Strengthening Public Financial Management through Transparency in Timor - Leste

International Consortium on Governmental Financial Management May 17, 2011

Confusion?

Strengthening Public Financial Management in Timor-Leste

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Congress cuts transparency funding

Strengthening Public Financial Management in Timor-Leste

How can Timor-Leste afford government transparency?
Timor-Leste Independence GDP Per Capita GDP Growth Unemployment Below poverty line Life Expectancy Literacy 2002 $2,600 8% 20% 42% 67.95 58.6% United States 1776 $47,400 2.7% 9.7% 12% 78.92 99% Comparison 3.4% 5.5% 338% 206% 350% 86% 59%

Strengthening Public Financial Management in Timor-Leste

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globalization

Strengthening Public Financial Management in Timor-Leste

= competition

Strengthening Public Financial Management in Timor-Leste

choice

Strengthening Public Financial Management in Timor-Leste

citizens are watching
Strengthening Public Financial Management in Timor-Leste

empowered

Strengthening Public Financial Management in Timor-Leste

Democratic Republic of TimorLeste (RDTL) Transparen cy Objectives
Strengthening Public Financial Management in Timor-Leste 10

build civil society

Strengthening Public Strengthening Public Financial Management in Timor-Leste Financial Management in Timor-Leste

build infrastructure

Strengthening Public Financial Management in Timor-Leste

build capacity

Strengthening Public Financial Management in Timor-Leste

build citizen involvement in government

Strengthening Public Financial Management in Timor-Leste

improve government performance

Strengthening Public Financial Management in Timor-Leste

?
Strengthening Public Financial Management in Timor-Leste

HIGH 2

Government Effectiveness and GDP*

Normalized Government Effectiveness Index

1
PAPUA NEW GUINEA

0

-1

UGANDA

-2 LOW -3

Higher the government effectiveness = higher the country GDP Per Capita

209 Countries
GDP Per Capita (PPP, logs)

Source: The World Bank * At purchasing power parity

Strengthening Public Financial Management in Timor-Leste

AUSTRALIA

3

Benefits of Transparency

3 HIGH 2

Normalized Voice and Accountability Index

1

0

-1

UGANDA

PAPUA NEW GUINEA

-2 LOW -3

Higher the government accountability = higher the country GDP Per Capita

207 Countries
GDP Per Capita (PPP, logs)
. Source: The World Bank * At purchasing power parity

Strengthening Public Financial Management in Timor-Leste

AUSTRALIA

Voice and Accountability and GDP*

Benefits of Transparency

HIGH 2

Control of Corruption and GDP*

Normalized Control of Corruption Index

1
PAPUA NEW GUINEA

-1

UGANDA

0

-2 LOW -3

204 Countries
GDP Per Capita (PPP, logs)

Higher the control of corruption = higher the country GDP Per Capita

Source: The World Bank * At purchasing power parity

Strengthening Public Financial Management in Timor-Leste

AUSTRALIA

3

Benefits of Transparency

= stability

Strengthening Public Financial Management in Timor-Leste

= investor confidence
Strengthening Public Financial Management in Timor-Leste

avoid the resource curse

Strengthening Public Financial Management in Timor-Leste

technology leapfrog

Strengthening Public Financial Management in Timor-Leste

use what works

Strengthening Public Financial Management in Timor-Leste

skip what doesn’t work

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skip stages

Strengthening Public Financial Management in Timor-Leste

modernize

Strengthening Public Financial Management in Timor-Leste

rapidly

Strengthening Public Financial Management in Timor-Leste

review

Transparency and Accountability
T h e n ext g e n e ra ti n o f p u b l c fi a n ci l o i n a m a n a g e m e n t te ch n o l g y w i la l o w th e o l l p u b l c to tra ck th e b u d g e t l ve , to se e i i w h e re e ve ry d o l a r i b e i g sp e n t, a n d l s n to g a i re n e w e d co n fi e n ce i th e n d n p ro ce ss D e m o cra ti R e p u b l c o f Ti o r- Le ste c i m V i on si
Strengthening Public Financial Management in Timor-Leste

sequenced
Strengthening Public Financial Management in Timor-Leste

Public Financial Management – Foundation for Country Growth
Public Financial Management Decentraliz ation Autonomous Agencies

GoTL LAWS

Human Resource Development FMIS (software and hardware)

Ministries

Procurement Commission

Capacity Building (Training)

Strengthening Public Financial Management in Timor-Leste

Strengthening Public Financial Management in Timor-Leste

1. International Standards
Strengthening Public Financial Management in Timor-Leste

International Public Sector Accounting Standards

IPSAS

Strengthening Public Financial Management in Timor-Leste

EITI
Extractive Industries Transparency Initiative

Strengthening Public Financial Management in Timor-Leste

Government Financial Statistics

GFS

Strengthening Public Financial Management in Timor-Leste

Medium Term Expenditure Frameworks

MTEF

Strengthening Public Financial Management in Timor-Leste

IATI
International Aid Transparency Initiative

Strengthening Public Financial Management in Timor-Leste

2. Manager’s Dashboard

Strengthening Public Financial Management in Timor-Leste

review

examines budget execution data

integration with macro-economic data

integrated with backoffice procurement & commitment accounting within IFMIS
Strengthening Public Financial Management in Timor-Leste 40

3. Document Management

Strengthening Public Financial Management in Timor-Leste

manages correspondence with senior managers

repository for freedom of information

4. e-Procurement Portal

Strengthening Public Financial Management in Timor-Leste

review

government tenders published

vendor alerts

integrated with backoffice procurement & commitment accounting within IFMIS tender results published
Strengthening Public Financial Management in Timor-Leste 44

5. Transparency Portal

Strengthening Public Financial Management in Timor-Leste

review

www.transparency.gov.tl

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articles subscribe

drill down

Expenditures , Transparency Portal

10 years of data drill through the chart of accounts

Expenditures , Transparency Portal
export to xls, doc, pdf, html, xml

track commitments

Lessons Learned

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1. Leadership

Strengthening Public Financial Management in Timor-Leste

Goodbye Conflict, Welcome Development

Timor-Leste will be the country that goes down in history as the nation to put a stop to falling victim to large companies and the resource curse

Prime Minister Xanana Gusmão

Strengthening Public Financial Management in Timor-Leste

2. Learn from the mistakes of others
Strengthening Public Financial Management in Timor-Leste

Goodbye Conflict, Welcome Development
When we in the developing world face these types of crisis, which we do on a more regular basis than our colleagues in more economically advanced nations — then we are repeatedly told to increase our openness to the global economy, to trust in the market but to regulate them well. To be honest this approach has worked

Minister of Finance Emilia Pires
Strengthening Public Financial Management in Timor-Leste

3. Transparen cy is not an Option
Strengthening Public Financial Management in Timor-Leste

citizen auditors

YouTube Facebook Twitter SMS

Strengthening Public Financial Management in Timor-Leste

4. Transparency = Performance > Embarrassment

Strengthening Public Financial Management in Timor-Leste

Strengthening Public Financial Management in Timor-Leste

Role of Civil Society
• NGO’s can help organise literacy groups and provide materials. They can provide private education and education for the blind. They can provide school materials for students, and assist with school equipment chairs and books • NGO’s can help us organise and run technical training Strengthening Public Financial Management in Timor-Leste

5. Sequenced Holistic Multiple-Year PFM Strategy

Strengthening Public Financial Management in Timor-Leste

Public Financial Management –
Foundation for Country Growth

review

Improve government performance Improve transparency & accountability

Improve budget execution

Improve government capacity

Strengthening Public Financial Management in Timor-Leste

6. Build Capacity

Strengthening Public Financial Management in Timor-Leste

Alignment with Capacity Building

PFM Modernization

review

• Training beyond software
– IT capacity – Project management – Government accounting

• Intuitive systems
– Translation including terminology – Simple & goaloriented interfaces

• Beyond training

• Mentoring

 – Adaptable help – E-Learning – Knowledge Strengthening management Public Financial Management in Timor-Leste

7. Require Sustainability in Partner Performance

Strengthening Public Financial Management in Timor-Leste

8. Adopt International Standards

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9. Leverage Open Systems

Strengthening Public Financial Management in Timor-Leste

Transition to Open Environment: Transparency
Domain Transparency Data Availability Mode ROI Reason Target Closed Access to Information Data for Sale Publish, Audited & Vetted Revenue Generation Business Community Transition Open Document Machine Readable Publish as Exception Do not Publish as Exception Mixed Near Real-Time What are they going Publishing as Government to do Society & PressCitizens Civil with the data? Platform

Transition to Open Systems: Technology
Domain Closed Integration Proprietary Middleware within Suite= Proprietary Viewpoint Customer Lock Open Systems Extensibility reduce system High Costs performance Transition Open Support for Industry Service Oriented Standards Architecture Proprietary/Open Open Standards = Tactical approach Open Systems extend Customer Choice Open Systems = value for vendor Extensibility Need Low Cost Ecosystem Application Assembly

10. Leapfrog is possible
Timor-Leste United States Comparison GFS, IPSAS, EITI, ? Leaped IATI, MTEF Manager’s Various tools To leap Dashboards Manager Documentacross government Catching Up Various Records & Management Correspondence To leap August 15 FedBizOpps Transparency Data.gov & others - Leaping Portal underfunding

1. Standards 2. Performance Management 3. Document Management 4. e-Procurement 5. Transparency

Strengthening Public Financial Management in Timor-Leste

www.revenuewatch.org

Strengthening Public Financial Management in Timor-Leste

How?
Timor-Leste Strategic Vision Holistic Government Structure Unitary Civil Society & Media Seen as Improving Results Good Government Seen as Intervention 1. Standards Ease to Move to International Standards 2. Performance Single system data Management source 3. Document Management 4. e-Procurement 5. Transparency United States 1 Year Budgets, complex election cycles Federal Seen as “Special Interests” Seen Suspiciously Long History of Entrenched National Multiple entrenched Standards systems

Strengthening Public Financial Management in Timor-Leste

Links

• Open Systems Enable Government Transparency Leapfrog http://www.freebalance.com/blog/? p=1559 • E-Government Transparency in Developing Countries http:// www.cutter.com/offers/egovt.html • Developing Countries can Leapfrog Developed Countries in Government Transparency http:// tech.state.gov/profiles/blogs/how-developing Strengthening Public Financial Management in Timor-Leste 74 • More: dhadden@freebalance.com

Goodbye Conflict, Welcome Development

Strengthening Public Financial Management in Timor-Leste

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