Some Country Examples

Some Country Examples

16. Many developing country governments have programs in place to improve PFM in general, and supporting information systems in particular. Here we will describe some of these initiatives, on which the World Bank and IMF have cooperated, to see how they fit in terms of the overall information and systems architectures for PFM described above and examine the implementation strategies adopted.

(i) Public Financial Management Systems in Bolivia

Computerized information systems, together with administrative reform, regulatory reform, civil service reform, and human resource development, are one of the instruments being used by the government of Bolivia since 1987 to improve the effectiveness of its public sector over a 10 to 1 5 year period.

Starting in 1987, with financing from numerous ODA agencies (UNDP, USAID, IDB, bilateral assistance from Switzerland and Italy, and the IDA), the government has been developing several systems to modernize fiscal management according to landmark legislation (SAFCO Law) creating a decentralized financial administration and control system in the country:

(a) Tax Administration Systems, addressing primarily the taxpayer registration and tax collection functions. These systems have been quite successful, and measurable expansion of both the taxpayer and the revenue bases can be attributed at least in part to them. However, they use technology incompatible with that of other PFM systems, and produce incomplete data flows to the accounting system.

(b) Systems for Public Investment Program Budgeting, Management and Financing. These have had varying degrees of success. The investment budgeting system has been the most successful, and since 1988, produced the country's investment budget submission to the legislature. This system, however, has weak links to external debt management, macro-economic policy formulation, and government accounting. The investment program management system has been less successful, due mainly to lack of efficient data flows with sector ministries and decentralized implementing organizations. Finally, the investment financing system, which in the case of Bolivia would be particularly complex because of the multiplicity of ODA sources, has yet to be developed in full.

(c) Emergency Program Cash Management System. Severe fiscal austerity being a major part of Bolivia's successful stabilization program in 1986, a system to track expenses and cash throughout the public sector was an indispensable tool. This system was successfully developed, and for over three years it was the government's main fiscal management instrument. Since it was developed under crisis conditions, however, the system unfortunately lacked data compatibility with other PFM systems.

(d) Integrated Government Accounting and Payment System. PFM in Bolivia has been substantially improved already through the installation of this rather successful system. Indepth analysis preceded its development that standardized budgeting, accounting procedures, and coding standards country-wide. The system has not been extended to sector agencies and decentralized institutions, however, and has a number of technical problems, among them its confinement to proprietary technology and its weak links to other PFM systems.

(e) Expense Budget Formulation and Evaluation Systems. These are the weakest in the suite of PFM systems. Although coding standards and administrative procedures were rationalized, the actual systems support has been reduced to function-poor software for budget formulation. Implementing agencies do not have access to the system, and MOF staff must travel extensively to help them with budget formulation. Systems support for budget evaluation is even weaker, and devoid of working linkages with investment budget monitoring.

In hindsight, it is possible to conclude that a strategic perspective for PFM systems in Bolivia would have contributed greatly to avoid the following problems:

(a) Inability to Transfer Information Across Systems. An information architecture would have allowed incremental development of modules while ensuring that data structures were compatible across systems.

(b) Incompatible and Proprietary Technology. With a technology architecture at hand, the government would have had a decision framework for hardware and software choices made for the various systems, and the isolation of the accounting system into proprietary hardware and software could have been avoided. The current four different and incompatible technical environments would have been reduced, and the government would have made the most of the knowledge of scarce technical staff through transfer across core organizations.

(c) Difficult System Expansion to Decentralized Implementing Agencies. The clear identification of information requirements and flows provided by an information architecture would have resulted in systems that from the beginning would have pursued the fulfillment of those requirements and flows as a central objective.

(d) Weak IT Support Organizations. None of the core agencies involved has IT support organizations and policies commensurate with the importance of the information systems to be developed and maintained. A good strategic plan would have pointed this out and proposed timely remedial action.

This is not to deny the benefits of Bolivia's PFM systems efforts. The new systems streamline, regularize, and speed up key functional areas of government. Additionally, they provide key support to other instruments of public sector reform:

Regulatory Reform is supported through built-in system design features implementing many of the internal control, accounting, and financial management regulations of the SAFCO Law; and Administrative Reform is supported through the modernization of administrative practices required by the new systems. Decentralized program budgeting a major administrative reform in Bolivia was introduced concurrently, and supported by, the new system.

(ii) Financial and Program Management Improvement Project in Jamaica

This project was approved in June 1991. The objectives are to support the efforts of government to improve the management of the financial and human resources of the country. The project aims to develop the methodology and procedures for the preparation of an informative budget by defining clearly the objectives and expenditures of government programs, projects, and activities. The program budget would help in clearly defining priorities in allocating scarce funds among competing demands. The project is assisting the government in revising the budget model in use to program budgeting, designing a standard object code, and adapting the present accounting, cash management, and financial reporting systems to the revised budget model. Particular emphasis would be given to the improvement, timely and accurate compilation, and consolidation of accounts by the spending agencies, and the preparation of the aggregate government accounts by the MOF. The project is also strengthening the personnel management processes of the Ministry of Public Service.

The informatics component of the project is assisting the government to implement:

(a) a Financial Management Information System (FMIS) for the MOF and line ministries to support the budgeting accounting, cash management, and financial reporting processes; and

(b) a related Human Resources Management Information System (HRMIS) to assist the Ministry of Public Service in the management of civil servants.

The implementation of these systems would provide the MOF, the Ministry of Public Service, and the line ministries with the tools necessary to manage the financial and human resources at their disposal.

In terms of the systems architecture mentioned earlier, this project is focusing on the following areas:

(a) the FMIS which is essentially a system to assist the government in the budgeting, monitoring, and accounting areas; and

(b) the HRMIS that will assist the government in the areas of human resource management.

In terms of implementation issues, earlier experience gained in Jamaica indicated that the project would need to be limited in scope and implemented in a phased manner. It was, therefore, decided that to start with, the project would be limited to the implementation of systems at 11 major ministries. It was also noticed that government agencies prefer to have control over the data they generate and that the telecommunication network cannot be relied on exclusively for the transfer of data between line agencies and central ministries. A highly centralized mainframe-based system located at the MOF and connected via the telecommunication network would therefore be unsuitable in the context of Jamaica. It was decided that computing power would need to be distributed to various government organizational units where the systems are used and could not be restricted to a central site. The FMIS is accordingly being implemented on a series of microcomputer-based networks located at the MOF and line agencies. The computers located at the line agencies would perform all necessary local processing. Data would be transferred to the MOF using the telecommunications systems to the extent feasible. When this is not possible, the data would be transferred periodically on computer-compatible media.

The project intends to use packaged software written using modern fourth generation language application-development tools for implementation of the systems. To overcome the shortage of technical staff required for the  implementation and support of the systems, a pool of computer experts has been set up under the project. This pool is staffed by Jamaican computer professionals and assisted by the expatriate consultants employed under the project. It is hoped that close interaction between the expatriate consultants and local specialists would also encourage transfer of skills to local staff.

To get an idea of the order of magnitude of the effort, it maybe mentioned that the project envisages systems implementation to be completed over a three to four year period and the computer component costs are estimated to be about US$6.2 million (of this amount, about $3.7 million is for hardware and software, and $2.5 million for consulting services) out of a total project cost of some US$15.5 million).

In addition to the above initiatives, some other information systems have been put in place under separate projects. At least two debt management systems are in operation; one each in the Central Bank and the Office of the Accountant General. This has resulted in the inevitable problems associated with duplicated systems (for example, numbers from the two systems not agreeing with each other). An elaborate set of systems and associated hardware has been put in place to support several areas in tax administration. The system services the tax administration area quite well. However, some problems have been reported by the MOF of not obtaining adequate data from these systems. It is felt that development of an information and systems architecture at the outset would have partly avoided some of these problems by enabling the systems components to be designed to be compatible with each other and fulfill the government information requirements.