrative expertise to member countries.

On substance, PIFMA 5’s topic was the implementation of integrated financial management systems around the Pacific. Beginning in November 2008, PFTAC undertook a study of such systems in six countries around the Pacific. These studies identified several areas of mutual interest and ways in which members could learn from the experience of each other. I’ll come back to this in a future blog.

Donors have also found PIFMA a very useful vehicle for interacting with member countries. At the fourth PIFMA, the Australian Department of Finance and Deregulation made a presentation on the accrual accounting and budgeting process in their country. They especially emphasized the intensive human resource requirements of introducing these advance concepts in accounting and budgeting. The emphasis of the Australian presentation was on getting the fundamentals right before moving on to advanced concepts. This was found very useful by PIFMA members who have had a surfeit of advice to move in this direction, but with little domestic capacity to implement or sustain such reforms. To improve capacity, PIFMA is also developing a data base of local PFM experts who could be used in the region itself. Both at PIFMA 4 and 5, the ADB took the opportunity to talk to members about the significant Internal Audit program they embarked upon, following the seminal PFTAC study on Internal Audit in the Pacific region.

At PIFMA 5, the ADB also introduced the annual accounting awards. These awards aim to promote good accounting in the region and ADB has proposed a panel of three respected professionals who would evaluate the accounting reports submitted by countries.

PIFMA has also been represented at the Annual Asian Senior Budget Officials meeting for two years now. At the last Asian SBO meeting at Bangkok in February 2010, at the request of the members, the PFTAC PFM Advisor made a presentation on the work being undertaken in the PFM area around the Pacific.

Over last 5 years then, PIFMA has therefore emerged from a fledgling into a powerful strategic decision making and guidance body and an engine of PFM reform in the region, found useful both by members and by donors.

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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