P-LS-K00-003

Project Details
ID: P-LS-K00-003 Name: INSTITUTIONAL SUPPORT FOR THE ENHANCEMENT OF THE PFM SYSTEM Status: Ongoing Country: Lesotho
Sector: Multi-Sector Approval date: 14-Oct-2013 Task Manager: GEBRE-SELASSIE Kalayu, RDGS4
Total cost: 2600000
Currency: UAC
Source(s) of financing
ADF: 2600000
Implementing Agency: MINISTRY OF FINANCE Location: LESOTHO

Objectives

The objective is to establish efficient, effective and accountable use of public resources as a basis for a stable macroeconomic environment and public service delivery for the benefit of the population. This will be achieved through strengthening the capacities in key public institutions engaged in public financial management and governance.

Description

The Bank will support the implementation the PFM Reform Action Plan through this institutional support project, which will provide funds towards strengthening capacity within The Mininstry of Finance, the Office of the Auditor General, the Directorate on Corruption and Economic Offences and the Public Accounts Committee, providing expertise towards strengthening existing systems and processes, and procuring required services, goods and materials towards ensuring that the outcomes of the project can be met. The project will target two main outcomes: i) Efficient and transparent public procurement systems; ii) Enhanced accountability in the use of public funds. The various activities will contribute to ensuring greater value for money in procurements and establishing a system of checks and balances to ensure that the public resources are spent effectively and efficiently in line with strategic priorities of the NSDP. To ensure sustainability and effectiveness of capacity building and knowledge development, emphasis will be given to strengthening national training institutes, building networks and ensuring national ownership of the project.

Benefits

The direct beneficiaries of this project will be the Ministry of Finance, The Office of the Auditor General (OAG) (80 women; 34 men), the Public Account Committee (PAC) (25 members (5 women and 20 men), 1 clerk) and the Directorate of Corruption and Economic Offences (DCEO) (staff (3 men, 2 women)) of the Prevention and Education Department.Within the Ministry of Finance the beneficiaries will include the Procurement Policy and Advisory Division (PPAD) (7 men, 2 women), the Internal Audit Department (IAD) (35 women; 12 men) and the PFM Reform Secretariat (6 staff). The project will also benefit Government officials from across the 23 ministries, in particular internal auditors and procurement officers (approx. 54 women; 46 men) that will benefit from the various trainings and outreach activities. The work with the PPAD and the DCEO will also directly target and benefit the general public and private sector actors, particularly small and micro businesses through sensitization and outreach activities at the district level (aim to reach min. 300 SMEs, of which 50% women led). Indirect beneficiaries will include the broader population of Lesotho through improved procurement and scrutiny of public expenditure, which should help to ensure that public resources are allocated and used in the efficient and effective delivery of public services.

Rational

Lesotho's exposure to external risks, including the unpredictability of Southern African Customs (SACU) revenues and adverse weather conditions, make it increasingly clear that fiscal consolidation efforts are needed if the NSDP targets are to be met. This includes broadening the revenue base and improved spending prioritization in line with NSDP targets, while on-going Public Financial Management reforms need to be kept on track to ensure spending effectiveness, especially through strengthening transparency and accountability. A series of recent Public Financial Management assessments and related reports point to a number of areas across PFM that require attention.In the area of procurement, the inability of GoL to produce annual procurement performance reports; low level of competition in procurement (with waivers for single sourcing being an inordinately large percentage in comparison to competitive sourcing); and lack of transparency on award of tenders, are some of the areas that need to be addressed. On external scrutiny, the Office of the Auditor General has a backlog (back to 2010) on preparing audited statements on the annual accounts, it lacks independence and the average time of parliament scrutiny of OAG reports has averaged 14 months, weakening the effectiveness of accountability mechanisms. This translates into a continued lack of efficiency, transparency and accountability in the use of public resources and fuels opportunities for misappropriation of funds and corruption.

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