A Milestone in Public Financial Management
Planning and financial management is a critical core governance function that provides a system to prioritize development needs, allocate resources efficiently and strategize for the future. To strengthen the planning and financial management systems it is necessary to assess fiduciary and other risks associated with the use of public funds so they may be mitigated.
In July 2011, UNDP in partnership with the African Development Bank and World Bank conducted the South Sudan Integrated Fiduciary Assessment (SSIFA). The objectives of this assessment were to map the current public financial management system, identify the strengths and assess the weaknesses in the country’s public financial management and procurement systems. Mr. Jeremiah Matanga, Country Director, African Development Bank explained the significance, “[this assessment is] an important milestone in public financial management and procurement in South Sudan. It is an opportunity to engage with various stake holders to discuss the management of public finance and procurement in South Sudan.”
Key findings on the strengths from the SSIFA, included:
- Upstream PFM (planning and financial management) functions have improved considerably since 2005 and budgets are prepared in alignment with Government policy.
- The introduction of the Financial Management Information System, Freebalance, has brought significant benefits, including faster processing time, increased accuracy of data, better tracking of payment requests against budget provisions, and lower risk of diversion of funds.
- The introduction of the Electronic Payroll System in 2010 has reduced the risk of salaries being paid to individuals who are ineligible.
- Although nascent, progress is being made in the strengthening of internal and external audit systems.
However, the SSIFA found some significant challenges, including:
- Downstream PFM areas, such as budget execution, accounting and internal control systems remain significantly weak. Expenditures tend to be significantly different from the approved budgets and the constitutional and legal controls regarding changes to the budget are not followed.
- Internal control procedures governing the use of government property, declaration by spending agencies of non-tax revenue collections, and the reconciliation of bank account statements require significant improvement.
- A rudimentary legal framework for public procurement lacking in transparency.
- Major weaknesses throughout the procurement chain, which can invite corrupt practices.
The Honourable Kosti Manibe, Minister of Finance and Economic Planning, stated “the assessment sends an important signal to donor partners and potential investors regarding good governance and investing in South Sudan, a right step in the country’s new membership of international financial Institutions.” Mr. Balázs Horváth, Country Director UNDP expanded on the significance of this assessment, stating, “For development partners to feel comfortable in delivering aid in the form of budgetary support, it is critical for Government to honour its commitment and make the necessary reforms to build effective financial systems, ensure transparency, and address the risks during budget execution.”
Since the CPA, UNDP has partnered with Government to strengthen PFM systems at the national, state and county level by providing technical assistance, equipment, and logistical support to MOFEP, State Ministries of Finance, State Ministries of Local Government and State Revenue Authorities. Currently, UNDP has embedded over 50 planners, financial management specialists, local revenue specialists, and statisticians within the State Ministries of Finance and Local Government to provide immediate ‘gap filling’ of essential public service functions, conduct one-on-one coaching and mentoring, as well as structured classroom-based training.