Government of the United Republic of Tanzania

Government of the United Republic of Tanzania

Ministry of Finance

Public Financial Management Reform

Programme

Operations Manual – BASKET ARRANGEMENT

Xxx xxxx

Table of Contents

Abbreviations used3 - 4

Section 1 - Introduction to the manual 5 - 8

Section 2 - Institutional arrangements9 - 13

Section 3 - Updating and preparing action plans and budgets14 - 18

Section 4 - Financial management arrangements19 - 30

Section 5 - Monitoring and evaluation framework31 - 37

Annex A - Forms

Annex B - Reporting formats

Annex C - Direct payment guidelines

Abbreviations used

BGP / Budget Guidelines Paper
BoT / Bank of Tanzania
CAG / Controller and Auditor General
CFAA / Country Financial Accountability Assessment
CPO / Central Payment Office
EIN / Exchequer Issue Notification
GFS / Government Financial Statistics
GoT / Government of the United Republic of Tanzania
ICB / International Competitive Bidding
ICT / Information, Communication and Technology
IFMS / Integrated Financial Management System
IMTC / Inter Ministerial Technical Committee
IMWG / Inter Ministerial Working Group
JSC / Joint Steering Committee
LGAs / Local Government Authorities
LGRP / Local Government Reform Programme
LPO / Local Purchase Order
M&E / Monitoring and Evaluation
MDAs / Ministries, Departments and Agencies
MoF / Ministry of Finance
MTEF / Medium Term Expenditure Framework
NAO / National Audit Office
PAD / Policy Analysis Department
PER / Public Expenditure Review
PFMRP / Public Financial Management Reform Programme

Abbreviations used

PIR / Programme Implementation Review
PO - PSM / President’s Office – Public Service Management
WP / Work Plan
PP / Procurement Plan
PRS / Poverty Reduction Strategy
PRSP / Poverty Reduction Strategy Paper
PS / Permanent Secretary
PSMWG / Public Sector Management Working Group
PSRP / Public Service Reform Programme
PV / Payment Voucher
RA / Regulatory Authority
ROSC / Report on the Observance of Standards and Codes
TAS / Tanzania Assistance Strategy
ToR / Terms of Reference
TRA / Tanzania Revenue Authority

Section 1 - Introduction to the manual

______

Introduction to the manual

Background

Phase IV of the Public Financial Management Reform Programme (PFMRP) started on the 1st July 2012 for a period of five years. Its main objective is to support National Strategy for Growth and Poverty Reduction - MKUKUTA/MKUZA II and the five Year National Development Plan to attain the Vision 2025.

The Government (GoT) has requested support to implement the strategy from Development Partners (DPs) and an MoU govern this partnership.

This Operations Manual will guide the management of PFMRP IV’s basket fund, which has been set up to support implementation of PFMRP IV.

About this manual

This manual builds on the principles and high level procedures for co-operation contained in the PFMRP IV Memorandum of Understanding (MOU). PFMRP implementation shall comply with GoT legislation and circulars in force. The manual does not substitute for these statutory requirements and should therefore be used in conjunction with them.

The manual, which is effective from July 1, 2012, is for use by all Government, non-Government and Development Partners participating in PFMRP IV.

Its primary aims are to:

•Support PFMRP IV’s implementation to achieve the intended results;

•Ensure transparency and full accountability by GoT to the Tanzanian Public, DPs financing PFMRP and other stakeholders.

In this regard, the manual specifies institutional arrangement, processes and/or procedures for planning and budgeting, accounting, internal control, monitoring and evaluation.

Amendments to the manual

This operations manual is intended to be a “living document”. In this regard, it will be reviewed during the Annual Supervision Mission and updated as necessary. Any revisions to the manual will be approved by the JSC.

Outline of the manual

The remainder of this manual is presented in four sections, each structured according to its own unique content.

Section 2 coversPFMRP IV’s institutional and administrative arrangements.

Section 3 describes the processes and procedures for programme planning and budgeting.

Section 4 provides guidance on financial management procedures used for PFMRP IV.

Section 5 sets out a broad framework for monitoring and evaluating theprogramme’s performance.

In addition, this manual offers:

•A definition or explanation of frequently used abbreviations and terminology at the start (see pages 3 and 4) and in the body of the manual respectively

•A range of sample and standard formats to support each of the key processes. A reference to these formats is provided in the relevant sections of the manual

•Cross-references to processes to ensure that users do not overlook important linkages.

Section 2 - Institutional arrangements

Introduction

This section describes PFMRP IV’s institutional arrangements. In particular, it specifies roles and responsibilities with respect to:

•Formulating, approving, coordinating and implementing the PFMRP IV’s strategy and plan of work. Further, these arrangements allocate responsibility to various institutions to ensure effective linkages between PFMRP IV and other core reforms.

•Financial management of resources and reporting programme activities and results

•Tracking and analysing implementation progress and thereafter developing and/or recommending measures for correcting under performance.

Management arrangements

The division of institutional mandates, roles and responsibilities for the management of the programme is summarised in Figure 2.1opposite. In addition, management arrangements are described in greater detail in the sub-sections that follow.

Joint Steering Committee (JSC)

PFMRP IV will be governed by a JSC, composed of representatives from GoT and DPs. It will be co-chaired by Ministry of Finance’s Permanent Secretary (PS), who is the Accounting Officer for the Ministry, and the designated representatives from the PFM DP Group.

The participants will include MoF’s DPS-PFM Reforms, DPS-PMO-RALG, MoF’s Programme Manager, the Reforms Coordination Unit and the GoT and DPG PFMRP Secretariats. The JSC will invite representatives to attend from the Programme’s components and other DPs as required.

The main mandate of the JSCis to provide strategic oversight and direction to PFMRP IV by:

Review and endorse the Programme Management Committee’s (PMC) recommendations on programme reports (as set out in xxxx), and fund releases;
Review and endorse the PMC’s recommendations, and where necessary issue additional strategic directions to ensure that the results in the M&E framework are achieved;

Decide on management response to audits related to PFMRP IV Basket management[KH1].
Endorse official communications on PFMRP IV

Minutes signed by the co-chairs shall be distributed to all JSC members in scanned format by the PFMRP IV secretariat within a week of meeting concluded.[KH2]

The JSC meeting shall be held each quarter. The call for the meeting, initiated by the GoT must be agreed with the co-chairs of the JSC and give participants at least 10 workdays notice. All documents, including draft decisions [KH3]will have to be distributed with 5 work days before the said meeting and should have been discussed at the PMC level prior to the JSC. [KH4]Any co-chair has the right to postpone a meeting if the call and/or document are not sent within the given timeframe.

If needed – and for practical purposes – after agreement between the co-chairs of the JSC – an individual decision of the JSC can take the format of an ‘exchange of letters’ between the co-chairs. [KH5]

PFMRP IV Programme Management Committee (PMC)

The PMC will be co-chaired by Ministry of Finance’s Deputy Permanent Secretary in charge of PFM Reforms (DPS-PFMR), and the designated representatives from the PFM DP Group.

The participants will include designated senior representatives from the PFMRP Component managers, representatives from the DPs who are signatories to the MoU, MoF’s Programme Manager and the GoT and DPG PFMRP Secretariats.

The main mandate of the PMC is to:

Review and approve programme reports (as set out in xxxx), and fund releasesfor endorsement by JSC;
Discuss progress against the M&E framework, identify challenges and formulate recommendations for the JSC decision;
Co-ordinate and ensure flow of information across the PFMRP and to all stakeholders of PFM reforms;
Co-ordinate with other core reform programmes;
Take operational decisionswith financial implications within a components approved budget;
Take operational decisions without financial implications across the Programme;
Discuss and make recommendations concerning the Budget Support Performance Assessment Framework for endorsement by the JSC

PFMRP PMC meeting shall be held each quarter and prior to the JSC meetings. The call for the meeting must give participants at least 7 workdays notice and all documents needed for the meeting will have to be distributed with 5 workdays before the meeting.[KH6]

A PFM PMC meeting can be adjourned and reconvened to another time if required.

PFMRP KRA Technical Working Groups (TWGs)

The PFMRP strategy has been organized around 5 Key Result Areas – as indicated in the table below. The GoT have appointed a lead for each KRA. The KRA leads are expected to stay informed on progress and challenges within their respective KRA. In order to facilitate this arrangement, the DPs has similarly appointed KRA leads that will be the direct counterparts to the GoT KRA leads.

TWGs will be formed within the KRAs to link the component managers with their DP counterparts. This will be the primary forum for detailed technical discussions in order to build consensus on critical issues prior to the formal meetings of the PMC and JSC, with support from the GoT and DP Secretariats as required. The DP representatives for each KRA and component will be formally communicated to the GoT and updated as necessary.

The main mandate of the TWGs is to:

Discuss progress against the relevant component in the M&E framework, identify challenges and formulate recommendations for consideration by the PMC;
Discuss the programme reports (as per annex x) for purposes of submitting recommendations to the PMC.

TWG meetings will be held at least monthly and prior to the PMC. Such meetings may be informal and called by either party with support from the PFM RP and DPG secretariat where necessary.

Table...Key Result Areas (KRAs) and Components Overview:

KRA / Component, Department and KRATW
1. KRA 1: Revenue Management, Leader: CPAD /

Treasury Registrar - MoF
Prime Minister’s Office – Regional Administration and Local Government (PMO_RALG)
Commissioner for Policy Analysis Department (CPAD) - MoF

2. KRA 2: Planning and Budgeting, Leader: BC /

Commissioner for Budget (CB) - MoF
PMO-RALG

3. KRA 3: Budget Execution, Transparency and Accountability, Leader: AccGen /

Accountant General (ACCGEN) - MoF
CPAD - MoF
Public Procurement Regulatory Authority (PPRA)

4. KRA 4: Budget Control and Oversight,
Leader: IAG /

Internal Auditor Department - MoF
National Audit Office
PPRA?
TR? - MoF
Parliament

5. KRA 5: Cross-Cutting Issues (Change Management and Programme Management),
Leader: DPD /

Department for Financial Management Information System (DFMIS) - MoF
Department for Planning Division - MoF

A contact list for the components is maintained by the GoT Secretariat.

The individual TWGs referred to earlier are composed of representatives from a component and from the DP side.

Programme Manager

The Director of Planning Division within MoF is tasked as PFMRP IV’s Programme Manager and is responsible xxxxxxxxxxxxxxx. (Warrant holder, signs off on reports.. ) .

[KH7]

Components

The Component Managers is the most senior officer within a division, department, agency or office responsible for implementation.

Component Managers are responsible for:

Implementing the agreed activities to attain the milestones and the results in their sections of the M&E Framework;
Reporting, in a timely manner, on implementation progress and challenges encountered in order to support the formulation (when necessary) of recommendations for the JSC and PMC to consider;
Reporting, in a timely and accurate manner, information required for PFMRP IV Programme Documents;
Supporting the development of communications and ensuring that if another component within PFMRP IV is likely to be substantially impacted by their activities, that they are informed.
Effectively manage their responsibilities as warrant holders.

GoT’s PFMRP Coordination Secretariat

A Coordination Secretariat has been established within MoF and reports to the Director for Planning Division who, for PFMRP IV, reports to the Deputy Permanent Secretary –PFM Reforms. The Secretariat’s role is to “support the MoF in the coordination of PFMRP implementation, including but not limited to: providing technical support and quality assurance; ensuring linkages between PFMRP and other reform programmes; liaising and sharing information with various stakeholders; supporting monitoring and evaluation activities.

The core positions of the Secretariat include a Programme Coordinator, an M&E Specialist, a Procurement Specialist, a Financial Expert/Administrator, a PFM Advisor and a Communications Specialist. Other resources can be recruited to meet specific needs. The need to mainstream the Secretariat’s functions has been recognized. Its role and function will be reviewed at the Programme’s mid-term with a view to mainstreaming its core functions by the end of the Programme.

Each of the core and other positions will be guided by Terms of Reference approved by the PMC.

The Reform Coordination Unit (RCU)

The RCU is mandated to advise and assist the Chief Secretary on the coordination and leadership of core reforms for the better achievement of results. It also serves as the Secretariat to the Inter-Ministerial Technical Committee and chairs the Technical Committee of reform coordinators. The RCU is therefore strongly placed to guide PFMRP IV in relation to other core reform programmes and to support this role, the RCU is a permanent member of the JSC.

PFM Reform Programme Communication

The responsibility for communications on PFM issues on behalf of the government will remain with the Communications Department within the Ministry of Finance. (fiscal information produced by the MoF).

Communication regarding the PFM Reform Progamme will be coordinated by the PFM Secretariat in collaboration with the component managers. The intent of this communication will be to inform stakeholders on key developments within the individual components and the programme as a whole.

It is also expected that PFM RP communication will support the coordination of effort and collaboration with other core reform programmes and engage in dialogue with non state actors. Information sharing should also be done proactively to facilitate planning, sequencing and effective use of resources.

To this end, the PFM secretariat will develop a multi-year communication strategy / plan within the first 6 months of Phase IV. This strategy will be used to guide the development of annual communication planning for the program.

The guiding principle for the communication strategy should be to keep all relevant stakeholders informed on the progress challenges and emerging developments within the reform programme and to seek input for management decisions.

The strategic intent of the communication strategy should be build communication networks that will create and sustain focus on Government’s PFM reform agenda and the results that are being achieved.

All PFM communications should be closely coordinated between the Secretariat and the Communications Department within the Ministry of Finance.

Insert figure on institutional setup.

Section 3 – Planning and budgeting

Planning and budgeting

Introduction

PFMRP IV’s Strategy, M&E Framework and Annual Work Plans and Budgets (AWPBs) guide the Programme’s implementation and resource allocation. It is expected that during the course of implementation, the M&E Frameworks and AWPB will be updated as necessary to ensure that it remains current. The following section offers guidance on updating and rolling forward AWPB.

Key roles and responsibilities during planning and budgeting

PFMRP Component Managers and their teams use the WP and budget to guide their activities and as a basis for gauging and reporting implementation progress to the Program Manager. They are responsible for updating and revising plansand budgets to reflect changed circumstances or issues arising during implementation. Discussions on the AWPB at the component level will take place in the TWGs.

Planning and budgeting

The M and E framework sets out the primary objectives for the program and the 5 year workplan provides the general structure and schedule of activities that are required to achieved the program objectives. The M and E framework and the 5 year work plan will guide the development of annual work plans and budgets. The planning process will be ongoing and revisions will be required from time to time to reflect actual achievements. The annual work plan allocates roles and responsibilities for implementation and defines what activities that must be completed.

The consolidated annual program budget[1] consisting of work plan, procurement plans and cash flow forecast will be completed by April 30th of each year and submitted to the PMC for approval.

DP and GoT indicative financial commitments for the next financial year will be communicated by January 31st with confirmed commitments based on the approved annual program budget by May 31st.

These documents and decisions are informed by the annual review as set out in the M and E section.

The table below inform the planning process on expenses that are not eligible for donor financing. This is consistent with Government regulations and to the extent possible with the broader DP position.

Table

The budget narrative should clearly identify how the activities relate to the M and E framework and the major milestones. In the case of multi-year activities the total indicative cost of should be presented alongside the annual estimate.

Section 4 – Financial management arrangements

Financial management arrangements

Introduction

This section describes the financial management procedures for the PFMRP basket fund. In particular it: describes key roles and responsibilities for financial management; specifies the accounting bases and systems; outlines the chart of accounts used. It also covers the following processes: management of deposits; cash flow management; procurement; accounting; reporting; external auditing; and records management. Annex C sets out financial management arrangements with respect to direct payments.