03 May 2009

East Timor Planning & Financial Management Capacity Building Program

Mark as propaganda! 1. What is the Planning and Financial Management Capacity Building Program (PFMCBP) and why was it started? 2. What have been some of the benefits of the program? 3. How have the Timorese staff in the Ministry of Finance benefited from the project? 4. Who funds the program? 5. Who recruits the consultants?

1. What is the Planning and Financial Management Capacity Building Program (PFMCBP ) and why was it started?

The PFMCBP is a five-year technical assistance program designed to assist Timor-Leste’s Ministry of Finance strengthen its planning, budgeting, public expenditure management and revenue administration functions.

The Planning and Financial Management Capacity Building Program (PFMCBP) was approved in May 2006 at a time when Timor-Leste was experiencing renewed conflict and civil unrest, which resulted in the re-introduction of Australian security forces and displacement of over 100,000 people. It was designed to help the government of Timor-Leste use the country’s petroleum revenue to build social stability, deliver services to the people and to help restart economic growth and development.

2. What have been some of the benefits of the program?

The Planning and Financial Management Capacity Building Program (PFMCBP) has delivered significant results for Timor-Leste since its inception in May 2006. The government’s budget execution increased from US$76 million in 2005/06 to US$550 million in 2008.

This seven-fold increase in budget execution enabled the Government to carry out a successful program of political and social stabilization in 2008, in which most Internally Displaced Persons (IDPs) were resettled with cash grants, payments were made to the petitioners, pensions were introduced for veterans, the elderly and the disabled and a major increase was achieved in the sums of money spent on labor-intensive public works.

Within the Ministry of Finance, tax reform is underway, an overhaul of customs and procurement is in progress, and there are credible efforts to increase transparency in PFM. Treasury systems have been improved, including regular reconciliation and the introduction of a new payroll management system.

A large allocation of PFMCBP resources (US$5 million) is directed at professional development programs for Ministry staff, including basic literacy and numeracy, tertiary education and career work placements.

3. How have the Timorese staff in the Ministry of Finance benefited from the project?

The program in Timor-Leste has provided, and continues to provide, intensive on the job training to around seven hundred Timorese staff in the Ministry of Finance. This is being managed by the consultants.

The project has focused on formal skills development within the Ministry of Finance including training in information technology, budgeting, statistics; and numeracy, literacy and language skills.

Tailor-made courses are being designed at local tertiary institutions; secondments have been arranged; and the Ministry is in the process of selecting staff for graduate and undergraduate scholarships abroad.

Consultants are required to develop the skills of their Timorese counterparts and handover tasks incrementally as their skills rise. The long-term aim is for Timorese staff to undertake all functions in the Ministry of Finance, making consultants redundant, but until the skills and systems are in place the consultants will need to be used.

Already, this training and support has resulted in a marked improvement in financial management and budgetary efficiency.

But these impressive achievements should not give rise to complacency - the scale of the task cannot be underestimated. Almost half of all adults are illiterate. A large proportion of the population did not complete formal education. This is one of the long-term, and often under-estimated, costs of conflict and instability. While significant progress has been achieved in the years since independence, much work remains to be done. There is no quick fix.

4. Who funds the program?

Through the International Development Association (IDA), the World Bank granted $7m to the Government of Timor-Leste to help finance the PFMCBP.

In addition to the IDA grant, the five-year, Program is being co-financed through a multi-donor trust fund with contributions from Australia, New Zealand, Irish Aid, Norway and the European Commission.

5. Who recruits the consultants?

The Ministry of Finance is responsible for the selection and employment of consultants financed under the PFMCBP. The Ministry advertises for consultants locally and internationally to attract people with the right mix of skills and experience. The contracts are between the Ministry of Finance and the consultants. The World Bank is not a party to these contracts – we are responsible for project supervision – i.e. ensuring that consultant selection and contracting processes are carried out in accordance with World Bank guidelines.

The rate for consultants is set by the international market.


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