The road to establishing IJA’s Public Financial Management Framework

In February 2014, the Stability Fund began providing technical assistance to the Interim Jubba Administration (IJA) to establish a sound Public Financial Management (PFM) framework and the necessary infrastructure for financial operations to commence by July 2014. This aggressive timeframe was met largely due to the commitment of the IJA leadership to implementing superior public financial management systems.

The IJA’s enactment of the Public Financial Management Decree 2014 recognized the Minister and the Ministry of Finance (MoF) as the custodian of IJA financial matters and a legal framework for PFM. Expenditure management procedures and a robust commercial Financial Management Information System (FMIS) have been developed for use by the MoF and all other government bodies. Working closely with Stability Fund, the IJA has also completed an initial review of subnational government revenue and has developed a decree to formalize revenue raising.

In September 2014, the Stability Fund delivered a two week seminar for 25 IJA officials to introduce them to the PFM framework and procedures.  This included staff from line ministries and agencies for the first week, followed by more intensive training for 12 newly-recruited Ministry of Finance staff during the second week.  By the end of the seminar, through a practical, learning-by-doing approach to capacity building, the FMIS was fully operational and the recently-approved Budget for the second half of the 2014 fiscal year had been entered into the system.

The next step, as envisaged in the 2014 Budget, was to formalize responsibility for revenue collection in a new Revenue Administration (The IJARA). A workshop to outline the strategic plan for establishing the IJARA was completed in Kismayo in October. Banking arrangements have been established with Dahabshiil Bank, providing safe cash storage, deposit and withdrawal services, and full transaction reporting.

The IJA’s system features a Budget Classification Structure (BCS) that allows the MoF to control and account for all revenues and expenditures based on the IMF Government Finance Statistics (GFS) framework.  This particularly applies to donor funding provided directly to the IJA, which can be uniquely identified. The use of the donor funds can accordingly be tracked and reported in line with International Public Sector Accounting Standards (IPSAS).

In recent months, the MoF has continued to progress implementation of its PFM framework, with limited technical assistance and support from the Stability Fund. The ministry continues to collect revenue, which is now all deposited in the IJA’s Treasury Single Account (TSA) in Dahabshiil Bank. While a permanent ministry building is being constructed, financed by the Stability Fund, the Minister is operating from secure temporary offices. With just 10 laptops and a reliable internet connection the budget department is now finalising the FY 2015 budget.

The Stability Fund is proud to have had the opportunity to work with the IJA on establishing its PFM framework. The degree of commitment and ownership shown by the IJA, from the President to data entry clerks, bodes well for the future of an administration that will thrive by embracing the principles of financial transparency and accountability, and delivering public services in return for government revenues.