Centre Coordinator Report: FY2017 Overview David Kloeden

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1 Centre Crdinatr Reprt: FY2017 Overview David Kleden

2 AGENDA OF COORDINATOR S PRESENTATION FY17 PROGRAM Overview Key prgram highlights and utcmes Resurce utilizatin and expected year-end utturn FY17 utturn versus recent years TA delivery by cuntry

3 AN OVERVIEW OF THE JUST PUBLISHED FY17 ANNUAL REPORT Appreciatin t Sctt Rger fr huge effrt t prepare the FY17 reprt befre and after his departure frm PFTAC Fllws frmat f past Annual Reprts TA delivery/plans measured in Persn Days: Fully accunts fr STX time Partly accunts fr LTX time, when n missin but nt at PFTAC managing TA FY18 wrkplan tentative, subject t change

4 FY17 HIGHLIGHTS: A YEAR OF TRANSITION End f Phase IV Octber 31, 2016: Remaining unspent funds apprx. US$480,000, may be less by April when accunts shuld be finalized. Dnrs may rll ver t Phase V if permitted, r will receive a pr-rata refund Start f Phase V Nvember 1, 2016, thrugh April 2022 (66 mnths): Year lng prcess t agree & articulate Phase V pririties, resurce needs, and targeted budget Release f the Prgram Dcument (final versin just published) Fund-raising effrts and results Staff changes: Change f crdinatr January/February 2017 Rtatin f experts with gaps befre arrival, 3 f 7 replaced: PFM, FSS and GFS 4

5 PFTAC FY17 EFFORTS ARE DELIVERING SUSTAINABLE PFM RESULTS PFM systems cntinue t imprve, cntributing t greater resilience and sustainability f public finance: Wide reginal PEFA cverage, with repeat assessments and FY17 new in FSM and Nauru With refrm pririties clear, emphasis nw t translate Actin Plans/Radmaps int results PEFA Assessment trends reflect mst imprvement in Treasury Related Functins Strnger Fiscal Reprting: Fiji, Sama, Tnga Budget Executin & Cntrl gains: FMIS in PNG; Internal Audit in Vanuatu

6 PFTAC FY17 EFFORTS ARE DELIVERING SUSTAINABLE PFM RESULTS PFM systems cntinue t imprve, cntributing t greater resilience and sustainability f public finance: Wide reginal PEFA cverage, with repeat assessments and FY17 new in FSM and Nauru With refrm pririties clear, emphasis nw t translate Actin Plans/Radmaps int results PEFA Assessment trends reflect mst imprvement in Treasury Related Functins Strnger Fiscal Reprting: Fiji, Sama, Tnga Budget Executin & Cntrl gains: FMIS in PNG; Internal Audit in Vanuatu Onging effrts t further imprve utcmes and PEFA scres: Legal Framewrks: Fiji Financial Management Act; Nauru Financial instructins; Slmn Islands: cash management regulatins Asset Management: Cash Management in PNG (CMU/bank recnciliatins) & Sama (EFT/cash frecasting); Timr-Leste first PIMA in Regin by FAD Managing Fiscal Risks, SOEs: Sama (strategy/risk assessment & reprting)

7 ..WITH IMPACTFUL REVENUE MOBILIZATION REFORMS Revenue mbilizatin effrts are prducing dividends: Mdern Revenue Legal Framewrks in Fiji: Incme Tax Act; Nauru: Bus. Tax; Tnga: better Rev. Admin Act; Vanuatu: ptins, impact and steps fr refrm Mre Effective Organizatinal & Gvernance arrangements: Mve frm Tax Type t Functinal structures in Palau, Tnga, Vanuatu Strengthened Taxpayer Services in Fiji, FMI, Kiribati, Palau, RMI Mre effective Risk Management in Fiji (HNWI), Sama & Tnga (cmpliance)

8 ..WITH IMPACTFUL REVENUE MOBILIZATION REFORMS Revenue mbilizatin effrts are prducing dividends: Mdern Revenue Legal Framewrks in Fiji: Incme Tax Act; Nauru: Bus. Tax; Tnga: better Rev. Admin Act; Vanuatu: ptins, impact and steps fr refrm Mre Effective Organizatinal & Gvernance arrangements: Mve frm Tax Type t Functinal structures in Palau, Tnga, Vanuatu Strengthened Taxpayer Service in Fiji, FMI, Kiribati, Palau, RMI Mre effective Risk Management in Fiji (HNWI), Sama & Tnga (cmpliance) wrking with reginal partners, and drawing n assessment tls: Reginal Cllabratin PITAA: supprted set-up and increasing selfsufficiency, strng partnership in training OCO: jint wrk n risk cmpliance imprvement Develpment partners: TADAT awareness Existing and newer tls: PITAA Baseline Assessment, TADAT in the future RA-FIT/ISORA FAD Feb 2017 Tax refrm Lessns Learned Assessment

9 AS FINANCIAL SECTOR VULNERABILITIES ARE TACKLED Financial systems are being strengthened t address vulnerabilities, with TA t enhance supervisr capacity and utilizatin f tls and framewrks: Risk Based Supervisin fcus, but starting t shift emphasis after gd prgress with credit unins (Fiji, PNG, Timr-Leste, Slmn Islands, Vanuatu) t bank supervisin Nnbank supprt expanding t insurance sectr Onsite examinatin TA t Sama and RMI, and wrking t address supervisry gap in Tuvalu with develpment partners Diagnstic and design TA fr Ck Islands in creating an innvative Supervisin Framewrk Jint wrkshps n disaster preparedness (AFSPC) and Financial Stability Indicatrs (IMF/STA)

10 AND STATISTICS UPDATED. Imprvements with statistical methdlgies, and push fr better disseminatin t enhance wide, timelier and cnsistent use f data: Natinal Accunts LTX supprt: using HIES (Sl Islands, Sama, Tkelau); better use f admin/tax data (Ck Islands, Sama, Tnga, Tuvalu); Quarterly GDP (Fiji); Rebasing cnstant price GDP t mre current year (Sama, Sl Islands); GDP by Expenditure (Kiribati, Tkelau); External Sectr: STX supprt limited t Ck Islands & PNG n BPM6 imprvements GFS supprt thrugh STX (till March 2017) t imprve cllectin and use f surce data and disseminatin f high frequency data: estimates in GFSM 2014 frmat (Ck Islands); cnslidated general gvernment (Fiji); Uncnslidated general gvernment (FSM, Palau, RMI); and ther supprt (PNG, Slmn Islands, and Timr-Leste)

11 LEADING TO BETTER MACROECONOMIC ANALYSIS AND FORECASTING Greater capacity and use f apprpriate mdels fr sund natinal macrecnmic analysis and prgramming is being supprted by PFTAC macrecnmic prgram: Fiji Financial Prgraming (FP) Framewrk, ne f the first macr/fiscal framewrks develped in the regin, upgrade (including Financial Stability Indicatrs) led by RBF with varius participating Fijian agencies (Statistics, Revenue, Ministries f Ecnmy and Industry, Trade & Turism). Marshall Islands Fiscal Mdel (MI-FM), fr medium-term budgeting, and analyzing the impact f sme grants terminating in 2023 under the Amended Cmpact Agreement. Mdel f the Vanuatu Ecnmy (MOVE), develped with RBV, prduces nminal and real GDP frecasts. Als a Revenue Frecasting Framewrk cnsistent with the MOVE ecnmic frecasts was develped with MFEM, it is an imprtant tl in mdeling pssible revenue refrm ptins. GDP Frecasting Wrkshpdelivered jintly with Statistics prgram Cmpiling GDP and Frecasting Revenues Wrkshpwith Statistics and Revenue prgrams

12 LESS, BUT STILL IMPORTANT REGIONAL TRAINING Sectr Partner Lcatin Tpic Duratin (Days) N Participants Participant Days Revenue PITAA Fiji Develp PITAA Strategic Plan Revenue Fiji Turism Cmpliance Wrkshp Revenue OCO Fiji Cmpliance Wrkshp FSS FAFSPC Palau Financial Supervisrs FSS/Stats IMF STA Fiji Cmpiling and Using FSIs Macr/ Stats Fiji Cmpiling and Frecasting GDP Macr/Stats / Revenue PFM US Grad Schl FSM Cmpiling GDP and Frecasting Revenue PASAI Slmn Islands Strengthening PFM Thrugh Risk-based auditing (Internal and External) IMF PFM/ Macr APD Fiji Building Resilience fr Natural Disasters Ttals: Significantly reduced prgram (ne third f nrmal year budget) Crss-sectr initiatives leverage sectr prgrams and bring different agency staff tgether Cllabratin with reginal partners(eg, PITAA, OCO, FAFSPC) supprts sustainability

13 FY17 OUTTURN Financial: Budget $6.82 m, Est. Outturn $4.43 m (65 percent), f which: Resident Advisrs (LTX): budget $2.59 m, utturn $1.47 m (57 percent) Shrt-Term Experts (STX): budget $1.83 m, utturn $1.53 m (84 percent) Travel: budget $0.56 m, utturn $0.32 m (57 percent) Wrkshps/seminars: budget $0.67 m, utturn $0.34 m (51 percent) Other csts: budget $1.16m, utturn $0.79m (68 percent) Activity (measured in LTX/STX field persn days): Planned 2,513 days, utturn 1,692 days (67 percent) Of which, PFM: 392 f 589 days (67%); Revenue (with Legal): 472 f 780 days (61%); FSS 242 f 239 days (101%); Statistics 418 f 546 days (77%); Macr 168 f 344 days (49%) 13

14 FY17 OUTTURN FACTORS Phase transitin: Uncertainty f remaining Phase IV funds required cautius prgram executin, ultimately unspent balance less than cst f a mnth f full-scale peratins Uncertainty f Phase V fund-raising and liquidity necessitated very cnservative and gradual scaling-up f prgram delivery frm Nvember 1 Staff Changes: LTX changes and gaps: PFM (4 mnths gap), FSS (2 mnths gap); delay f almst a year in appinting 2 nd Statistics advisr (GFS frm March 2017) Secnd Macr advisr did nt materialize Overall Impact: TA delivery and resurce use abut tw thirds f that f a year at full-strength peratins Even bigger scaling-dwn f sme mdalities, eg, wrkshps, ne third f nrmal 14

15 OUTTURN VS. PLANS: FY15 FY17 FY15 utturn was 76 percent mre than plan: 2,142 vs. 1,216 days FY16 utturn was 25 percent mre than plan: 2,194 vs. 2,142 days FY17 utturn was 33 percent less than plan: 1,692 days vs. 2, Actual Outturn vs Plans: FY15 thrugh FY18 140% 120% 100% 80% 60% Variance between Wrkplan and Outturn: FY15 - FY17 123% 127% 101% 85% 76% % 20% 0% -20% 0% 24% 21% 12% 0% 12% 25% 0% PFM Revenue FSS Statistics Macr Legal Ttal Plan 2015 Outturn 2016 Plan 2016 Outturn 2017 Plan 2017 Outturn PFM Revenue FSS Statistics Macr Legal 2018 Plan -40% -60% -80% PFM, -33% Revenue, -46% -12% FSS, 1% Statistics, -23% Macr, -51% Legal, 0% Ttal, -33% 2015 Variance 2016 Variance 2017 Variance 15

16 FY2017 Outturn by Cuntry and Prgram 250 Macr PFM Statistics FSS Revenue (inc Legal) Percent Ttal 16.0% Kiribati, 65 Tuvalu, Tkelau, 21 Niue, 32 Palau, % 3.0% FSM, 90 Sama, % 3.8% Timr-Leste, 100 RMI, 100 Tnga, % 5.4% Ck Islands, % 5.9% Slmn Islands, 140 PNG, 114 Nauru, % 6.0% 6.9% Vanuatu, 235 Fiji, 183 Reginal, % 8.3% 10.8% 13.9% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0 0.8% 1.2% 0.0% 16

17 Majr beneficiaries/activities (10 percent r mre f resurces): Vanuatu: 235 days, 13.9 % f resurces ptins fr revenue refrm, MOVE, RBS Fiji: 183 days, 10.8 % f resurces PFM (IPSAS), Revenue (Admin), Macr (Framewrk), GFS (Sub-)Reginal, mstly wrkshps: 161 days, 9.5 % f resurces, but significantly dwn Mderate beneficiaries (5 < 10 percent f resurces): Slmn Islands (140 days,8.3%); Nauru (117 days, 6.9 %); PNG (114 days (6.7 %); Ck Islands (101 days, 6.0 %); Timr-Leste (100 days, 5.9 %); RMI (100 days, 5.9 %); Tnga (92 days, 5.4 %); FSM (90 days, 5.3 %) Targeted TA users: FY17 OUTTURN BY COUNTRY Sama (77 days, 4.6 %); Kiribati (65 days, 3.8 %); Tuvalu (51 days, 3.0%); Niue (32 days, 1.9 %); Tkelau (21 days, 1.2 %); Palau (13 days, 0.8%) 17