Speech by UNDP Country Director, Balázs Horváth, South Sudan Integrated Fiduciary Assessment Dissemination Workshop, 7 February 2013 - Juba, South Sudan
Honourable Minister of Finance and Economic Planning, Kosti Manibe Ngai,
Honourable State Ministers of Finance,
Distinguished Senior Government Officials,
My Colleagues from the World Bank and the African Development Bank,
Representatives of the international development community
Ladies and Gentlemen,
First I would like to thank my colleagues from the World Bank for inviting me to participate in this discussion on the findings from the South Sudan Integrated Fiduciary Assessment. This assessment was conducted jointly with the African Development Bank, the World Bank and UNDP in June and July of 2011.
The objectives of the assessment were, one, to develop a shared understanding of the current state of the Planning and Financial management and procurement systems in the country. And two, to identify the strengths and weaknesses so fiduciary risks associated with the use of public funds can be assessed, mitigated, and managed.
Although, it has been some time since this assessment, many of the findings and recommendations are still relevant. The study found:
- That upstream PFM functions have improved considerably since 2005 and the budgets are prepared in alignment with Government policy
- The introduction of the Financial Management Information System, Freebalance, has brought significant benefits in terms of faster processing time, increased accuracy of data, better tracking of payment requests against budget provisions, and lowered the 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.
- Though still in their infancy, progress is being made in the strengthening of internal and external audit systems
However, as you will note during the presentation, significant challenges still remain, including:
- The 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.
- The legal framework for public procurement is rudimentary and the public procurement systems lack transparency.
- Major weaknesses exist throughout the procurement chain, which can invite corrupt practices.
As a nominee for the "New Deal for Engagement in Fragile States”, South Sudan, members of the G7+ and development partners have committed to FOCUS on new ways of engaging fragile states and to build mutual TRUST by providing aid and managing resources more effectively. A major component of these “FOCUS” and “TRUST” principles is the “Use and Strengthening of systems”. 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.
However, before South Sudan gets to the stage where development partners start delivering aid in the form of budget support, there are other intermediate arrangements that can be put in place to use and strengthen country systems. These include Pooled Funds, Sector Investment Funds, and for us in the UN “Letters of Agreement” that give flexibility to Government in determining how donor funds are used. I hope this afternoon you will dedicate time to discuss how these arrangements can be appropriate given the current context.
I would also like to note, that you are not alone in this task of implement reform and building accountable financial systems. Since the CPA, UNDP and the development partners represented here, have partnered with Government to strengthen PFM systems at the national, state and county level. UNDP has provided technical assistance, equipment, and logistical support to MOFEP, the State Ministries of Finance, State Ministries of Local Government, Revenue Authorities and other relevant institutions. 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 mentoring, as well as structured classroom-based training. Recent project reviews have demonstrated the effectiveness of this approach – a daily presence within Government institutions providing on the job support.
Even though the effort to create credible and robust PFM systems will not be accomplished overnight, I have the confidence that South Sudan will get there. Let me reiterate that UNDP is committed to continue partnering with the Government and development partners. We will work to ensure that our strong presence in the ten states as well as our existing working relationship with the state governments are leveraged to demonstrate results and tangible impact. Together we will build a peaceful, democratic, just and peaceful South Sudan.