Institutional Support for the Integrated Public Financial Management Reform Project (IPFMRP)


  • Référence: P-LR-K00-013
  • Date d’approbation: 10/09/2012
  • Date de début: 12/02/2013
  • Date d'évaluation: 15/03/2012
  • Statut: En coursOnGo
  • Emplacement: Liberia


Proposed development objectives and project objectives

Proposed development objectives: The overarching goal is "Improved budget coverage, fiscal policy management, financial control, and oversight of government finances in Liberia". Through strengthened institutional capacity for the delivery of effective PFM and oversight, the government will be able to expand and deepen the scope of reforms to reduced corruption, improved service delivery, and thereby reducing poverty.

Project description

Recent Achievements: The government, in partnership with multilateral and bilateral development partners, has implemented a wide range of public financial management (PFM) reforms covering aspects of policy, legislation, and institutional arrangements and systems. These reforms have sought to restore working conditions of PFM systems and to initiate their modernization to enable Government to better implement its poverty reduction and development strategies. The most critical of these reforms has been the passing of the PFM Act in August 2009, which has provided the foundation for other PFM reforms. Several institutional reforms have also been implemented: a Macro-Fiscal Analysis Unit has been created; the former Bureau of the Budget has been merged into the MOF; the Debt Management Unit has been strengthened, and the accounting function has been unified by merging two departments and bringing them under the control of the Comptroller and Accountant General (CAG). Other reform efforts include introducing a new chart of accounts (COA), adopting Cash Basis-IPSAS as the standard for government accounting and financial reporting, improving revenue administration, implementing an IFMIS, approving the Internal Audit Strategy, and restoring and strengthening the external audit function.

Remaining challenges: Recent assessments identified a range of weaknesses in Liberia's PFM systems. The 2008 Public Expenditure Man agement and Financial Accountability Review (PEMFAR), was the first comprehensive assessment of PFM systems in Liberia, as well as IMF's TA Report from 2009, are the latest analytical underpinnings for the design of PFM reform activities in Liberia. The key challenges are summarized in Box 1:

Box 1: Key challenges "Legal and institutional framework. Implementation of the PFM Act remains to be completed. Multiple sections of the law are yet to be operationalized or, in other cases are weakly implemented, and the financial operations of many units, including ministries, agencies, and counties are not fully aligned with the provisions of the law. This compliance gap means that corruption still remains an issue.

"Extra-budgetary expenditures and oversight of public institutions/agencies. Except for budget support operations, funds advanced by donors for project implementation are not included in the GOL budget. Total development assistance was estimated at US$380 million in 2010 - almost as much as the GOL's annual expenditure budget. Given the magnitude of external assistance compared with domestic resources, it will be difficult for the government to improve allocative efficiency and ensure alignment with the PRS. Budget scrutiny remains weak and budget approvals are often late. Audits by the General Auditing Commission (GAC) will need to be extended to Ministries, Departments and Agencies (MDAs) and state-owned enterprises (SOEs) that have remained unaudited. The Legislature will be required to examine audit reports effectively and on a timely basis and oblige the Executive to act on their recommendations.

"Cash management, accounting, and reporting. The treasury management function, consistent with the PFM Law, needs to be fully introduced within the Office of the CAG. Financial reporting is still very weak and will require strengthening. The MOF and MDAs are still unable to produce annual statutory financial statements as required by law. As a result, the GAC is not able to undertake statutory audits that meet the full requirements for Government to account to the Legislature.

"Internal audit and controls. Although most MDAs have internal audit units, the units are not well-equipped to perform their functions satisfactorily. As the 2008 PEMFAR pointed out, the internal audit function in Liberia is weak. It also pointed out that the role of internal audit in the management control responsibilities should be better defined. The GAC has identified a list of 76 internal control weaknesses that that need to be addressed. An internal audit strategy has now been approved by Cabinet, which will seek to tackle most of these challenges in the area of strengthening internal audit. An Internal Audit Governance Board will serve as the regulatory agency for observance of internal audit processes. The role of the internal auditors will be, inter alia, the maintenance of good practice internal audit practices across Ministries and Agencies, with focus on systemic issues and using risk-based audit internal audit techniques.

Reform Agenda Going Forward: A comprehensive PFM Reform Strategy anchored in the country's PRS was approved by the Government in July 2011. The strategy seeks to widen and strengthen the foundation of public financial management laid in the first phase of the PFM reform process. The strategy plans for concrete improvements in selected systems, in a manner that would enable Liberia to gradually develop its own institutional, organizational, and human resource capacities in the medium term. This strategy provides a comprehensive framework on which to base further development assistance to ensure that interventions and support are coordinated, well sequenced and aligned with GOL needs and priorities.

Project Components: Consistent with the GOL PFM reform strategy, the proposed IPFMRP has five components which are mutually reinforcing:

(i) enhancing budget planning and credibility,

(ii) strengthening budget execution, accounting and reporting;

(iii) strengthening revenue administration;

(iv) enhancing transparency and accountability; and

(v) project management and capacity building. The major activities under each component are summarized below.

Component 1: Enhancing Budget Planning, and Credibility The component will include:

(i) training in macroeconomic modeling, financial programming and revenue forecasting;

(ii) support to the medium-term expenditure framework (MTEF);

(iii) support for strengthening planning and budget preparation processes with a focus on the preparation of comprehensive forward spending estimates and the development by Ministries & Agencies of costed sector strategies, investment plans, and budget preparation capabilities; and

(iv) establishing a fiscal monitoring framework for SOEs that helps to identify risks with a view to reducing overall fiscal risks to GOL. Inputs will be in the form of consultancies, training, and provision of computers, and accessories and vehicles.

Component 2: Strengthening Budget Execution, Accounting and Reporting It will support the roll-out of the Free Balance-based budget preparation, execution, and fiscal reporting modules of the IFMIS to MDAs and, on a phased basis, to donor funded projects. The component will also complete the implementation of the payroll system.. The main inputs include:

(i) implementation services, software costs, and training related to the roll-out of Free Balance to MDAs;

(ii) full implementation of the payroll system initiated under the IFMIS project;

(iii) implementation of requisite e-transcript interfaces with county level systems;

(iv) support to build capacity in implementing guidelines for producing IPSAS Cash Standards financial statements;

(v) design the budgeting, accounting, and reporting tools within IFMIS using the Government's COA;

(vi) training the staff of the PFMU in the CAG Accounting Services Unit on the implementation of project accounting as part of the overall GOL accounting arrangements; and

(vi) establishing County Treasuries including the design and provision of simplified book-keeping and accounting tools, and capacity building of county treasury officers through consultancies.

Component 3: Strengthening Revenue AdministrationThe component will support:

(i) training on customs administration;

(ii) provision of Technical Assistance (TA) for implementation of SIGTAS roll-out and training;

(iii) procurement of hardware and related software, and certain SIGTAS modules; and

(iv) operational expenses for effective SIGTAS project management, including technical staffing and change management.

Component 4: Enhancing Transparency and Accountability through support to integrity institutions. The activities under this component include:

(i) TA support, training and provision of essential equipment to strengthen the Public Procurement and Concessions Commission,

(ii) TA support for establishing the Internal Audit Governance Board and Secretariat;

(iii) providing internal audit operational tools (e.g. computers hardware);

(iv) training of internal auditors across MDAs;

(v) TA support for implementation of internal audit manuals;

(vi) development and implementation of a risk-based audit methodology; (vii) relevant short-term training and certification for GAC staff; (viii) provision of logistical support (including office equipment and LAN) needed to facilitate the work of the LBO and the legislative committees; (ix) training and seminars on budget analysis for LBO staff; (x) the establishment of a platform for information sharing between the government and the public through engagement with NSAs; (xi) provision of grants to NSAs to help build their capacity in the analysis and monitoring of the national and local government budget preparation, approval, and execution cycles; (xii) advocacy activities and dissem ination of information on all aspects of PFM at the national and local government levels; and (xiii) media training for journalists on covering government budget and spending matters.

Component 5: Project Management and capacity buildingThis will strengthen the project management function and delivery of PFM human resource capacity. This will include

(i) in-service and specialized training programs in PFM, and procurement,

(ii) hiring an international procurement specialist to help build procurement capacity in the RCU,

(iii) design of a career path for PFM staff (e.g., accountants, auditors, and other PFM related positions), and

(iv) support to monitor, evaluate, and review progress on all project components and communicate key aspects of progress to the public and develop effective change management strategies to address issues that may impede progress.


Project objectives: The overarching goal of the project is "Improved budget coverage, fiscal policy management, financial control, and oversight of government finances in Liberia". Through strengthened institutional capacity for the delivery of effective PFM and oversight, the government will be able to expand and deepen the scope of reforms to reduce corruption, improve service delivery, and thereby reduce poverty.

Project Components: The project supports has five components which are mutually reinforcing:

(i) enhancing budget planning and credibility,

(ii) strengthening budget execution, accounting and reporting;

(iii) strengthening revenue administration;

(iv) enhancing transparency and accountability; and

(v) project management and capacity building.


Project Rationale

PRSP and CSPs priorities and development issues the project is aiming to address

The proposed operation is aligned with country's poverty reduction program and public financial management reform strategy. The rationale for the proposed operation is consistent with, and aligned to, the Poverty Reduction Strategy (PRS) and the vision enshrined in 'Liberia Rising - 2030' which recognizes the fact that sound public financial management is crucial to achieve the nation's central economic goal of rapid, inclusive, and sustainable growth and development. The Government has approved a medium term PFM reform strategy and action plan (2011 -2014) to guide and coordinate reform efforts in Liberia. The strategy provides a comprehensive framework on which to base further development assistance to ensure that the interventions and support are coordinated, well sequenced and aligned with Government of Liberia's needs and priorities.

The proposed operation is also consistent with the JAS 2008-2011 (extended to December 2012) priorities, in particular Pillar I "Rebuilding core state functions and institutions" and Outcome - 1 "improving efficiency of budget preparation and execution and enhanced revenue administration". The proposed operation is firmly anchored in the objectives and structure of the PRS and the JAS. The project will build on the achievement of the previous operation (ISP I), and consolidate the Bank's support to Liberia's medium term PFM reform strategy and action plan.

Progress has been made in reforming the PFM system which shows that the current government is firmly committed to governance reform over the medium to long term. Since the launching of the first ISP, commendable progress has been registered in a number of areas, including:

(i) Country PFM systems have been significantly strengthened, but further work on PFM is needed; and

(ii) Country aid management and project management processes are improving, and

(iii) there are plans to use the IFMIS for all GOL expenditure regardless of source of funds. However, there is no doubt that many challenges remain, primarily in continuing the process of capacity development and strengthening PFM on a sustainable basis. AfDB is seen as an important donor, providing invaluable support in a flexible and responsive manner. The PCR noted that in order to sustain reform and build on the gains from the previous projects, Bank intervention in the areas of PFM needs to continue.

Why the Bank Group should intervene

The project will help intensify and sustain reform efforts in Liberia. Current gains must be consolidated and the remaining gaps in PFM capacity and accountability addressed. A continuing PFM reform agenda exists and needs to be pursued in order to consolidate the gains attained under the previous project and to reduce vulnerabilities. Through well-targeted institutional capacity development interventions this project will make a significant contribution to addressing the critical capacity weaknesses in general, and more specifically, would help improve Liberia's PFM system by: reinforcing compliance with the PFM rules and systems through a host of intervention models, including strengthened internal and external audits as well as a strengthened oversight capacity of the Legislature and the non-state-actors over the Executives' management of public finances.

The proposed operation also complements the ongoing policy-based operation, the Economic Governance and Competitiveness Support Program (EGCSP, 2011 -2013) The EGCSP supports institutional reform in the areas of customs administration, business enabling environment, financial transparency and accountability, and extractive industry governance. The proposed operation complements the EGCSP through capacity building support to key PFM institutions including General Audit Commission (GAC), Legislative Budget Office (LBO) and Non-state Actors to enhance external oversight and accountability which is critical for the delivery of the broader reform program supported under the EGCSP.

Contacts clés



Source Montant
Co-financierUSD 186.200.000
DeltaUSD 64.607.676
TotalUSD 121.592.324