Samoa’s Financial Management Ranked Low By ADB

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Samoa’s Financial Management Ranked Low By ADB Donor practices, accounting and budget execution rate poorly

By Jason Brown

APIA, Samoa (Samoa Observer, Oct. 2, 2013) – Samoa’s Government has been given the lowest possible rating in some areas of financial management, according to a review by the Asian Development Bank.

Reviews in 2006 and 2010 gave Samoa an overall rating of C+ for financial management, on a 10 level rating scale from D to A+.

A November 2012 progress report states that lower scores "occurred in both years for: (i) DP practices; (ii) external scrutiny and audit; (iii) accounting, recording and reporting; and (iv) budget execution predictability and control – where average scores were in the D+ to C range."

"DP" refers to donor practices, outside of the control of the Samoa government.

However, the lowest rating – a D rising – was given to "Quality and timeliness of annual financial statements", according to the original 2010 document, the Samoa PFM Performance Report (final), from April 2010.

New ratings are expected to come from how well government does meeting deadlines set for this December, under the second phase of a financial reform programme funded by the ADB, the World Bank, Australia, New Zealand and other donors.

The ratings are contained under the Public Expenditure and Financial Accountability (PEFA) reviews.

PEFA rates governments around the world on a range of 28 domestic performance rankings and three foreign or "donor" inputs.

"In terms of previous PEFA studies the overall 2006 and 2010 ratings suggest that Samoa is overall a C to C+ type of country," reads the November 2012 progress report.

"In both years the scores were highest for: (i) budget credibility; (ii) budget comprehensiveness and transparency; and (iii) policy based budgeting - where average scores were in the C+ to B range."

Samoa may have scored reasonably well when it came to preparing budgets, but scored much lower when it came time to actually account for how it spent against those budgets.

Weaknesses were recorded in how government relates with "DP" or development partners, audit reports and budget control.

The November 2012 progress report stated that, "Some 35 separate initiatives have been developed under phase 2 of the PFMRP, around 10 of which have been completed with some 16 initiatives still underway with a further 9 initiatives still at the design and/or contracting phase."

In other words, less than a third of the outcomes outlined from 2008 have actually been completed.

There were signs of increasing urgency last month within government to improve reporting standards.

The Ministry of Finance uploaded eight quarterly reports covering a full two years of economic performance – all on the same day.

Their web site uploads were the latest in a series of documents being pushed through government as it works towards improve low ratings for financial management.

Previously, the last time the Finance ministry uploaded a quarterly report was back on 13th September 2011, more than two years ago.

The latest documents were all uploaded on 24th September 2013.

There was no public comment from government on what had caused such lengthy delays.

The huge gap in reporting economic activity in Samoa came despite millions of aid dollars poured into capacity building programmes, like the Public Finance Management Reform Plan.

This gap highlights wider problems within government and its long standing promises towards transparency and accountability.

Started in 2008, government aimed the Public Finance Management Reform Plan at "strengthening its public financial management systems in order to promote the efficient use of resources for the public good."

According to a 2008 document from the ministry website, "This will include improved transparency in accounting for public funds and increased availability of information on Government’s annual budgets and accountability statements."

However, there is little word on what caused the long delay in releasing financial statements, or the quarterly economic and audit reports.

Samoa is currently in phase II of the plan which is due to finish at the end of the year.

Government mentions "issues" some 41 times in its progress report.

The report also mentions "important challenges" but does not detail what those might be.

"Important challenges remain in successfully concluding Phase II of the PFMRP by the end of 2013. Consolidation of existing gains and making further progress with unfinished actions is the immediate priority for the next year. While the results of this review to November 2012 indicate good prospects for successfully concluding most short term actions under Phase II, there is no cause for complacency. Gains need to be consolidated and unfinished items need to be completed over the next year."

As it had on previous occasions, government blamed lack of progress on the 2008 global financial crisis and the 2009 tsunami, and would soon have cyclone Evan to add to the list.

However aid support for improving government planning predates those events by more than a decade.

While donor support for financial management goes back to before independence, the more recent phase of capacity building dates back to before 1996.

This is when government launched the first Samoa Economic Strategy, the first of three leading up to 2001. From 2002, the name was changed to the Samoa Development Strategy.

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