Since strengthening public financial management (PFM) is a key element of governance, the government is pursuing a PFM reform action program based on Public Expenditure and Financial Accountability (PEFA) findings, according to a recent report issued by World Bank.
The Public Financial Management Performance Report says that based on the 2010 PEFA assessment report, the government has prepared a time bound action plan to bring about improvements in the PFM framework leading to enhancement in quality of public spending.
As part of the governance agenda, strengthening PFM systems is an area of high priority for the government. Given that the government is a major controller of public resources, the government over the years has been making progress in PFM covering budget preparation and execution, control, reporting and oversight.
“There is increased legislative oversight on budget approval through a finance committee and of audit reports through a public accounts committee,” the report states.
Similar to other countries, the public at large has become more demanding about transparent and efficient government. With all strategic documents placing a great demand and importance for a transparent and efficient government and good governance, PFM within the country is expected to strengthen.
The government has taken two large initiatives, which include formation of a PFM-governance group (PFM-GG) and establishment of a PFM-multi-donor fund (PFM-MDF). These two initiatives will help the government to meet the objectives of finding sustained resources to carry out PFM reforms. With the formation of the PFM-GG, institutional arrangements are in place to spearhead the PFM reform agenda. PFM-GG, a national plan for Bhutan will coordinate resources required for the implementation of the action plan. Meanwhile, the PFM-MDF will help the government implement its PFM reform program in a coordinated and holistic way. This is done through a basket-funding mechanism by establishing an MDF, which provides a common platform for development partners to come together by pooling their resources and efforts in strengthening PFM in Bhutan.
According to the report, MDF plays a catalytic role in leveraging knowledge and financing by drawing on the best expertise in the field and working closely with a broad range of partners and stakeholders.
European Commission and Austrian Development Agency will initially fund the MDF through a Euro 4mn contribution.
The report also states that significant developments in decentralization have taken place in Bhutan. According to it, the introduction of the resource allocation formula for the budgeting of dzongkhags and gewogs has provided more clarity in terms of resource allocation and has facilitated local level planning.
Issues of Local Government (LG) rules and other guidelines also brought clarity to the roles of the local governance support.
However, weak human capacity in terms of numbers and skills and inadequate resource base of own-source revenue of the LGs and bureaucratic administrative systems hamper efficiency and effectiveness. These need to be addressed by the government.
Pema Seldon from Thimphu
