The Bottom line Vol. I No. 6 Nov. /Dec. 2004 A monthly newsletter on EMCP reform activities in the Federal and Regional Governments Dear Readers, It s now been a year since the first issue of this newsletter. We would like to take this opportunity to thank those who participated by sending us articles on the reform. We also want to encourage you, our readers, to participate by sending us brief and informative articles on reform activities in the Federal and Regional governments. Your comments and suggestions are most welcome. Best wishes for this New Year to all our readers! This issue of the The bottom Line introduces a new section, THE PEOPLE PAGE, where we feature profiles of people directly involved in the reform. In this issue, we present to you a strong and committed person whose contribution to the budget and accounts reforms, to his Bureau and his region as a whole is remarkable. The story on page 4. Workshop on the Implementation of the Budget and Accounts Reforms BOFED heads from Afar, Harari, Gambella,Benishangul Gumuz, Somali regions and Addis Ababa and Dire Dawa City Administrations No. Of participants: 24 Global Hotel, November 23 rd, 2004 The main objective of the workshop is to introduce the strategy and operations of the budget and accounts reforms. Finance and Economic Development Bureau Heads, as well as budget and accounts heads from Addis Ababa and Dire Dawa Administrative Cities, Harari, Afar, Gambela, Benishangul and Gumuz and Somali regions attended the workshop. Key principles as regards the sequencing of the reforms, simplification of the financial management at wereda level, awareness and commitment of senior management to the reforms, were discussed. The status of the devolution to weredas in the small regions were presented by each region. Approach and responsibilities of both the project and the regions in implementing these reforms were also discussed in detail. Discussions were held on issues such as conducting assessments, reviewing BOFEDs functions, operations, and difficulties, establishing technical reform teams and steering committees that will lead the reform implementation, design and provision of training, as well as automation of the budget and accounts systems. A brief presentation of the DSA project s disbursement regulations was also made focusing on issues such as requests for funds and reconciliation of accounts. The workshop was chaired by Ato Melaku Kifle, EMCP Office Head at the Ministry of Finance and Economic Development. The Bottom Line is prepared by the. The is implemented by Harvard University and funded by Development Cooperation Ireland (DCI), the Netherlands Minister for Development Cooperation and the United States Agency for International Development (USAID).
The The Bottom Line, November/December, September/October 2004 Standardizing the Budget Structure Workshop on Reviewing the Budget Structure Regional and Administrative BOFEDs No. Of participants: 48 Global Hotel, November 15 th and 16 th, 2004 Workshop on the Standardization of the Budget Structure Federal Sector Ministries No. Of participants: 19 MOFED Conference Room, 8 th Floor, Dec. 3, 2004 Workshop on the Standardization of the Budget Structure Ministry of Education and Ministry of Health No. Of participants: 14 MOFED Conference Room, 8 th Floor, Dec. 17, 2004 Th e, in collaboration with the Ministry of Finance and Economic Development, organized a series of workshops to review the budget structures and codes in an attempt to standardize these structures and codes across all regions and the Federal government. Budget heads and experts from all regions, federal sector ministries and MOFED participated in these workshops. The two main reasons why consistency in categorizing and in coding expenditure is important: Transparency and consistency of budgets Easier nationwide consolidation of budget and accounts The process of budget standardization was as follows: Identify core functions of government and those public bodies within these functions whose budgets and expenditure data will be needed for nation wide consolidation and analysis. These core public bodies are highlighted in the ʺRecommended Standard Budget Structureʺ. (B-154). Agree to a standard BI code and description for these core public bodies. 311 Bureau of Education 311/01 Support and Advisory 311/02 Primary Education 311/03 Secondary Education 311/04 Higher Education 311/05 Technical Vocational Education 311/06 Teacherʹs Training Education 311/07 Non-Formal Education 311/08 General Education Recommended budget structure for Education Sector 341 Bureau of Health 341/01 Support and Advisory 341/02 Primary Health Care 341/03 Hospital Affairs and Services 341/04 Health Training 341/05 Disease Control 341/05/01 HIV/AIDS 341/05/02 Malaria 341/06 Public Health 341/07 Drug and Health Products Recommended budget structure for Health Sector In most cases a consensus was reached and standard BI codes and descriptions were agreed to. In some regions, a number of public bodies have been merged under one public body. In these cases the proposed solution was to make sure that under the main public body the major activities were separated at program level (e.g. secondary education in the Bureau/Office of Education). In this way, the data for each program can be extracted and consolidated nation-wide. The workshops were successfully completed with an agreement reached on a common structure for the following main sectors. Health, Education, Agriculture, Construction and Administration. This standardized budget structure and codes will be used by regions and the Federal for the preparation of the FY 98 budget. 2
The Bottom Line, November/December September/October 2004 Planning Reform in SNNPR Wereda Performance Agreement The case of SNNPR Th e Woreda Performance Agreement is an agreement document to be signed every year between the SNNPR BOFED and Woreda and Townʹs Office of Finance and Economic Development (OFED) on matters of Key Performance Objectives (KPOs) in relation to the money the weredas receive as a budget. Performance objectives in turn are objectives which public bodies try to achieve in physical and service standards in order to meet their broader sectoral goals and mission statements. Hence, OFEDs are signing the agreement representing the public bodies in their respective weredas and towns. The aim of this initiative is to introduce performance and strengthen accountability in a decentralized system of financial administration. It enables the wereda and the region as a whole to introduce system of accountabilities (outcome accountabilities) and improve allocation efficiency through performance budgeting. Signing-off the agreement in the SNNPR was Others started in September 2004 i.e., following the Welkite Financial Management Conference of the SNNPR, held on September 1 st, 2004. Orientation was given at the conference to the participants about the contents of the agreement document. Agreement proposals were distributed to participants. Following a thorough discussion on the issue, consensus was reached by the participants to start signing-off the agreement in the current year. To this effect, so far 31 weredas and towns (25% of all weredas and towns) have already sent their signed agreement to BOFED for signature by BOFED. It is expected that by the end of Tahisas the performance will rise to >50%. Hence, as a first endeavor the progress is encouraging though slow. The reason for the slow response from the weredas could be lack of full understanding about the purpose and technique of preparation of the agreement, and also negligence by some weredas. 1. Location Wereda Zone By Getachew Eshete, SNNPR BOFED FY 1997 Wereda Performance Agreement 2. Budget allocated for FY 1997 for the wereda Budget 1 Block grant 2 Specific purpose grant-capital Total 1 Revenue to be collected from the wereda 2 Regional subsidy Amount in Birr 3. Block grant allocation formula and summary 4. Weredas are authorized to allocate the block grant to public Sector Block grant Budget Recurrent Capital Recurrent Budget Budget Budget Requirement Unit Unit Qty Total Cost Birr Education Student Health Patient Agriculture Beneficiary Water Road Beneficiary Distance Sepcial Purpose Grant Recurrent Capital bodies. Special purpose grant will be used for the purpose intended only. In addition, weredas are responsible and accountable to perform (accomplish) the agreed-upon "service delivery" and "governance" "Key Performance Objectives" set by the Regional Government. The budget will be evaluated (allocated) based on the above assumptions. Extract from the SNNPR Wereda Performance Agreement document. For complete documentation see project documents OR-28 and P-63 Additional training and follow-up is also required. It is believed that some kind of penalty should be determined by law, against those weredas that are not responding. A reward system should also be in place to encourage high performing weredas and towns. These and other tasks such as, extending the agreement to the zones and regional bureau, deriving and relating KPOs with the future Public Expenditure Program Objectives (PEP will be prepared in the region at all administrative levels) will improve financial management in the region. 3
The People Page The The Bottom Line, November/December, September/October 2004 Visit of Gurage zone Cheha Wereda FY 1994 HIS name is Kedru Abza. He is the head of the Systems Network and Data Processing Services of the SNNPR Bureau of Finance and Economic Development. Kedru has been the IT specialist for the Bureau for the last 7 years. He currently manages the BIS and BDA systems, now installed at BOFED, 13 zones and 4 special weredas in the region, from his well organized, well equipped IT offices. Discussing with Wereda Officials in Gumer Wereda, Gurage zone (FY94) Kedru has long been and still is a force in the Bureau. This dynamic person was actively involved in the automation of the budget and accounts systems for the bureau and runs this integrated system with ease and efficiency. The SNNPR BOFED printed earlier in November the FY1997 Approved Budget for the region, processed using BIS. SNNPR is now the first region to have closed accounts (FY1995) using the new BDA 3 (A) 1 system with budget data captured directly from BIS. Kedru presenting the BIS processing in SNNPR FY 1995 Kedru told The Bottom Line that he is currently actively working with his team on closing the FY1996 accounts. He is confident he will submit his reports to the Central Accounts Department of MOFED by end of January 2005. Furthermore, he just returned from a region-wide assessment of the status of the FY1997 accounts data entry into BDA 3 (B) 2. He returned on December 10 th, 2004. His findings: accounts data as of October 2004, has already been entered into BDA in most of the zones and special weredas visited. Crossing the Omo River... Kedru is married and is the father of one little girl. The Bottom Line congratulates him on his work and wishes him further success in the future. Accronyms 1. BDA 3(A): New Chart of Accounts, single-entry 2. BDA 3(B): New Chart of Accounts, double-entry 4
The Bottom Line, November/December September/October 2004 Training in Regions in Budget, Accounts and Information Technology (IT) Accounts Reform Federal Nov. 1-Dec.10: BDA 3(B) Training for 128 Federal Public Bodies staff from 40 Federal institutions. Accounts Reform Nov. 24-25: Oromia Region Single Pool Guidelines Awareness Workshop for 887 weredas and zones officials and accounts staff Harari Region Budget Reform Nov. 23-26: Region-wide training in Budget Execution for 106 accountants Dire Dawa City Government Budget Reform Nov. 8-11: ToT in Budget Execution to 17 core trainers Nov. 16-Dec. 2: Budget Execution training for 103 accountants Reform News in Brief Assessment in the Small regions. An assessment looking at the functions and operations of the Bureau of Finance and Economic Development as well as Sector Bureaus in Afar and Gambella regions was carried out during the period December 20 th, 2004 to January 5 th, 2005. The findings of the assessment, technical and policy recommendations and next steps will be discussed with the BOFEDs senior officials. Automation of the accounts system at Oromia s 14 zones. Oromia Region is working hard to close FY 1996 accounts by the end of January 2005. In order to meet this goal, the Oromia BOFED and DSA rolled out in November 2004, the BDA 3(A) system to all zones in the region. By devolving the IT systems to zones, the closure of FY96 accounts has been made more efficient because it significantly reduces the cost and time of data collection from weredas, and also moves the data processing closer to the source where any problems can be resolved in a timely manner. Furthermore, it reduces the load on BOFED, where previously all weredas had to come to submit their accounts data. Single Pool Guidelines training at Oromia region.. A two-day awareness workshop on Pool Guidelines was conducted on November 24 th and 25 th, 2004 involving 887 OFED and DOFED accountants and senior wereda and zone officials. The workshop was conducted at 6 selected sites and involved trainers from the Oromia BOFED. 5
Documents Available The Bottom Line, November/December 2004 The following is a list of recent documents available from the for distribution. A major objective of this newsletter is to make Federal and Regional finance officials aware of the documents available on the reform and to rapidly disseminate the concepts and lessons of the reform. Office Accounts Oromia Region Accounts Reform Single Pool Guidelines [Oromiffa Version] (A-91) Manual 3-A: Amhara Region Accounting System for Regional Sector Bureaus Volume I, Version 1.0 (A-92) Budget Workshop on Reviewing the Budget Structure Part One: Presentation and Summary of Exhibits Workshop on Reviewing the Budget Structure Part Two: Exhibits Budget Structures of regional governments and the Federal government (B-151) Budget Reform Manual: Volume II Accounting and Reporting; A Guide for Harari Region [English Version] (B-152) Budget Reform Manual: Volume II Accounting and Reporting; A Guide for Dire Dawa City Provisional Administration [English Version] (B-153) Recommended Standard Budget Structure (B-154) Dire Dawa City Provisional Administration Trainee Version [Amharic Version] (T-210) Dire Dawa City Provisional Administration Trainer Version [Amharic Version] (T-211) Dire Dawa City Provisional Administration Set of Forms [Amharic Version] (T-212) Dire Dawa City Provisional Administration Overheads for Trainers [Amharic Version] (T-213) Budget Reform Manual: Training Module Accounting and Reporting; A Guide for Harari Region Trainee Version [English Version] (T-214) Budget Reform Manual: Training Module Accounting and Reporting; A Guide for Dire Dawa City Provisional Administration Trainee Version [English Version] (T-215) Planning Regional Economic Policy Review Planning for Growth and Competitiveness in the Southern Region Background paper for the 1998 budget planning cycle (P-65) Presentation on the Regional Economic Policy Review (REPR) in the SNNPR (P-66) Planning Reform in the SNNPR Update, issues and actions (P-67) Planning Reform in the Tigray Region (P-68) Information Technology (IT) Budget Disbursement and Accounts System BDA3 (B): Public Body Accounts Module User s Manual (IT-BDA-31) Budget Disbursement and Accounts System BDA3 (B): Public Body Budget Control Module User s Manual (IT-BDA-32) Budget Disbursement and Accounts System BDA3 (B): Public Body Budget Control Module and Public Body Accounts Module Training Exercises (IT-BDA-33) Budget disbursement and Accounts System BDA3 (B): CAD Monthly Reports Module User Manual (IT-BDA-34) Budget disbursement and Accounts System BDA3 (B): CAD Transaction Register Module User Manual (IT-BDA-35) Defining an Appropriate IFMIS for Ethiopia (IT-007) Project Quarterly Reports Report of Project Activities: April 1 st to June 30 th, 2004 (Q-29) Report of Project Activities: July 1 st to September 30 th, 2004 (Q-30) Miscellaneous Report Workshop on the implementation of budget and accounts reforms Reform of Budget, Accounts and Budget Planning under the EMCP (M-45) Workshop on the implementation of budget and accounts reforms Presentation (M-46) Outside Reports involving the FY 1997 First Quarter Action Plan and Performance Report [AMHARIC VERSION]., Expenditure Management and Control Sub-Program Office. (OR-33) 6