(Published in l'express of the 15th April 2024)
Year in, year out , the same damning audit reports - Why is there no improvement in our Public Finance Management ?
The National Audit Office's Report highlights again and again that wastage and unnecessary expenditures have continued unabated. Though this year’s report seems to a milder one, not of the calibre of a Romoa’s report , it still points out the usual stuff - wastage and unnecessary expenditures, the deficiencies in the management of government capital projects, the lack of proper coordination amongst authorities engaged in procurement and project management, the wasteful capital investments in unprofitable govt institutions, the lack of financial transparency in the management of the Special Funds.
That’s scandalous ; at a moment where the rise in the cost of living is wreaking havoc on households’ budgets , our Ministries and Departments and State-owned enterprises are being profligate with taxpayers’ money. As significant sums are spent , we are not getting value for money. Our Ministries and Government Departments are not ensuring that public funds are spent economically, efficiently and effectively with a view to ensuring that expected outcomes are achieved.
Why is it that our efforts- to reduce bureaucratic inefficiencies, increase overall productivity and improve service delivery and respond proactively to the expectations of citizens and businesses, while acquiring the flexibility and agility to take and implement decisions rapidly- are not bearing fruits ?
We have written profusely on that (see my blog at http://rchand00.blogspot.com), this time let’s see what the experts have to say !
The Public Expenditure Financial Accountability (PEFA) assessment report, the AfDB’s 2020 Fiduciary Risk Assessment and a recent (Oct 2023)World Bank report titled “Mauritius Public Expenditure Review :From Resilience to Performance” have critically examined the Public Finance Management (PFM) of our budgetary system and proposed some crucial reforms. These are summarised below.
@What’s wrong with our budgetary system ?
There are many gaps in our PFM due to stalled reform efforts (by the MSM govt) and insufficient plans for new reforms.
a. In 2015, MOFED leadership returned to a more familiar input-based budgeting system, limiting the government’s ability to reallocate resources to priority policy objectives while also limiting the performance information presented to the public and National Assembly
b. The government lacks adequately skilled staff in the areas of procurement, project costing, and project development, which has been a factor in causing delays in project implementation, as well as inconsistent or inaccurate project costing. The creation of the Public Investment Monitoring Agency (PIMA) has failed in overcoming these flaws and inadequacies. For e.g, there is a lack of proper coordination among authorities on procurement and project management; projects are not properly planned at design stage resulting in delays, cancellation and additional works; inadequate market surveys and proper database that are vital for cost estimation and preparation of specifications; failure to assess financial and operational capacity of contractors, and a lack of proper project monitoring to ensure works are completed within their budgets, on schedule, and in compliance with relevant requirements.
c. There is no clear institutional framework for planning. Sector strategies are either absent or incomplete. Many of these strategies lack a strong implementation focus, and they often fail to link budgeting and performance management, which prevents them from serving as statements of intent to influence and shape the government’s policy and financial decisions.
d.The introduction of a Medium-Term Expenditure Framework (MTEF) has had little impact because of the lack of costed strategies to support it
e. The lack a connection between the budget, expenditures, and policy goals persists.
f. Performance monitoring and evaluation are not practiced systematically, and this leaves limited room for making evidence-based decisions and taking corrective action to achieve national and sector objectives. A weak Public Investment Monitoring(PIM) system, which struggles with budget execution, compounds these challenges.
g. The budget is becoming more rigid and fragmented, and expenditure execution rates are falling. Expenditure rigidity leaves little scope to reallocate public resources in response to changing policy priorities and economic conditions
@The proposed reforms :
Policy coordination, planning, and monitoring are core challenges for improving public finance and investment management in Mauritius.
a. Ensure systematic monitoring and evaluation and integrating evaluation into the decision-making process will help Mauritius implement evidence-based policies and corrective actions. More need to be done to link the budget system closer to the policy goals.
b. A stronger framework for public financial management, and especially public investment management, could improve the effectiveness of public spending and enhance service delivery.
c. Strengthen the monitoring and evaluation framework to improve linkages between budgets, spending, and outcomes, and resume the use of program-based budgeting.
d. Develop outcome monitoring and evaluation linked to both budget and planning processes; (iii) improving the efficiency of public investment by building project management skills and expanding climate adaptation policies; and (iv) creating a flexible, market-friendly planning process that supports engagement with the private sector and enables use of PPPs.
e. Minimize the use of special funds by developing more stringent criteria for their creation and closure. Additionally, appropriately consolidate any existing special funds into the general budget by considering as expenditures only the actual amounts spent by special funds, rather than the amounts transferred to them.
This regime has delivered little in the way of reforms. Budgetary reforms have not only been a forgotten agenda...they have also rolled back on essential elements of a more modern PFM.
Genuine reforms are not in the interest of a corrupt bureaucracy and a politicised establishment because they are likely to be made answerable for acts that are against the public interest or the greater good of the nation , particularly when public funds are involved.
