Public Financial Management refers to the set of laws, rules, systems and processes used to mobilise revenue, allocate public funds and undertake public spending. PFM reform is a critical element of the government’s efforts to establish fiscal and debt sustainability in Jamaica.
The Government of Jamaica (GOJ) has undertaken a programme to strengthen its Public Financial Management (PFM) in order to improve governance and accountability; fiscal control; efficiency and effectiveness in resource use.
In 2007, a Public Expenditure and Financial Accountability (PEFA) assessment was conducted which was repeated in 2012. The 2012 assessment appraised the progress in Jamaica’s PFM systems which established a baseline for future assessments and provided a basis for Government/Donor dialogue on future PFM reforms. The PEFA 2012 assessment covered the entire spectrum of PFM activities from the linking of policies to plans, budget formulation and preparation, budget execution, accounting, reporting and control to external oversight and legislative scrutiny.
The Government of Jamaica prepared a PFM Reform Action Plan (PFMRAP) after the 2012 Public Expenditure and Financial Accountability (PEFA) assessment. The plan identified, in great detail, reform activities to be carried out by various agencies based on gaps in the PEFA assessment along with performance measures and timelines. Subsequently, a PFM Reform Action Plan Monitoring Committee was formed to assess progress and report to an Oversight Committee. The Oversight Committee was responsible for identifying any strategies to deal with issues arising from implementing reforms.
The Government recently completed its third PEFA assessment in October 2016. This PEFA provided an update of progress in PFM in Jamaica since the last PEFA in 2012 and established a new PEFA baseline using the 2016 PEFA methodology. The assessment covered expenditures by central government budgetary units and revenues collected by government.
The results of the PEFA show a public financial management system in Jamaica that is strong. The report shows that (i) the budget process is evolving, (ii) revenue forecasting has improved significantly since the previous PEFA, and (iii) the revenue agencies have developed effective processes and procedures which impact on the execution of the budget.
The Ministry of Finance and the Public Service has initiated and completed critical actions for the institutionalisation of key PFM reforms to include:
- Amendments to the PBMA and FAA Acts in order to strengthen the Fiscal Rules.
- Restructuring of the Accountant General’s Department and its continued transformation to a modern treasury.
- Introduction of new legislation for Public Procurement Management.
- Centralises Treasury Management functions in the Accountant General’s Department
- Operationalisation of key ICT infrastructure for revenue management (i.e. RAiS and ASCYCUDA World).
- Restructuring of the debt management function in the Ministry of Finance to meet international standards.
- The implementation of a Public Investment Management System.