PACIFIC FINANCIAL TECHNICAL ASSISTANCE CENTRE Supporting Macro-Financial Stability and Sustainable and Inclusive Growth in the Pacific
PFTAC ANNUAL
Reserve Bank Building Level 7, Pratt Street GPO Box 14877 REPORT Suva, Fiji T. +(679) 330.4866 F. +(679) 330.4045 PFTAC.org facebook.com/FijiPFTAC 2019 INTERNATIONAL MONETARY FUND Institute for Capacity Development Global Partnerships Division 700 19th Street, NW Washington, DC 20431 USA T. +(1) 202.623.7636 F. +(1) 202.623.7106 [email protected] PFTAC is an IMF initiative supported by the following member countries and development partners:
Cook Islands Fiji Kiribati
Marshall Islands Federated States Nauru of Micronesia
Niue Palau Papua New Guinea
Samoa Solomon Islands Timor-Leste
Tokelau Tonga Tuvalu
Vanuatu
European Union
A MESSAGE FROM THE PFTAC STEERING COMMITTEE CHAIRMAN
Mr. Loi M. Bakani, CMG The volume of CD delivered by PFTAC was 13 percent up over the previous year that had otherwise been the busiest Governor, Bank of Papua New Guinea since 2009 to date, with budget utilization up 15 percent. This was PFTAC Chairman 2019 achieved despite the turnover of four of the team of seven resident experts, with both Statistics advisors departing for th The reporting period was historic given the 25 Washington positions with gaps before arrival of anniversary of PFTAC as the first role model successors, the arrival in June 2018 of a new PFM advisor of regional Capacity Development (CD) after a gap of four months, and the smooth transition of centers that the IMF has now replicated Revenue advisors with a month-long handover. Delivery globally more than 15 times. In addition to growth was mostly attributed to scaling-up of the Revenue program given additional resources pledged by Australia celebrating this major milestone, the year was to support revenue mobilization generally, and PACER the busiest in terms of CD delivery, budget Plus adjustments. utilization, and most importantly, member country progress towards sustainable Financing for PFTAC operations benefited from a € 6 million contribution agreement from the European Union and the noted outcomes that contribute to inclusive growth. additional Revenue support. Member country contributions have It is my pleasure to host members and observers at the been encouraging, subject to the remaining three members 2019 PFTAC Steering Committee convened in Port formalizing their commitments to shared regional support. As we Moresby, Papua New Guinea on March 27 and 28, 2019. approach the halfway point in the current fifth operational and I am delighted to proudly host this event at one of the financing phase, a remaining funding gap must be closed with prime venues of the highly successful series of Asia some urgency to safeguard the scope and volume of the future Pacific Economic Cooperation (APEC) meetings in 2018, PFTAC program. that culminated in the leaders’ meeting in November. Looking back over the period May 1, 2018 to date, the To conclude, I thank PFTAC for its recent help to Papua New highlight of the PFTAC calendar was the High-Level Guinea, including in capacity building for bank supervision; Dialogue on Capacity Development and Growth held in training and TA to strengthen medium-term macroeconomic Nadi, December 6 and 7, 2018 Fiji and attended by 200 models and forecasting capacity of BPNG and the Treasury; Pacific and regional senior policy makers and an array of foundational work that led to the Medium-Term Revenue development partners, thought leaders, and civil society. Strategy (MTRS) efforts now under way, and a forthcoming The important contribution of PFTAC over the past 25 PEFA assessment of the national state of Public Financial years was clearly articulated, noting a continuing, but Management. adapting role required going forward to help the Pacific address its new and future economic development and capacity challenges.
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FOREWORD FROM THE PFTAC COORDINATOR
David Kloeden
I am very pleased to present this annual report Five new staff joined PFTAC in the period, first Celeste Kubasta covering the accomplishments of PFTAC in its 25th as PFM advisor in June 2018; Shane Prasad in August 2018 in year of operations, a major milestone for both the the new role as economic analyst; Georg Eysselein and Marcus Pacific and the regional Capacity Development Scheiblecker as revenue and RSS advisors in October 2018; and Luis Temes as new GFS advisor from April 2019. Three (CD) model of the International Monetary Fund. It locally selected interns spent time at PFTAC, two during the July was a pleasure to join with so many past and 2018 break and another in February 2019.
present contributors to the success of PFTAC at our The PTAC team and our colleagues from the IMF Suva anniversary event in Nadi in December 2018. Resident Representative office spent most of the year in Thirty months have now elapsed since the start of Phase V as temporary office facilities while our home for most of the past 25 we now approach the mid-point of the operational and years on the seventh floor of the Reserve Bank of Fiji building financing cycle and begin preparing for a mid-term external was renovated. We returned to an updated and refreshed work evaluation. The period May 2018 to April 2019 is our second environment in late April 2019. full fiscal year of this phase, with each year producing a record You will notice significant changes in this report from the past level of CD delivery. Although an even higher level of as we adopt a style recently piloted by the IMF Central Africa execution is planned for FY2020, this is expected to plateau at CD center that is now being rolled out across all centers an optimal level of our delivery ability and more importantly the including PFTAC. This is a final version of the report absorptive capacity of our membership. Much of the recent incorporating changes and adjustments to an earlier draft growth is attributed to a heavier fiscal effort, predominantly version issued in advance of the March 2019 Steering through the Revenue program that is benefiting from additional Committee reflecting actual results and resource utilization Australian financing to expand in support of revenue through the end of April 2019. mobilization generally, and more specifically, to help those PACER Plus signatory countries to institute reforms to offset Many thanks to the staff at PFTAC and our Washington expected declining trade tax collections colleagues plus everyone who contributes to our mandate for a very busy but productive and rewarding year. This has only We bid farewell to three of the team, namely Richard Wild and been possible with both the financial and substantive support of Barend de la Beer respectively the real sector and government our donors and member countries who have made such good finance statistics advisors, both recruited to the IMF Statistics use of PFTAC’s capacity development efforts over the years Department, and Stan Shrosbree after four years as revenue that are encapsulated in the Fijian example shown in the short advisor. The gratitude that Stan earned from tax practitioners video presented at the anniversary event: across the Pacific was warmly displayed at the 2018 PITAA https://www.pftac.org/content/dam/PFTAC/Videos/PFTAC25y meeting. He remains heavily engaged in delivering the ears.mp4 expanded revenue program from his Auckland base.
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LIST OF ACRONYMS AND ABBREVIATIONS
ABS Australian Bureau of Statistics ADB Asian Development Bank AFSPC Association of Financial Supervisors of Pacific Islands Countries APD IMF Asia and Pacific Department APEC Asia Pacific Economic Cooperation BCG Budgeting Central Government BOP Balance of Payment BPNG Bank of Papua New Guinea CARTAC Caribbean Regional Technical Assistance Centre CBSI Central Bank of the Solomon Islands CD Capacity Development CIS Compliance Improvement Strategy COA Chart of Accounts DFAT Australian Department of Foreign Affairs and Trade DRM Domestic Resource Mobilization ESS External Sector Statistics EU European Union FAD IMF Fiscal Affairs Department FEMM Forum Economic Ministers Meeting FMIS Financial Management Information System FSM Federated States of Micronesia FP Financial Programming FSS Financial Sector Supervision FTE Full Time Equivalent FY Financial year GDP Gross Domestic Product GG General Government GFS Government Financial Statistics GFSM Government Finance Statistics Manual HIES Household Income and Expenditure Survey HLD High Level Dialogue HQ (IMF) Headquarters ICD IMF Institute for Capacity Development IFRS International Financial Reporting Standards IMF International Monetary Fund IPSAS International Public-Sector Accounting Standards ISORA International Survey on Revenue Administrations IT Information Technology ITA Income Tax Act LEG IMF Legal Department LOU Letter of Understanding
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LTX Long-term expert or resident advisor MCM IMF Monetary and Capital Markets Department MFAT New Zealand Ministry of Foreign Affairs and Trade MFED Ministry of Finance and Economic Development MFEM Ministry of Finance and Economic Management MOVE Model of the Vanuatu Economy MPCC Macroeconomic Policy Coordination Committee MTRS Medium Term Revenue Strategy MTSES Medium Term Supervision Enhancement Strategy NA National Accounts NSO National Statistical Office OCO Oceania Customs Organization PACER Pacific Agreement on Closer Economic Relations PASAI Pacific Association of Supreme Audit Institutions PAYE Pay as You Earn PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PFTAC Pacific Financial Technical Assistance Centre PIC Pacific Island Country PIF Pacific Islands Forum PIFS PIF Secretariat PIMA Public Investment Management Assessment PITAA Pacific Islands Tax Administrators Association PNG Papua New Guinea PRIF Pacific Regional Infrastructure Facility PSDS Public Sector Debt Statistics PSSC Pacific Statistics Steering Committee RAP Resource Allocation Plan RBM Results-Based Management RBS Risk Based Supervision RMI Republic of the Marshall Islands RCDC Regional Capacity Development Centre RSS Real Sector Statistics RTAC Regional Technical Assistance Centre SC PFTAC Steering Committee SDG Sustainable Development Goal SERF Samoa Economic and Revenue Forecasting model SOE State-Owned Enterprise SPC Secretariat of the Pacific Community STA IMF Statistics Department STI Singapore Regional Training Institute STX Short-term Experts TA Technical Assistance TAA Tax Administration Act TADAT Tax Administration Diagnostic Assessment Tool TEI Tuvalu Economic Indicators TYPSS Ten Year Pacific Statistics Strategy UNDP United Nations Development Program UNESCAP United Nations Economic and Social Commission for Asia and the Pacific USP University of the South Pacific VAT Value Added Tax
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TABLE OF CONTENTS
1 9 17 A Message from the PFTAC Steering Committee SECTION I SECTION II Chairman Overview Results (May 2018 – April 2019) 11 A Overview of the Pacific Financial Technical 19 A Summary and Overview Assistance Centre 2 (PFTAC) 39 B Revenue Administration Foreword from the PFTAC
Coordinator 14 B PFTAC Programs and Areas 45 C Public Financial Management
of Operation 50 D Macroeconomic 16 C PFTAC Member Countries Programming and 3 and Partners Analysis List of Acronyms and Abbreviations 55 E Macroeconomic Statistics
60 F Financial Sector Supervision 5 Table of Contents
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66 97 CHARTS 13 Chart 1. 368 Scored SECTION III SECTION IV Milestones due by April 2019 Work Program PFTAC Staff by Program (May 2019 – April 2020) 20 Chart 2. Implementation
Progress of PFTAC’s Logical 67 A Summary and Overview Framework at April 30, 2019 73 B Revenue Administration 23 Chart 3. FY2019 Total Technical Assistance Days by 78 C Public Financial Management 100 Country (2,060 Days) 83 D Macroeconomic Programming 27 Chart 4. FY2019 Total 2,060 and Analysis ANNEX Mission Days by Program
87 E Macroeconomic Statistics 101 Annex 1. Macroeconomic 28 Chart 5. FY2019 Expert Days Developments of PFTAC Member Delivery and Backstopping TA 94 F Financial Sector Supervision Countries
31 Chart 6. FY2019 Final Program
Outturn-Percent of Budget
Expended
69 Chart 7. FY2020 Workplan (2,495 Days) vs FY2019 Outturn (2,060 Days)
69 Chart 8. Distribution of FY2020 Mission Days (2,495 Days) by Program
70 Chart 9. FY2020: 188 Planned Missions/ Activities
70 Chart 10. FY2020: 2,495 Planned TA Field Days
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BOXES
21 Box 1. Main Results of PFTAC 44 Box 6. Recent Tax Law Work in Tuvalu Technical Assistance Centre the Pacific (May 2018 to April 2019) 53 Box 11. Revitalized 47 Box 7. PEFA in Samoa Samoa Macroeconomic 25 Box 2. Celebrating 25 Policy Coordination Years of PFTAC 48 Box 8. Workshop to Committee Strengthen Financial 42 Regional VAT Workshop- Reporting IPSAS Cash or Box 3. 54 Box 12. Inaugural South Fiji Accruals Based Pacific Central Banking Accounting Research for Policy 43 Box 4. Revenue Reforms in Conference Tonga 51 Box 9. Customized
Training Get High Marks 59 Box 13. Pacific Statistics 43 Modernization of Box 5. Standing Committee Vanuatu’s Department of 52 Box 10. Peer to Peer (PSSC) Meeting Customs & Inland Revenue Learning from Tonga to
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TABLES
24 PFTAC TA Delivery Table 1. 36 Table 8. Proposed FY2020 80 Table 15. FY2020 Work by STX/LTX Days and Budget (in US Dollars Millions) Program Summary: Public Missions: FY17, FY18, FY19, Financial Management FY20 (Plan.) 37 Table 9. Status of Financial Contributions for Phase V (as of 84 Table 16. FY2020 Work 27 Execution of Work Table 2. April 30, 2019) Program Summary: Program During Fiscal Year Macroeconomic 2019 (In Person-Days) 49 Table 10. PEFA & PIMA Programming and Assessments and PFM Analysis 29 Table 3. Implementation of Roadmaps in Pacific Island the FY2019 Work Program Countries 89 Table 17. FY2020 Work (in Number of Activities) Program Summary:
68 Table 11. FY2020 Planned Macroeconomic Statistics 30 Table 4. FY2019 Workshops/ Workshops/ Seminars (Government Finance Seminars Statistics)
71 Table 12. PFTAC Proposed 31 PFTAC FY2019 Table 5. FY2020 Budget (in US 92 Table 18. FY2020 Work Budget (in US Dollars) by Dollars Millions) Program Summary: Program Macroeconomic Statistics
72 Table 13. PFTAC FY2020 (Real Sector Statistics) 31 Table 6. PFTAC FY2019 Final Budget by Program (in US Outturn (in US Dollars) by Dollars) 95 Table 19. FY2020 Work Program Program Summary: Financial Sector Supervision 32 Table 7. PFTAC FY2019 75 Table 14. FY2020 Work Final Outturn (in percent) Program Summary: Revenue by Program Administration
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SECTION I
OVERVIEW
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PFTAC 25th Anniversary, Nadi, December 2018
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I I OVERVIEW OF THE PACIFIC FINANCIAL TECHNICAL ASSISTANCE
CENTRE (PFTAC)
INSITITUTIONAL FRAMEWORK PFTAC was established in 1993 to promote macro-financial stability in Pacific Island countries (PICs) through a focused program of technical assistance (TA) and training, otherwise termed, Capacity Development (CD). The goal of PFTAC is to strengthen the institutional capacity of Pacific countries to design and implement sound macroeconomic and financial policies. Macroeconomic and financial stability, in turn, are essential underpinnings for sustainable economic growth and the achievement of Sustainable Development Goals (SDGs).
PFTAC assists 16 PICs that comprise 13 members of the IMF, including Federated Delegates at the 2019 PFTAC Steering Committee, PNG, March 2019 States of Micronesia (FSM), Fiji, Kiribati, Nauru, Palau, Papua New Guinea The framework for PFTAC’s operations, regional priorities and the needs of (PNG), Republic of the Marshall Islands as well as for its accountability, is largely member countries. The objectives (RMI), Samoa, Solomon Islands, Timor- determined by the program established defined in the Phase V Program Leste, Tonga, Tuvalu and Vanuatu, plus at the beginning of each funding cycle. Document (PD) provide a basic medium- the Cook Islands, Niue and Tokelau. PFTAC staff work closely with IMF term framework for guiding PFTAC’s headquarters staff both in planning and activities. However, PFTAC priorities and PFTAC’s operations are funded by implementing the work program. PFTAC activities must be sufficiently flexible and contributions from three sources. In the provides accountability to its members nimble to respond to evolving objectives Phase V funding cycle, running from through Quarterly Reports, which report set by regional leaders, as well as the November 2016 to April 2022, funding is on activities, finances, and performance activities of other development partners. provided by PFTAC’s traditional in relation to those objectives; the Annual The annual work program is agreed at donors—the Asian Development Bank Report; and through its annual Steering the beginning of the financial year as part (ADB), Australia, the European Union Committee meetings. The program of the integrated IMF Resource (EU), Korea, and New Zealand—and, for provides for an external independent Allocation Plan (RAP), but changes the first time, by its member countries. evaluation of PFTAC midway through eventuate during the year to Member countries also contribute each phase which falls due in the coming accommodate emerging CD requests through in-kind support for training year. following agreement between the Asia activities in the region, and development Pacific Department (APD) and relevant partners also contribute through co- CAPACITY DEVELOPMENT TA Department. The PFTAC RAP is funding of workshops. The IMF STRATEGY prepared under leadership of APD, in contribution finances the center CD provided by PFTAC reflects close collaboration with PFTAC staff and coordinator, local support employees, specifically defined program priorities, the functional TA departments supporting and office overheads. but adaptable within resource and the delivery of TA and training in the competency constraints to evolving region.
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Revenue Administration, and Tax Policy), STA, and MCM, as well as a bespoke catalogue for the Macroeconomics program that is backstopped by APD. PFTAC works towards only a fraction of the CD areas covered by the entire IMF catalogue that covers more than 600 defined outcomes. During FY2019, the PFTAC programs were working towards 12 high-level objectives cited throughout this report, drilling down to 42 outcomes. (PFM works on 6 core objectives towards 12 outcomes; the Revenue program works on 2 core objective areas towards 11 outcomes; the FSS program works on 2 core objective areas towards 6 outcomes; the Statistics program works on a single objective towards 10 outcomes; and the Macroeconomics program also has a single objective Opening ceremony, Steering Committee, PNG, March 2019 towards 3 outcomes). We actively tracked and reported on the progress of PFTAC PROGRAMS 528 milestones of which 365 were Seven resident PFTAC advisors deliver expected to be achieved during the and manage five CD programs. There is period or earlier. major emphasis on fiscal issues given the importance in the region to ensuring PFTAC is managed by a Coordinator, sustainable public finances, with two core and CD is provided by the team of programs covering Public Financial resident advisors with substantial Management (PFM) and Revenue Policy expertise in their respective sectors and and Administration, both technically supported by four administrative overseen or ‘backstopped’ by the Fiscal employees and a recently recruited Affairs Department (FAD). Two economic analyst in our Suva office. The macroeconomic statistics advisors advisors are based in Fiji and travel supported by the Statistics (STA) extensively throughout the region, which Department focus primarily on National allows them to develop rapport with Accounts issues (plus modest external country authorities and familiarity with sector issues) and Government Finance national and regional contexts and Statistics (GFS), accounting for a further needs. quarter of PFTAC operations. Two PFTAC Resident Advisors, Steering Committee, additional programs with sole advisors On average, the resident advisors spend Fiji, March 2018 work on financial sector supervision about half of their time each year on
(FSS) CD under the Monetary and mission to member countries and the Capital Markets (MCM) Department, and balance at the PFTAC office, maintaining finally the Macroeconomic Analysis and an active dialogue with their counterparts Programming program supports effective following up on previous CD or preparing medium-term frameworks, tools, and for upcoming missions or activities. The capacity that supports the work of the advisors also manage the short-term other programs and the IMF’s experts (STX) employed to assist with surveillance mandate. delivery of the CD programs. The skill mix of the advisors reflects the priority needs RESULTS BASED MANAGEMENT of the member countries. The Our Results Based Management (RBM) Coordinator and advisors are assisted in framework was developed to categorize delivering the CD program, finances, all IMF provided CD according to a small reporting, travel arrangements, workshop number of high-level objectives that and conference logistics and other expands into a set of typically targeted Centre activities by four locally-engaged outcomes per objective. Each TA staff and a recently recruited economic department has developed its own analyst. catalogue to ensure consistency in developing, documenting, and PARTNER COLLABORATION importantly reporting CD activities. The Close PFTAC collaboration with regional Partners of PFTAC, Steering Committee, Fiji, PFTAC program draws on elements of partners is vital to leverage the impact of March 2018 catalogues developed by FAD (PFM, the PFTAC program. PFTAC’s long and productive history of working closely
ANNUAL REPORT 2019 | PFTAC 12 together and jointly delivering training GENDER AND INCLUSIVENESS traditional channels highlights IMF and even some TA delivery with regional The importance of gender issues and research on a range of gender issues of groups will continue. This includes the opportunities are integral to the PFTAC macro-criticality, including work place Pacific Association of Supreme Audit objective of promoting inclusive growth. participation, financial inclusion, and Institutions (PASAI), the Pacific Islands In terms of training and other events, gender-based budgeting issues that is Tax Administrators Association (PITAA) PFTAC proactively encourages increasingly being reflected in the policy on many tax topics along with the beneficiary agencies to nominate suitably discussions under the IMF’s surveillance Oceanic Customs Organization (OCO), qualified female candidates, and similarly role, and where member country interest the Association of Financial Supervisors encourages and facilitates participants and demand exists, through Capacity of Pacific Island Countries (AFSPC), and with disabilities. This has included Development events provided regionally the University of the South Pacific (USP). making appropriate arrangements for or customized to country needs. Past mobility impaired participants at training examples include a joint PFM/Macro Working closely with regional events and seminars, ensuring workshop on Medium-term expenditure development partners such as the ADB, accessibility of accommodation and planning for national sustainable the World Bank, regional organizations venue facilities. PFTAC has participated development included a session on like the Pacific Islands Forum Secretariat in the Pacific Disability Forum in 2018 inclusive budgeting with an exercise (PIFS) and the Secretariat of the Pacific and 2017, an important annual multi- involving participants calculating the Community (SPC), as well as United stakeholder dialogue event. The most impact on national GDP if the labor force Nations (UN) agencies such as the UN recent engagement built on a 2017 participation rate was the same as men. Development Programme (UNDP) and PFTAC presentation on budget UN Economic and Social Commission for processes in which the Asia and the Pacific (ESCAP), ensures forum discussed recent CHART 1: 368 MILESTONES DUE BY APRIL that the comparative advantages and findings on trends in 2019 BY PROGRAM expertise of these organizations are public spending on melded with the economic and financial disability inclusivity Financial Sector expertise of PFTAC to deliver well- across six PICs. Supervision, 43 Revenue rounded and comprehensive events for Administration, our respective, and mostly overlapping The proportion of 55 client bases. Some development female training partners can provide co-financing (such participants was 40.5 Macroeconomic as the ADB and UN/ESCAP) that may percent in FY2019, Programming, Public Financial train more participants and/or across several 46 Management, accommodate additional PFTAC events workshops and 44 than would have otherwise not been courses delivered by possible. April 2019. PFTAC Government Finance Real Sector outreach through Statistics, Statistics, social media and other 93 87
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I I PFTAC PROGRAMS AND AREAS OF
OPERATION
REVENUE ADMINISTRATION PUBLIC FINANCIAL MANAGEMENT MACROECONOMIC PROGRAMMING
In the area of revenue policy and In this area, the Center supports the This program aims to improve administration, PFTAC supports member planning and prioritization of PFM macroeconomic policy advice to countries to strengthen the capacities of reforms based on the PEFA governments and central banks through more effective medium-term economic frameworks tax administrations, mobilizing tax framework and assessments; and forecasting capacity. revenue, improving taxpayer strengthening legal frameworks;
strengthening budget preparation, compliance, and promoting citizens’ ownership of their role as taxpayers. budget transparency, execution; and strengthening budget monitoring, reporting and accountability. OBJECTIVES OBJECTIVES OBJECTIVES (1) Well-functioning macroeconomic (1) Strengthened revenue policy and institutions and improved administration management and (1) Improved PFM laws and effective macroeconomic policy advice to governance arrangements institutions government through sound medium- term macroeconomic frameworks; (2) Strengthened core tax (2) Comprehensive, credible, and strong institutions for policy making; administration functions, including policy based budget preparation improved public access to key an accurate taxpayer base, quality macroeconomic and fiscal information; taxpayer services supporting (3) Improved budget execution and and sound macroeconomic voluntary compliance, and control supported by an efficient surveillance and policy/ research improvements in filing, payment and financial management system available for policy making. audit services. (FMIS) and with responsive internal audit (3) Improved legal frameworks (4) Improved coverage and quality of fiscal reporting
(5) Improved asset and liability management
(6) Strengthened management of fiscal risks
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GOVERNMENT FINANCE STATISTICS REAL SECTOR STATISTICS BANKING REGULATION AND SUPERVISION In this area, the Center supports the In this area, the Center supports member states in compiling national the member states in compiling In this area, the Center helps the countries accounts that are robust and compliant create resilience in their banking systems and harmonizing government with international standards and in through sound regulation that helps promote finance statistics to ensure they are implementing effective economic policy financial stability and better access to both reliable and consistent with tools. finance. international standards.
OBJECTIVES OBJECTIVES
OBJECTIVES (1) Strengthened compilation and (1) Strengthened financial sector (1) Strengthened compilation and dissemination of data on financial surveillance through upgrading of dissemination of data on financial statistics for decision making regulatory framework in line with statistics for decision making international standards
(2) Enhance transparency of financial (2) Make more efficient use of supervisory statistics for decision making through resources to better oversee key risks strengthened dissemination via the in the banking system Fund’s Data Standard Initiative (3) Ensure that banks have strong capital and liquidity positions that adequately cover their risks and contribute to financial system stability
(4) Improved supervisory effectiveness through enhanced capacity in IFRS knowledge related to provisioning.
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I I PFTAC MEMBER COUNTRIES AND PARTNERS
PFTAC MEMBER COUNTRIES
PFTAC PARTNERS
Asian Development Bank Korea European Union New Zealand Australia
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SECTION II
RESULTS (MAY 2018 – APRIL 2019)
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Government Finance Statistics Regional Workshop, Fiji, August 2018
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I II SUMMARY AND OVERVIEW
FY2019 was a record year for PFTAC on MAIN ACHIEVEMENTS several fronts. It was the 25th year of operations since establishment in 1993 Multiple metrics can be used to measure as the first Regional Technical CD, including inputs such as financial Assistance Center (RTAC) of the IMF, resources and personnel; activities like now called Regional Capacity missions and training events; and outputs Development Centers (RCDC) in like mission reports, strategy documents recognition of the integration of training and medium-term economic frameworks. and technical assistance into Capacity Outcomes however are what ultimately Development (CD). A major event was matter to advance each member country convened in Fiji in early December 2018 and the region towards their overarching to celebrate the anniversary milestone. objective of inclusive and sustainable growth and macroeconomic and financial stability.
During Phase V, the five PFTAC programs cumulatively work towards 13 high level outcome objectives, six for PFM, two each for Revenue and FSS, and one each for the Macro and two statistics programs.
The progress towards completion of 368 predefined milestones that were expected to be achieved by the end of April 2019 have been tracked and summarized at Chart 1. Each milestone is scored from 1 (not achieved) to 4 (fully achieved) and are averaged when grouped. This provides a snapshot of where the PFTAC programs are working within each country towards broadly targeted objectives, reflecting the progress towards completion of milestones that ultimately contribute to reaching the targeted outcomes. Box 1 then provides a summary of the main results achieved or underway during the year.
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CHART 2. IMPLEMENTATION PROGRESS OF PFTAC’S LOGICAL FRAMEWORK AT APRIL 30, 2019
4. Results Achieved 3. Results Broadly Achieved 2. Results Partially Achieved 1. Results Not No activity during (4.0<=3.5) (3.4<=2.5) (2.4<= 1.5) Achieved (1.4<=1.0) FY19
PFTAC Cook Solomon Timor Fiji FSM Kiribati Nauru Niue Palau PNG RMI Samoa Tokelau Tuvalu Tonga Vanuatu Region Islands Islands Leste Public Financial Management
Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg 2.0 1. Stronger PFM Laws and Institutions 2.8 3.5 1.5 1.0 2.5 3.5 4.0 3.0 2.5 3.5
2. Comprehensive, credible, and policy-based Avg Avg 1.7 1.7 budget Preparation
Avg Avg 3. Improved Budget Execution and Control 3.0 3.0
4. Improved Coverage and Quality of Fiscal Avg Avg Avg Avg Avg Avg Avg Avg 2.6 3.0 3.0 1.0 3.0 Reporting 2.5 3.0 2.5
5. Improved Integration of Asset and Liability Avg Avg Avg 3.0 Management 3.0 3.0
6. Strengthened identification, Monitoring, and Avg Avg Avg Avg 2.3 Management of Fiscal Risks 3.0 1.0 2.5
Revenue Policy and Administration
1. Better revenue administration, management and Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg 3.0 1.0 3.5 3.0 2.0 2.0 4.0 2.0 governance arrangements 4.0 4.0 4.0
Avg Avg Avg Avg Avg Avg Avg Avg Avg 2.6 2.Stronger tax administration core functions 2.6 2.7 2.6 2.0 4.0 2.4 2.6 3.0
Financial Sector Supevision
1. Develop/strengthen banking regulations and Avg Avg Avg Avg Avg Avg Avg Avg Avg 2.3 2.5 2.0 2.0 2.7 2.0 2.7 prudential norms 2.0 2.0
2. Implement a risk-based supervision (RBS) system Avg Avg Avg Avg Avg Avg Avg 2.8 2.0 and upgrade other supervisory processes 2.6 2.8 2.0 2.5 2.5
Macroeconomic Programming 1. Well functioning macroeconomic policy and Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg institutions: improved macroeconomic policy advice 2.7 3.5 1.3 3.0 2.5 1.8 3.3 3.5 2.1 3.0 2.2 to government Government Finance Statistics
1. Strengthen compilation and dissemination of Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg 2.1 2.0 2.0 2.1 2.2 2.3 2.0 2.1 2.8 2.0 data on macroeconomic and financial statistics. 1.2 2.0 2.8 1.3 2.6
Real Sector Statistics
1. Strengthen compilation and dissemination of Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg Avg 1.8 2.2 1.5 2.1 3.0 1.8 3.0 1.3 data on macroeconomic and financial statistics. 1.1 1.4 1.5 1.8 1.5 1.6 2.1 2.5
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BOX 1. MAIN RESULTS OF PFTAC TECHNICAL ASSISTANCE CENTER (MAY 2018 TO APRIL 2019)
COOK ISLANDS • VAT tool kit developed, and core analysis and forecasting, including tax administration functions on GDP measurement. • Re-engagement and scaling-up strengthened. of revenue CD program. • Progress in development of a FSS NAURU risk rating model and capacity • Solid progress in FSS built in on-site examination of Supervisory Framework. • Procedures revised to comply with market and liquidity risk. IPSAS Cash accounting. • GDP rebased. • Tax administration organization • Tax administration organizational review as input to MTRS reforms. • Release of a Medium-Term enhancements proposed. Fiscal Strategy. REPUBLIC OF MARSHALL • Efforts ongoing to estimate GDP ISLANDS (RMI) • Chart of Accounts revised for by production drawing on tax data. Financial Management IT • Capacity being established for system and better GFS. NIUE National Accounts to be prepared by statistics office independently • National Accounts and External FIJI of external providers. Sector Statistics tables updated to • Insurance reform started. 2017/18 • Efforts ongoing to improve medium-term budgeting • • Tax administration organization Multi-faceted revenue program processes and documentation. delivering results with respect to restructured, and efforts launched self-assessment, a tax rulings to strengthen core tax functions. • Assistance provided to update program, IT strategic review, banking legislation and on-site updated legislation, and • Drafting assistance to modernize examination. strengthening of core tax the Income Tax Act and Tax administration functions. Administration Act. • Improvements made to taxpayer services and management of • Mapping and refinement of the PALAU arrears and return filing. GFS Chart of Accounts. • A joint tax policy and revenue forecasting mission provided SAMOA • Redrafting of the PFM legislation, advice on the design and development of financial reporting • Full in-country PEFA completed. projected impact of introducing instructions for SOEs, and VAT. capacity built in risk-based internal • Strong progress on PFM reforms audit. including redevelopment of budget • Adoption of compliance documentation, internal audit improvements and restructured FEDERATED STATES OF strategic plan, review of IPSAS tax administration. MICRONESIA (FSM) Cash compliance, development of a warrant system, and • Initiative launched to overhaul • Training for VAT implementation. development of SOE risk indicator banking legislation. monitoring. • Assistance to update banking • Strengthening of filing and debt legislation. • National Accounts finalization compliance, and taxpayer audit covering 2016 census, 2013 capacity building. PAPUA NEW GUINEA HIES, and 2013 business survey. • GFS financial balance sheet KIRIBATI coverage extended to budgetary • Completion and publication for the • Public Investment Management central government. first time of a general government Assessment (PIMA) completed. consolidated time series (FY2013- • National Accounts improvements 2017). • GFS coverage being expanded to to deflation updates, tax data the entire public sector. acquisition and mechanized • Update of insurance legislation processing. and regulation launched. • Small Business Tax regime being developed, and legislation drafted • Extensive customized training • Full review of tax administration for sea bed mining. provided in macroeconomic audit program, structure, staffing
arrangements, management • Central Bank (BCTL) enhancing • Launched work to draft insurance practices, risk analysis and case credit risk regulation and legislation and regulations. selection systems to underpin a implementing IFRS9 with PFTAC new audit plan. help. • Expansion of GFS and PSDS coverage to nonfinancial public SOLOMON ISLANDS • Presentation by PFTAC advisor at corporations. the Fiscal Reform Commission’s • Medium-term revenue projections Public and Financial Management • produced for the current tax Publication of new GDP estimates Seminar for Sustainable Growth system, and effects quantified for and Development. a VAT to replace import duty and TUVALU the goods tax. • • CD and surveillance integration Tuvalu Economic Indicators (TEI) strengthened through PFTAC database created and being used • Steps to expand GFS coverage to participation in Article IV mission. to estimate real GDP with industry General Government and the start from world prices and components of expanded coverage of public TOKELAU of the consumer price index. sector debt statistics. • Developing a PFM roadmap • Assistance to develop a banking • Improved adjustments to National arising out of the findings in the supervision framework. Accounts to address under 2016 PEFA self-assessment. coverage, misreporting, and • Updated GDP estimates with the definitional or conceptual TONGA incorporation of the new HIES differences. 2016 data. • Finance Ministry Chief Economist provided peer-to-peer learning • Major expansion in revenue • Tax administration efforts focused with Tuvalu to help develop GDP efforts including: review and on a review of core tax functions; forecasting with Macro Advisor. updating of recent reforms; new strengthening on-time filing and corporate strategy and business payment and taxpayer services; • Training for Internal Audit; plan; measures to improve development of a modernization improvements to Chart of management of tax arrears and plan; design of a compliance Accounts; progress with financial outstanding returns; move to a improvement strategy; and a reporting under IPSAS Cash function-based structure; plans to review of the current IT system. introduce a Large Taxpayer provisions; and PFTAC led Tonga PFM Symposium assessing Office; measures to strengthen VANUATU audit and taxpayer services. progress against PFM Roadmap. • Improvement in the quality of • Progress in development of a risk • Major scaling-up of the Revenue national accounts statistics rating bank supervision model and program relating to PACER Plus: particularly for livestock. capacity built for on-site reviewing reform progress and • examination of market and determining future TA needs; Development of a risk rating liquidity risk. upgrading the tax audit function model for bank supervision. and design of an audit plan; plans • • Follow-up cash management to further expand the Large Risk-based internal audit being training. Taxpayer Office; developed an adopted and Finance Ministry Industry Partnership program to capacity improving in financial tackle high risk industry segments; • PFTAC participation in Article IV reporting with new accounting reviewed and proposed mission to better integrate and regulations. enhancements to the reinforce CD priorities. organizational structure; made • Revenue reforms include an improvements to filing and TIMOR-LESTE updated Compliance Improvement payment compliance and audit Strategy; design of a Taxpayer • Quarterly and annual GFS capacity; and assisted in the Survey; plans to improve on-time compilation improved with rewrite of the Revenue Services filing and payment; drafting a Tax reduced statistical discrepancies. Administration Act and Administration Bill and Consumption Tax Act. regulations; and functional reorganization.
Key indicators in execution of the FY2019 work program and with respect to PFTAC operations and governance were:
2,060 550 63% field person days of CD delivered professional government staff (of of CD was fiscal, either PFM or which 40 percent were women) were Revenue (1,287 of 2,060 field days), trained from the 16 PFTAC member with 40% just Revenue (818 days) countries in 18 regional workshops totaling 2,019-person days of training
153 30% $ 20.5 million activities executed by PFTAC of CD is delivered by the team of contributions received of approx. advisors and experts, comprising 18 seven resident PFTAC advisors (619 US$ 30.2 million pledged by five donors seminars and 135 missions to member of 2,060 TA field days), and 70 percent and 13 of 16 PFTAC countries so far countries of 1 – 2 weeks duration by members of the IMF’s roster of short-term experts
92% $ 6.38 million 36% of resources (735 days) provided to execution rate of the work plan of projected expenses from a budget seven PFTAC countries designated (2,060 TA days versus 2,238 planned), of US$ 7.43 million (approx. 86%), as fragile (Kiribati, FSM, RMI, Papua and 88% of missions (153 of 173 excluding the 7% trust fund fee planned) New Guinea, Solomon Islands, Timor Leste, and Tuvalu)
CHART 3. FY2019 TOTAL TECHNICAL ASSISTANCE DAYS BY COUNTRY (2,060 DAYS)
Vanuatu, 6.3% Cook Islands, 7.3% Tuvalu, 4.0% Fiji, 13.3% Tonga, 9.4%
Tokelau, 0.4%
Timor-Leste, 1.7% FSM, 1.0%
Kiribati, 6.2% Solomon Islands, 10.4% Nauru, 1.9% Niue, 2.3%
Palau, 3.3% Samoa, 9.9%
Papua New Guinea, Marshall Islands, 9.4% 3.0% Regional, 10.3%
ANNUAL REPORT 2019 | PFTAC 23
A HIGH LEVEL OF EXECUTION Scheiblecker in late October, and the Two charts illustrate the share of TA by Program execution in FY2019 reached GFS advisor departed in October 2018 country, the pie chart above reflects its highest level in the history of PFTAC with a successor due in April 2019. only 2,060 field mission days, while the in terms of budget utilization and CD Timely recruitment allowed for a month- bar chart below also includes the delivery, around 13 percent higher than long hand-over between the Revenue apportioned time at PFTAC that totals FY2018 that had previously been the advisors from Mr. Stan Shrosbree 2,793 TA days. most active year. The higher execution (outgoing) and Mr. Georg Eysselein rate was largely due to an injection of (incoming) in October. Beyond regionally related efforts additional donor financing to expand the (including (sub) regional workshops) Revenue program that began in mid- RESOURCE UTILIZATION was the that consumes 17.2 percent of TA days, FY2019 (November 2018), and highest yet in FY2019, the total of 2,060 five countries (Fiji, Tonga, PNG, gradually scaled-up towards a FY2020 days of TA field delivery is up from Solomon Islands, and Samoa) program approximately 45 percent 1,830 days in FY2018, with the ratio of benefitted from 45 percent of total TA larger than the baseline Revenue STX to LTX days (1,441:619) days in FY2019. program before expansion. unsurprisingly increasing over FY2018 (at 1,090:740) given fewer available A further five countries (Cook Islands, Program execution rates of around 90 LTX days and the scaling-up of the Kiribati, Tuvalu, Palau, and Vanuatu) percent were achieved, slightly higher revenue program mostly using STX accounted for the next 24 percent of as measured in TA field days (92 resources. PFTAC resources. percent) versus delivery of planned missions/activities (88 percent). Most Given at least half of each advisors’ The balance of 14 percent of TA programs had high execution rates time is spent in Suva at PFTAC in delivery is shared by the remaining six despite the change-over of four resident managing their respective programs PFTAC member countries (FSM, experts and gaps between the including backstopping the missions Nauru, Niue, RMI, Timor Leste, and departing and incoming advisors. This and activities of STX, these days are Tokelau). included the arrival of Ms. Celeste also tracked and apportioned as Kubasta, the second PFM advisor in accurately as possible to the beneficiary CD efforts for the seven PFTAC June following a gap since February, country receiving the advisors’ members designated as fragile states and the early departures of both attention. This added 733 TA days of (Kiribati, FSM, RMI, PNG, Solomon Statistics advisors (Messrs. Richard LTX time spent at PFTAC in addition to Islands, Timor Leste, and Tuvalu) Wild and Barend de la Beer) for 619 TA field days while on mission, a accounted for 36 percent of field TA Washington-based positions, first the total of 2,793 TA days, the approximate delivery with further growth expected in RSS advisor departed in August and equivalent of 12 full-time equivalent FY2020. was replaced by Mr. Marcus (FTE) person-years.
TABLE 1. PFTAC TA DELIVERY BY STX/LTX DAYS AND MISSIONS: FY17, FY18, FY19 (Act.), FY20 (Plan)
STX Days LTX Days Total TA Days Missions Program FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20 Macroeconomic Programming 0 0 11 33 164 137 121 165 164 137 132 198 14 16 15 19 Financial Sector Supervision 154 167 198 171 88 88 55 65 242 255 253 236 20 15 16 23 Govt Finance Statistics 0 50 69 38 0 113 78 83 0 163 147 121 0 11 10 10 Real Sector Statistics 249 170 152 89 131 119 89 125 380 289 241 214 25 21 16 18 Public Financial Management 187 308 285 418 173 196 184 250 360 504 469 668 31 37 33 41 Revenue (incl Legal) 301 395 726 974 111 87 92 84 412 482 818 1058 44 37 63 77 GRAND TOTAL 891 1090 1441 1723 667 740 619 772 1558 1830 2060 2495 134 136 153 188
ANNUAL REPORT 2019 | PFTAC 24
BOX 2. CELEBRATING 25 YEARS OF PFTAC
To celebrate the 25th anniversary of PFTAC, the IMF’s first Regional Capacity Development Center, two events were convened in Nadi, Fiji— a technical-level workshop on Policy Making to Influence Sustainable Growth and Productivity, December 3 – 5 and a High-Level Dialogue (HLD) on Capacity Development and Growth, December 6 – 7. The event was generously co-financed by New Zealand contributing US$100,000.
The training event and prelude to the two-day HLD was jointly delivered by PFTAC and the IMF’s Institute of Capacity Development (ICD) and trained 36 mid-level and senior officials from 14 of the 16 PFTAC countries. Visiting economists from the IMF’s Asia Pacific Department (APD) contributed to the event through policy discussions with country participants. The event generated positive participant
ratings, with the topics providing a natural segue to the HLD. DMD Grasso, course participants and facilitators were photographed (pictured left) following the award of completion certificates by DMD Grasso.
During her first visit to Fiji, IMF Deputy Managing Director Carla Grasso welcomed participants and dignitaries to the HLD opening event, officiating in various HLD sessions plus engagements with development partners, several Fijian charities, and prominent Fijian women. DMD Grasso also acknowledged the long and dedicated service of Ms. Nina Samuela (pictured above) who has been a local Fund employee for the past 25 years and from the very first day of PFTAC’s existence.
The HLD and Anniversary event drew many senior officials and prominent Pacific dignitaries, including ministers, central bank governors and other financial sector regulators, heads of finance ministries, revenue agencies, and statistical offices, plus the preceding workshop trainees. Development partners were well represented including all five PFTAC donors and other close partners like the World Bank. Pictured right with DMD Grasso are senior European Union developments officials – Christophe Wagner, Suva based head of cooperation and Ms. Erica Gerretsen, Brussels based unit head for budget support, PFM and Domestic Resource Mobilization. Other participants included representatives of regional bodies, civil society organizations, academia, the private sector, youth, and the media. A wide cross section of IMF departments contributed including officials from APD, ICD, Communications and TA Departments (Fiscal Affairs, Legal, Statistics, and Monetary & Capital Markets) and regional offices (Bangkok, Tokyo, New Delhi and Singapore).
Following DMD Grasso’s opening remarks, and on behalf of PFTAC’s host, the Acting Prime Minister of Fiji and Minister for Economy, Hon. Aiyaz Sayed-Khaiyum noted the important contribution of PFTAC to the region’s economic development over the past 25 years. In addition to the effectiveness of the IMF’s capacity development for its member countries, the Minister noted the strong engagement and complementary support and financing of development partners in the progress achieved in the Pacific.
The first panel session of the HLD chaired by Minister Sayed-Khaiyum explored the Growth Opportunities for the Pacific and Achievement of the Sustainable Development Goals (SDGs) with Deputy Prime Minister Toafa of Tuvalu, Finance Minister Tuioti of Samoa, Robert Utz from the World Bank, and Mr. Kolone Vaai, a former senior Samoan official and one of the original instigators in the establishment of PFTAC in 1993. This distinguished panel along with DMD Grasso and Ms. Alison Stuart and Mr. Odd Per Brekk from APD are pictured right.
ANNUAL REPORT 2019 | PFTAC 25
In a highlight of the two day event, and in a thought provoking hour-long session, the Financial Times Tokyo bureau chief, Mr. Robin Harding interviewed Ms. Helen Clark the former New Zealand Prime Minister and former UNDP head across a wide range of topics—from multilateralism; to the SDGs; how the Pacific should address their development issues and the challenges of climate change; strategies to raise growth; debt sustainability; gender equality and challenges facing aspiring women leaders.
Ms. Clark and Mr. Harding are pictured left during this highly applauded interview that can be viewed at: www.pftac.org.
DMD Grasso also presented awards to the winners of two youth engagement competitions held prior to the anniversary event. A youth photography competition was held across the Pacific through social media for youth aged 16 – 24 years, plus an essay contest for Fijian high school students. The aim of both competitions was to engage regional youth to showcase success stories on development and growth in their home countries that they see as benefiting their fellow citizens. Entries were received from youth in Fiji, Kiribati, Papua New Guinea, Solomon Islands, Timor Leste, and Vanuatu, with recognition and prizes awarded for entries from Fiji, Solomon Islands, and Mr. Binsar de Jesus from Timor Leste who is pictured right receiving his award jointly from DMD Grasso and Governor de Vasconselos of Banco Central de Timor Leste.
During her time in Fiji, DMD Grasso made two charity donations on behalf of the IMF Giving Campaign. These well received donations were made to a pre-school program called “Champs on Wheels” (pictured right), and a local environmental project, “Nature Fiji” (pictured below). The representative recipients for the two groups were deeply appreciative of the recognition of the IMF to the importance and impact of their causes to the community and environment respectively.
Meeting with prominent Fijian women, DMD Grasso heard key messages that women need to be in highly visible political leadership positions, and the need to promote change to traditional attitudes towards women’s roles; as well as the need for greater public funding for early childhood education, and to support female workforce participation. The weeklong event and the culminating HLD demonstrated that there was broad recognition and strong appreciation of the work of PFTAC. Representatives of PFTAC donors and development partners spoke of their appreciation of PFTAC’s contribution to national and regional development including across a range of successful examples with respect to macroeconomic stability, statistics, financial sector supervision, public financial management, and revenue mobilization. Donor partners expressed their ongoing support and commitment to the future of PFTAC. Overall, it was noted that the IMF’s Regional Capacity Development Center model and the PFTAC experience has been highly effective in the Pacific and beyond. It has evolved and adapted to changing needs and developments, with an expectation of continuation into the foreseeable future from both beneficiary and donor perspectives.
Key takeaway messages from the event were elicited through a fast-paced and innovative online voting process. These included the critical issues of climate change and natural disasters that drive priorities to build strong institutional capacity to support sustainable and inclusive growth; and tackling core budget, revenue mobilization, financial supervision, and statistical priorities, while PFTAC has been responding to more recently emerging demands in Fintech and Public Investment Management.
ANNUAL REPORT 2019 | PFTAC 26
TABLE 2. EXECUTION OF WORK PROGRAM DURING FISCAL YEAR 2019 (IN PERSON-DAYS)
May 2018 through April 2019 TA Days Executed Execution Country/Region/Seminar Planned LTX & Resident advisors rate (In Short-term STX Field Days Total percent) At PFTAC In-Field experts COOK ISLANDS 14 60 91 165 124 122 FIJI 20 41 232 293 281 97 KIRIBATI 12 10 118 140 130 98 MARSHALL ISLANDS (RMI) 5 14 47 66 49 124 MICRONESIA (FSM) 66 5 16 87 47 45 NAURU 51 18 22 91 68 59 NIUE 33 0 48 81 58 83 PALAU 28 11 56 95 85 79 PAPUA NEW GUINEA (PNG) 33 98 95 226 220 88 SAMOA 20 79 125 224 228 89 SOLOMON ISLANDS 4 67 147 218 236 91 TOKELAU 3 8 0 11 5 160 TIMOR-LESTE 15 3 32 50 32 109 TONGA 101 36 157 294 193 100 TUVALU 13 19 64 96 118 70 VANUATU 47 30 99 176 131 98 Regional work & workshops 270 120 92 482 234 91 GRAND TOTAL 733 619 1,441 2,793 2,239 92
Fragile states 148 216 519 883 832 88
CHART 4. FY2019 TOTAL 2,060 MISSION DAYS BY PROGRAM
Macroeconomic Programming, 6%
Financial Sector Supervision, Revenue 12% Administration, 40%
Statistics, 19%
Public Financial Management, 23%
ANNUAL REPORT 2019 | PFTAC 27
CHART 5. FY2019 EXPERT DAYS DELIVERING AND BACKSTOPPING TA
Note: 2,793 TA Days (includes 619 LTX and 1,441 STX Mission Days plus 733 LTX Backstopping Days at PFTAC)
Supervision Framework Enhancement Program, Papua New Guinea, 2018
ANNUAL REPORT 2019 | PFTAC 28
TABLE 3. IMPLEMENTATION OF THE FISCAL YEAR 2019 WORK PROGRAM (IN NUMBER OF ACTIVITIES)
Activities Activities Execution Country/Region/Seminar planned executed rate COOK ISLANDS 8 10 125 FIJI 19 19 100 KIRIBATI 12 9 75 MARSHALL ISLANDS (RMI) 5 4 80 MICRONESIA (FSM) 5 1 20 NAURU 7 4 57 NIUE 5 4 80 PALAU 6 5 83 PAPUA NEW GUINEA (PNG) 15 16 107 SAMOA 15 12 80 SOLOMON ISLANDS 18 15 83 TOKELAU 0 1 n/a TIMOR-LESTE 2 3 150 TONGA 16 16 100 TUVALU 7 6 86 VANUATU 11 8 73 Regional seminars and courses 22 20 91 GRAND TOTAL 173 153 88 Fragile States 64 54 84
Commencing the PEFA in Samoa, August 2018
ANNUAL REPORT 2019 | PFTAC 29
TRAINING EVENTS further expanded the change in LTX and scheduling Supervisors of Pacific Island Countries in FY2019, with 18 events training 550 challenges. The Revenue program (AFSPC) and the Pacific Islands Tax government officials (a 43.6 percent hosted the most with seven events, Administrators Association (PITAA). increase) during 2,019 training days, up reflecting the scaling-up including PFTAC is also increasingly integrating from 14 events in FY2018 that trained specifically targeted topics relating to its CD efforts through joint events with 383 officials over 1,837 training days. the scaling-up such as VAT and TADAT the IMF’s more traditional training However, a modest increase in the workshops. A highly successful joint delivered in Washington at ICD and at number of training days of just 10 Caribbean and Pacific revenue the Singapore Training Institute (STI). percent is because each event mobilization conference was held in averaged 3¾ days in FY2019 versus July 2018 between PFTAC and In response to member country 4¾ days in FY2018. CARTAC that also included the other requests for customized training, small island states of Cape Verde, PFTAC organized three joint training The most common training venue was Maldives, Mauritius, and Seychelles. events under the Macro program with Fiji with nine events held in Nadi and Given the success of this event that ICD and STI in FY2019. This example one in Suva; six elsewhere in the Pacific drew on IMF expertise and resources, of integrating TA and training adapted (two in Vanuatu and one each in FSM, another joint event in Washington is IMF training course material to Pacific PNG, Samoa, and the Solomon planned on PFM issues in circumstances with regional events held Islands); and two outside the region in FY2020.Training effectiveness is in the Solomon Islands in July and Sydney and Washington DC enhanced through collaboration, both November 2018, and a PNG in-country respectively. across PFTAC programs such as the training event in April 2019. This entails joint PFM/Macro Cash Management customization to local issues and data All programs convened at least one workshop, and with regional groupings availability. event other than RSS program given such as the Association of Financial
TABLE 4. FY2019 WORKSHOPS/ SEMINARS
Duration Training Sector Partner Location Topic Male Female Total (Days) Days PFTAC 25th Anniversary - Sustainable Growth Macro Macro/ ICD Nadi, Fiji 3 20 16 36 108 & Productivity Macro/ Port Moresby, Macroeconomic Policy for Stabilization and Macro 5 22 12 34 170 ICD/ STI PNG Growth CARTAC/ Joint Caribbean/Pacific Workshop on Revenue Revenue Washington 5 9 5 14 70 FAD Mobilization Revenue PITAA Nadi, Fiji Revenue Administration TA Planning 1 21 11 32 32 Annual PITAA Heads Meeting: Overview of Revenue PITAA Nadi, Fiji 3 32 16 48 144 Regional Reforms Revenue Nadi, Fiji Tax Leadership 1 21 11 32 32 Revenue Nadi, Fiji Value Added Tax (VAT) 3 23 8 31 93 TADAT Tax Administration Diagnostic Assessment Revenue Nadi, Fiji 4 14 16 30 120 Sec Tool (TADAT) Revenue PITAA Nadi, Fiji Taxpayer Surveys 4 10 15 25 100 FSS Suva, Fiji Insurance Regulation 5 10 9 19 95 Santo, FSS AFSPC Annual AFSPC Meeting and Joint Workshop 2 16 13 29 58 Vanuatu APRA/ Santo, Information Technology Risk Assessment & FSS 3 16 13 29 87 AFSPC Vanuatu Supervision FSS APRA Sydney Prudential Regulation 2 8 7 15 30 GFS Nadi, Fiji Government Finance Statistics Training 5 28 21 49 245 GFS FSM Government Finance Statistics Training 5 3 2 5 25 Solomon Macroeconomic Policy for Stabilization and Macro IMF/ICD 5 32 16 48 240 Islands Growth in the Pacific PFM WB Nadi, Fiji Financial Reporting 5 16 13 29 145 PFM/Macro Apia, Samoa Cash Management and Forecasting 5 26 19 45 225 TOTALS 66 327 223 550 2019
ANNUAL REPORT 2019 | PFTAC 30
CHART 6. FY2019 FINAL PROGRAM OUTTURN-PERCENT OF BUDGET EXPENDED
TABLE 5. PFTAC FY2019 BUDGET (US DOLLARS) BY PROGRAM
Revenue PFM Macro FSS RSS GFS Other Total Resident Advisors (Long Term Experts - 328,371 647,454 357,913 311,920 309,754 209,754 - 2,165,166 LTX) LTX Travel 71,062 124,502 70,075 57,019 57,679 56,080 - 436,417 Short-Term Experts (STX) 1,122,973 479,523 44,315 303,492 193,952 73,488 136,882 2,354,625 Diagnostic Missions 145,659 113,034 - 22,992 25,280 75,000 39,500 421,465 Training/Seminars/Workshops 293,997 152,298 163,893 158,244 119,628 112,994 169,336 1,170,390 Backstopping/Project Management 54,056 53,189 - 79,306 76,514 71,348 39,102 373,515 Other Costs (Evaluation, misc., etc.) 19,477 - - 26,619 3,691 455,240 505,027 Total TA Provision/Delivery* 2,035,595 1,570,000 636,196 932,973 809,426 602,355 840,060 7,426,605 Trust Fund Management Fee 142,492 109,900 44,534 65,308 56,660 42,165 58,804 519,862 Total Trust Charges 2,178,087 1,679,900 680,730 998,281 866,086 644,520 898,864 7,946,467 * Trust Fund Fee is 7 percent of funds utilized for TA delivery
TABLE 6. PFTAC FY2019 FINAL OUTTURN (US DOLLARS) BY PROGRAM
Revenue PFM Macro FSS RSS GFS Other Total Resident Advisors (Long Term Experts - 342,079 606,509 351,899 316,091 229,614 145,627 - 1,991,819 LTX) LTX Travel 80,962 124,126 75,537 38,112 50,793 13,802 - 383,332 Short-Term Experts (STX) 1,096,391 318,669 13,576 298,035 198,787 102,355 21,500 2,049,313 Diagnostic Missions 107,608 110,107 - 1,810 29,510 62,697 34,176 345,908 Training/Seminars/Workshops 233,104 84,823 149,936 191,586 20,350 88,034 92,232 859,565 Backstopping/Project Management 53,539 40,828 - 22,730 63,159 63,945 34,319 278,520 Other Costs (Evaluation, misc., etc.) - - - - 3,262 - 465,201 468,463 Total TA Provision/Delivery* 1,913,683 1,284,562 590,948 868,364 595,475 476,460 647,428 6,376,920 Trust Fund Management Fee 133,958 89,919 41,366 60,785 41,683 33,352 45,320 446,384 Total Trust Charges 2.047,641 1,374,481 632,314 929,149 637,158 509,812 692,748 6,823,204 * Trust Fund Fee is 7 percent of funds utilized for TA delivery
ANNUAL REPORT 2019 | PFTAC 31
TABLE 7. PFTAC FY2019 FINAL OUTTURN (PERCENT) BY PROGRAM
Revenue PFM Macro FSS RSS GFS Other Total Resident Advisors (Long Term Experts - LTX) 104% 94% 98% 101% 74% 69% 0% 92% LTX Travel 114% 100% 108% 67% 88% 25% 0% 88% Short-Term Experts (STX) 98% 66% 31% 98% 102% 139% 16% 87% Diagnostic Missions 74% 97% 0% 0% 0% 84% 87% 82% Training/Seminars/Workshops 79% 55% 91% 121% 17% 78% 54% 73% Backstopping/Project Management 99% 77% 0% 29% 83% 90% 88% 75% Other Costs (Evaluation, misc., etc.) 0% 0% 0% 0% 12% 0% 102% 93% Total TA Provision/Delivery 94% 82% 93% 93% 74% 79% 77% 86%
CAPACITY DEVELOPMENT AND THE IMF’S SURVEILLANCE ROLE
CD is one of the Fund’s three core enhance transparency and strengthen members, remain well-positioned to activities and has grown in importance the basis for strategic decision making support a more flexible, needs-based in recent years. It supports member model in collaboration with countries’ efforts to build the institutions Categorizing CD as TA or training is headquarters. and capacity necessary to formulate increasingly difficult as CD continues to and implement sound economic move toward a medium-term project Thirteen of the 16 PFTAC countries are policies, thereby complementing the focus with more flexible engagement subject to regular macroeconomic Fund’s surveillance and lending modalities. This means continuing to policy consultations with IMF staff mandates. Member countries, partners, shift toward multi-year project through the Article IV surveillance and external commentators give the engagements and knowledge sharing, process. This however does not apply Fund high marks for the quality of its including through peer-to-peer to the Cook Islands, Niue, and Tokelau CD. At the same time, efforts need to interactions and attachments. This also that are PFTAC members but as New continue to strengthen Fund CD to requires continuing to strengthen Zealand realm jurisdictions are not serve members’ current and evolving flexibility in delivery modalities, members of the IMF individually. needs. This led to the 2018 CD Strategy reducing emphasis on producing Review that examines progress since detailed TA reports and focusing more To further strengthen the integration of the last review and strategy developed on assisting with implementation, CD and surveillance, members of the in 2013 and proposes a CD strategy for including through related training for PFTAC team overlapped with the the next five years. officials. Article IV missions in FY2019 to PNG, Solomon Islands, and Timor Leste to The review builds upon the existing CD From the training side, it means less follow up on key CD areas that are also strategy, focusing on two mutually emphasis on classroom-based training macro-critical areas for surveillance reinforcing objectives. First, the impact of diverse groups of officials and more which helps build better synergies of Fund CD needs to be increased by emphasis on online training and between the authorities, the APD further strengthening integration with tailoring classroom training by targeting country teams, and PFTAC to ensure the Fund’s policy advice and lending similar groups of officials or customizing consistency in advice. This will continue operations, while continuing to make delivery to a specific organization to with one or more advisors or the progress in framing CD through carry out policy functions. Peer learning coordinator participating in future comprehensive strategies tailored to workshops have become increasingly surveillance engagements depending each member’s needs, capacity, and common in project engagements with on the country specific circumstances. conditions, focusing on implementation countries and help sustain the impact of and outcomes. Stronger coordination both TA and training. between CD and the Fund’s other core functions will better connect CD with Finally, CD departments are countries’ risks and vulnerabilities and increasingly adjusting the mix of ensure surveillance and lending technical support, combining field- integrate lessons from CD more based experts and HQ-based missions. effectively. Second, the efficiency of CD RCDCs, including PFTAC which by needs to be increased by improving CD design have traditionally played a more processes and systems. This will hand-on role given proximity to
ANNUAL REPORT 2019 | PFTAC 32
WORKPLAN MANAGEMENT for CD In late October 2018 at the mid-point of to budget support. Given a 2009 delivery falls under a Resource FY2019, a detailed review was mandate from the Forum Economic Allocation Plan (RAP) for each region completed of the workplan and budget Ministers Meeting (FEMM), PFTAC that covers detailed planning for the execution against the changing contributes an annual report through forthcoming or current fiscal year landscape. On a demand driven basis, PIFS on the state of PFM reforms, running from May 1 to April 30 that also new activities and missions were added particularly progress against PFM has a longer horizon to cover following consultation with APD and the Roadmaps associated with PEFA programmatic plans in the second and backstopping department. Other assessments that PFTAC often either subsequent years. activities were rescheduled as leads or coordinates. The PFM advisors necessary, and in some instances from PFTAC convene regular meetings The PFTAC workplan is just one dropped if no longer required. Two key to share information amongst donors component of the RAP for the Asia developments during the mid-FY and other CD providers who are active Pacific Department (APD), along with review led to a net change in planned in the PFM space that is often quite workplans from other regional IMF missions from 167 to 173, and a net crowded. The time and effort devoted to centers in China, India, Thailand, and increase in planned TA delivery from this coordination led by PFTAC is not Singapore, as well as for CD delivered 1,980 to 2,238 TA days. The most insignificant but is essential. directly from Washington based significant change arose from the functional departments (e.g. FAD, LEG, Revenue program scaling-up with total Working closely with regional MCM, and STA). Development of the TA days for the entire year growing development partners such as the ADB, RAP is launched in December under from 518 to 781 and an increase in the World Bank, regional organizations the leadership of the respective APD missions from 43 to 65, just over 50 like the Pacific Islands Forum mission chiefs based on their percent increase on an annualized Secretariat (PIFS) and the Secretariat consultations with country authorities basis. This was slightly offset by a slight of the Pacific Community (SPC), as well about their CD needs to assist in the reduction in the RSS program due to as United Nations (UN) agencies such implementation of the Fund’s policy the advisor gap, and an approximate 25 as the UN Development Programme advice and the authorities’ own reform percent reduction in the Macro program (UNDP) and UN Economic and Social and capacity building priorities. given the postponement until FY2020 of Commission for Asia and the Pacific recruitment of an overlapping second (ESCAP), ensures that the comparative The development of the workplan and resident advisor for a six-month period. advantages and expertise of these RAP is an iterative multiparty exercise. organizations are melded with the The TA needs expressed by the Delivery of all programs was projected economic and financial expertise of beneficiary countries transmitted through April 30, 2019 based on PFTAC to deliver well-rounded and through various formal and informal expectations at March 1, 2019, which comprehensive events for our channels drive the process. For now has been updated to reflect actual respective, and mostly overlapping PFTAC, much of this arises from the program delivery as at end of April client bases. frequent interactions between the 2019. Reported execution and outturn PFTAC team and member country results are based on the version of the PFTAC continues working productively officials and technical counterparts. FY2019 workplan that was amended at by jointly delivering training and even PFTAC and APD country teams the mid-point of the FY on November 1, some TA with regional groups. This regularly consult to foster the closest 2018 and that was made available includes the Pacific Association of possible integration of surveillance and publicly through the PFTAC website. Supreme Audit Institutions (PASAI) CD, with feedback and needs factoring Budget outturn is similarly based on the where PFTAC jointly delivered a PFM into prioritizing and scheduling activities uplifted budget to reflect the additional Symposium in Tonga and attended the in the PFTAC workplan, including funds injected to expand the revenue annual PASAI congress in Australia. responding to unforeseen events. program as well as an earmarked New Most of the training component of the Zealand contribution of $US 100,000 PFTAC Revenue program is now ADAPTIVE WORKPLANS ensure towards the 25th Anniversary event. delivered jointly with the Pacific Islands flexibility and responsiveness to Tax Administrators Association changing circumstances. While the COLLABORATION LEVERAGES the (PITAA), with topics covered in FY2019 FY2019 workplan endorsed by the effectiveness and impact of PFTAC’s including Tax Leadership, VAT, March 2018 Steering Committee efforts. This occurs through multiple TADAT, and Surveying Taxpayers. meeting was a comprehensive and mechanisms and forums, and in several PFTAC aims to hold at least one realistic program, it was constantly joint events each year. Most donors and revenue event annually with the monitored and adjusted throughout the development partners have a very Oceania Customs Organization (OCO). year with regular reporting in the close interest in PFM issues and often Such joint efforts are likely to grow in PFTAC Quarterly reports. also directly support their own CD response to the PACER Plus initiatives activities or link PFM reform milestones that require both domestic tax and
ANNUAL REPORT 2019 | PFTAC 33
customs responses to replace declining of two students over the month-long concurrently at PFTAC, but in the trade tax revenues. semester break in July 2018 and longer term, the possibility of facilitating PFTAC additionally advertised and the placement of interns in central In the financial sector, PFTAC selected a single intern for the banks or other economic agencies will continues to provide secretariat January/February 2019 period to work be explored. services to the Association of Financial on the following projects: Supervisors of Pacific Island Countries PEER LEARNING continues to be a (AFSPC), delivering a topical training • a postgraduate economics student very effective CD modality to facilitate event in conjunction with the annual worked with the PFTAC Macro the sharing of skills and experiences of AFSPC meeting. The FY2019 Advisor and local economist in the staff from one country with counterparts workshop on IT and cyber Risk Resident Representative office to in other countries. Assessment was delivered by a team of contribute to an ongoing project on cutting-edge experts and was highly Estimating Potential Output. The Macro program has had some appreciated by regional financial excellent results in FY2019 such as the regulators. • an undergraduate commerce experience with the Tonga Finance student assisted the FSS advisor in Ministry sharing their knowledge with WORKING WITH ACADEMIA has Developing a Pacific Financial Tuvalu officials and in facilitating the Sector Supervision Map. extended the reach of PFTAC to benefit Samoa Macroeconomic Policy from local and regional expert views Coordination Committee to experience • another undergraduate commerce and to share the experience and the operations the Fiji Macroeconomic student worked as an intern over knowledge of the Fund with the next Committee. The model is flexible to the year-end break in January generation of analysts and policy different circumstances, such as 2019 with the Revenue advisor and makers and their teachers. In April each facilitating the participation of bank PFTAC Economic Analyst on supervisors from RMI in on-site FIDC year, the PFTAC advisors and developing a framework Taxpayer supervision of a Guam based bank. coordinator deliver guest lectures to a Survey as input to an April 2019 post graduate PFM class at the regional workshop. University of the South Pacific (USP) at The fiscal programs have also organized attachments, including Fijian the Suva campus. University faculty are These three modest internship tax officials joining missions to Niue and regularly engaged in various economic experiences confirm the value of the and statistical forums with PFTAC staff model that will continue with several plans for inclusion of regional PFM and participated in the PFTAC 25th interns competitively recruited from a officials in PEFA assessments. Peer Anniversary. wider pool of academic institutions for learning was also advanced through the both the month-long mid-year semester joint CARTAC/PFTAC revenue PILOT INTERNSHIP placements have break in July and the longer year-end mobilization conference that facilitated now been successfully trialed at PFTAC break in December and January. Space an expansion of networking between for three USP students. USP faculty constraints and mentoring needs will small state tax administrators. assisted in the advertising and selection likely limit this to one or two interns
ANNUAL REPORT 2019 | PFTAC 34
FINANCIAL REPORT
The cost of PFTAC operations in • several other smaller increases to From a budget category perspective, FY2019 was US$ 6.8 million including the FY2019 baseline program LTX costs (salary and allowances) had the 7% Trust Fund Management Fee. budgets including PFM a high outturn of 92 percent and LTX While some budget categories (LTX (+US$70,000) and FSS regional travel was 88 percent. The (+US$130,000). travel, STX costs, and workshops) are overall STX budget outturn was 87 tracked and projected locally, other percent, suppressed by PFM and The following analysis of expenditure budget categories are controlled Macro underspending despite full outturn is with respect to the uplifted centrally (LTX salary, diagnostic utilization by the FSS, GFS, and RSS budget. The Revenue, Macro, and FSS missions, backstopping and project programs, and 98 percent by Revenue. programs have very high outturns at 94 management charges). A 73 percent workshop/seminar outturn percent, 93 percent, and 93 percent of was achieved, with good utilization of all budget respectively. The slightly lower Amounts cited exclude the IMF’s in-kind programs except RSS and PFM. The PFM outturn of 82 percent is an contribution that covers the salaries and training course that preceded the 25th improvement over FY2018 but is held expenses of the coordinator and four of anniversary event was financed by a down by an STX budget underspend at the support staff and other annual specific ICD training budget that was 66 percent. Over Phase V, PFM overheads of approximately US$ 0.5 sufficient for one major event during utilization of the STX budget has lagged million. Phase V and is now exhausted. but a pick up late in FY2019 is expected
to continue. The FY2019 expenditure outturn is The PFTAC administrative budget slightly less than the original US$7.0 (separate from the IMF contribution) Unsurprisingly, both statistics budgets million budget (including management included a one-time supplement as were underspent, with the RSS fee) that was endorsed by the 2018 endorsed by the 2018 SC meeting of program at 74 percent and GFS at 79 Steering Committee meeting. However, $US100,000 towards the cost of the percent, primarily from reduced LTX it represents an outturn of around 86 anniversary, and a recurring annual costs given the gaps between outgoing percent of the budget that was budget of $US 50,000 was also and incoming advisors. The modest subsequently adjusted upwards to approved to finance the recruitment of a STX budgets for both statistics US$ 7.95 million during the year from: locally employed Economic Analyst programs were fully used, whereas the who joined the PFTAC team in August workshop budgets, particularly for RSS 2018. This administrative budget also • an initial pledge of US$ 1.0 million was mostly untouched given the from Australia to expand the covers the office rental costs at the challenges for a newly appointed Revenue program of which the Reserve Bank of Fiji, and the cost of the advisor to deliver a regional training revenue administration and legal annual Steering Committee that have budgets were expanded by event that was hampered by scheduling been projected for the March 2019 Port US$700,000, with the balance of conflicts. The outgoing GFS advisor Moresby meeting. the extra funds and underspending delivered a planned single regional carrying forward to FY2020; and event before leaving.
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TABLE 8. PROPOSED FY2020 BUDGET (US DOLLARS MILLIONS)
% of Prog FY2019 FY2020 Program Tot Ph V Doc
Document Expenses to Budget Orig. Proposed Budget Outturn Change Budget end-FY19 thru end- Budget Budget FY19 Resident Advisors (Long Term $12.6 $5.0 40% $2.17 $1.99 $2.28 $2.46 $0.2 Experts - LTX) LTX Travel $2.3 $1.0 42% $0.44 $0.38 $0.39 $0.46 $0.1 Short-Term Experts (STX) $11.4 $4.4 39% $2.35 $2.05 $2.10 $2.35 $0.2 Diagnostic Missions $1.2 $0.7 58% $0.42 $0.35 $0.20 $0.32 $0.1 Training/Seminars/Workshops $6.0 $1.7 28% $1.17 $0.86 $1.07 $1.22 $0.1 Backstopping/Project $1.9 $0.6 31% $0.37 $0.28 $0.37 $0.40 $0.0 Management Other Costs (Evaluation, misc., $1.6 $0.7 47% $0.51 $0.47 $0.50 $0.74 $0.2 etc.) Total TA Provision/Delivery $36.9 $14.1 38% $7.43 $6.38 $6.91 $7.94 $1.0 Trust Fund Management Fee* $2.6 $1.0 38% $0.52 $0.45 $0.48 $0.56 $0.1 Total Trust Charges $39.5 $15.1 38% $7.95 $6.82 $7.40 $8.50 $1.1 IMF and Host Country In-Kind $2.6 $0.50 $0.59 $0.50 $0.50 $(0.0) Contribution TOTAL $42.1 $8.45 $7.41 $7.90 $9.00 $1.1 * Trust Fund Fee is 7 percent of funds utilized for TA delivery
FUND RAISING faces challenges However, the first pledge and tranche of ahead from a funding gap that needs to US$ 1.0 million will be exhausted before THE FUNDING GAP is nominally be closed in FY2020. Of US$ 30.15 the mid-point of FY2020, so for the US$9.5 million, which is the difference million pledged, US$ 20.51 million in expanded program to continue between the Program Document fund- contributions have been received (see uninterrupted in delivery of the raising target of US$ 39.5 million and Annex). The contribution agreement proposed FY2020 workplan requires current pledges of almost US$ 30 with the European Union finalized in further commitment and contribution of million. The baseline budget for the FY2019 for € 6.0 million included a funds in FY2020 to avoid an abrupt remaining three years including the large initial contribution that improved scaling-back of the Revenue program trust management fund fee is US$ 22.2 short-term liquidity and outlook. Further returning to the baseline scenario. A m (FY2020 - US$ 7.5 m; FY2021 - donor partner contributions of US$ 7.49 second tranche of AUD$1 million in May US$7.2 m; FY2022 - US$7.5 m). Added million should continue to safeguard 2019 from Australia has guaranteed the to the US$ 15.1 million actual expenses liquidity during FY2020. program expansion through FY2020. through end-FY2019 suggests a slightly lower financing requirement of US$ Member country contributions are According to the Phase V Program 37.3 million over the baseline Phase V encouraging with 45 percent of Document, the resident GFS advisor budget, reducing the funding gap to expected inflows received (US$ 1.74 of position is due to end in April 2020, with US$ 7.3 million. However, several US$3.89 million), although US$770,000 the GFS program contracting to a few factors impact this analysis: is at risk given the still outstanding STX missions in FY2021 and FY2022. commitments RMI, Palau, and Timor A new GFS advisor arrives at PFTAC in • Revenue program scaling-up adds Leste to sign Letters of Understanding April 2019 and under current plans will US$ 1.0 million for each of the final that are a prerequisite to financially have an assignment of just over one three years and must be funded contributing. year. However, a groundswell is additionally beyond closing the baseline gap. emerging from the region to retain the
By April 30, 2019, Phase V is 45 percent GFS program with an extension of the • Even at the best outturn yet, complete at 30 of 66 months over, yet resident advisor beyond April 2020. budget execution in FY2019 was around 38 percent of the program Either an offsetting adjustment between 86 percent, that realistically may be budget of US$ 39.5 million has been programs is needed to remain within the difficult to better. The same ratio utilized. The proposed FY2020 budget $US 39.5 million budget envelope for applied to the remaining three of US$ 8.5 million including trust fund Phase V, or an increase to the budget years would see actual expenses closer to US$20.1 million versus fee (see Section III) - is inclusive of envelope adding to the existing funding the baseline budget of US$ 22.2 US$ 1.0 million of Australian funding to gap. million, which would reduce the expand the Revenue program.
ANNUAL REPORT 2019 | PFTAC 36
funding gap by $US4.3 million retaining an LTX would be second year would expand the down to US$ 5.2 million. approximately US$400,000. The funding gap to US$ 5.6 million that first-year extension could be would need to be closed or • If the GFS program was to be financed from the funds carried- financed by savings found. extended, the annual cost of forward from Phase IV, and the
TABLE 9. STATUS OF FINANCIAL CONTRIBUTIONS FOR PHASE V (AS OF APRIL 30, 2019)
Contributions Commitments received Payments pending (U.S. Currency* (partner currency) (U.S. dollars) (U.S. dollars) dollars)
PARTNERS ADB U.S. dollar 800,000 800,000 800,000 0 Australia Aust. dollar 11,300,000 7,807,000 5,444,427 2,362,573 European Union Euro 6,000,000 7,013,442 3,382,466 3,630,976 Korea U.S. dollar 2,500,000 2,500,000 1,000,000 1,500,000 New Zealand NZ dollar 12,000,000 8,147,855 8,147,855 0 SUBTOTAL, PARTNERS 26,268,297 18,774,748 7,493,549 MEMBER COUNTRIES COOK ISLANDS U.S. dollar 110,000 80,000 30,000 FIJI U.S. dollar 687,500 375,000 312,500 KIRIBATI U.S. dollar 82,500 32,925 49,575 MARSHALL ISLANDS (RMI) U.S. dollar LoU Pending 110,000 0 110,000 MICRONESIA (FSM) U.S. dollar 110,000 40,000 70,000 NAURU U.S. dollar 82,500 82,026 474 NIUE U.S. dollar 27,500 9,950 17,550 PALAU U.S. dollar LoU Pending 110,000 0 110,000 PAPUA NEW GUINEA (PNG) U.S. dollar 1,375,000 625,000 750,000 SAMOA U.S. dollar 165,000 165,000 0 SOLOMON ISLANDS U.S. dollar 165,000 165,000 0 TOKELAU U.S. dollar 11,000 11,000 0 TIMOR-LESTE U.S. dollar LoU Pending 550,000 0 550,000 TONGA U.S. dollar 110,000 49,921 60,079 TUVALU U.S. dollar 27,500 17,500 10,000 VANUATU U.S. dollar 165,000 90,000 75,000 SUBTOTAL, MEMBER COUNTRIES 3,888,500 1,743,322 2,145,178 GRAND TOTAL 30,156,797 20,518,070 9,638,727
Source: IMF, Institute for Capacity Development
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PIF and PFTAC Member Flags – except French Polynesia. Timor-Leste is not a PIF member.
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I II REVENUE ADMINISTRATION
MAIN ACHIEVEMENTS (3) Improving the emphasis and (5) Facilitating the introduction of VAT (1) Facilitating the function based effectiveness of taxpayer or modernizing existing VATs; and approaches to revenue services; administration; (6) Modernizing tax legislation (4) Strengthening the management including Income Tax Acts, VAT (2) Developing and implementing risk- and compliance of the large Acts, and Tax Administration Acts. based compliance improvement taxpayer segment; strategies;
Regional Taxpayer Survey Workshop, Fiji, April 2019
ANNUAL REPORT 2019 | PFTAC 39
WORK PROGRAM EXECUTION prioritization in responding to workshops. In 2018-19 these included a The PFTAC revenue administration member country needs. Those VAT Implementation workshop for those program continues to focus on two demands have grown more given countries contemplating the introduction of key objectives: (1) strengthening the wider revenue mobilization VAT; ‘Leading Change’ and a ‘Regional revenue administration and agendas of most Pacific countries. Technical Assistance Needs’ workshop governance arrangements, and The 2017 signing of the regional which provided an opportunity to discuss (2) strengthening core tax PACER Plus trade agreement by PIC tax reform progress and CD needs. A administration functions. The some Pacific nations has added regional Tax Administration Diagnostic program is delivered by a resident tax pressure given projected trade tax Assessment Tool (TADAT) workshop administration advisor and draws on losses that will need to be offset by provided senior tax administration officials an extensive pool of international tax new revenue sources, with the with an overview and training on the administration experts. These efforts impact varying by country. Given the TADAT methodology. A workshop to are expected to help mobilize expanding demand for PFTAC facilitate the design of a Taxpayer Survey domestic revenue with lower Revenue assistance that has been framework adaptable by all member administrative costs but better filing highly effective over the years, countries will be repeated annually and is and payment compliance rates. negotiations with Australia expected to provide a valuable resource to Additional modest resources are culminated in June 2018 with an better monitor taxpayer satisfaction levels provided from the IMF’s Legal injection of financing to PFTAC to and address identified weaknesses. Department for drafting new or scale-up the Revenue program. revised tax legislation to support the A joint CARTAC/PFTAC event on Revenue revenue program objectives, as well Potentially, this means that the Mobilization in the Caribbean, Pacific, and as tax policy expertise from the Fiscal revenue program will expand by other Small Island States was convened at Affairs Department. approximately 45 percent from the IMF Headquarters in Washington in July baseline Phase V plan with program 2018. Tax administration heads or senior Through the generous support of the delivery expanded through the officials participated from 18 Caribbean and Australian government, additional delivery of additional short STX and 12 Pacific nations as well as Cape Verde, funding to expand PFTAC’s revenue Headquarters delivered TA. Most of Maldives, Mauritius, and the Seychelles. program by approximately 45 the scaling-up is directed to PACER Presentations on tax administration, tax percent was pledged with an initial Plus signatories, with early policy, and tax legislation were delivered by tranche received in FY19. This expansion in the Cook Islands, a wide range of very experienced and scaling-up of the revenue program Kiribati, Solomon Islands, and knowledgeable experts in tax will provide tax policy advice, tax Tonga, as well as Fiji that is not a administration, tax policy, and tax legislation drafting, and extensive tax signatory to the trade agreement. legislation made presentations from the administration CD. Beyond a broad IMF, Small Island Developing States revenue mobilization objective, these (SIDS) and other development partners. At the regional level, PFTAC works additional resources will support The workshop addressed issues and closely with the Pacific Island Tax countries facing declining trade tax challenges relevant to the Caribbean, the Administrators Association revenues expected through trade Pacific and other SIDS. (PITAA) in presenting CD liberalization under the PACER Plus Agreement. PFTAC capacity building and training focuses largely on strengthening core tax functions and facilitating the design of compliance improvement strategies.
Revenue Program Expansion There has been long-standing unmet demand for additional assistance under the PFTAC revenue program. With a single resident advisor, the program has operated at full capacity in recent years, necessitating difficult Delegates at the Joint CARTAC/ PFTAC event on Revenue Mobilization, Wash DC, July 2018
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For the second consecutive year, (3) completion of an IT quality (5) designed the framework to introduce a assurance review; small business tax; and PFTAC hosted an annual awards (6) assisted with drafting amended dinner and recognized the (4) improved risk management legislation for the implementation of achievements of three countries for synchronized to new IT system Sea Bed Mining. their progress in advancing their developments; revenue reforms. Fijian Minister for Strengthening of revenue administration in Economy, Hon Aiyaz Sayed- (5) implementation of VAT audit RMI led to: Khaiyum, presented the awards to tools; and Kiribati for strengthening core tax (1) improving taxpayer registration functions, Fiji for supporting regional (6) an objective report on the processes; and
tax administration development, and effectiveness of reforms and (2) an action plan to improve the Tonga for strengthening revenue effects of adopting a risk-based Compliance Improvement management of outstanding returns administration and governance Strategy, with respect to: and tax arrears. arrangements.
PFTAC’s support to Nauru facilitated: • improvements in on-time filing, on-time payment and the management of tax (1) a review of current organizational arrears and outstanding arrangements and recommendations returns; for further enhancements; and
• a strategy to improve (2) an action plan to improve core tax compliance in the High functions. Net-Worth Individual segment; Niue benefitted from assistance that led to:
• legislative review of the Fiji’s minister for Economy, Hon (1) improvements to the current Aiyaz Sayed-Khaiyum presents VAT and Stamp Duty Acts. organizational structure; awards to Kiribati FSM received PFTAC support to: In the Cook Islands PFTAC (2) a plan to improve core tax functions; assistance led to: (1) strengthen on-time filing, on- (1) a review of reforms and time payment and the (3) recommendations to modernize the opportunities to further management of tax arrears and Niue Income Tax Act; and strengthen revenue outstanding returns; and administration and core (4) legal assistance to renew the Niue Tax functions; (2) improve audit capability Administration Act with harmonized
(2) the development of a renewed procedural and administrative rules. strategic and business plan; and In Kiribati, PFTAC provided technical assistance to: PFTAC assistance to Palau helped with: (3) new processes to strengthen arrears and returns (1) develop a modernization (1) a joint tax policy and revenue management. project plan; forecasting mission provided advice on the design and projected impact of Extensive support to Fiji led to the (2) develop a VAT audit tool kit to introducing VAT; following achievement: strengthen audit processes; (2) a VAT training manual to support the audit capability and planning; implementation of VAT legislation; (1) development of a platform for the (3) strengthen the collection of tax full implementation of self- arrears and outstanding (3) a training program for staff to prepare assessment that is aligned to returns; for VAT implementation; and administration’s new Information
Technology (IT) system; (4) strengthen the collection of tax (4) development of a function-based
arrears and outstanding organization to manage compliance. (2) development of a tax rulings returns; program;
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BOX 3. REGIONAL VAT WORKSHOP- FIJI
Seven PICs and representatives established VAT regime from Bhutan attended a workshop on countries such as Fiji and ‘Implementing a Successful Value Kiribati. The workshop also Added Tax (VAT)’. Participating included discussions countries without a VAT included relating to potential revenue Solomon Islands, Palau, RMI, Nauru, reforms arising from the and FSM who received advice on the Pacific Agreement on critical issues relating to the Closer Economic Relations successful implementation of VAT (PACER Plus) trade with experience shared from agreements with Australia and New Zealand. Regional VAT Workshop, Fiji, September 2018
(2) the development of a new Corporate (2) the development of the tax audit In Papua New Guinea, the PFTAC Revenue program contributed to: Strategy and Business Plan; function and design of an audit plan;
(1) an evaluation of organization wide (3) an action plan to strengthen the (3) developed a plan for the further reforms and recommendations to management of tax arrears and expansion of the Large Taxpayer Office; advance their implementation; and outstanding returns; (4) developed an Industry Partnership (2) the implementation of a Medium-Term (4) implementation of a function-based approach to deal with high risk industry Revenue Strategy (MTRS) funded structure; segments; through the Revenue Mobilization Trust Fund and backstopped by FAD. (5) an action plan to introduce a Large (5) reviewed the organizational structure Taxpayer Office; and provided recommendations for further enhancements; In Samoa technical assistance led to: (6) a plan to strengthen the audit function; (1) a full review of the audit program, (6) assisted in the development of a plan to structure, staffing arrangements, (7) the design of a modernization strategy; improve on-time filing, on-time payment management practices, risk analysis and and the management of tax arrears and and case selection systems and outstanding returns; assistance in designing a new audit (8) strengthening the taxpayer services plan. function. (7) facilitated the design of a plan to improve the audit function;
Expanded engagement with the Solomon In Tonga, PFTAC is contributing to a major (8) reviewed the impacts of the PACER Islands contributed to: scaling-up in revenue reforms including: Plus Trade Agreement; and (1) a review of overall reforms undertaken (1) a review of overall reform progress and in recent years and recommendations the identification of future technical (9) assisted in the rewrite of the Revenue for further modernization; assistance needs; Services Administration Act and Consumption Tax Act.
Participants during Taxpayer Survey Workshop, April 2019
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BOX 4. REVENUE REFORMS IN TONGA Modernizing our tax administration is a Framework that is designed to improve compliance trends already improving. top priority which over the last few the quality of life for all Tongans by The taxpayer services function, years has resulted in several initiatives 2025. An increase in taxpayer services included in the new organizational contributing to increased tax revenues. and education activities over the last structure, arranged a tax week This has included improvements to our two years has seen an increase in the “Revenue from the Community for the legal framework such as a redrafted number of registrations for Income Tax, Community” which raised wide Revenue Services Administration Act Small Business Tax, Employers awareness of tax obligations and was and a Consumption Tax Act. (PAYE), and Consumption Tax. The supported by an intensive media Modernizing our organization along creation of our Risk Management Unit campaign. These initiatives have functional lines has sharpened our has taken the lead in risk identification played a significant role in improving efficiency and increased performance and embarked upon numerous compliance with tax revenues far across core functions. Our new compliance activities that have exceeding projections for both 2016 corporate plan supports the produced good results. The creation of and 2017. Government’s Strategic Development our Large Taxpayer Office has proved Kelemete Vaha, Chief Executive to be a good strategic decision with Officer, Ministry of Revenue and Customs, Tonga
Technical assistance to Tuvalu included: (5) a review of the current IT system. (3) drafting a Tax Administration Bill, technical notes and regulations; (1) a review of core tax functions; In Vanuatu, PFTAC’s support contributed
to: (4) facilitating the design of a renewed (2) strengthening on-time filing, on-time Compliance Improvement Strategy for payment and taxpayer services; (1) implementation of a new function-based 2019 – 2010; structure; (3) development of an overarching (5) the design of a Taxpayer Services modernization plan; (2) the design of a project plan to facilitate Strategy; and implementation of organizational (4) the design of a compliance improvement reforms; (6) a plan to improve on-time filing, on-time strategy to improve compliance; and payment and management of tax arrears and outstanding returns.
BOX 5. MODERNIZATION OF VANUATU’S DEPARTMENT OF CUSTOMS AND INLAND REVENUE
Vanuatu’s administrative reforms have Using Vanuatu’s Model of The Vanuatu segment by 53 percent with modest gained momentum over the last few Economy (MOVE) we were able to increases across the small and years resulting in: (a) the development demonstrate that a large proportion of medium segments. A renewed CIS is of a new strategic and business plan; this increase was attributed to currently under development and (b) a risk-based Compliance increased voluntary compliance. In includes elements related to the Improvement Strategy (CIS); (c) 2018 VAT increased by 20 percent TADAT framework. implementation of a function-based over 2017, although part of this A prosecution strategy has resulted in the structure; (d) implementation of basic increase is attributed to a 2.5 percent prosecution of 5 high risk taxpayers performance standards; (d) a computer increase in the VAT rate, indications sending a strong message to taxpayers system which has facilitated taxpayer are that part of this growth, as in 2017, that strong enforcement action will be compliance; and (e) setting up a project can be linked to increased voluntary taken against those that do not comply. management framework and compliance. PFTAC has played an important role governance structure to oversee The CIS has seen inroads into reducing supporting us in our reform agenda for reform implementation. the number of outstanding VAT returns which we are most appreciative. Under our CIS, we have seen an by 24 percent & reducing the number Collins Gesa, Acting Director, Division increase in VAT revenues and an of debtors by over 25 percent. Debt of Customs and Inland Revenue, improvement in targeted areas. VAT levels in the Very Large segment was Vanuatu revenues increased by over 17 percent reduced by 40 percent, the Large in 2017 compared to 2016. segment by 81 percent, and the Micro
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BOX 6. RECENT TAX LAW WORK IN THE PACIFIC
A considerable volume of legislative sections and over 450 pages. A small went to Parliament in February 2019. drafting assistance has been provided working group has been put together to The drafting of a TAA has commenced under the PFTAC Revenue program in oversee the rewrite process with the in Niue and the work on the TAA will the Pacific. The reforms have primarily aim of keeping the new ITA to no more run in parallel with the ITA rewrite. involved updating and modernizing tax than 100 pages!! The working group Tax reform work has commenced in legislation, particularly for the income includes representatives from Treasury Kiribati, with legislation prepared to tax and VAT. and the Internal Revenue Commission. amend the ITA to provide for the Two countries with old Income Tax Work has commenced on modernizing taxation of seabed mining operations Acts (ITA), Papua New Guinea (1959) and simplifying VAT legislation in Fiji and to introduce a presumptive tax for and Niue (1960), have commenced the and Tonga (where the tax is referred to small business. process of rewriting their ITA as a as “consumption tax”). Fiji has also modernized and simplified income tax started a rewrite of the Stamp Duties law suitable for the current business Act. A focus of the VAT rewrites is on and economic environment in the improving the taxation of supplies of respective countries. Interestingly, in imported services, including digital their origin, the ITAs in both countries products, and reviewing exempt and were largely transplanted from other zero-rated supplies. Work has countries (Australia in the case of PNG continued in Palau on the development and New Zealand in the case of Niue) of a VAT law. and, therefore, the ITA rewrite in both Several PICs have been working on a countries is an opportunity to Tax Administration Act (TAA). In broad implement income tax legislation that is terms, a TAA provides for harmonized Attendees at a training program on the more relevant to the needs of the two procedural and administrative rules Vanuatu TAA run by the University of New countries. applicable to inland taxes, particularly South Wales with financial support from Australian AID showing their excitement at The PNG ITA has been amended many the income tax and VAT. Both PNG having a TAA. times since its original enactment and and Vanuatu have recently enacted a is a long and complex piece of TAA, and the bill for a new Revenue legislation running to around 800 Services Administration Act in Tonga
Mr. Peter Mondoro, Assistant Secretary, The initial work in Tonga was interrupted Revenue Policy, Treasury, and chair of by Cyclone Gita, which hit during the the ITA rewrite working group, and Mr. middle of the mission and saw tax Lee Burns (who noted that the PNG ITA reform work give way to helping with the was “born” the same year as he was, clean-up. which is a good reason of itself to rewrite it!
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I II PUBLIC FINANCIAL MANAGEMENT
MAIN ACHIEVEMENTS policy-based budgets through (6) Facilitating effective cash (1) Improving capacity to meet fiscal improved documentation management through improved responsibilities by using accompanying parliamentary forecasting and monitoring; and diagnostic assessments to build budget submissions; reform programs; (7) Improving the management of (4) Improving data integrity and fiscal risks associated with (2) Modernizing public financial budget execution through risk oversight of state-owned management legislation to based internal audit; enterprises by establishing support on-going reforms, fiscal oversight and reporting responsibility, and transparency; (5) Strengthening the coverage of mechanisms. reporting with improved account (3) Helping PICs to have more structures; comprehensive, credible, and
Public Financial Management Seminar hosted by the Fiscal Reform Commission, Timor-Leste, March 2019
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WORK PROGRAM EXECUTION
In FY2019, PFTAC completed 33 country countries to improve reporting on assets identified additional improvements and/or missions (totalling 469-person days) and and liabilities within the notes to the strategies for improving monitoring and conducted or participated in three regional financial statements. Examples of oversight. workshops and two regional meetings on changes being supported through PFTAC PFM topics. More than one third of the assistance include reporting on non- In the Cook Islands PFTAC helped: missions, in terms of person days, were financial assets and equity investment. conducted by the two Suva-based PFM Data classification in financial reporting is (1) Prepare the structure of the Chart of advisors with the remainder delivered by occurring through additional reporting on Accounts for implementation with the STX and with Fiscal Affairs Department functional and administrative new FMIS. (FAD) staff in one case. classifications while economic Extensive support to Fiji led to the classifications are now being structured to following achievements: The major users of PFM TA during the year reduce overlap and provide improved were Fiji, Kiribati, Samoa and Vanuatu. economic data. (1) Completion of a comprehensive The major topics of assistance continued redrafting of the Public Financial to be Public Expenditure Framework These IPSAS reforms were addressed in a Management Bill to replace the Evaluation (PEFA) assessments; January 2019 workshop on financial current public Financial improving controls and developing internal reporting that allowed for member Management Act; audit processes; implementing countries at more advanced stages of International Public-Sector Accounting reform to present their experiences and (2) Adoption of a risk-based audit Standards (IPSAS) cash accounting and challenges to others from the region. This methodology for payroll that is a accounting frameworks and policies. peer-to-peer interaction allows countries to significant component of the budget; appreciate problems shared by others to The PEFA framework was updated by the work collaboratively towards solutions. (3) Further development of a new Chart PEFA Secretariat in 2016 with the revised of Accounts, including development framework now implemented across the Expansion and enhancement of cash of new economic classifications of region. Multi-phase assessments are now management and cash flow forecasting revenues, expenditures, assets, and required covering: (1) a review of the was a major focus during a workshop in liabilities; progress achieved since the last PEFA, late April. It provided countries an utilizing the previous framework; (2) opportunity to share their existing (4) Draft instructions on financial completion of an assessment under the forecasting models and cash management reporting for small public enterprises new framework, and (3) inclusion of both practices. Presentations focused on the and statutory authorities; and assessments in the report. This requires relationship between the medium-term additional assessment effort and lengthens fiscal strategy and management practices, (5) Building on earlier TA for the the report. This was fully implemented in including communication strategies. analysis of fiscal risks associated the Samoa assessment during 2018. Participants were able to learn best with SOEs. Planning for the PEFA in PNG has been practices in forecasting models, with an underway throughout 2018, and more opportunity to review and enhance their In Kiribati the focus of PFTAC assistance recently, a Fiji PEFA is being explored. models through interactive discussions in conjunction with FAD: with country officials and workshop (1) Finalized the PIMA assessment to Improvements in internal audit practices moderators. Country officials who have have been occurring throughout the region. improve processes around public successfully reformed cash management investment management. While initially this involved the and/or cash flow forecasting presented establishment of audit committees, their achievements and discussed the PFTAC’s support to Nauru is helping implementation of audit charters and challenges faced. Such interaction allows make: reporting, recent work has turned to countries to recognize commonly updating planning and audit practices that (1) Systematic and procedural changes experienced problems to work to improve compliance with IPSAS are consistently risk based. This includes cooperatively to find solutions. establishing risk-based audit of systems, cash reporting. such as procurement and payroll. Finally, reforms in monitoring the fiscal In Papua New Guinea, the PFTAC PFM risks associated with state owned program: Financial reporting is being enhanced on enterprises (SOE) and oversight of SOEs multiple fronts. A major update to the has been improving in the region from (1) undertook preparatory work ahead of IPSAS cash reporting requirements related PFTAC assistance and previous a national PEFA assessment in early to financial reporting took effect in January workshops. Missions during the year FY2020. 2019 (with earlier implementation reviewed country implementation and encouraged). It provides opportunities for
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BOX 7. PEFA in SAMOA
Samoa was the first PFTAC Samoa has undertaken ongoing developing a new roadmap will now member to undertake a full PEFA PFM reforms for over a decade need to consider the greater assessment under the revised which at first glance under the new expectations around PFM actions 2016 methodology, noting that the methodology looked to have had and the Samoan context in where last PEFA to be undertaken in PNG little success in terms of the ratings. we need to focus our efforts to was a test version of the revised The 2016 guidelines for reporting consolidate our gains and meeting methodology. Samoa’s previous indicate that a direct comparison these new expectations. PEFA experience in 2014 utilized cannot be made. Tracking change the 2011 methodology. is done by using the PEFA framework used in the previous What is considered good PFM assessment to the corresponding practice has evolved over time data for the years covered by the mostly driven by ongoing PFM current assessment. Essentially reforms, resulting in higher applying two lenses to the same expectations. Amongst other evidence. things, the updated PEFA framework has a stronger focus on The Government's PEFA internal financial controls, greater Taskforce were responsible for the requirements for public access to initial evidence gathering and the more comprehensive financial conduct of a self-assessment information and more emphasis on outlined the initial surprise “Being use of macro forecasts and the able to clearly demonstrate that adoption of a medium-term improvements had been made PEFA Assessment, Samoa, Aug 2018 approach towards budget. since 2014 was a positive point to make. The process towards
(1) the PFM advisor joining the Article IV In Samoa, an extensive program of PFM Help to Tokelau included: technical assistance included: missions to ascertain how PFM reforms were progressing and to (1) Developing a PFM roadmap arising (1) A full in-country PEFA assessment identify opportunities to further out of the findings in the 2016 under PFTAC leadership including integrate CD and surveillance; and PEFA self-assessment. post-assessment follow-up; (2) Follow-up training on cash Timor Leste benefited from: (2) Redevelopment of budget forecasting and a progress review of documentation for submission to outcomes from previous cash (1) Participation of the PFM advisor in Parliament to enhance forecasting missions. the Fiscal Reform Commission’s understanding of the budget; In Tonga PFTAC: Public and Financial Management Seminar for Sustainable Growth (3) Developing a strategic plan for the (1) Assisted in the PFM Symposium and Development. Internal Audit Unit and training to hosted by the Tongan government implement a risk-based audit in conjunction with PASAI to assess In Vanuatu, PFTAC’s support methodology; progress against the PFM roadmap contributed to:
(4) A review of the government’s (2) Assessed the progress of internal (1) Adoption of a risk-based approach compliance with requirements of audit and financial reporting facilities towards internal audit activities and IPSAS cash accounting standards along with training for internal reviewing the progress on the risk- and drafting of non-financial asset auditors on risk-based auditing; based internal audit of the payroll accounting and reporting policy; system; and (3) Assisted with further improvements to (5) Developing a revised warrant economic classifications in the (2) Developing capability and capacity in system to improve cash existing chart of accounts; and the Ministry of Finance in the management processes; and adoption of improved financial (4) Reviewed progress with the reporting and new accounting (6) Developing risk indicators to implementation of financial reporting regulations. monitor each of the SOEs reforms and compliance with IPSAS
The Solomon Islands benefited from: cash.
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BOX 8. WORKSHOP TO STRENGTHEN FINANCIAL REPORTING IPSAS CASH OR ACCRUALS BASED ACCOUNTING
Finance ministry officials from 14 compliance with cash basis, which genuine desire to learn from the countries and audit officials from is considered a requirement for the experience of each other. Many two countries attended a PFTAC transition to accruals. Participants participants noted the lack of organized workshop in late January noted that the standard allows understanding in their country that 2019. Countries shared their reporting on data associated with compliance with even the most financial reporting and accounting accrual accounting, such as fixed basic reporting standards requires practices which highlighted that assets, payables, and government robust accounts, which in turn most countries used cash basis business enterprises within the relies on a basic level of capability accounting and were working notes to the financial statements. in relation to internal controls, toward accrual accounting, with just The importance of appropriate human resources, Financial a few already on a full accrual basis timing and a pathway for transition Management Information Systems, of accounting and financial from cash to accrual accounting chart of accounts, and reporting. provides an opportunity to reflect reconciliations. on the implementation of full Presentations, activities and peer accrual accounting and the benefits Each country developed an action engagement during the workshop versus the cost. plan for financial reporting activities improved understanding of the which was presented by country requirements of the International Presentations were delivered by officials to reflect a practical Public-Sector Accounting countries that reflect advances in approach to improving financial Standards (IPSAS) and challenges practices such as electronic reporting taking into consideration in improving reporting in payments (Fiji), improvements to individual country circumstances. accordance with these standards, notes to accounts (Samoa), and Appropriate follow-up with each particularly issues with recent enhancements in asset country will be built into PFTAC’s changes in the IPSAS “Financial management (Fiji). Engagement future CD engagements. Reporting under the Cash Basis of was extensive with and between Accounting”. The change eases workshop participants and a
Regional Workshop on Improving Financial Reporting, Fiji, January 2019
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TABLE 10. PEFA & PIMA ASSESSMENTS AND PFM ROADMAPS IN PACIFIC ISLAND COUNTRIES
Most Number of PFTAC Guided Most Roadmap Planned Planned Completed Country Recent PEFAs Self- Recent Development Roadmap PEFAs PIMA External (Final) Assessments Roadmap Support Development
Cook Islands 2014 2 2013 - - 2016 Self - FSM 2012 1 2016 - - 2018 Self FY19 Fiji 2012 1 2012 Full: FY19 - 2016 PFTAC - Kiribati 2009 2 2017 - 2018 2011 EU FY20
Nauru 2010 1 2016 - - Revised ADB/PFTAC FY19 Revised Niue 2011 1 - - - PFTAC - 2014 Palau - 0 2013 Full: FY19 - - - FY19
PNG 2015 3 2014-15 Full: FY20 - 2015 PFTAC/FAD -
RMI 2012 1 2012 - - 2013 PFTAC - Samoa 2018 4 2013 - - 2014 Self - Solomon Islands 2012 2 2012 - - 2018 PFTAC -
Timor Leste 2019 3 - - 2017 - - -
Tokelau - 0 2018 - - 2019 PFTAC - Tonga 2010 2 2014 Self: FY20 - 2014 PFTAC - Tuvalu 2011 2 2015 - - 2017 PFTAC Vanuatu 2012 3 2015 - - 2016 PFTAC
Joint PFM and Macro Regional Workshop on Cash Management and Forecasting, Samoa, April 2019
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I II MACROECONOMIC PROGRAMMING & ANALYSIS
MAIN ACHIEVEMENTS leading capacity development at Planning to develop GDP (1) Ten of PFTAC’s 16 members, their institutions, the PNG public forecasting; and Cook Islands, Fiji, Palau, PNG, sector and the region; RMI, Samoa, Solomon Islands, (5) In response to member requests Tonga, Tuvalu, and Vanuatu (3) The Samoa Macroeconomic for customized training, PFTAC have a macroeconomic Policy Coordination Committee organized joint training events programming framework that is was revitalized following an with the IMF’s Institute for observation attachment to ; used in policy analysis; Fiji Capacity Development and
Singapore Training Institute. (4) The Tonga Ministry of Finance (2) The Bank of Papua New Guinea assisted staff at the and Department of Treasury are Tuvalu Ministry of Finance and Economic
Course on Fiscal and Monetary Policy Forecasting, Papua New Guinea, April 2019
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WORK PROGRAM EXECUTION
Bank of Solomon Islands and the was to bring together IMF and technical The macroeconomic program is focused Ministry of Finance and Treasury in staff from member countries to better on assisting members to develop Honiara. It brought together 48 analysts integrate capacity development and quantitative tools for use in policy from Cook Islands, Fiji, PNG, Samoa, surveillance. Staff from the IMF’s Asia analysis, forecasting, debt sustainability, Solomon Islands, Timor-Leste, and Pacific Department joined the and external vulnerability analysis; Tonga, Tuvalu, and Vanuatu to workshop to help facilitate discussions. strengthening inter-agency coordination; discuss the importance of sound and sharing experience, knowledge and macroeconomic policy and institutions. It The Bank of Papua New Guinea expertise among policy analysts and was followed by a two-day extended (BPNG) and the Department of Treasury advisors across the region. session for participants from PNG (DoT) co-hosted a five-day course on and Solomon Islands on ‘Adjustment Macroeconomic Policy in April. It was In response to member requests for Options for Commodity Exporters’. held at the DoT and facilitated by ICD, customized training PFTAC organized PFTAC and STI. Participants were three joint training events with the IMF’s Thirty-six participants from 14 PFTAC invited from the BPNG, the Departments Institute for Capacity Development and members analyzed sources of economic of Finance, National Planning and Singapore Training Institute in FY2019: growth and productivity at a three-day Monitoring and Treasury, the Internal workshop on ‘Policy Making to Influence Revenue Commission, the National A five-day course on ‘Macroeconomic Sustainable Growth and Productivity’ in Economic and Fiscal Commission and Policy for Stabilization and Growth in the Nadi. An important aspect of the training the PNG Customs Services. Pacific’ was co-hosted by the Central
BOX 9. CUSTOMIZED TRAINING GETS HIGH MARKS
In response to member requests for country presentations, group the training events to others. customized training PFTAC discussions and technical hands-on Participants particularly valued that organized joint training with the IMF’s exercises for which new tools and the courses were tailored to the Institute for Capacity Development country data were constructed. Pacific and the peer-to-peer learning. and Singapore Training Institute. A Feedback suggests that customized The positive Pacific experience is five-day course on Macroeconomic regional training is a key aspect of helping design other IMF customized Policy for Stabilization and capacity building with 98% and 91% training. Growth in the Pacific and a two-day of participants agreeing or strongly extended session on Adjustment agreeing that they would recommend Options for Commodity Exporters were hosted by the Central Bank of Solomon Islands and the Ministry of Finance and Treasury. The courses focused on strengthening the understanding of linkages between macroeconomic sectors by constructing sector by sector a “microframework” populated with PNG data.
A three-day workshop on Policy Making to Influence Sustainable Growth and Productivity preceded and fed into PFTAC’s 25th anniversary celebrations. The event provided a mix of theoretical training designed from ICD lecture material, Regional Course on Macroeconomic Policy for Stabilization and Growth in the Pacific, Solomon Islands, July 2018
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The FY19 events were designed from ICD (1) A medium-term fiscal strategy has output and the output gap are useful and STI training material and focused on been released for 2019/20-22/23; indicators for the conduct of monetary topics of relevance to the region and and fiscal policy but not directly available data. PFTAC members highly (2) To establish and implement new observable. value the IMF’s extensive program of ICD fiscal rules, following IMF and STI courses, workshops and seminars methodology, Ministry of Finance (1) A working paper was prepared and which are an important complement to and Economic Management presented at the Nadi workshop PFTAC technical assistance, but (MFEM) staff developed a tool and the inaugural South Pacific participants often find it difficult to apply new which is integrated with the fiscal Central Banking Research skills and knowledge acquired at these forecasting and budget processes; Conference; and events in their home countries because of lack of data. (3) MFEM has agreed to share the (2) Work has started to estimate new tool with Pacific neighbours. potential and output gaps for other PFTAC continued to facilitate multi-topic Pacific countries. workshops. The macroeconomics program Work is also on-going to estimate the was involved in training events on GFS, VAT economic and revenue contribution of To address fiscal challenges and make Implementation and Cash Management. the international financial services the tax system fairer and more efficient industry. Palau is considering fiscal reform Cook Islands is preparing for a surveillance options. Grants are terminating under type-technical assistance mission. It will be Researchers at the Reserve Bank of Fiji the Compact Agreement with the United led by the IMF’s Asia and Pacific Department are collaborating with an Economist States and fishing revenues will fall with PFTAC assistance and review from the IMF Resident Representative following the signing into law of the macroeconomic policy and institutions. Office and the PFTAC Macroeconomic Palau National Marine Sanctuary Act. Advisor to estimate potential output and Fiscal reform options include: Prudent fiscal management is essential for an output gap for Fiji using ICD training macroeconomic stability: material and computer code. Potential
BOX 10. PEER TO PEER LEARNING: FROM TONGA TO TUVALU AND BACK
In October 2018 Sione Faleafa, Chief decision-makers in a timely Economist, Ministry of Finance, Tonga, manner.” Niuatui Niuatui, Director of joined PFTAC Macroeconomic Advisor Iris Planning, Budget and Aid Claus in Tuvalu to share his knowledge Coordination, Tuvalu Ministry of and Tonga’s experience with GDP Finance & Economic Planning. forecasting and assist staff at the Ministry of Finance and Economic Planning to “Helping set up the Tuvalu develop their own GDP forecasting framework has given me new ideas framework. Having indicators of economic for how we can enhance our own activity is critical for forecasting and a framework back home.” Sione database, Tuvalu Economic Indicators Faleafa, Ministry of Finance, Tonga. (TEI), was set up. Peer-to-peer learning is invaluable. “Having access to a good forecasting Thank you Minister Tu'I’onetoa and framework is remarkably enriching the CEO Fa’otusia for releasing Sione government in its budget preparation to join me in Tuvalu!” Iris Claus, PFTAC Macro Advisor, Iris Claus with and particularly informing our PFTAC. Sione Faleafa from Tonga Ministry of Finance
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(1) Introduction of a VAT and expansion of Work is continuing to incorporate enhanced (2) Enhance budget processes and the net profit tax for businesses to GDP compilation methods into forecasts documentation. replace import duties and the highly and develop composite indexes of distorting gross revenue tax; and indicators to estimate and forecast non- In Samoa a Technical Forecasting mineral and mineral GDP. Committee was formed in 2017. In 2018 (2) Reductions in wage and salary tax to members from the committee participated compensate workers for a one-off The Budget is a key document for the in a two-week attachment to the Reserve increase in process that may result from Government to communicate how it plans Bank of Fiji to observe the process of the the VAT. to achieve policy objectives in the short and Fiji Macroeconomic Committee. Following medium term. Staff at the RMI Ministry of the observation attachment, the team made Increased revenue could be used to build Finance are continuing to: recommendations on how “to enhance up the Palau trust fund to provide a GDP forecasting ability for better policy perpetual revenue stream. (1) Progress medium-term budgeting; making, planning and budgeting”. The and team’s recommendations led to the Samoa The BPNG and DoT are leading capacity Macroeconomic Policy Coordination development for macroeconomic analysis Committee being revitalized. and forecasting at their institutions, the PNG public sector and the region. Joint ICD-STI-PFTAC events happened because of a BPNG request to ICD for tailored training.
(1) The BPNG’s Monetary and Fiscal Forecasting (MFF) Model was used for the Honiara training; and
(2) The DoT hosted an interagency workshop which was an important event to share data and knowledge on national accounts following methodology changes by the NSO to the measurement of GDP. Sub-Technical Committee debating the Forecasts, Samoa, October 2018
BOX 11. REVITALIZED SAMOA MACROECONOMIC POLICY COORDINATION COMMITTEE
To strengthen institutional structures Coordination Committee (MPCC) was produces consolidated forecasts that for macroeconomic policymaking a revitalized with a new structure, terms are published in the Fiscal Strategy. Technical Forecasting Committee of reference and memorandum of was formed in 2017 comprising understanding that is to be finalized “The observation attachment to the members from the Central Bank of before the end of the 2018/19 financial Reserve Bank of Fiji was a great Samoa, the Ministry of Finance, the year. opportunity for the team Samoa Ministry for Revenue, and the Samoa (from the Technical Forecasting Bureau of Statistics (advisory role). The new proposed MPCC has three Committee) to grasp the knowledge Committee members participated in a levels chaired by the Ministry of and experience the process of two-week attachment to the Reserve Finance—Main Committee, Technical conducting meetings, and to gain Bank of Fiji in 2018 to observe the Committee and Sub-Technical an understanding of the nature of process of the Fiji Macroeconomic Committee—and the following each level of each committee’s Committee. members: a. Ministry of Finance; b. focus, roles and responsibilities.” Central Bank of Samoa; c. Ministry for Samoa Attachment Report, October Following the observation attachment Revenue; d. Ministry of Commerce, 2018 and recommendations by the team, Industry and Labor; and e. Samoa the Macroeconomic Policy Bureau of Statistics. The MPCC
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In Solomon Islands staff at the Central not generate significant revenue Tuvalu Economic Indicators (TEI), Bank of Solomon Islands (CBSI) and the but are costly to collect. was set up; Ministry of Finance and Treasury (MoFT) continue to enhance their Staff at the Tonga Ministry of Finance (2) Real GDP estimates and forecasts macroeconomic programming continue to use and enhance tools by industries are produced based frameworks. A template for the developed in joint technical assistance on the economic and fiscal monetary sector which was discussed provided in FY2016 by PFTAC and a indicators in the TEI database and during the ICD-STI-PFTAC training in secondee from the Reserve Bank of GDP deflators are forecast with Honiara was adopted in the CBSI New Zealand. Peer-to-peer learning is a world prices and components of the model. key aspect of capacity building and the consumer price index; and Finance Ministry’s Chief Economist The MoFT’s Solomon Islands joined the Macroeconomic Advisor in (3) Methods were also enhanced to Macroeconomic Model (SIMEM) is derive annual estimates of being used to inform tax reform to Tuvalu to help develop GDP economic and fiscal variables when support private sector economic activity forecasting. partial data for the year are and investment: available. In Tuvalu staff at the Ministry of Finance (1) Medium-term revenue projections and Economic Planning continue to Staff at the Reserve Bank of Vanuatu have been produced for the current build capacity for GDP forecasting (RBV) continue to use the Model of the tax systems; and which is a key statistic for Vanuatu Economy. In 2016 RBV staff macroeconomic analysis, monitoring presented on GDP forecasting using a (2) The effects were quantified of and forecasting. composite index of indicators at a introducing a VAT to replace the PFTAC workshop on GDP compilation goods tax and import duty which (1) Having indicators of economic and forecasting. Composite indexes to are particularly harmful to activity is critical and a database, estimate and forecast non-mineral and economic activity and the sales tax mineral GDP are now being developed and other ‘nuisance tax’ which do in PNG.
BOX 12. INAUGURAL SOUTH PACIFIC CENTRAL BANKING RESEARCH FOR POLICY CONFERENCE
The central banks of Fiji, PNG, journals and international and policy; and (iv) encourage Solomon Islands and Vanuatu, conferences. Non-technical versions retention of high-quality researchers together with Australia’s Griffith of the papers are published in the local in the region. This year’s research for University convened an inaugural media and posted on the South policy conference will be hosted by the research conference in Suva, Fiji on Pacific Centre for Central Banking Reserve Bank of Vanuatu. There are December 12 – 13, 2018. The event (SPCCB) blog. The objectives of the plans for a central banks-SPCCB- brought together central bank SPCCB are to: (i) build credible local PFTAC collaboration in 2019 which researchers to share with academics, capacity for policy-oriented research; will be further explored at the PFTAC policy makers, regulators, multilateral (ii) generate research results for use steering committee meeting in Port organizations, business leaders, civil by policy analysts and policy makers; Moresby. society, from the South Pacific and (iii) promote links between research Australasia current research on the region and to explore vital links between research and policy relating to central banking, including financial and private sectors and economic growth and development. Invited key stakeholders from the ADB, DFAT, IMF/PFTAC, the Reserve Banks of Australia and New Zealand, the World Bank and commercial banks, participated in the conference as moderators, speakers and panelists.
Papers presented will be published as working papers and submitted to Delegates at the Inaugural South Pacific Central Banking Research for Policy Conference, Suva, December 2018
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I II MACROECONOMIC STATISTICS
MAIN ACHIEVEMENTS
(1) Improving the use of tax and compilers, through the other administrative data to publication of more timely (5) Compilation and dissemination supplement or replace business results; metadata; and good of Government Finance surveys in the compilation of quality internal business process Statistics (GFS) for the gross domestic product (GDP); documentation; budgetary central government (BCG), and expanding coverage to the general government (GG); (4) Ensuring that new national chart (2) Providing general and targeted and training to local staff to build of accounts (CoA) are mapped compilation capacities; and aligned to the classifications according to the Government (6) Increased coverage in the Finance Statistics Manual 2014 compilation of public sector debt (3) Improving the information (GFSM 2014) for automation in statistics (PSDS). available to data users and the financial systems;
Regional Workshop on GFS Classification, Compilation and Dissemination, Fiji, August 2018
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WORK PROGRAM EXECUTION
Government Finance Statistics increase in the number of in October 2018. This slightly lowered reporters from eleven (FY2018) the projected delivery outturn of the The GFS program maintained to 13 (FY2019) PFTAC member updated workplan to around 84 momentum in FY2019 despite the countries, a major achievement percent, with 16 of 19 planned early departure of the PFTAC GFS since the inception and missions/activities delivered, utilizing resident adviser in October 2018 completion of the Japan 241 days of TA delivery time versus a who continued to oversee and government funded GFS project plan of 275 days (89 LTX days deliver the program from his new in the Pacific; delivered versus 102 days planned, assignment at the Statistics and 152 STX days delivered versus Department at IMF Headquarters. A (3) Expanding coverage to the GG, 173 days planned). Of the 16 replacement resident advisor is due with progress in data preparation delivered missions, two covered to arrive at PFTAC in April 2019. As in Fiji, RMI, Solomon Islands, External Sector Statistics to the RMI envisaged in the Phase V Program Tonga, and Vanuatu. Cook and Kiribati respectively accounting Document and as budgeted, the Islands and Samoa produced full for 36 STX days of field TA. Two position of a resident GFS advisor is consolidated general government regional or sub-regional workshops currently due to end in April 2020. accounts for the first time with a that had been planned during FY19 complete data series of three did not materialize due to the change Over FY2019, ten GFS missions years (FY2015-17) and five years in experts and challenges in (totaling 147 TA field days) were (FY2013-17) respectively. PNG scheduling for the targeted beneficiary delivered: 78 days by the PFTAC kept the momentum of expanding countries. GFS resident adviser, and 69 days GFS coverage to its national by STX. The program also delivered budget volume II with further Despite the gap and changeover of two training programs: a regional improvements to the overall resident advisor, several important workshop in August 2018 in Fiji budget compilation process accomplishments are noted during attended by 11-member countries, aligned to the GFSM 2014; and FY19 including: and a sub-regional GFS training (4) In country missions continued to mission for two northern Pacific (1) Finalizing of rebased National increase coverage in the countries in February 2019 in FSM. Accounts through 2017 in Fiji compilation of PSDS, with and Samoa; progress made in , , The main themes in FY 2019 for the Fiji Samoa , , and GFS program were: Solomon Islands Tonga (2) Improved calculation of cattle . Vanuatu livestock data, an important
(1) Increased assistance in the contributor to economic activity In the northern Pacific nations of the coding and mapping of the new in Vanuatu; and RMI, FSM, and Palau, remote national chart of accounts aligned assistance enabled the compilers to to the guidelines provided (3) Commencement of report GFS for budgetary central through the GFSM 2014. independent GDP calculations and state governments to the GFSY. Reforms started and progressed in RMI. RMI received continued support in in the Cook Islands, Fiji and the compilation and dissemination of The sole objective of the RSS Tonga. Chart of accounts and quarterly GFS for BCG. A hands-on- program is to strengthen financial system reforms were training mission in February 2019 macroeconomic and financial also initiated in the RMI, FSM and assisted new and current GFS statistics compilation and Palau. These reforms may see compilers of RMI and FSM to further dissemination. potential improvements in improve compilation techniques and producing financial statistics if the methodologies. Reliable macroeconomic statistics GFS is automated as part of the (National Accounts (NA) and Balance process; Real Sector Statistics of Payments (BoP)) are essential for
evidence based economic policy- (2) Compilation and dissemination of The RSS program was similarly making by country authorities. They GFS for the BCG for decision affected by a change in resident also provide the private sector, foreign making and IMF surveillance as advisor, with a gap between the investors, rating agencies, and the well as for reporting to IMF’s GFS departure of the former advisor in public in general with important inputs annual database, resulting in an August and the arrival of a successor
ANNUAL REPORT 2019 | PFTAC 56 in their decision-making, while financial management system; In Niue, developments included: informing economic analysis and IMF surveillance. The Macroeconomic (4) Improvements in the quality of (1) both the national accounts and programming and analysis program national accounts statistics with the external sector statistics also rely heavily on high quality data respect to the definition of output tables were updated to 2017–18; for monitoring, analysis and research (particularly relating to and purposes available for policymaking. agricultural output and the air transport industry) and the (2) preparatory work was undertaken Capacity development in this field application of double deflation; ahead of rebasing national aims to improve the ability of member and accounts in 2019, including countries to compile independently analysis of the 2015-16 (5) Staff training to correctly derive and timely high-quality data, to make household income and constant price GDP through the them available to the public, to provide expenditure survey. correct use of intermediate information about their reliability, and consumption prices and to provide expertise about methods In Papua New Guinea, the PFTAC production of volume estimates of and data sources. assistance helped with: taxes on products and imports
and subsidies. In the Cook Islands: (1) coverage being expanded to the
financial balance sheet for In , developments included: (1) time series GFS data was for the Kiribati budgetary central government by
first time submitted for inclusion in collecting and calculating (1) revisions and reclassification of the IMF’s annual GFS database; balances for currencies and institutional sectors and general deposits and accounts payable government GFS data with an (2) progress towards implementation and expense arrears; expansion of coverage to the rest of a revised chart of accounts for of the public sector commenced; the budgetary central (2) review of national budget volume and government was made to support II and advice for 2019 budget
a new financial management implementation; (2) advice provided to reconcile data information system; sets and improve statistics on (3) National Accounts improvements (3) economic and functional codes overseas development to deflation updates; tax data were mapped to automate GFS in assistance. acquisition and mechanized the new financial system; and processing; and In RMI local capacity is being (4) completion of the rebase of the created: (4) revisions to GDP by Production annual and quarterly GDP through joint assistance with the estimates were published in (1) for the authorities to develop ABS. December 2018. National Accounts independently of external providers with PFTAC In Samoa: Fiji received assistance on help towards independent statistical issues towards the determination of value-added (1) strengthened linkages between following: estimates for some production PFM and GFS through activities. participation in the PEFA (1) completion of the general assessment; government unconsolidated data In Nauru, assistance in National series (FY2010-15) to be Accounts has contributed to (2) training of 18 officials of the published as production tables on progress despite staff constraint budget and treasury divisions of the Fiji Bureau of Statistics with: the Finance Ministry on website; guidelines for the GFSM 2014 (1) estimates of gross domestic and how to apply the (2) preparation of draft gross debt product (GDP) by production; methodology during budget statistics for corporations; preparation; (2) utilizing new tax information to (3) mapping and refinement of replace weaker modelled (3) completion and publication of a economic and functional codes components. general government consolidated to automate GFS in the new
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Tuvalu assistance in April 2019 will help with:
(1) updating GDP estimates with the incorporation of the new HIES 2016 data.
In Vanuatu, PFTAC’s support contributed to:
(1) reconciliation of variances by the Ministry of Finance and Economic Management between balance sheet presentation for stocks and flows of nonfinancial Regional Government Finance Statistics Workshop, FSM, February 2019 assets, financial assets, and (4) time series (FY2013-17) for the liabilities; first time; PFTAC assisted Timor-Leste to: (2) improvement in the quality of (5) rebasing of National Accounts national accounts statistics was finalized that incorporated (1) improve quarterly and annual particularly for livestock for cattle the 2016 Population Census, the GFS compilation with aiming at estimates and fishery output that 2013 Household Income and reducing statistical have been re-estimated in Expenditure Survey and the 2013 discrepancies; and accordance with 2008 SNA Business Activity Survey; and standards; (2) align GFS and financial reporting (6) Publication of revised National (3) staff capacity building for more needs raised by the treasury and Accounts figures in March 2019. efficient quality control of the Fiscal Reform Commission to incoming data through support ensure overall improvements in The efforts from automated outlier detection Solomon Islands reporting. included: and replacement software; and
The focus of PFTAC assistance to (1) an expansion of GFS coverage to (4) explanation of methods for Tonga was: General Government (GG); national accounts compilation
concerning production side (1) an expansion of GFS and PSDS (2) a start to expand coverage of activities. coverage to nonfinancial public public sector debt; corporations;
(3) improved adjustments to National (2) investigate possibilities of Accounts to address under increasing frequency of reporting coverage, misreporting, and advice on current reporting definitional or conceptual procedures; and differences, reconciliation of two
GDP measures, and balancing (3) in support of efforts to rebase product level estimates; and GDP starting in 2019 and drawing
on the latest business census, (4) advice on imputation processes with plans to publish new for the business survey. estimates in March 2020.
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BOX 13. PACIFIC STATISTICS STANDING COMMITTEE (PSSC) MEETING
The annual meeting was convened in development partners under Phase 3 acknowledged their diverse work and Fiji November 1 – 2 and was the first of the SPC’s Ten-Year Pacific PFTAC’s support of statistics in the opportunity of the just appointed Real Statistics Strategy (TYPSS). region. The group also expressed Sector Statistics advisor, Mr. Marcus Improvements were noted in socio- their concern that funding for the Scheiblecker to meet many demographic statistics with steady PFTAC Government Finance Government Statisticians from the progress of regional economic Statistics (GFS) program would Pacific as well as other Statistical statistics. The Donor and conclude in April 2020 and planned to development partners include the Development Partners Group (DDPG) advocate for resources to be secured Pacific Community (SPC), the – of which PFTAC is a member – to allow for a continuation of the Australian Bureau of Statistics (ABS) agreed on more frequent meetings to program. and New Zealand Statistics. improve the coordination of measures and to consider the establishment of The conference focused on the terms of reference including clear progress of members and principles of partnership. The PSSC
2018 ABS Pacific Statisticians Leadership Forum, Brisbane, August 2018
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I II FINANCIAL SECTOR SUPERVISION
MAIN ACHIEVEMENTS
(1) Contribute to macroeconomic (3) Development and implementation stability and growth through stable, of Financial Supervision Framework (5) On-site financial sector examination well-supervised financial Enhancement strategies; capacity building.
(2) institutions that contribute to (4) Supporting and facilitating banking financial inclusion; regulation reform; and
Annual Meeting of the Association of Financial Supervisors of Pacific Countries (AFSPC), Vanuatu, August 2018
Reserve Bank of Vanuatu Governor Simeon Athy making opening comments at the AFSPC Meeting
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frameworks. Initial diagnostic missions and (3) Assess the ability of supervisory staff WORK PROGRAM EXECUTION the establishment of medium-term to implement a framework (skills and
supervision enhancement strategies experience, and thus training and Financial Sector Supervision (MTSES) and TA plans were completed in capacity needs); and
2017 for the Cook Islands, Vanuatu, The FSS FY2019 program contributed to PNG, and the Solomon Islands. (4) Assess the efficiency and significant enhancement and reform of the effectiveness of the operation of the financial sector regulatory and supervision To develop MTSES and TA plans, PFTAC framework, i.e. does a changed risk frameworks of member countries. and the supervisory authorities of the rating lead to a reassessment of Provision of TA commenced on some long- member countries assessed the structure supervisory action; and is financial standing gaps and inefficiencies in the and operation of the supervision analysis incorporated into an overall supervisory systems, while work continued frameworks, in relation to the size and risk assessment of the institution. with the Supervision Framework complexity of the respective financial Enhancement Program and the Banking sectors, and against international Key findings of the diagnostics were: Regulatory Reform project. New in supervision standards and practices. FY2019, PFTAC made a start on long (1) Gaps in the coverage of banking requested TA to enhance insurance The assessment focused on four key prudential standards; regulatory frameworks in the Pacific. components of risk-based supervision
(RBS) frameworks: (2) Underdeveloped and outdated on-site Overall, the FSS program delivered 16 of examination processes and 20 planned missions/activities in FY2019, (1) Regulation (legislation, prudential infrastructure; using 253 days of field TA versus 297 standards, licencing); planned days, although the weighting (3) Lack of operating risk-rating models; shifted slightly more to STX (198 days (2) Risk identification and assessment delivered versus 220 planned) than LTX (4) Lack of in-depth financial analysis (off-site and on-site supervision (55 days delivered versus 77 days (entity specific and industry wide); processes); planned).
(5) Lack of risk-focused supervisory (3) Risk-rating models; and The success of PFTAC’s FY2019 action planning processes; and
workplan is mostly attributed to a strategic (4) Supervisory action planning. (6) revisions and reclassification of focus that builds on foundational efforts institutional sectors and general around four key pillars: Strategic, Focused, The aim of the framework assessment government GFS data with an Innovative, and Efficient. was to: expansion of coverage to the rest of Strategic: CD is Focused: CD the public sector commenced. based on targeted projects are (1) Identify structural weaknesses and projects aimed at formulated on gaps in regulatory/supervisory fundamental mutually assessed Since 2017, PFTAC has undertaken 14 enhancement and and agreed infrastructure, e.g. are there: (1) missions ((PNG (5), Cook Islands (4), reform of regulatory needs; and in line prudential standards covering all key and supervisory with the recipient’s Vanuatu (2), Solomon Islands (3)) risk areas; (2) an operating risk rating frameworks as a strategic goals across all key components of the project. whole, over a 2-4 and ability to model; and (3) supervisory action year timeframe. absorb the CD. These missions account for a large share planning processes; of FSS program resources utilized since
Innovative: 2017.The Risk Rating and Supervisory Methods of CD Efficient: (2) Assess the quality (and identify delivery are adjusted Practical durable Action Planning Enhancement deficiencies) of the infrastructure, to recipient CD is delivered component of the project is largely circumstances, TA through e.g. (1) are prudential standards and training multilateral complete, with all countries now having providing sufficient guidance to resources, IMF/ expandable new risk rating models with RBS action banks on minimum expectations; (2) PFTAC coordination projects. planning infrastructure developed with and time constraints. does the risk rating model produce a PFTAC assistance. On-site examination net risk rating by key risk area or process and infrastructure development Supervision Framework Enhancement does it not have a sufficiently detailed has progressed steadily. PFTAC Program rating characteristic framework/ commenced this work with all countries guidance; (3) is supervisory action PFTAC initiated a medium-term strategic and will finalize it in FY2020. Work on the planning focused on supervisory approach in 2017 to assist Pacific off-site supervision component of the activities, rather than risk-based countries to enhance the structure and project (financial analysis and prudential supervisory action; operational effectiveness of their FSS reporting) has commenced and will be a
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priority in FY2020. Regulatory reform of recommended strengthening Insurance Regulatory Reform and enhancement had the least included: Using the banking regulatory reform attention so far and will be a focus in project structure as a model for insurance FY2021. regulatory reform, PFTAC and the IMF’s Supervisor Supervisor Licensing Monetary and Capital Market’s mandate governance criteria Implementation Progress Department (MCM) held a regional workshop on insurance regulation in Fiji in
Resolution Business License May 2018. The workshop was attended by conduct revocation Risk Rating Prudential Reporting representatives from the Cook Islands,
Supervisory Financial Fiji, PNG, Samoa, Solomon Islands, Action Risk Planning Timor Leste, Tonga, and Vanuatu. The Analysis Exposure Audit Fit & Proper standards standards standards workshop: (1) provided information on Risk Prudential international good practice on insurance Management Standards Assessment legislation and prudential standards On-site examination Legislation Risk Governance Operational (content and structure); (2) facilitated a management standards risk self-assessment of current legislation and standards standards standards against international standards; Banking Regulatory Reform and (3) established a proposed regulatory In late 2016, the RMI Banking Implementation Progress reform strategy and technical assistance Commission, the FSM Banking Board plan for Fiji, Samoa, and Tonga. and the Financial Institutions Commission of Palau, requested TA to Training on Detailed Stakeholder The self-assessments highlighted the enhance their banking legislation and international drafting consultation good assistance need for significant reform of the prudential standards frameworks. In practice for Final insurance regulatory frameworks of response, PFTAC and the IMF Legal legislation Initial drafting participating countries. Key weaknesses and Department (LEG) conducted a stakeholder assistance prudential engagement identified in insurance legislation and Regional Workshop for these authorities standards: prudential standards ranged from not in Guam in July 2017. having any legislation to govern the Participant
self- insurance sector, to gaps in legal The workshop provided information to assessment protection for supervisors, consolidated participants on international good supervision, risk-based capital, resolution, practice on banking legislation and Reform strategy and and offshore placement of insurance prudential standards (content and planning cover. structure); facilitated a self-assessment of current legislation and standards Arising from the participant discussions against international standards; and PFTAC and LEG have undertaken four about the regulatory reform plans, and established a proposed regulatory missions as part of this project, given the commonalities of each of the reform strategy and TA plan for each completing the initial phase of bilateral jurisdictions, PFTAC and MCM identified jurisdiction. Representatives from the work. More work will follow in FY2020 on the most efficient way to deliver TA is to Kiribati Attorney General’s Office and the detailed drafting of the revised provide a single draft example insurance the Kiribati Ministry of Finance and banking laws and regulations. The law and suite of prudential standards. Economic Development also project has suffered delays of about six These can then be adapted to each participated to learn about banking months behind original expectations country’s circumstances. To undertake regulatory frameworks. agreed between PFTAC, LEG and the this work PFTAC employed the services of respective authorities, mainly due to two insurance regulation experts over a 3- The regulatory reform program constraints in mobilizing LEG resources. month period from November 2018 to continued in FY2019 with the first produce a draft example insurance law; a bilateral follow-up missions to Palau As a result, PFTAC and LEG will draft example suite of prudential (May 2018), RMI (July 2018) and FSM commence using short term legal standards; and a gap analysis of existing (in April 2019). The bilateral missions experts backstopped by LEG to ensure laws and prudential standards. recommended the strengthening of that the project progresses well in current banking legislation and FY2020, and to enable it to be expanded For this project, PFTAC and MCM have regulations in several key areas and for the development of a banking undertaken three missions so far. provided drafting suggestions to revise regulatory framework for Kiribati. However, budget utilization is significantly legislation and regulation. The key areas higher than the number of missions
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suggests, given the two experts were infrastructure. (6) Loan policy assessment checklist. employed for 20 and 30 days respectively. The next step will be to PFTAC completed the first follow-up Implementation of IFRS 9 adapt the example law and prudential mission of the project in November 2018 to In early 2018, Banco Central de Timor standards for local conditions and legal provide training to the MFED on: Leste (BCTL) requested training on IFRS frameworks, and then start the 9 that PFTAC provided in April 2018. consultation process. PFTAC will assist During the mission, a strategy and plan with this process through FY2020. (1) Introduction to prudential was developed to enhance the credit risk supervision; governance and credit risk management Implementation Progress regulations, incorporating the application Training on international good practice for (2) Introduction to bank financial of IFRS 9 forward-looking loan loss legislation and prudential standards. analysis; and • Participant self-assessment provisioning by Timorese commercial • Reform Strategy and Planning banks. A follow-up mission in October • Example Insurance Law (3) Introduction to credit risk 2018 provided additional training on the • Example Insurance Prudential Standards assessment. implementation of IFRS9 and produced • Bilateral drafting assistance
• Initial Stakeholder engagement for the BCTL draft regulations on credit • Stakeholder Consultation The mission provided guidance to the risk management and IFRS 9’s forward- • Final Drafting Assistance MFED in conducting on-site looking loan loss provisioning based on
examinations of credit risk and expected credit losses (ECL). The mission Supervision Framework Development operational risk at the NBT and DBT. also produced proposed amendments to A supervision project was initially The exercise provided on-the-job BCTL’s regulations for capital adequacy suggested in November 2016 with a TA training to MFED staff, particularly in and asset classification to address mission agreed for November 2017 with loan file assessment. The Supervision needed enhancements for the adoption of the Tuvalu Ministry of Finance and Expert provided introductory training on IFRS 9. Economic Development (MFED). A operational risk concepts. supervision strategy and TA plan On-site Examination Support envisages the development of a As part of its on-site examination CD, In FY2018 PFTAC supported the RMI supervision framework on three the mission developed templates and Banking Commission through the coordinated levels: tools for the MFED to create its attachment of two Banking Commission
assessment framework for credit risk examiners to attend an FDIC on-site (1) Supervision Expert – will be engaged and operational risk, including: examination of a Guam-based bank. The by the MFED under the Banking attachment aimed to build capacity of the Commission Act to undertake direct (1) A proposed Credit Risk Commission examiners in on-site off-site and on-site supervision of Assessment Framework document examination, particularly with respect to the National Bank of Tuvalu (NBT) and a proposed Operational Risk familiarity of US Anti-Money Laundering and the Development Bank of Assessment Framework document surveillance, supervision and Tuvalu (DBT) and develop that outlines the key areas of examinations standards, on which the supervisory capacity of the MFED; assessment for inherent risk, Commission’s own examination
adequacy of management and framework is based. The attachment (2) PFTAC will assist in developing the controls, and information provided the examiners an opportunity for supervisory infrastructure and will requirements for on-site on-the-job training from experienced FDIC train MFED staff in all aspects of examination; examiners with the AML/BSA standards. prudential supervision and will The learnings from the FDIC attachment assist the Supervision Expert and (2) Proposed timeframes to undertake will be applied to the Commission’s onsite MFED with enhancing off-site and on-site examinations; examinations in RMI. on-site supervision practices; and
(3) A proposed outline of the structure Following on from this successful (3) MFED staff will be assigned to and content of credit risk and attachment, in October 2018, PFTAC develop supervisory skills and operational risk assessment again supported an attachment of Banking experience by working with the guidance manuals; Commission examiners to attend an on- Supervision Expert on direct site examination, but this time, with the banking supervision. They will (4) An onsite examination scoping experienced examiners of the Palau benefit from the training provided by template; Financial Institutions Commission. PFTAC and the Supervision Expert
and will work with PFTAC on (5) Loan file review line sheet; and PFTAC’s support for these attachments developing the supervisory
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provides RMI Banking Commission with Supervisors of Pacific Countries In FSM assistance is providing for: valuable, durable CD through on-the-job (AFSPC) held its annual meeting in (1) banking regulatory infrastructure. on-site examination training, at an Vanuatu in August. The gathering efficient cost to PFTAC’s budget. PFTAC facilitates coordination among the 11 In RMI assistance has worked towards: does not need to employ short term AFSPC member and two observer (1) effective on-site examination; and experts to provide the knowledge countries on financial-sector issues and transfer and experience sharing that promotes cooperation on managing (2) banking regulatory infrastructure. these on-the-job training opportunities regional supervisory issues and risks. facilitate. Following on from the 2017 Annual In Palau progress is being with: Meeting in which AFSPC members AFSPC Prudential Reporting Workshop identified cybersecurity and IT risk as an (1) banking regulatory infrastructure. The regional Prudential Regulatory important issue for supervisory attention Workshop on reporting was held in and found that there is a need for TA in In Papua New Guinea, the PFTAC Sydney during June 2018 attended by managing such risks, PFTAC and MCM assistance helped with: representatives from the Cook Islands, staged a three-day workshop on Cyber (1) developing a risk rating model and Tonga, Samoa, Fiji, Vanuatu, Security and IT Risk during the meeting. supervisory action planning process; Solomon Islands, Papua New Guinea, and , , , , the The workshop drew on global expertise Timor Leste Palau RMI FSM World Bank (Sydney), and the Australian in managing cyber and IT risk, including (2) building capacity in the on-site Prudential Regulatory Authority (APRA). the participation of cyber experts from examination of market and liquidity Additionally, four private sector MCM and ITD; APRA; Financial risk. information technology service providers Services - Information Sharing and In support of the financial sector in Samoa: attended the workshop. Analysis Center and the Central Bank of Armenia. (1) work was launched to revise and The workshop launched AFSPC efforts redraft insurance legislation and of the Prudential Reporting Working The workshop provided an overview of regulations. Group to facilitate contacts with private how to manage such risks and identified The Solomon Islands efforts included: service providers and regional regulators gaps in regulatory frameworks and (1) developing a risk rating model and experienced in developing online supervision practices. The workshop will supervisory action planning process; reporting processes. The event be followed with targeted bilateral TA in and contributed to the group’s determination assisting with the development of of next steps, priorities, and workplans to comprehensive risk regulations and (2) assisting the CBSI to build capacity address the long-standing challenges of capacity building. in the on-site examination of market manual Excel based prudential and liquidity risk. reporting. Four private sector IT service Bilateral TA Coverage FY2019 v FY2018 In Timor Leste: providers (three from Australia and one FY2019 saw PFTAC expand its bilateral from the United States) presented the TA coverage of member countries to 13, (1) BCTL is enhancing its credit risk group with ideas and concepts for up from 7 in FY2018. This was the result regulation and incorporating automating prudential data submission of additional support provided to the implementation of IFRS 9. and analysis reporting. PFTAC FSS workplan by MCM; the In Tonga: increased use of short-term experts; and (1) work to draft insurance legislation Follow-up work from the workshop the efficient use of PFTAC’s resources and regulations was launched. involved the working group developing through innovative TA delivery. standard system requirements and three In the Tuvalu, PFTAC is working: of the service providers developing a In the : Cook Islands (1) to develop a banking supervision project outline and costing to develop a framework. prudential reporting system for AFSPC (1) a risk rating model and supervisory In Vanuatu, PFTAC’s support contributed members. The working group will action planning process were to: continue the assessment of the developed. proposals in FY2020, with an aim to (1) development of a risk rating model identify possible solutions by the end of In Fiji: and supervisory action planning 2019. process. (1) work commenced on revising and
AFSPC Annual Meeting redrafting insurance legislation and The Association of Financial Sector regulations.
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Regional Workshop on Cyber and IT Risk Workshop, Vanuatu, August 2018
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SECTION III
WORK PROGRAM (MAY 2019 – APRIL 2020)
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I III SUMMARY AND OVERVIEW
This section summarizes the work leadership that PFTAC contributes STAFFING CHANGES program planned for the period May 1, towards through individual and With the turnover of four of the team of 2019 to April 30, 2020, corresponding to seven LTX in FY2019, the outlook for the 2020 IMF fiscal year (FY2020). The institutional capacity development in stability with the team of resident experts work program reflects the strategic the core economic and financial in FY2020 is favorable. One firm change objectives programmed over the fifth competencies of the IMF, with ultimate will occur with the scheduled departure of operational phase of PFTAC financing, progress depending on the the Macro advisor in February 2020 after covering the period November 2016 – development and effective a five-year assignment. Her successor is April 2022. implementation of appropriate policies currently being recruited with a target start by PIC governments and the in September 2019 to facilitate a six- PFTAC’s delivery of CD during FY2020 reinforcement, commitment, month overlap with a slightly expanded will continue to build upon the earlier encouragement, and resources from work program. Phase V investments and during FY2019. partners and stakeholders. Reflecting the adaptiveness of the PFTAC With one of the PFM advisors and the model, the FY2020 plan can be adjusted ADAPTIVE TA MODALITIES FSS advisor both beginning their fourth with appropriate consultation to PFTAC is a demand-driven provider of year at PFTAC in October and July accommodate opportunities for new CD. In-country missions of typically 2019 respectively, their departure engagements or reengagements with one or two weeks duration by the should be anticipated at the end of the member countries, that ultimately work resident PFTAC advisor or an STX fourth year or possibly sooner, although towards three overarching objectives as remains the main delivery mode to extension for a fifth-year could be articulated in the Phase V PD: build capacity and help implement considered. Early or unanticipated staff specific reforms. For a few more changes have a greater adverse impact • Strengthening macro-financial strategically focused missions each on program delivery than when resilience to natural disasters and year, additional skills or leadership may recruitment occurs well in advance to other shocks. be provided from the HQ functional facilitate a smooth transition as was the department, such as for PIMA case with the Revenue advisor and is • Enhancing macro-financial assessments, tax policy expertise, or planned for the Macro advisor. sustainability so that PICs have specialist financial sector knowledge. sustainable systems, institutions, and The recruitment of a local Economic resources to tackle the medium and Peer learning is crucial to share best Analyst in August 2018 following the longer-term challenges faced by their practices and country experience that 2018 SC meeting endorsement and societies from social, health, and often spurs new demand for PFTAC budget provision has been highly demographic changes, and CD. Regional workshops and seminars successful and has contributed to particularly the impact of climate and customized training is at the heart improved outreach efforts including the change. of this knowledge sharing. Attachments adoption of the new Annual Report further reinforce the impact of regional format. • Facilitating sustainable, inclusive events with PFTAC facilitating short growth, the ultimate objective for the visits between countries. citizens of the region and their
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TABLE 11. FY2020 PLANNED WORKSHOP/SEMINARS
Estimated Duration Sector Partner Location Topic Date (Days) Joint PFTAC/CARTAC Conference on Small State PFM PFM IMF/ CARTAC Washington Dec-19 5 Reform and Climate Change and Disaster Resilience PFM PIFS Suva, Fiji PFM Leadership (fully financed by EU/PIFS) Jun-19 3 PFM Nadi, Fiji Internal Audit Workshop Jan-20 5 Revenue Nadi, Fiji Managing Large Taxpayers Feb-20 5 Managing Effective Compliance Improvement Revenue Nadi, Fiji Mar-20 5 Strategies Revenue Nadi, Fiji Managing Taxpayer Services for Operations Managers Oct-19 5 Revenue Nadi, Fiji Workshop for Taxpayer Audit Managers Jul-19 5 Management of Core Tax Functions for Senior Revenue Nadi, Fiji Nov-19 5 Managers Revenue PITAA Majuro, RMI Annual PITAA Conference Sep-19 2 Capacity Development for Government Finance Statistics/GFS Nadi, Fiji Aug-19 5 Statistics Statistics/RSS Nadi, Fiji Workshop for National Accounts Seasonal Adjustments Jul-19 5 FSS Guam Risk Based Supervision Northern Pacific Sub-Region Feb-20 5 FSS Nadi, Fiji Cyber Risk Regulation Nov-19 5 FSS AFSPC Tonga Annual AFSPC Meeting Sep-19 2 FSS AFSPC Tonga Cross Border Regulation Sep-19 3 Port Moresby, Macro STI Fiscal Frameworks May-19 5 PNG Revenue/ Effective Exchange of Admin and Tax Data for GDP PITAA Majuro, RMI Sep-19 3 RSS/Macro Compilation PFM/ Macro WB Honiara Managing Fishing Revenues Aug-19 5
PFM /Macro Nadi, Fiji Managing Fiscal Risks Apr-20 5 PFM/ Macro UNDP Nadi, Fiji Budget Documentation Nov-19 5 GFS/Macro STI Nadi, Fiji Workshop on GFS and Debt Sustainability Feb-20 5 TOTAL 93
TRAINING/WORKSHOP EVENTS at Every PFTAC program is scheduled to conjunction with the annual PITAA heads the regional or sub-regional level are deliver at least one training event, with meeting in Majuro, RMI and will draw on expected to be up 17 percent with 21 the expanded Revenue program a recent IMF Working Paper. events planned versus 18 delivered in accounting for a third of the total. Five FY2019. Most events are open to all 16 events will be delivered jointly with the Training collaboration also extends to PFTAC member countries, others may Macro program, three with the PFM other parts of the IMF as well as target sub-groups, either program, one with GFS, and another development partners. A customized geographically designated (a common with both the RSS and Revenue IMF Fiscal Framework course will be approach for the three northern Pacific programs. This reflects the cross- held in PNG with STI, and a joint nations of FSM, Palau, and RMI, and cutting nature of the Macro program CARTAC/PFTAC event on PFM occasionally other Micronesian states), that is focused on building capacity with Reforms and Climate Change and or where the participating countries medium-term economic frameworks Disaster Resilience is planned in share common issues, such as those and forecasting that is closely related to Washington along the lines of the highly receiving significant fishing revenues. the capacity building of the other successful Small State Revenue programs around fiscal management, Mobilization Conference in July 2018. Illustrating the integration of TA and revenue collection, and statistical training into seamless CD, it is also compilation. The joint Macro/ Joint events with AFSPC and PITAA are quite common for a seminar or RSS/Revenue workshop will focus on planned as in the past, and PFTAC will workshop to be provided exclusively for the challenges of Statistical Offices play a key role at a PIFS organized PFM the officials of a country receiving a TA having access to reliable tax and other Leadership symposium, and a follow-on mission, particularly under the Macro administrative data for GDP to a highly successful 2018 Fishing and PFM programs. compilation that is essential for Revenue Management event will be forecasting and economic modeling. delivered with the World Bank. This workshop will be held in
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CHART 7. FY2020 WORKPLAN (2,495 DAYS) VS. FY2019 OUTTURN (2,060 DAYS)
400
343 350 303 300
250 224 215 207
200 171 153 147 150 130 129 116
100 85 72 71 67 57 50 5 0 Fiji Tonga Regional Solomon Cook Vanuatu Papua New Marshall Kiribati Samoa Palau Timor-Leste Tuvalu Niue FSM Nauru Tokelau Islands Islands Guinea Islands
FY19 Outturn FY20 Plan
FY2020 WORK PROGRAM will expand further than the However, this will be achieved with 7 percent fewer Field record outturn in FY2019 as follows: TA days that will decline to 236 from 253 following a boost in the STX budget in FY2019 to finance unforeseen • 2,495 TA Field days are planned (772 LTX and 1,723 demands in the Solomon Islands and other countries. STX), up 21.1 percent from 2,060 days. Several STX assignments in FY2019 were longer than the historic TA average to support insurance reforms, • 188 Activities are planned (167 missions and 21 accounting for a surge in TA Field Days but with a lower workshops), up 23 percent over 153 activities (135 activity count. missions and 18 workshops). CHART 8. DISTRIBUTION OF FY2020 MISSION DAYS The respective workplans are summarized in annexes to the (2,495 DAYS) BY PROGRAM following program chapters. Full FY2020 plan details are available at www.pftac.org from two perspectives, program- FSS, 9% by-program and additionally by country. GFS, 5% Changes to the overall work program are attributed to: Revenue, 42% RSS, 9% • Revenue program expansion that reflects scaling-up over the entire year versus only the second half of FY2019. The number of activities will grow 22 percent (77 up from 63), and TA field days by 29 percent (1,058 up from 818). The resident advisor will devote slightly Macro, 8% more time to managing the program with LTX field days dropping from 92 to 84 days, with 92 percent of the program delivered by STX at 974 field days. PFM, 27% • The PFM program is finally expected to reach a long- envisaged level of execution, with 42 percent more Field TA Days (668, up from 469), and 24 percent more • Macro program resource utilization will grow from a activities (41 up from 33). With both resident advisors planned overlap of up to six months between the expected to be in place throughout the year, the number outgoing resident advisor who is due to finish after five of LTX days will grow from 184 to 250, plus a years in February 2020 and the appointment of a proportionate increase in STX from 285 to 418 days. successor targeted for September 2019. Activities will increase by 27 percent (19 up from 15), and TA Field • The FSS program will see a 44 percent increase in Days will increase 50 percent to 198 from 132 days, activities with 23 planned compared to 16 in FY2019. predominately LTX days (165 up from 121), and to a lesser extent STX days (33 up from 11).
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• Workplans for the two Statistics programs are expected days, partly offset by additional LTX days given the return to to deliver slightly more activities compared to the stability with the resident advisors. underspent FY2019 budget. Overall, 8 percent more Statistics activities are planned at 28 versus 26, all The proportion of resources targeted to the seven fragile attributed to the RSS program with the GFS activities Pacific states in FY2020 is approximately the same as in remaining steady. TA field days are expected to decline FY2019 at 35 percent (869 of 2,495 planned TA Field Days). 14 percent net from 388 to 335 days, all due to fewer STX
COUNTRY LEVEL planning will see CHART 9. FY2020: 188 PLANNED MISSIONS/ ACTIVITIES slightly less than half of the 2,495 days of field deliver in FY2019 provided to five countries, with Fiji (13.7 percent), Vanuatu, 13 Cook Islands, Tonga (12.1 percent), Solomon Tuvalu, 7 16 Islands (8.6 percent), Cook Islands (8.3 percent), and Vanuatu (6.9 Tonga, 20 Fiji, 24 percent). While Fiji has traditionally been a major recipient of PFTAC Tokelau, 0 assistance across all programs, and the Timor-Leste, 7 FSM, 6 Solomon Islands and Vanuatu are Kiribati, 9 usually in the top six countries, Tonga Solomon and the Cook Islands have moved up Islands, 14 Nauru, 6 from recent years as moderate Niue, beneficiaries, in both cases from Samoa, 11 6 expanded engagement in fiscal issues, Palau, PFM as well as Revenue where efforts 9 RMI, 11 PNG, 8 are focused on revenue mobilization Regional, 21 including within the context of PACER Plus reforms.
The next five countries will account for 27 percent of PFTAC resources, with CHART 10. FY2020: 2,495 PLANNED TA FIELD DAYS
PNG (6.1 percent), RMI (5.9 percent), Vanuatu (5.2 percent), (5.2 Kiribati Samoa Tuvalu 7% Cook Islands percent) and Palau (4.6 percent). 3% 8% PNG’s share has dropped marginally Tonga 12% over recent years with their heavy Fiji revenue mobilization TA needs now 14% Tokelau being met from the HQ managed trust 0% fund that is financing a resident advisor FSM Timor-Leste and extensive TA inputs. The volume of 3% 3% PFM support that Samoa received in Kiribati FY2019 will proportionately decline, and 5% while a modest revenue program is Solomon Nauru currently planned, this could Islands 2% subsequently scale-up at mid-year with 9% Niue respect to PACER Plus needs. Revenue 3% Samoa Palau support to both Kiribati and Palau will be RMI Regional PNG higher in FY2020 to support revenue 5% 5% 6% 9% 6% mobilization objectives, and possible
VAT implementation in Palau.
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The remaining six PFTAC member year work program review, including the in the preparation and delivery of 21 countries account for a further 14 percent possibility of expansion of programs in planned workshops and seminars of allocated resources for in-country Timor-Leste and Nauru if the authorities’ support, Timor-Leste (3.4 percent), revenue reform strategies move forward. Finally, the 2,495 TA Field Days that Tuvalu (2.9 percent), Niue (2.8 percent), In the case of Timor-Leste this entails constitute the FY2020 work program is FSM (2.7 percent), Nauru (2.3 percent), plans to introduce VAT, and for Nauru to exclusive of the time spent by the seven and Tokelau (0.2 percent). Even though develop tax reforms to compensate for resident advisors in managing and these planned resources may be initially significant tariff revenues that must be overseeing their respective programs modest, every country also benefits from replaced under PACER Plus. from the PFTAC office in Fiji. This regional training events. amounted to 733 work days in FY2019, A further 9 percent of PFTAC resources an average of at least 100 days per year A reallocation or reprioritization of (224 TA field days) are currently for each advisor. resources may eventuate during the mid- earmarked to regional activities, primarily
TABLE 12. PROPOSED FY20 BUDGET (US DOLLARS MILLIONS)
% of Prog FY2019 FY2020 Program Tot Ph V Doc Budget Document Expenses to thru end- Orig. Proposed Budget end-FY19 Budget Outturn Change FY19 Budget Budget Resident Advisors (Long Term $12.6 $5.0 40% $2.17 $1.99 $2.28 $2.46 $0.2 Experts - LTX) LTX Travel $2.3 $1.0 42% $0.44 $0.38 $0.39 $0.46 $0.1 Short-Term Experts (STX) $11.4 $4.4 39% $2.35 $2.05 $2.10 $2.35 $0.2 Diagnostic Missions $1.2 $0.7 58% $0.42 $0.35 $0.20 $0.32 $0.1 Training/Seminars/Workshops $6.0 $1.7 28% $1.17 $0.86 $1.07 $1.22 $0.1 Backstopping/Project $1.9 $0.6 31% $0.37 $0.28 $0.37 $0.40 $0.0 Management Other Costs (Evaluation, misc., $1.6 $0.7 47% $0.51 $0.47 $0.50 $0.74 $0.2 etc.) Total TA Provision/Delivery $36.9 $14.1 38% $7.43 $6.38 $6.91 $7.94 $1.0 Trust Fund Management Fee* $2.6 $1.0 38% $0.52 $0.45 $0.48 $0.56 $0.1 Total Trust Charges $39.5 $15.1 38% $7.95 $6.82 $7.40 $8.50 $1.1 IMF and Host Country In-Kind $2.6 $0.50 $0.59 $0.50 $0.50 $(0.0) Contribution TOTAL $42.1 $8.45 $7.41 $7.90 $9.00 $1.1 * Trust Fund Fee is 7 percent of funds utilized for TA delivery
PROPOSED FY2020 BUDGET is just over consistent with the increase in the work budget because of a cumulative gap of 10 $US 1.1 million more than the baseline program (21 percent more TA field days months between incoming and outgoing budget, effectively reflecting the scaling-up and 23 percent more activities). The advisors. While the PFTAC anniversary of the Revenue program, and contingent remaining variance is attributed to created a one-time boost in other on a further tranche being received or at $US0.46 million in LTX costs to cover a full expenses, $US 0.3 million budget least pledged before the middle of FY20. year of the entire team of seven resident provision is included in FY2020 for the advisors plus six months of a second mid-term external evaluation of the fifth At $US 8.5 million, the proposed budget is Macro advisor. phase of PFTAC operations. 24.6 percent higher than the FY2019 outturn of $US6.82 million. This is broadly In FY2019, the LTX cost outturn was below
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TABLE 13. PFTAC FY20 BUDGET BY PROGRAM (US DOLLARS)
Revenue PFM Macro FSS RSS GFS Other Total Resident Advisors (Long Term 335,499 664,830 517,339 318,362 309,754 309,754 2,455,538 Experts - LTX) LTX Travel 61,546 124,910 101,999 57,765 57,679 56,080 459,979
Short-Term Experts (STX) 1,173,766 570,000 64,862 222,072 168,283 33,734 112,932 2,345,649
Diagnostic Missions 177,668 65,595 49,635 12,767 12,767 318,432
Training/Seminars/Workshops 396,030 249,713 164,415 192,245 123,000 91,451 1,216,854
Backstopping/Project Management 59,850 79,232 83,875 73,842 68,842 36,660 402,301
Other Costs (Evaluation, misc., etc.) 14,036 27,355 10,142 10,142 679,491 741,166
Total TA Provision/Delivery 2,218,395 1,781,635 848,615 923,954 755,467 582,770 829,083 7,939,919
Trust Fund Management Fee* 155,288 124,714 59,403 64,677 52,883 40,794 58,036 555,794
Total Trust Charges 2,373,683 1,906,349 908,018 988,631 808,350 623,564 887,119 8,495,713 * Trust Fund Fee is 7 percent of funds utilized for TA delivery
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I III REVENUE ADMINISTRATION
PFTAC’s CD strategy for revenue administration for FY2020 represents a continuation and expansion of TA activities working towards:
• Objective 1: Strengthened revenue administration management and governance arrangements,
• Objective 2: Strengthened core tax administration functions, assist those countries facing the part in strengthening revenue Under the proposed FY2020 administration and domestic revenue workplan, 77 activities are planned, biggest impacts from the PACER Plus representing a 22 percent increase trade agreement. Although PACER mobilization and are being promoted to over the expected outturn of 63 Plus implementation is scheduled to facilitate the transition towards more activities in FY2019. This will be take place over an extended time effective and efficient tax systems. reflected in expected 1,058 TA field frame, PICs are becoming increasingly Raising TADAT awareness has also days of technical support, compared aware of its implications and have provided PICs with an objective view of with 818 in FY2019. requested extra PFTAC TA to assess the strengths and weaknesses of their its impact on tax revenues and respective administrations and the need The upscaling of the Revenue evaluate options to replace possible for their reform agendas to include Program now enables PFTAC to revenue losses. In response, PFTAC is TADAT indicators. address a large unmet TA demand planning a program to support affected and facilitates considerable PICs in identifying and evaluating AT THE REGIONAL LEVEL, delivery of expansion of the program including policy options in terms of revenue the Revenue Administration program in responding to a range of revenue impact, legislative change FY2020 will include seven regional mobilization needs to address requirements, and administrative workshops up from six in FY2019, declining trade taxes, revenue constraints. covering the following topics: volatility (from natural resources and fishing licenses), and to build PFTAC will continue to promote the use of (1) Managing the Large Taxpayer; individual and institutional capacity ISORA, TADAT, and the implementation for modern revenue administration. of an MTRS for those countries (2) Management of Debt and undertaking substantive reforms. These Returns Workshop for Operations Managers; Through the upscaling PFTAC will tools are increasingly playing an important
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(3) Management of Taxpayer revenue reforms including potentially Services for Operations a MTRS. FSM will initially receive a mission to be Managers; delivered jointly with PITAA to Tonga is actively pursuing revenue strengthen audit skills, with the (4) Audit Planning and mobilization and administration likelihood of additional TA needs Management; modernization and will benefit from 8 emerging given the criticality and high missions following a late FY2019 tax priority of revenue mobilization for the (5) A joint workshop with the policy mission led from Washington to authorities. Macroeconomic Programming set the scene for responses to PACER and Real Sector Statistics Plus Challenges. In support of ambitious fiscal reforms in programs on Facilitating Effective Timor Leste, provision has been made Exchange and Use of Other PACER Plus countries that will for 3 strategically focused missions for Administrative (Tax and Social see more TA than in recent years, possible development of an MTRS and Security) Data for National include Kiribati with 4 missions; Nauru plans towards implementation of a VAT. Accounts; and with an initial plan for 3 missions that may subsequently expand depending Niue will receive 2 tax administration (6) Managing Effective Compliance on the authorities’ reform intentions; missions plus a tax legislation mission Improvement Strategies similarly, Samoa with 5 missions; and to advance ongoing reform efforts, and
Vanuatu with 4 missions to build on Tuvalu is currently slated to receive a (7) Management of Core Taxes recent gains, and potentially to support single mission. Functions for Senior Managers the implementation of income tax
subject to parliamentary passage. Of the 16 PFTAC member countries, 14 IN TERMS OF COUNTRY will receive bilateral direct TA, with no ACTIVITIES, TA and training in Fiji has been a very effective user of plans for either Tokelau or PNG that is FY2020 will continue to entail TA PFTAC revenue assistance and has now receiving extensive resources and provided to PICs by the resident generously shared its experiences and support under the FAD managed MTRS advisor with a significantly higher challenges from the region and will program that is financed under the proportion provided by STX, managed benefit from 7 missions in FY2020. IMF’s Revenue Mobilization Trust Fund and backstopped by the resident that provides for significant CD advisor and HQ staff. In the Northern Pacific, RMI will be resources in tax administration, tax
hosting the 2019 PITAA annual meeting policy, and tax legislation including the The scaling-up of the Revenue that will be supported by PFTAC with an placement of a resident advisor. The program entails significantly larger adjoining workshop on the sharing of tax PFTAC Revenue program will however programs in several countries, mostly data with national statistical offices for remain closely informed of signatories to the PACER Plus GDP compilation. RMI will additionally developments in PNG to add value agreement, including Solomon receive 4 PFTAC missions and Palau when opportunities arise and in terms of Islands with 9 missions planned to will similarly receive 4 missions to build longer-term sustainability of the support extensive modernization of on administration strengthening in ambitious reform program. the tax administration around core advance of the possible introduction of functions, creating an effective large VAT. taxpayer program, and holistic
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TABLE 14. FY2020 WORK PROGRAM SUMMARY: REVENUE ADMINISTRATION
Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
STRATEGIC OBJECTIVE 1: BETTER REVENUE ADMINISTRATION, MANAGEMENT AND GOVERNANCE ARRANGEMENTS Cook Review Strategic and No strategic or annual Strategic and operational STX Islands Operational Plan operational plan plans prepared Design Function Based Function based structure Cook Made progress but not Improve monitoring and STX Structure and Compliance introduced and effective CIS Islands implemented effectively evaluation of risk Improvement Strategy facilitating compliance Cook Review reform progress and Review reform progress and LTX Periodic review required Islands status of Recommendations status of recommendation Review compliance Effective CIS facilitating high Determine effectiveness and improvement strategy and Effective implementation levels of compliance and Fiji STX further improvement Public and Private Ruling required disputes resolution process needed. Program in place
Areas identified for further Quality assurance review E-tax and risk needs further Fiji STX IT Quality Assurance review technical assistance completed assistance
Develop industry partnership Industry partnership in Industry partnership Industry partnership to Fiji STX strategy process of being designed developed by 31/12/2019 improve compliance
Review reform progress and Review reform progress and Fiji LTX Periodic review required status of Recommendations status of recommendation Finalize renewal of Stamp Legislation not finalized Modernized laws Request by authorities to Fiji STX Duty and VAT legislation yet. implemented by 6/30/2020. modernize their tax laws. Review reform progress and Review reform progress and FSM LTX Periodic review required status of Recommendations status of recommendation Review organisation Strong governance Implementation of modernisation project plan Project plan developed framework needed and Kiribati STX modernization strategy and and compliance improvement and being implemented expanded compliance improved compliance levels strategy project improvement strategy Review reform progress and Review reform progress and Kiribati LTX Periodic review required status of Recommendations status of recommendation Support for Facilitate seabed mining and Modernized laws Request by authorities to Kiribati STX implementation of new small business tax implemented modernize their tax laws. legislation required
Marshall Review compliance Compliance improvement An effective CIS facilitating Determine effectiveness and STX Islands improvement strategy strategy developed high levels of compliance. further improvement.
Marshall Review reform progress and Review reform progress and LTX Periodic review required Islands status of Recommendations status of recommendation Pacer Plus will impact on Modernized laws Provide options to recoup Nauru FAD Pacer Plus mission revenue. implemented by 30/6/2021. losses from trade taxes LTX / Review reform progress, Ensure appropriate Nauru Periodic review required Reform strategy in place. STX organizational arrangements institutional settings. Facilitate implementation of Function based structure An organizational structure Assistance to ensure Niue STX new organizational structure introduced recently in place and suitably staffed successful structure Review reform progress and Review reform progress and Niue LTX Periodic review required status of Recommendations status of recommendation Renewal of Income Tax Act Renewal of tax legislation Modernized laws Request by authorities to Niue STX and Tax Administration Act in progress implemented modernize tax laws. Review implementation of Functional structure f Organizational structure in PFTAC recommendations Palau STX functional structure being implemented place and suitably staffed accepted. Facilitate implementation of VAT system implemented on New tax necessary -reduced Palau STX VAT to be introduced VAT scheduled date. grants Review reform progress and Review reform progress and Palau LTX Periodic review required status of Recommendations status of recommendation Renew compliance Plan needs evaluation and New generation CIP and Industry partnership strategy Samoa STX improvement strategy and improvement, support industry partnership introduced but struggle to get industry partnership strategy needed for implementation designed and implemented off ground
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk LTX / Review reform progress and Review recommendations Samoa Periodic review required STX core tax function and status of implementation Facilitate implementation of Design of LTO delivered and Assistance requested for Solomon Plans for implementation STX the large taxpayer office and function-based structure design of LTO and function- Islands of LTO developed function-based structure introduced based structure Solomon Need identified for a Design and implementation Authorities requested FAD Facilitate design of MTRS Islands MTRS mission of an MTRS assistance with MTRS. Solomon Facilitate compliance Compliance improvement New generation CIP Compliance Improvement STX Islands improvement strategy plan needs to be renewed designed and implemented Plan is evaluated Solomon Assist with implementation of VAT implementation Successful implementation Decision to implement a STX Islands VAT require support of VAT. VAT has been made Need identified for a Design and implementation The authorities requested Timor-Leste FAD Develop MTRS MTRS mission of an MTRS assistance with MTRS. Facilitate implementation of VAT implementation Successful implementation A decision to implement a Timor-Leste STX VAT requires support of VAT. VAT has been made Review implementation of Need identified to expand Strategy developed to Tonga STX Plan in place to expand LTO large taxpayer (LTO) office the LTO expand LTO Renewed CIP implemented Renew the compliance Strategies implemented and high-risk segments Current strategies and plans Tonga STX improvement strategy and but needs to be renewed showing compliance evaluated industry partnership strategy improvements LTX/ Review reform progress and Implementation of reform Tonga Periodic review required STX governance arrangement and governance framework. Finalize renewal of Renewal of tax legislation Modernized laws Request by authorities to Tonga STX Consumption Tax legislation in progress implemented by 30/6/2019. modernize their tax laws. Review compliance Compliance improvement improvement strategy and plan needs to be renewed, Effective implementation of Governance framework Tuvalu STX overarching modernization support needed with the strategy and reforms provide better outcomes plan implementation Review compliance Compliance improvement Compliance Improvement Renewal of Plan may be Vanuatu STX improvement strategy plan needs evaluation Plan is evaluated needed Review reform progress and Review reform progress and Vanuatu LTX Periodic review required status of Recommendations status of recommendation LTX / Training on establishing Assist authorities in the Regional Managing Large taxpayers Important reform step STX (LTO’s) needed design of LTO’s LTX / Introducing effective Training on compliance Focus on importance of Support effective risk Regional STX compliance improvement improvement needed effective risk management management Tax and Social Security Data Sharing data for national Sharing of data for national Identify constraints and Regional LTX for National Accounts accounts problematic accounts improved present best practice
STRATEGIC OBJECTIVE 2: STRENGTHENED CORE FUNCTIONS EVIDENCED BY AN ACCURATE TAXPAYER BASE, TAXPAYER SERVICES SUPPORTING VOLUNTARY COMPLIANCE, IMPROVEMENTS IN FILING, PAYMENT AND AUDIT SERVICES
Review reform progress and Review reform progress and Niue LTX Periodic review required status of recommendations status recommendation Improve management of Improvement required for Operational plan in place to Potential to improve on time Palau STX outstanding tax returns and management of returns improve on-time filing and filing and payments tax arrears and arrears payment Review taxpayer service and Improvement required for Improved delivery of More TA is needed to Palau STX facilitate improvements the taxpayer service taxpayer services support implementation Review reform progress and Review reform progress and Palau LTX Periodic review required status of recommendations status recommendation Improve management of Improvement required for Operational plan in place to Potential to improve on time Samoa STX outstanding tax returns and management of returns improve on-time filing and filing and payments tax arrears and arrears payment Improve taxpayer services Improvement required to Improved taxpayer services Improvement in voluntary Samoa STX and audit function service and audit and audit function compliance. Review reform progress and Review reform progress and Samoa LTX Periodic review required status of recommendations status recommendation Improve management of Improvement required for Operational plan in place to Solomon Potential to improve on time STX outstanding tax returns and management of returns improve on-time filing and Islands filing and payments tax arrears and arrears payment Develop audit strategy and Solomon Audit and taxpayer service Develop audit plan and TA requested to develop STX operational plan, improve Islands to be improved improve taxpayer service new generation audit plan taxpayer service
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
Improve management of Improvement required for Operational plan in place to Potential to improve on time Timor Leste STX outstanding tax returns and management of returns improve on-time filing and filing and payments tax arrears and arrears payment Improvement required for Improved delivery of TA needed to institutionalize Timor Leste STX Strengthen taxpayer services the taxpayer service taxpayer services concept Improve management of Improvement required for Operational plan in place to Potential to improve on time Tonga STX outstanding tax returns and management of returns improve on-time filing and filing and payments tax arrears and arrears payment Review progress and further Improvements required for The audit function operating Audit modernization plan Tonga STX strengthen the audit function the audit function at improved efficiency levels has been accepted LTX/ Review reform progress and Successful implementation Tonga Periodic review required STX revenue administration of reform Improve management of Improvement required for Operational plan in place to Potential to improve on time Tuvalu STX outstanding tax returns and management of returns improve on-time filing and filing and payments tax arrears and arrears payment Review and improve taxpayer Improvement required for Improved delivery of Introduce a taxpayer Tuvalu STX services, the taxpayer service taxpayer services services strategy. Improved delivery of Improve taxpayer services Improvement required for TA requested to build Vanuatu STX taxpayer services and audit and review audit function taxpayer service and audit function and capability. function Improve management of Improvement required for Operational plan in place to Potential to improve on time Vanuatu STX outstanding tax returns and management of returns improve on-time filing and filing and payments tax arrears and arrears payment Review reform progress and Review reform progress and Vanuatu LTX Periodic review required status of recommendations status recommendation Management of Core Tax Training on management Senior management LTX/ Strengthen management of Regional Functions for Senior of Core Tax Functions for increased awareness of STX tax functions Managers Senior Mangers needed managing core tax functions LTX / Training on audit Improve audit management Enhanced audit Regional Audit Managers Workshop STX management needed expertise. management capability Training on debt and LTX/ Management of Debt and Improve returns and debt Enhanced debt and returns Regional return management STX Returns for Ops Managers management capability. management needed LTX / Management of Taxpayer Training on managing Improve management of Enhanced taxpayer services Regional STX Services for Ops Managers taxpayer services needed Taxpayer services management
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I III PUBLIC FINANCIAL MANAGEMENT
In FY2020, TA in PFM will continue to assist members using various modalities to strengthen capacity in three broad areas, consistent with the objectives set out in the program document: • Planning and prioritization of PFM reforms based on the results of PEFA assessments, ongoing development of PFM reform roadmaps; and support for strengthening of legal frameworks; • Strengthening budget preparation, including better integration of planning and budgeting; improved budget transparency, execution; and stronger and ADB; and debt, asset, and risk management; and • A regional workshop on internal audit; regional, sub-regional, and country- • Strengthening budget monitoring, • A regional workshop on cash flow specific training jointly sponsored by reporting and accountability. forecasting and management; and PFTAC and regional partners like PASAI, PRIF, and PIFS. • PFM Capacity Development will be A workshop on the disclosure and management of contingent liabilities delivered in a variety of forms including: TA Planned regional or sub-regional events and other specific fiscal risks. provided directly to member countries include: through missions by the PFTAC resident IN TERMS OF COUNTRY ACTIVITIES, advisors and/or by an STX. A little under half • Working with the Pacific Islands the delivery under the PFM program in the missions will involve STX, but since their Forum Secretariat (PIFS), a PFM FY2020 is 24 percent greater than missions tend to be longer than those of the leadership seminar with Finance FY2019, with 41 missions/activities resident advisors, almost two-thirds of Ministry heads will discuss issues of planned versus FY2019 outturn of 33, mission days (418 of 668 days) are expected commonality in PFM; and with 668 days of TA field delivery up to be delivered by STX; 199 days from FY2019. • A joint Caribbean/Pacific event is PFTAC will continue to coordinate with other planned to bring together Small providers of PFM TA to ensure consistency Island States senior PFM officials In the Cook Islands, TA will target and sustainability in the delivery of TA to together in Washington to be improving treasury operations and coordinated with CARTAC that will members. controls for non-salary expenditure. include a focus on disaster resilience;
AT THE REGIONAL LEVEL, five regional or PTAC will work across multiple PFM sub-regional workshops are planned drawing • Building on a highly successful event objectives with the Fiji authorities in FY2020 on the resources of the PFTAC resident in 2017, a regional workshop on including preparations for and conducting advisors, IMF Fiscal Affairs Department staff, fishing revenue on Expenditure the PEFA assessment. Assistance will be STX, and experts from other development Forecasting/Budget Documentation provided to revise financial instructions partners including the UNDP, the World Bank is planned; consistent with new PFM legislation,
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including alignment with international Niue will receive assistance in drafting new planned reforms. Work on improving standards and good practices, and address PFM legislation. financial reporting will also continue with existing limitations. To facilitate the new a focus on notes to the financial Palau will be provided guidance with a PFM legislation, a mission on preparing an statements and a fixed asset framework. planned PEFA self-assessment. implementation plan will be conducted. Tuvalu will be supported in making Efforts will also continue to make PFTAC will lead a full national PEFA in improvements in their annual budget improvements to risk-based audit systems. PNG working with other development documentation. Further training for ministries on the Chart of partners that are expected to support Accounts will be provided as well as the subsequent sub-national PEFA In Samoa a review of treasury business quality control of a CoA manual. Finally, assessments. operations is planned to improve assistance will be provided to improve the efficiency of financial reporting and work In support of a PEFA assessment in presentation of budget execution reporting will continue improving financial Timor Leste, PFTAC will work with the and analysis. reporting. authorities and other development
partners on preparation of a PFM Reform PFTAC will provide input to Kiribati, on their The Solomon Islands will receive further Roadmap. PFM roadmap. TA to help improve treasury operations Ongoing assistance in the development and controls for non-salary expenditures. RMI will be supported in making of a PFM Reform Roadmap will continue improvements in their annual budget for Tokelau. Vanuatu will benefit from reviews on: (1) documentation. progress on improving accounting Tonga will receive support for a planned internal controls and CD needs to adopt PEFA self-assessment, in addition to FSM will receive TA to improve treasury new accounting regulations, and (2) risk consideration for updated PFM operations and controls for non-salary based internal audit functions with legislation, and further TA for payroll expenditures. audit. A review of the Chart of Accounts additional training planned. Assistance
will identify next steps to be taken. A will also be provided to improve financial Nauru will be supported with complying mission to prepare a revision to the PFM reporting and compliance with financial with IPSAS Cash reporting standards. legislation will focus on updating regulations. legislation consistent with on-going and
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TABLE 15. FY2020 WORK PROGRAM SUMMARY: PUBLIC FINANCIAL MANAGEMENT
Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
STRATEGIC OBJECTIVE 1: IMPROVED LAWS AND EFFECTIVE PFM INSTITUTIONS The draft legislation is currently being reviewed and will need to go Strategy to update to bill drafters after review. Delay in Draft legislation prepared ministries and officials Prepare implementation plan preparation could be problematic Fiji STX and circulated for on changes required in for draft PFM Legislation and require date changes in comments new legislation and implementation plans. This is timetable especially critical for those areas with delayed implementation dates Review Financial Regulations and identify changes needed Minimal updates are Update regulations to Delay in approval or legislation is Fiji STX updating financial regulations underway support new legislation staled could change dates through work at home mission PEFA assessment is Government officials will Need to LTX/ Planning for PEFA is Fiji PEFA Assessment conducted and report plan and prepare evidence for STX underway is issued assessment prior to fieldwork Working with the Secretary to A number of diagnostics PFM Roadmap establish set of PFM priorities LTX/ missions have been Kiribati PFM Roadmap Development endorsed by taking into account findings from STX undertaken. PFM Government the PEFA self-assessment and Roadmap still not drafted PIMA and other diagnostic efforts The current law Working with the Department to Draft PFM Legislation Niue STX Draft new PFM Bill governing PFM is over prepare a contemporary PFM law prepared 40 years old to cover all of Government in Niue Climate change Preparing and working with Palau LTX/ readiness recommended PEFA Self- Palau PEFA Self-Assessment officials to undertake a PEFA self- STX that Palau undertake a assessment conducted assessment PEFA PEFA assessment to be conducted Pre-PEFA work has PEFA report checked LTX/ with assistance for agencies, ADB PNG PEFA Assessment commenced with concept by PEFA Secretariat STX and WB. Sub national PEFA's to be note finalized and finalized undertaken by other providers Providing input into PFM Working with officials and Establishing PFM reform White Paper. Field work PFM Roadmap development partners post PEFA Timor-Leste LTX priorities post PEFA on PEFA underway led established assessment on future actions in by the WB PFM Using the PEFA self-assessment PFM Roadmap Establishing PFM reform Self-Assessment undertaken in 2017 to establish a Tokelau LTX adopted by priorities post PEFA undertaken in 2017 roadmap of priority actions to be Government undertaken in subsequent years PEFA self-assessment A lack of information available The need for update of LTX/ is conducted and can during the self-assessment mission Tonga Pre-PEFA PEFA framework and STX be used to update may require government officials to indicators acknowledged reform plans finalize after the mission Review legislation and Review draft recommend updates Reform activities will need to be Prepare draft amendment or legislation and Tonga STX consistent with current reviewed by government to ensure revision to PFM Legislation implementation operations and reform inclusion within the revisions strategies plans Currently proposed to be Workshop with leaders of the Workshop-PFM Leadership working with EU and Completion of Regional LTX Ministries of Finance on key Workshop PIFS on a PFM Workshop contemporary issues Symposium Model on the successful revenue conference in 2017 bringing Review draft Currently proposed for together the leaders of the Conference- Joint legislation and Regional HQ implementation in Nov Ministries of Finance in Caribbean CARTAC/PFTAC Leadership implementation 2019 and Pacific to work through strategies common PFM issues and disaster management STRATEGIC OBJECTIVE 2: STRENGTHEN BUDGET PREPARATION TOWARDS MORE COMPREHENSIVE, CREDIBLE & POLICY ORIENTED BUDGET
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk 2019/20 Budget Working with the Macro Advisor to document is improved Further developing budget enable improved budget in terms of Marshall process development tools to presentation. LTX presentation and Islands automate the process and Assisting the MoF to utilize development process improve budget documentation improved budgeting development of the budget is tools across government improved. 2020 Budget is reported in an Working with PRIF to improve Working with PRIF to improve the improved format with a Tuvalu LTX the multiyear budget process budgeting for capital and more credible for infrastructure and capital. infrastructure. approach towards public investment. Working with macro adviser and Initial workshop was other providers, FFA, WB, Tuna completed in February Workshop - Fishing Revenues Completion of the Commission, ADB and the PNA to Regional LTX 2017 bringing together Follow up workshop provide follow up on budget work national institutions particularly looking at revenue involved in fishing. projections and credible MTF's Working with UNDP who provide a Work has been floating budget analysis team undertaken by the UNDP Workshop - Improving Budget Completion of the across countries on the Pacific to Regional LTX with Parliamentarians on Document Transparency workshop help MPs understand budget analyzing budget document. (in conjunction with documents. Macro) STRATEGIC OBJECTIVE 3: IMPROVED BUDGET EXECUTION AND CONTROL New FMIS is currently Adoption of new Improve treasury operations Looking to improved operations Cook LTX / being implemented. procedures. Improved and controls for non-salary with implementation of the new Islands STX Assisted with structuring internal controls over expenditure system across government. of CoA. budget execution. Training is provided on The work activity associated with implementing a risk based Payroll audit is Training has been the payroll audit may not be internal audit for procurement, conducted and provided on risk-based adequate to identify LTX/ review of payroll audit and reviewed by mission. Fiji payroll audit. Updates to implementation. Similarly, if the STX prepare (or update) audit Preparation for risk legal framework are draft legislation is not in final stages, charter, audit committee based procurement underway. limited activity may have occurred structure and documentation audit. prior to the mission. consistent with PFM law Adoption of new Improve treasury operations LTX/ procedures. Improved Improving business operations for FSM and controls for non-salary STX internal controls over new FMIS system. expenditure budget execution. Risk based planning implemented and Training is provided on Training on risk based reviewed during Implementation on risk based Tonga STX implementing a risk based planning has been mission. Training on planning may not initiate on a internal audit for payroll provided. conducted a risk timely basis. based payroll audit is provided. Improve treasury operations Identify improvements Improve effectiveness of the Samoa STX and controls for non-salary in treasury operations Accounts Division in budget expenditure and internal controls execution and financial reporting. Risk based planning Delay in implementation of new Government wide audit Training is provided on implemented. Training strategic plan or mission activity is underway and Samoa STX implementing a risk based on conducted a risk recommendations from April 2019 risk based planning has internal audit for payroll based payroll audit may hinder mission activities in been initiated. occurs. 2020. Improvement in control Improve treasury operations IMF led mission identified Following up on 2018 work on Solomon over non-salary STX and controls for non-salary priority actions to be priority actions in the Ministry of Islands expenditure and expenditure undertaken in the MoF. Finance. account reconciliation. Review risk based internal Review of Training on risk based Delay in audit activities due to audit functions and provide procurement audit and planning, payroll, and special audit requests can hinder Vanuatu STX additional training on auditing implementation of risk procurement audits has progress in implementation modern and recommendation based annual audit been provided. internal audit function. monitoring. plan.
Completion of the Combined workshop with PIFS on Regional LTX Workshop - Internal Audit workshop internal audit practice in the region.
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
STRATEGIC OBJECTIVE 4: IMPROVE COVERAGE AND QUALITY OF FISCAL REPORTING Revisions to structure and lack of Chart of Accounts detail in the manual on the Training for ministries on chart PFTAC recommended structure is adopted by mapping of all segments may result Fiji STX of accounts and quality control structure adopted by MoE with in limited improvements and of CoA manual. MOE. implementation dates provide opportunity for improper and training provided. economic codes to be identified in the future. Assisting with analytical tools to Improved presentation of Quarterly execution assess within year execution Fiji STX budget execution reporting and reports are published reports consistent with the revised analysis. legislation. Looking to have the 2016/17 and Follow up work on initial 2017/18 FS submitted to the Follow up mission on Nauru STX mission in March 2019 on auditor by Dec 19 and looking to work done in FY-2019 Cash reporting have the 2018/19 compliant with IPSAS cash standards. Accounts division Mission works with continues resolving staff to review Limited change occurs due to staff issues relating to asset Samoa LTX Improved reporting on notes progress and identify turnover and reduced capacity to and liabilities, while strategies for implement reforms. managing audit improvement. recommendations. Updated economic Review progress on chart of Ministry of Finance is The finalization may not occur on a code is implemented. Tonga STX accounts and identify next finalizing new economic timely basis or may be substantially Segment structure is steps. codes. delayed. adopted. Roles and responsibilities Improved operations Improving fixed asset reporting and Review of treasury business are not adequately implemented to enable notes to financial statement and LTX/ Tonga operations to improve defined to reflect MoF timely reporting on in identifying treasury functions and STX efficiency of financial reporting. and line ministry year and annual investing potential for electronic activities. financial reported payments Improved operations Activities are underway Review of treasury business implemented to enable Financial statement preparation is to prepare 'unissued' Vanuatu STX operations to improve timely reporting on in delayed and reforms are unable to annual financial efficiency of financial reporting. year and annual be implemented. statements. financial reported STRATEGIC OBJECTIVE 6: STRENGTHEN IDENTIFICATION, MONITORING, AND MANAGEMENT OF FISCAL RISKS Fisk risk monitoring Review of fiscal risk monitoring improvements Fisk risk framework The monitoring changes are Fiji STX and management for improved recommended by and reporting process adopted but not implemented on a reporting. February 2019 mission is adopted by MOE. timely basis. are adopted. Fiji STI Workshop - Fiscal Risks Workshop Completed In conjunction with STI
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SECTION III SECTION III MACROECONOMIC D PROGRAMMING & ANALYSIS D
Under the macroeconomic programming and analysis CD work program for FY2020, efforts will contribute towards three outcomes:
• Outcome 1: Timely, high quality macroeconomic monitoring, analysis, and research available for policymaking;
• Outcome 2: Ready public access to key monetary, fiscal, and financial soundness information; and
• Outcome 3: Sound medium-term macroeconomic programming country specific issues. GDP estimates and forecasts are framework. important for macroeconomic Under the proposed FY2020 workplan, 19 missions/activities are planned versus an PFTAC will continue to organize multi- expected outturn of 15 missions, a 27 topic workshops including on Effective percent increase over FY2019, requiring Exchange and Use of Administrative Data, management and fiscal and monetary an expected 198 TA field day (165 LTX Budget Documentation and Fiscal Risks, policy because they underlie the forecasts and 33 STX), up 50 percent from 132 in and partner with STI to deliver training of revenue collections, inflationary FY2019 (121 LTX and 11 STX), primarily tailored to Pacific countries on pressures and the balance of payments. resulting from an overlap of up to six Government Finance Statistics and Debt Through CD, tools and methodologies for months between the outgoing and Sustainability. forecasting GDP will be developed in incoming resident advisors. Palau and continue to be enhanced in IN TERMS OF COUNTRY ACTIVITIES, Tuvalu. GDP forecasting will be reviewed AT THE REGIONAL LEVEL, building on a TA and training in FY2020 will continue to following re-benchmarking and rebasing in successful event in 2018, PFTAC will develop and support the use of Solomon Islands and Vanuatu partner with the Asian Development Bank quantitative tools. Ten of PFTAC’s 16 and the World Bank Group to host a members, Cook Islands, Fiji, Palau, Prudent fiscal management remains a second workshop on Managing Fishing PNG, RMI, Samoa, Solomon Islands, focus for the program. The PNG Revenues. Participants from the fisheries Tonga, Tuvalu, and Vanuatu have a Department of Treasury will host a course agencies and ministries of macroeconomic programming framework on Fiscal Frameworks to be delivered finance/treasuries will be invited from which is a useful empirical tool for the jointly by PFTAC and STI for participants member countries of the Parties to the analysis of economic developments. from PNG and Solomon Islands. PFTAC Nauru Agreement (PNA), FSM, Kiribati, Countries’ frameworks will continue to be will support empirical analysis of tax Nauru, Palau, PNG, RMI, Solomon enhanced to undertake medium-term reform in RMI and a climate change policy Islands, and Tuvalu, and other countries projections, debt sustainability and assessment in FSM. with significant fishing revenues, Cook external vulnerability assessments. Islands and Tokelau. A joint seminar for PFTAC will continue to support peer-to- Kiribati and Tuvalu will follow up on GDP is a key macroeconomic statistic. peer learning by encouraging regional
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empirical analysis and research and how a country has instituted a reform or A new Macroeconomic Advisor will start in facilitating staff attachments. Staff development that may have application FY2020. The work plan assumes a six- attachments entail analysts from one and benefit to their country. PFTAC covers month overlap of the incoming and country visiting another country (usually in the travel and accommodation costs and outgoing advisors. the region) for one to three weeks so that per diems of participants while the persons they can share their expertise and attached continue to receive their regular knowledge or observe and learn first-hand salary.
TABLE 16. FY2020 WORK PROGRAM SUMMARY: MACROECONOMIC PROGRAMMING AND ANALYSIS
Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
STRATEGIC OBJECTIVE 1: IMPROVED MACROECONOMIC POLICY ADVICE TO GOVERNMENT AND CENTRAL BANK MANAGEMENT OUTCOME 1: Improved quality and frequency of macroeconomic surveillance and policy/ research available for policymaking Technical assistance No bilateral technical (1) The macroeconomic and fiscal impacts will support an IMF Support climate assistance has been of climate change risks are quantified and Fiscal Affairs FSM LTX change policy provided by the monitored (Apr. 20). (2) Macroeconomic Department's Climate assessment. macroeconomics and fiscal risks arising from climate change Change Policy program. are managed (Apr. 21). Assessment. (1) Medium-term fishing revenue Methodology to forecast projections are produced jointly by The seminar will be Seminar on managing Kiribati, fishing revenues started ministries of finance and marine authorities joint with PFM and LTX and forecasting fishing Tuvalu to be developed in (Apr. 20). (2) Fishing revenues are built on the regional revenues. Tuvalu. managed within a medium-term fiscal workshop. framework (Apr. 21). (1) An economic indicator database is set Develop GDP GDP forecasts are up and maintained (Apr. 20). (2) GDP Technical assistance Palau LTX forecasting currently produced by the forecasts are independently produced (Apr. will be supplemented methodology. U.S. Graduate School. 21). (3) Economic and fiscal forecasts are with attachments. consistent (Apr. 21). The course will be Fiscal reforms are being delivered jointly by (1) Discussion of current and medium-term implemented in public PFTAC and the Papua New fiscal performance in budget documents LTX Fiscal course. financial management, Singapore Training Guinea and monetary policy statements is improved revenue generation, and Institute (STI). (Apr. 19). fiscal reporting. Training will be tailored to PNG. The Marshall Islands Fiscal Model (MI-FM) produces medium-term (1) Advice on tax reform is empirically Support empirical RMI LTX projections for the current based (Apr. 20). (2) Analysis of tax reform analysis of tax reform. tax system. Some options is published (Apr. 20). preliminary analysis for tax reform has started. Upgrades of the Central Bank of Solomon Islands (1) GDP forecasting methodology is and the Ministry of Solomon Review and enhance reviewed and updated following the LTX Finance and Treasury's Islands GDP forecasting. rebasing of GDP (Jul. 19). (2) Economic macroeconomic and fiscal forecasts are consistent (Jul. 19). programming frameworks are almost complete. (1) GDP forecasts are independently GDP forecasting Support GDP produced and published (Dec. 20). (2) Tuvalu LTX methodology has been forecasting. Economic and fiscal forecasts are developed. consistent (Dec. 20). Review of GDP GDP is forecast using a (1) GDP forecasting methodology is Vanuatu STX forecasting bottom up and a top down reviewed and updated following the methodology. approach. rebasing of GDP (Apr. 20). (1) Participants identify priority areas for prudent management of fishing revenues (Aug. 19). (2) Medium-term fishing revenue A workshop on managing Workshop on projections are produced jointly by and forecasting fishing The workshop will be Regional LTX managing fishing ministries of finance and marine authorities revenues was facilitated joint with PFM. revenues. in 3 out of 9 countries (Apr. 20). (3) Data in February 2018. are shared between ministries of finance and marine authorities in 3 out of 9 countries (Apr. 20).
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
Workshop on (1) Participants recognize the importance of The workshop will be facilitating effective The extent of data sharing sharing data (Jul. 19). (2) Priority actions Regional LTX joint with Revenue exchange and use of varies across the region. are identified to enhance data sharing (Jul. and RSS. administrative data. 19). Support will be provided offsite. (1) Research papers are peer reviewed PFTAC will Support and advise on Research is currently (Apr. 20). (2) At least two working papers participate in the Regional LTX empirical analysis and undertaken in four- are published by Pacific central banks and / annual South Pacific research. member countries. or ministries of finance (Apr. 20). Central Banking Research Conference. Support will be (1) A regional database is set up with the provided offsite. Support the assistance of development partners (Apr. Input will be sought compilation of a No progress has been 20). (2) The database is published on a from the IMF Regional LTX regional database of made. PFTAC member country's website (Apr. Statistics Department indicators used for 20). (3) The PFTAC member maintains and and the Secretariat of forecasting. publishes the website (Apr. 21). the Pacific Community. OUTCOME 2: Ready public access to key monetary, fiscal and financial soundness information (1) Budget documents include a section on current and medium-term macroeconomic The quality of budget and fiscal performance (Apr. 21). (2) The workshop will be Workshop on budget Regional LTX documentation varies Budget documents include an annex with joint with PFM and documentation. across the region. fiscal and economic statistics for the last 10 UNDP. years, the current year, and the next 3 years (Apr. 21). (1) GFS balance sheet data is produced in Workshop on Data availability is 2 out of 10 countries (Apr. 21). (2) Debt The workshop will be government finance Regional LTX constraining debt sustainability analysis is included in joint with GFS and statistics and debt sustainability analysis. macroeconomic programming frameworks STI. sustainability. (Apr. 21). Contingent liabilities are (1) Participants identify fiscal risks (Apr. 20). Workshop on fiscal not yet included in The workshop will be Regional LTX (2) Contingent liabilities are quantified and risks. countries' macroeconomic joint with PFM. reported on (Apr. 20). programming frameworks. OUTCOME 3: Sound medium-term macroeconomic framework (1) The Cook Islands macroeconomic and Capacity is high in Cook fiscal framework continues to be used in Cook Support prudent fiscal LTX Islands. Staffing can be a budget preparations (Jun. 19). (2) Forecast Islands management. constraint. methodology continues to be enhanced (Apr. 20).
(1) Consistent economic and fiscal forecasts are produced, i.e. methodology is developed to map data between calendar and fiscal years (Apr. 20). (2) The Develop the fiscal macroeconomic and fiscal framework is sector in the Fiji Monthly fiscal data are used in budget preparations (Jul. 20). (3) Fiji LTX macroeconomic needed to map between The macroeconomic and fiscal framework is programming fiscal and calendar years. used in monetary policy settings (Apr. 20). framework. (4) The fiscal sector in the macroeconomic and fiscal framework produces internationally comparable data, i.e. it adopts official GFS methodology (Aug. 21).
(1) The MFF Model is used in monetary policy settings (Apr. 20). (2) The MFF Support the use of the Analysis and forecasting Model is used in budget preparations (Dec. PNG Monetary and tools will require updating PNG LTX 19). (3) The MFF Model is used for Fiscal Forecasting as official statistics sustainability analysis (Apr. 20). (4) The (MFF) Model. continue to be enhanced. fiscal sector is reported in GFS for general government (Apr. 20).
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
(1) The MI-FM continues to be used in Support the use of the Assistance will be budget preparations (Oct. 19). (2) The MI- Marshall Islands Fiscal provided jointly with Additional documentation FM is used for policy analysis including to Model (MI-FM) in the PFM Advisor. RMI LTX and staff training are develop a medium-term fiscal framework budget preparations Technical assistance needed on the MI-FM. (Apr. 20). (3) Quarterly GFS and outturns and policy analysis and will be supplemented compared to forecasts are reported on (Apr. document the model. with attachments. 20). (1) The SERF Model continues to be used Support the use of the The balance of payments in budget preparations (Jun. 19). (2) The Samoa Economic and Samoa LTX needs completing in the SERF model is used to undertake Revenue Forecasting SERF Model. sustainability analysis of policy scenarios (SERF) Model. (Apr. 20).
(1) The Ministry of Finance and Treasury's macroeconomic programming framework Complete the Solomon Islands is the continues to be used in budget preparations upgrades of the only member where the (Dec. 19). (2) The Central Bank of Solomon Solomon Islands' central bank and ministry Solomon Islands' macroeconomic LTX Islands macroeconomic of finance both have a programming framework continues to be programming macroeconomic used in monetary policy settings (Apr. 20). frameworks. programming framework. (3) The frameworks are used to undertake sustainability analysis of policy scenarios (Apr. 20).
(1) The GDP forecasting framework continues to be used in budget preparations Support the use of the Revenue forecasts need (Jun. 19). (2) The Tonga projection model Tonga LTX Tonga macroeconomic reviewing. continues to be used in budget preparations and fiscal framework. (Jun. 19). (3) Fiscal forecasting is enhanced (Apr. 20). Support the use of the (1) The MOVE is used in monetary policy Model of the Vanuatu settings and policy analysis (Apr. 19). (2) Economy (MOVE) and The monetary sector The national framework for revenue Vanuatu LTX the national framework needs to be forecast. forecasting is used in budget preparations for revenue (Dec. 19). (3) Documentation on the MOVE forecasting. is publicly available (Apr. 20).
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I III
MACROECONOMIC STATISTICS
The macroeconomic statistics program that comprises sub-programs for GFS and Real Sector Statistics (RSS) with a small component for External Sector Statistics (ESS) works towards one broad objective:
• Objective 1: Strengthen compilation and dissemination of data on macroeconomic and financial statistics for decision making according to the relevant internationally accepted statistical standard, including developing/improving statistical are summarized below and detailed in the infrastructure, source data, FY2020 workplan. serviceability and/or metadata. debt statistics guide for compilers and users 2013 (PSDSG 2013). GOVERNMENT FINANCE STATISTICS
AT THE REGIONAL LEVEL, one regional Data are compiled and disseminated using The PFTAC GFS program enters it final GFS training workshop is planned for the coverage and scope of the latest year of funding under Phase V, and unless FY2020. However, country-specific TA will guidelines. The majority of PFTAC member there is a change of plan and funding, the still represent most of PFTAC’s support with countries that receive bilateral assistance resident advisor position will end April 30, advisory in-country missions and remote have adopted the internationally accepted 2020. A new GFS PFTAC Advisor will join support. statistical standard, the GFSM 2014 for PFTAC in April 2019 focused on the same compilation and dissemination of GFS. TA themes as FY2020 including compilation IN TERMS OF COUNTRY ACTIVITIES, in FY2020 will continue to work with and dissemination using appropriate bilateral missions and workshops are country counterparts to improve the statistical techniques, higher frequency planned to provide TA coverage to 14- standards and methodology implemented. data and concurrently expanding coverage; member countries. Like the real sector and updating and releasing of metadata; and external sector statistics programs, the GFS Data are compiled and disseminated using developing customized solutions and program works to share effective, functional appropriate statistical techniques, methods for compilation and dissemination guidance on managing people and projects including to deal with data sources, and/or guided by the internationally accepted to increase the likelihood that technical assessment and validation of intermediate statistical standard, the GFSM 2014. developments come to timely fruition. data and statistical outputs. Collaboration These objectives and related milestones between various disciplines will take place Increased assistance will focus on how to related to planned missions and activities to assist in the financial programming compile PSDS guided by the public-sector framework as part of the macroeconomic
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and fiscal framework initiatives in the Summary Data Page (NSDP), Fiji, FSM, the main target for coming FY2020. region. The framework adopts the GFS Samoa, and Timor-Leste. Furthermore, missions have been methodology, which produces requested to support BoP compilations in internationally comparable fiscal data and REAL SECTOR STATISTICS are particularly useful for debt Country activities concentrate on increasing staff capacities, the release sustainability analysis. Cross collaboration The real sector and external sector of metadata and the documentation of and technical support between GFS and statistical CD needs of the PFTAC business processes, the use of up-to- PFM programs will ensure that the national member states varies significantly. These date concepts, definitions and CoA and its linkages to the bridge tables include countries embarking on the classifications, data coverage and derive appropriate GFS that can be used rebasing of GDP estimates to incorporate scope and the use of adequate source as input into the financial programming the latest and most comprehensive survey data. framework. These efforts in turn will data. This will be a key target of the RSS respect of capturing correctly FDI and improve and strengthen the compilation of program. external debt issues. budget documentation and medium term
fiscal frameworks aligned to the GFSM AT THE REGIONAL LEVEL, a national Kiribati plans to improve their BoP 2014 statistical or an equivalent standard. accounts regional workshop intends to coverage concerning the financial improve the usability of administrative data account. GFS is compiled and disseminated for the by various methods of quality control.
BCG and GG and its subsectors with Different approaches for outlier detection FSM’s GDP calculation is challenged by a higher frequency, timeliness, and and correction, and the treatment of restriction to access tax data. PFTAC will accuracy. Several PFTAC member missing values will be presented, and their support an agreement about future data countries have started the compilation of limitations discussed. sharing. PFTAC’s work will otherwise annual GG GFS. Assistance in FY2020 continue training staff to independently will continue to focus on improving the In recent years, PFTAC member countries calculate national accounts. compilation and dissemination methods have become more aware of data privacy
and processes to derive reconciled GFS issues. While this is understandable, some Due to severe staff capacity constraints, time series for the GG. Several member statistical offices are reporting problems in PFTAC will support Nauru with four weeks countries have not yet fully implemented accessing administrative data. Such data of national accounts missions to resume the Classifications of the Functions of is typically inexpensive and reflects a high GDP compilation and publication. Government (CoFoG) who serves as a degree of compliance with the needs for
very important input and measure for GDP national accounts statistics. To respond to In Niue PFTAC work in FY2020 calculation and defining government this adverse development, PFTAC plans a concentrates on incorporating the latest spending by purpose and social-economic workshop at the regional level in FY2020 HIES 2015/2016 results in national activity. COFOG deserve focused to bring together administrative data accounts. attention to make progress in the near-to- providers with representatives of statistical
medium term. Assistance in expanding institutes. This forum will discuss In Palau and RMI, PFTAC pursues its PSDS to include the scope of stocks of all problems, potential solutions and best efforts to put their statistical offices in the debt liabilities of general government and practices for data sharing in member position to compile national accounts public corporations and their classification countries. independently. aligned to the PSDSG 2013 will be
provided. IN TERMS OF COUNTRY ACTIVITIES, in Together with the statistical office in FY2020 the RSS program will scale back Tonga, PFTAC will assist with a rebase of Metadata released have been up to an extensive program after the national accounts to 2016/2017. strengthened consistent with the dataset deceleration in FY2019 given the
to enhance interpretation and analysis. changeover of resident advisors. There In Tuvalu the number of statistical Work with member countries to ensure are 17 missions planned to 13 PFTAC compilation staff is expected to be that comprehensive sources and methods member countries, including two on increased. PFTAC will continue to train the are documented, updated and external sector topics to Fiji and Tuvalu new staff members. disseminated regularly, inclusive of IMF respectively.
guided dissemination standards, like The priorities of PFTAC’s technical special data dissemination standards In the Cook Islands, analysis on imports assistance program in FY2020 for (SDDS), general data dissemination – especially capital products – has to be Vanuatu concentrate on the elaboration of system (GDDS) and enhanced general pursued in order improve value added a business process documentation for data dissemination system (e-GDDS). estimations of industries. improving their statistical resilience. The Five countries in the region are now calculation of livestock and fishery output participating to the e-GGDS initiative by For Fiji the resumption of work on is a further important goal. releasing statistics through the National quarterly national accounts is regarded as
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TABLE 17. FY2020 WORK PROGRAM SUMMARY: MACROECONOMIC STATISTICS (GOVERNMENT FINANCE STATISTICS)
Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
STRATEGIC OBJECTIVE 1: STRENGTHEN MACROECONOMIC AND FINANCIAL STATISTICS COMPILATION AND DISSEMINATION
OUTCOME 1: Data are compiled and disseminated using the coverage and scope of the latest manual/guide Remote technical A mission in September assistance should 2017 started work on support the efforts to Compile the institutional Sectoral coverage is used to institutional unit complete the institutional unit table for the public include all units of the public classification, but due to unit classification. Local Nauru Remote sector and investigate sector and to compile and source data gaps the staff shortages and source data for GFS disseminate GFS for policy making classification was not source data gaps may compilation purposes. and surveillance (Apr. 20). completed. Further work is continue to pose required. challenges and risks in making progress. Finalize the list of Progress have been made Staff resources and institutional units in order in defining and classifying Public sector GFS for internal use, availability of data is Tonga LTX to compile and units of the public sector policy making and surveillance sufficient to complete the disseminate full public- during the February 2019 (Apr. 20). task. sector accounts. mission. OUTCOME 2: Data are compiled and disseminated using appropriate statistical techniques Recent missions completed a review to determine reasons for Results of corrections Refine compilation statistical discrepancies. are dependent on the techniques for using Cook Discrepancies have been Reconciled statement of work external consultants LTX various administrative Islands narrowed down with the operations (Sep. 19). are performing on data sources to reduce main reason for clearing inconsistencies statistical discrepancies. discrepancies in the net in nonfinancial assets. investment of nonfinancial assets. The CoA and financial Dependent on skilled Bridge tables facilitate the management information GFS is automated in the financial resources and the compilation of budgetary Fiji LTX system reforms were management information system success is reliant of central government (BCG) initiated and progress was to compile reports (Aug. 20). sufficient staff training GFS. made. and awareness. Ensure that all Data series review National Statistics staff transactions of general conducted during the require continued PFTAC government and public previous GFS TA and Reconciled statement of Kiribati Expert support to improve corporations are included adjustments made to the operations (Dec. 19). techniques and in the coverage, inclusive data. Further review and methodologies. of donor contributions. improvements required. The process was initiated in the September 2017 External professional Mapping the national mission but the mapping GFS is automated in the financial technical support be Nauru Remote chart of accounts (CoA) to results need to be management information system available to assist with GFS. incorporated as part of the to compile reports (Aug. 20). the updates and the financial management migration. information system. Assistance required from Statement of operations external systems continue to present vendors to update the imbalances. Stocks and Imbalances using various management information flows in financial balance data sources to compile Reconciled statement of reporting systems. Timor-Leste Remote sheet creates GFS are investigated and operations (Dec. 19). Coordination between discrepancies as well as resolved. internal stakeholders unreconciled source data may be improved to derived from various achieve common systems. solutions. Reforms on the CoA and financial management Dependent on skilled Mapping the national information systems was GFS is automated in the financial resources and the Tonga LTX chart of accounts (CoA) to impacted by key staff and management information system success is reliant of GFS. management changes. to compile reports (Aug. 20). sufficient staff training Limited progress was and awareness. made.
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk Stakeholders from all Statement of operations three reporting agencies Imbalances using various continue to present (Treasury, Reserve Bank data sources to compile imbalances. Stocks and Reconciled statement of of Vanuatu and Vanuatu Vanuatu LTX GFS are investigated and flows in the balance sheet operations (Dec. 19). National Statistics office resolved. creates discrepancies to need to coordinate be resolved. efforts in resolving data discrepancies. Regional workshop on Trained staff for improved GFS All PFTAC member Regional LTX/Expert government finance compilation and dissemination countries will attend and statistics. (Aug. 19). be trained. OUTCOME 3: Higher frequency data is compiled and disseminated Compile, review and 1) Data compiled and disseminate data to the disseminated for the annual GFS IMF Statistics database, internal policy decision Department. Complete Provided that staff Annual data for general making, surveillance and use for Cook FY2018 for general resources are on LTX government completed up fiscal forecasting (Nov. 19). Islands government (GG). Start to strength and that source to FY2017. Quarterly GFS (Sep. 19). 2) PSDS produce quarterly GFS for data is readily available. submitted to the World Bank for FY2019. Compile and publication and used into debt disseminate public sector sustainability analysis (Apr. 20). debt statistics (PSDS). Compile, review and 1) Data compiled and disseminate data to the disseminated for the annual GFS Annual data for BCG Given that source data is IMF Statistics database, internal policy decision completed up to FY2017. readily available. Department. Complete making, surveillance and use for Unconsolidated GG data Unresolved classification Fiji LTX BCG for FY2018 and fiscal forecasting (Nov. 19). 2) completed up to FY2015. issues with BCG data will expand the coverage for PSDS submitted to the World Expanding coverage to the result in no progress with GG. Resolve inconsistent Bank for publication and used into public sector was initiated. GG consolidation. classifications of historical debt sustainability analysis (Apr. data. 20). Data compiled and disseminated Annual data for BCG and for the annual GFS database, Compile, review and 4 state governments were internal policy decision making, Provided that staff disseminate data to the sustained. Data was surveillance and use for fiscal resources are on FSM LTX IMF Statistics completed up to FY2017. forecasting (Nov. 19). 2) PSDS strength and new staff is Department. Expanding coverage to the submitted to the World Bank for fully trained. public sector was initiated. publication and used into debt sustainability analysis (Apr. 20). Data compiled and disseminated for the annual GFS database, Annual data for general National Statistics staff Compile, review and internal policy decision making, government completed up require sustained training disseminate data to the surveillance and use for fiscal Kiribati Expert to FY2017. Expanding and assistance in the IMF Statistics forecasting (Nov. 19). 2) PSDS coverage to the public compilation and Department. submitted to the World Bank for sector was initiated. dissemination of GFS. publication and used into debt sustainability analysis (Apr. 20). Data compiled and disseminated for the annual GFS database, Annual data for was Compile, review and internal policy decision making, Provided that staff sustained. Data was disseminate data to the surveillance and use for fiscal resources are on Palau LTX completed up to FY2017. IMF Statistics forecasting (Nov. 19). 2) PSDS strength and new staff is Expanding coverage to the Department. submitted to the World Bank for fully trained. public sector was initiated. publication and used into debt sustainability analysis (Apr. 20). Compile, review and Data compiled and disseminated Department of Treasury disseminate data to the Annual data for BCG was for the annual GFS database, staff capacity sufficient to IMF Statistics sustained. Data was internal policy decision making, produce annual and Department. Assist in the completed up to FY2017. surveillance and use for fiscal quarterly BCG. PNG LTX verification and revisions Expanding coverage to the forecasting (Nov. 19). Data are Concerted efforts are of the COA mapping and public sector was not published for International needed to produce associated compilation initiated due to size of data Financial Statistics and increased audited financial procedures for quarterly source gaps. timeliness and frequency for statements to compile reporting. surveillance (ongoing). public sector GFS.
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk Data compiled and disseminated for the annual GFS database, internal policy decision making, surveillance and use for fiscal Annual data for BCG was Compile, review and forecasting (Nov19). Data are Provided that staff sustained. Data was disseminate data to the published for International resources are on RMI LTX completed up to FY2017. IMF Statistics Financial Statistics and increased strength and new staff is Expanding coverage to the Department. timeliness and frequency for fully trained. public sector was initiated. surveillance (ongoing). 2) PSDS submitted to the World Bank for publication and used into debt sustainability analysis (Apr. 20). Data compiled and disseminated for the annual GFS database, internal policy decision making, surveillance and use for fiscal Annual data for general Compile, review and forecasting (Nov. 19). Data are Bureau of Statistics staff government completed up disseminate data to the published for International capacity sufficient to Samoa Remote to FY2017. Expanding IMF Statistics Financial Statistics and increased produce annual and coverage to the public Department. timeliness and frequency for quarterly BCG. sector was initiated. surveillance (ongoing). 2) PSDS submitted to the World Bank for publication and used into debt sustainability analysis (Apr. 20). Data compiled and disseminated for the annual GFS database, Annual data for BCG was internal policy decision making, Compile, review and Central Bank staff sustained. Data was surveillance and use for fiscal Solomon disseminate data to the capacity sufficient to Remote completed up to FY2017. forecasting (Nov. 19). Data are Islands IMF Statistics produce annual and Expanding coverage to the published for International Department. quarterly BCG. public sector was initiated. Financial Statistics and increased timeliness and frequency for surveillance (ongoing). National Statistics Office Data compiled and disseminated A time series of data was is at full strength, for the annual GFS database, completed for the BCG however strong Compile, review and internal policy decision making, (FY2013-16), however the commitment needed disseminate data to the surveillance and use for fiscal Tuvalu LTX data was not submitted for from the authorities in IMF Statistics forecasting (Nov. 19). 2) PSDS the annual GFS database disseminating data, Department. submitted to the World Bank for nor used for internal policy sustain compilation and publication and used into debt and decision making. using data for policy and sustainability analysis (Apr. 20). decision making. Annual data for BCG was sustained. Data was Data compiled and disseminated Capacity are sufficient in completed up to FY2017. for the annual GFS database, the Treasury to compile Compile, review and Expanding coverage to the internal policy decision making, and disseminate GFS, disseminate data to the public sector was initiated, surveillance and use for fiscal however concerted Vanuatu LTX IMF Statistics however progress is forecasting (Nov. 19). 2) PSDS efforts are needed Department. limited due to incomplete submitted to the World Bank for reconcile statistical and infrequent completion publication and used into debt discrepancies to make and audit of financial sustainability analysis (Apr. 20). progress. statements. OUTCOME 4: Macroeconomic data sets used by policy makers have been made more intersectoral consistent Prepare a reconciliation Complete, balanced statement of and include data for the Provided that all Reconciliation process operations with narrowing down financial balance sheet stakeholders contribute PNG LTX initiated for financial the statistical discrepancies and all and public-sector data to in providing and balance sheet. macroeconomic datasets are the monetary statistics reconciling source data. harmonized. and balance of payments. OUTCOME 5: A new dataset has been compiled and disseminated internally or to the public Assistance in the verification and Improved GFS and Assist in the verification improvement of GFS data macroeconomic statistics for PNG LTX and revisions of data compilation processes is internal policy and decision compiled for GFS. ongoing with the support making and surveillance. of PFTAC. OUTCOME 6: Metadata released internally or to the public have been strengthened consistent with the dataset to enhance interpretation and analysis
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk Country counterparts started the documentation A comprehensive sources processes and are now Business process documentation Staff resources are LTX and methods document is participating in the e- completed and available. Fiji committed to regular Mission disseminated and updated GDDS by publishing Associated metadata produced to updates and publication. regularly. updates through the support fiscal data time series. National Summary Data Page. Update current business Enhanced methodology and processes and include the Business process Staff resources are national guidelines are available Kiribati Expert compilation documentation does exist, committed to regular for GFS compilation and methodologies for public but need updating. updates and publication. dissemination. corporations.
TABLE 18. FY2020 WORK PROGRAM SUMMARY: MACROECONOMIC STATISTICS (REAL SECTOR STATISTICS)
Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
STRATEGIC OBJECTIVE 1: STRENGTHEN COMPILATION AND DISSEMINATION OF DATA ON MACROECONOMIC AND FINANCIAL STATISTICS
Reclassify ESS data correctly Some ESS data lacks ESS data correctly reflects Cook Availability of STX concerning foreign aid and comprehensiveness and the correct data on foreign aid and Islands necessary source data loan funded development data valuation loan funded development
More timely and regular As access to VAT data Cook Improve timeliness of quarterly Quarterly GDP estimates are STX publication of quarterly has been regained Islands GDP estimates published infrequently GDP estimates risks are low Compile expenditure side GDP As resources are Rebased productions side GDP has Rebased expenditure side Fiji LTX in line with rebased production available non- been published GDP is published side performing risk is low Discrepancies between GDP Discrepancies between Still no new Production side and expenditure by expenditure, income and GDP by expenditure, government statistician Fiji LTX side of GDP show considerable production resolved via income and production in office for deciding differences balancing decreased about priorities Still no new Fresh up training in QNA and Production side GDP is government statistician Fiji LTX start with compilation of Training took place two years ago published on a quarterly in office for deciding production side GDP basis about priorities Improve BoP coverage Certain components are missing in Financial account in the Availability of Kiribati STX concerning the financial the BoP statistics BoP is exhaustive necessary source data account. Improve the model for Value added and output The access to Construction industry model does Kiribati STX estimation of value added and estimates of construction construction permit not include construction permit data output of construction industry industry are more reliable data is not granted yet. Value added and output As access to VAT data Develop capacities and to start GDP is calculated by Graduate for three industries are has been denied, a Micronesia LTX with independent GDP School USA calculated by end of MoU is necessary to estimates FY2020 start work Emerged severe staff capacity Number of staff has not Resume GDP compilation and Publication of 2017 GDP Nauru LTX constraints jeopardize GDP increased to minimum publication estimates compilation operational level Collection of improved More reliable value-added Access to quality Estimates are based on weak Nauru LTX construction, house rental and estimates for construction source data and assumptions financial service data and the financial industry adequate staff number Rebase of national accounts to Latest HIES 2015/2016 Success depends on New HIES 2015/2016 are available Niue STX reflect latest HIES 2015/2016 results are reflected available staff but not yet incorporated in GDP results national accounts resources Value added and output Develop capacities and to start Success depends on GDP is calculated by Graduate for three industries is Palau LTX with independent GDP available staff School USA calculated by end of estimates resources FY2020 Methodologically Investigate/resolve Draft GDP calculation agreed with Staff capacities are PNG LTX improved version of GDP data/methods concerns MoF are available adequate estimation published
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Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk highlighted via previous GDP release
Training staff on analysis and Staff capable of Number of staff is Solomon STX dissemination of GDP Basic training had been provided independent GDP adequate so current Islands estimates calculation risk is low A user friendly and Review and documentation of Partially completed, but should be transparent Number of staff is Solomon STX annual business survey done within a comprehensive review documentation of annual adequate so current Islands imputation methods of the survey strategy business survey is risk is low published
2016 Household Income and Preparation of the new rebase Expenditure Survey, 2015 National accounts data Number of staff and TA Tonga STX round of national accounts to Population and Housing Census, published in 2020 reflects sources are adequate 2016/2017 and the 2015 Agricultural Census latest census data so current risk is low are available
The operational Output and value-added Livestock data is based on many reliability of the new Improve livestock and fishery estimations for agriculture Vanuatu LTX assumptions which have to be electronic data output calculation and fishing are more proved. Fishery data is incomplete collection system at reliable harbor fish markets Workshop on the improvement Broad participation of of the usability of In planning status, no venue and Regional LTX Completion of Workshop PFTAC member administrative data by various date agreement reached countries methods of quality control MoUs between Workshop on the improvement Workshop participation In planning status, no venue and administrative data Regional LTX of accessibility and usability of of high level Ministries date agreement reached providers and statistical administrative data of Finance staff offices are signed
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SECTION III FINANCIAL SECTOR SUPERVISION
F
Under the FSS CD work program for FY2020, efforts will contribute towards two core objectives to:
• Objective 1: Develop and strengthen banking regulations in line with international standards; and
• Objective 2: Implement a risk-based supervision (RBS) system and upgrade other supervisory processes.
Under the proposed FY2020 workplan, focus on the four major projects of the expanded in FY2020 to also assist 23 missions/activities are planned versus FSS program: Kiribati to develop a banking an outturn of 16 missions, a 44 percent regulatory framework; increase over FY2019. However, fewer 1. Supervision Framework TA field days are needed for FY2020 at Enhancement Program, with Cook 3. Insurance Regulatory Reform 236 (65 LTX and 171 STX), down 7 Islands, PNG, Solomon Islands project, with Fiji, Samoa and Tonga. percent from 253 in FY2019 (55 LTX and and Vanuatu. The FY2020 The FY2020 Workplan includes 198 STX) because of the lengthy multi- Workplan include missions to the follow-up missions to all three country STX contracts used to support Cooks Islands on financial analysis countries under the project to finalize insurance reforms in FY2019. and finalizing prudential standards regulatory drafts and support and on-site examination reform; to stakeholder consultation; and AT THE REGIONAL LEVEL, PFTAC will PNG on on-site examination and continue to organize multi-topic developing prudential standards; to 4. Supervision Framework workshops in FY2020 including on the Solomon Islands on financial Development project with Tuvalu. Effective Regulation of Cross Border analysis and developing prudential The FY2020 Workplan includes a Banking and Sound Governance; and standards; and to Vanuatu on mission to develop prudential support the AFSPC Annual Meeting to be financial analysis and developing reporting. held in Tonga. The IMF’s Singapore prudential standards; and Training Institute (STI) with the Legal Other planned activities in FY2020 Department will hold a course on Anti 2. Banking Regulatory Reform project, include two missions to Timor Leste to Money Laundering (AML)/ Countering with Palau, RMI and FSM. The finalize draft credit risk regulations and Financing of Terrorism (CFT) in June FY2020 Workplan includes follow-up review the banking law. 2019. mission to all three countries to finalize draft legislation and IN TERMS OF COUNTRY ACTIVITIES, regulations and support stakeholder TA and training in FY2020 will continue to consultation. This project will also be
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TABLE 19. FY2020 WORK PROGRAM SUMMARY: FINANCIAL SECTOR SUPERVISION
Beneficiary Mode Activities Current Position Expected Outcomes Comments/ Risk
STRATEGIC OBJECTIVE 1: DEVELOP AND STRENGTHEN BANKING REGULATIONS IN LINE WITH INTERNATIONAL STANDARDS
Assistance in finalizing draft Draft suite of prudential Final suite of prudential Cook Islands STX Prudential Standards following standards being finalized standards formally issued stakeholder consultation Assistance in developing Draft suite of prudential LTX/ Gaps in current suite of PNG comprehensive suite of Prudential standards ready for STX prudential standards Standards stakeholder consultation Assistance in developing Draft suite of prudential Solomon LTX/ Gaps in current suite of comprehensive suite of Prudential standards ready for Islands STX prudential standards Standards stakeholder consultation Assistance in developing Draft suite of prudential Gaps in current suite of Vanuatu LTX comprehensive suite of Prudential standards ready for prudential standards Standards stakeholder consultation Finalize draft legislation and Revised draft legislation Revised legislation and PFTAC requires Palau STX regulations and support and regulations being regulations finalized for assistance of IMF Legal stakeholder consultation developed issuance Department. Finalize draft legislation and Revised draft legislation Revised legislation and PFTAC requires RMI STX regulations and support and regulations being regulations finalized for assistance of IMF Legal stakeholder consultation developed issuance Department. Finalize draft legislation and Revised draft legislation Revised legislation and PFTAC requires FSM STX regulations and support and regulations being regulations finalized for assistance of IMF Legal stakeholder consultation developed issuance Department. PFTAC requires Assistance in developing draft Kiribati STX Currently no banking law Draft banking law developed assistance of IMF Legal banking legislation Department. Assist in finalizing insurance PFTAC requires Draft insurance law being Insurance law finalized for Fiji STX regulatory drafts and support assistance of IMF Legal developed stakeholder consultation stakeholder consultation Department. Assist in finalizing insurance Insurance law and regulations PFTAC requires Draft insurance law and Samoa STX regulatory drafts and support finalized for stakeholder assistance of IMF Legal regulations being developed stakeholder consultation consultation Department. Assist in finalizing insurance Insurance law and regulations PFTAC requires Draft insurance law and Tonga STX regulatory drafts and support finalized for stakeholder assistance of IMF Legal regulations being developed stakeholder consultation consultation Department. Assist in finalizing draft credit risk Draft regulations being Draft regulations finalized for Timor Leste STX regulations developed stakeholder consultation PFTAC requires Review and revise banking Gaps in current banking Revised draft legislation Timor Leste STX assistance of IMF Legal legislation legislation developed Department. STRATEGIC OBJECTIVE 2: IMPLEMENT A RISK-BASED SUPERVISION (RBS) SYSTEM AND UPGRADE OTHER SUPERVISORY PROCESSES Draft enhancements to on- Enhancements to on-site Finalize on-site examination Cook Islands STX site examination process examination process reform developed embedded Assistance in developing a Current financial analysis Draft enhancement to Cook Islands LTX financial analysis process that process is compliance financial analysis process effectively identifies risk based developed Draft enhancements to on- Enhancements to on-site LTX/ Finalize on-site examination PNG site examination process examination process STX reform developed embedded Assistance in developing a Current financial analysis Draft enhancement to Solomon LTX financial analysis process that process is compliance financial analysis process Islands effectively identifies risk based developed Assistance in developing a Current financial analysis Draft enhancement to Vanuatu LTX financial analysis process that process is compliance financial analysis process effectively identifies risk based developed Banks do not submit Prudential reporting process Tuvalu LTX Develop prudential reporting periodic prudential returns in place
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2019 PFTAC Steering Committee Meeting, PNG, March 2019
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SECTION IV
PFTAC STAFF
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Coordinator PUBLIC FINANCIAL MANAGEMENT
David Kloeden Celeste Kubasta (Since February 2017) (Since June 2018)
Celeste Kubasta joined PFTAC as a Public Financial David joined PFTAC in February 2017. David is an Management (PFM) Adviser in June 2018. With over Australian national, and prior to coming to PFTAC thirty years of experience, she has worked on served as Coordinator of CARTAC – the IMF’s implementation of PFM reforms in policy formulation Caribbean Regional Technical Assistance Center and implementation, budget preparation and execution, based in Barbados. With 20+ years as an IMF tax and financial reporting processes. She also has administration specialist, he has extensive Domestic experience in auditing, IT system implementation, and Revenue Mobilization experience. He is a CPA, has an teaching courses in accounting and public policy. From undergraduate degree in information technology and 2013 to 2018, Celeste provided technical assistance for post graduate degrees respectively in financial CARTAC within the Caribbean and has worked management, tax law, and economics. internationally providing technical assistance since
2006 in Africa, the Middle East, and the Caribbean. She Resident Advisors was formerly employed by the State of North Dakota as the Deputy Budget Director. Celeste is a Certified Public FISCAL AFFAIRS DEPARTMENT Accountant with a BS Accounting and MS Management. REVENUE ADMINISTRATION
Georg Eysselein (Since November 2018) Richard Neves (Since October 2016)
Georg joined PFTAC in November 2018 and is a South African National. Georg worked for the South African Revenue Service for more than 30 years in various Richard joined PFTAC in October 2016. Richard is an senior positions. His international career started by Australian who has worked in the budget areas of the working for the IMF and the European Delegation in Australian Department of Finance and the ACT Macedonia, followed by DFID, USAid and World Bank Treasury. Richard has also worked in Timor Leste for funded projects in Afghanistan and Somalia. Georg five years as the lead budget advisor and was the Cook was closely involved with the implementation of the Islands Financial Secretary from 2011 to 2015. post-graduate Tax Professional Qualification in South Africa for tax practitioners in the private sector and taxation auditors working for the Revenue Service. ASIA PACIFIC DEPARTMENT MACROECONOMIC PROGRAMMING AND ANALYSIS
Stanley Shrosbree Iris Claus (Since February 2015) (June 2014 – October 2018)
Iris joined PFTAC in February 2015. Iris has dual Stan joined PFTAC in June 2014. Stan is South African German and Canadian nationality. Before joining and started his career in the South African Revenue PFTAC she held policy and research positions at the Services before joining the IRD in New Zealand. He Asian Development Bank, the New Zealand Inland later served as Advisor to the Directorate General Revenue, the New Zealand Treasury, the Reserve Taxation in Indonesia. Since joining the IMF in 2006, he Bank of New Zealand, and the Bank of Canada. She has been involved in tax reform initiatives in South is on the editorial boards of the Journal of Economic Eastern Europe. Surveys and Asian Economic Papers and is a Senior Fellow at the University of Waikato, New Zealand.
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STATISTICS DEPARTMENT MONETARY AND CAPITAL MARKETS DEPARTMENT
REAL SECTOR STATISTICS FINANCIAL SECTOR SUPERVISION
Marcus Scheiblecker Ben Stefanou (Since July 2016) (Since October 2018)
Marcus joined PFTAC in October 2018. He is an Austrian Ben joined PFTAC in July 2016 and is an Australian national with extensive knowledge and expertise in Real national. Ben has extensive experience both as a bank Sector Statistics and experience in compilation of national supervisor with the Australian Prudential Regulatory Authority (APRA), the Australian bank regulator, and accounts. Prior to coming to the Pacific, Mr. Scheiblecker held various positions including as deputy director at the working in the commercial banking sector. He previously worked with the IMF as a TA advisor in the Caribbean. Austrian Institute of Economic Research where he acted as an advisor to Eurostat for seasonal adjustment and on financial statistics and national accounts for Statistics Austria. Administration
GOVERNMENT FINANCE STATISTICS SENIOR ADMINISTRATIVE ASSISTANT (ACCOUNTING/ OPERATIONS)
Maria Nina Samuela Barend De La Beer (March 2017 – November 2018)
Barend joined PFTAC in March 2017. Barend is both a SENIOR ADMINISTRATIVE ASSISTANT South African and a New Zealander. Many PFTAC (INFORMATION / OPERATIONS)
members will already be familiar with Barend, as he has Elenoa Bogiwalu been working with the IMF as an STX in the Japanese- sponsored project on GFS capacity building in the Pacific
since 2013. Previously, Barend worked as a senior financial analyst with the Auckland Council, and, from TEAM ASSISTANT 1997-2011, with the National Treasury of South Africa. Rusila Bituwaqa
Luis Temes Castrillon (Since April 2019) LOGISTICS ASSISTANT Josaia Nakete
Luis joined PFTAC in April 2019. He is a Spanish national with expertise in Government Finance Statistics and National Accounts. Before joining PFTAC he held various positions at the National Statistics Institute in Spain and ECONOMIC ANALYST
worked as a seconded national expert on GFS quality management and Government accounting at Shane Prasad EUROSTAT. He also worked as an advisor for the for the Minister of Employment and Social Security and as a senior analyst at the Independent Authority for Fiscal Responsibility (AIReF). He has under-graduate and postgraduate degrees in mathematics and statistics awarded from universities in Spain and the United Kingdom.
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ANNEX
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ANNEX 1. MACROECONOMIC DEVELOPMENTS OF PFTAC MEMBER COUNTRIES
In 2018, Pacific island countries (PICs) as For 2019, growth in the region is projected New Zealand economies experience a group experienced relatively slow to pick up to just under 4 percent as the significant spillovers from Asia. growth, of around 0.9 percent. While some PNG economy recovers. Risks are tilted to countries experienced good growth, the downside, however. As seen in Macroeconomic vulnerabilities in the supported by continuing strength in previous years, new natural disasters can region are also edging upwards as public tourism and fisheries sectors, weather- dramatically cut growth in individual debt-to-GDP ratios have been rising. related disasters hampered growth in countries and across the region. In Although debt ratios remain, in general, some PICs, notably Tonga, while a major addition, global growth momentum has below those seen in many other small earthquake in Papua New Guinea reduced been easing, and trade in Asia has slowed island economies, the vulnerability of the its growth to zero. Inflation in the region sharply in recent months. If sustained, the region to natural disasters underscores the remained low, reflecting exchange rate slowing of growth in Asia could dampen need to maintain significant fiscal space to stability and weak import prices. tourism earnings in the region, as well as cope with such disasters. slow growth indirectly if the Australian and
Small states growth generally improving in 2019 Country by Country the outlook is mostly positive
Real GDP Growth Projections - 2019 compared to 2018 (In percentage point) 5 4 3 2 1 0 -1 -2 Fiji Palau Nauru Tonga Tuvalu Samoa Kiribati Vanuatu Micronesia Timor-Leste Marshall Islands Solomon Islands Papua New Guinea New Papua Note: 2019 projected growth minus 2018 growth estimates. Sources: WEO.
Tourism is an important driver of growth in the region Tourism is an important driver of growth in the region
Visitor Arrivals in Selected Pacific Island Countries Share of Visitor Arrivals, by Source Markets (In thousands of persons) (In percent of Total Arrivals) 1,600 14 100% Arrivals Y-o-y percent change (rhs) 1,400 12 80% 10 1,200 60% 8 1,000 40% 6 800 20% 4 600 2 0%
400 Fiji PNG
0 Palau Tonga Samoa Islands Islands Vanuatu Marshall 200 -2 Solomon
Australia New Zealand Timor-Leste 0 -4 China Japan 2012 2013 2014 2015 2016 2017 Pacific Island Markets Other Markets Note: Includes Fiji, Samoa, Palau, PNG, Solomon Islands, Tonga and Vanuatu. Source: South Pacific Tourism Organisation (SPTO). Sources: South Pacific Tourism Organisation (SPTO).
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However, fiscal positions are projected to weaken And fishing revenues have been buoyant with higher spending
Outlook on Fishing Revenue in the Pacific Change in Overall Balance as a percent of GDP between 2018 and 2019 (Fishing revenue in percent of GDP) (In percentage point) 100 Positive Overall Balance in 2019 Negative Overall Balance in 2019 Kiribati Tuvalu Nauru Micronesia Marshall Islands 15 90 10 80 5 70 0 60 -5 50 -10 40 -15 30 -20 20 Fiji PNG
10 Palau Nauru Tonga Tuvalu Samoa Kiribati Islands Islands Vanuatu Marshall 0 Solomon Micronesia
2011 2012 2013 2014 2015 2016 2017 2018 Timor-Leste proj. Note: 2019 projections minus 2018 estimates. Sources: Countries authorities, and IMF staff projections. Source: WEO.
Debt has been rising…although… The pattern of debt differs across countries
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PFTAC is an IMF initiative supported by the following member countries and development partners:
Cook Islands Fiji Kiribati
Marshall Islands Federated States Nauru of Micronesia
Niue Palau Papua New Guinea
Samoa Solomon Islands Timor-Leste
Tokelau Tonga Tuvalu
Vanuatu
European Union PACIFIC FINANCIAL TECHNICAL ASSISTANCE CENTRE Supporting Macro-Financial Stability and Sustainable and Inclusive Growth in the Pacific
PFTAC ANNUAL
Reserve Bank Building Level 7, Pratt Street GPO Box 14877 REPORT Suva, Fiji T. +(679) 330.4866 F. +(679) 330.4045 PFTAC.org facebook.com/FijiPFTAC 2019 INTERNATIONAL MONETARY FUND Institute for Capacity Development Global Partnerships Division 700 19th Street, NW Washington, DC 20431 USA T. +(1) 202.623.7636 F. +(1) 202.623.7106 [email protected]