Papua New Guinea needs to address its recent history of poor public financial management (PFM)

BRISBANE, Australia - Jan. 11, 2016 - PRLog -- Good PFM is an essential component of policy development, service and project implementation, obtaining value-for-money, promoting economic development, fighting corruption and providing public accountability.

The PEFA Secretariat (and not the PNG government) published the latest PNG PFM assessment report in October 2015 prepared by a team of IMF officials. PFMConnect, a public financial management consultancy, has prepared a blog discussing the issues raised by this latest PEFA assessment.

The PEFA methodology uses a seven step scoring system ranging from A to D (with intermediate scores). Scores were determined using a new ‘testing’ methodology and the current 2011 methodology.

PNG’s poor PFM performance

The scores reported for the various PFM performance indicators (PIs) used to assess a wide range of PFM activities are quite disappointing. The PNG government had sought an outcome in this assessment where A and B scores would represent 50% of PI scores compared with 32% in the previous 2009 assessment but in the latest assessment A and B scores amounted to only 18% on a comparable basis. PNG’s overall PFM performance is weaker than some other developing countries with lower development indicators.

It is evident that no significant progress has been made in most PFM activities at government level over the past seven years. Numerous essential and basic PFM practices are still not entrenched in spite of the government receiving a significant amount of technical assistance in the latter period.

Improving the PNG government’s PFM

The IMF’s assessment team recommended a series of PFM reform measures in the PEFA assessment report. These have been subsequently used by the IMF and PNG government officials in the development of a “road map” for PFM reforms. Unfortunately, neither earlier PEFA assessments nor the new PFM road map have been published by the PNG government, substantially limiting scrutiny by development partner taxpayers and the people of PNG. It is important that all future work in relation to the development of PNG be undertaken in a much more transparent manner.

Given the relative failure of reform activity to date PFMConnect would like to see an open assessment undertaken of the PFM reform challenges and their root causes involving the full range of stakeholders. This should result in a set of objectives, reform processes, expected performance levels and timescales designed to deliver feasible and desirable improvements in administrative practice, governance and political relationships to achieve an acceptable minimum overall PFM standard. We consider that it is essential that such a response should be actively supported by the PNG Government and agreed and coordinated across the broad swathe of international partners that have traditionally provided unstinting support. We seriously question whether continued support is justified without such a rigorous approach to future reform efforts.

Read PFMConnect’s blog to get the full picture. The blog is now available at http://blog-pfmconnect.com/ whilst a similar version is available on the Devpolicy Blog from the Development Policy Centre based at the Australian National University’s Crawford School of Public Policy.

Note: PFMConnect is a consultancydesigned to support the development of good standards of public financial management in order to improve public service delivery, exend public accountability, encourage local business development and combat corruption. Its work is principally centred on developing countries,working in cooperation with goverments and other stakeholders.

For additional information on PFMConnect, please visit our website or contact david.fellows@pfmconnect.com or john.leonardo@pfmconnect.com (Ph: 61 (0) 7 38903086,Skype: johnleoroaming).