PUBLIC FINANCIAL MANAGEMENT
IMF Technical Assistance Finds A Teachable Moment in Africa
IMF Survey online
November 22, 2011
- Liberia needs help to rebuild after years of civil war
- Reform of public finances improves governance, transparency
- IMF technical assistance designed to share experience, expertise from over 100 countries
Stephen George is a public high school principal worried about the usual things: how students will fare on upcoming exams, crowded classrooms, and how to make sure his teachers get paid on time.
George has his work cut out for him. Matilda Newport High School in Monrovia, Liberia on the west coast of Africa has all the usual stresses that keep high school principals around the world awake at night, and then some.
The civil war wreaked havoc on daily life for the almost four million people in the small West African country. Roads and buildings were destroyed, people were displaced from their homes, and schools shut their doors.
George, the teachers, and students have to contend with the legacy of nearly 15 years of civil war in Liberia. There are 25 year-olds in his grade 9 classes, 15 year-olds who are the head of the family taking care of themselves and younger siblings after the death of their parents in the war.
And until recently, it took two weeks for his teachers to hunt down their paychecks.
“The previous system was very hectic because in their spare time, you wouldn’t find teachers in their classrooms; they had to leave school to collect their checks,” said George in an interview with IMF Survey online.
In rebuilding their lives, Liberians and their government need practical help to fix their economy and financial system.
The IMF’s technical assistance draws on experts in specialized fields such as budget reform, public financial management, and payment systems, from around the world. A country needing help sets its own goals and decides how to achieve them while drawing on the best practices and experience from over 100 countries.
To repair the system, the Ministry of Finance, with guidance from IMF experts, had to do three things: make a list of the teachers and their banking information, encourage banks to open bank accounts for teachers who didn’t have one, and then take one check for the whole salary amount to the bank, and ask the bank to simply deposit each teacher’s paychecks directly into their account.
George says the new system is much better and works fine.
Rebuilding after war
How a government manages public finances and runs a smooth financial system is about a lot more than just collecting taxes, and having a transparent budget process and payment system: it’s about governing in an efficient and legitimate way.
“The challenge this government faces is how do you get away from the ills that led to the war; how do you prevent the recurrence of the civil conflict we had in this country? It basically boils down to governance,” said Patrick Sendolo, Head of the Special Projects Implementation Unit in the Office of the President, during an interview in his office in Monrovia.
Reforms to help improve the economy, as well as monetary and fiscal policy are key to good governance, according to Sendolo.
“All of those things come together to ensure that as much as possible of the government’s revenues are kept in the coffers to go towards schools, hospitals, clinics, roads and the kinds of things that make people happy, and make society the ultimate beneficiary of the government’s revenues, and prevent the kinds of conflict we experienced in this country over the past 15 years,” he said.
Civil society organizations are pushing not only for reforms, but also for more accountability and transparency in how taxpayer resources are managed.
“Those were some of the reasons why we fought the war because people felt marginalized not only politically, but also economically,” said Jonathan Doe Nah, the executive director for the Center for Transparency and Accountability in Liberia.
After a long and destructive civil war, Liberia is slowly recovering. George Kennedy, a reporter and columnist for the Daily Observer newspaper in Monrovia likens the experience to being in a closed house with the heat rising.
“You have the doors closed behind you, and at the end of the hallway the door opens for you,” said Kennedy. “When you go out, the breeze begins to touch you; that’s how it feels now after years of war.”
Reforms lead to rising revenues
The IMF’s technical assistance is supported by several donors including the European Union, Japan, and Sweden. Their funding has allowed the IMF to share its deep reservoir of knowledge, experience, and experts with Liberia so that the country does not have to start from scratch, but instead can adopt best practices that work for them.
“One of our technical assistance [projects] that we all remember because it’s critical to our reform was the crafting of the public financial management law,” said Augustine Ngafuan, Liberia’s Minister of Finance, during an interview in his office in Monrovia.
“The IMF fielded a technical advisor for more than a year who worked with us, discussed the details, nuances and challenges, and was with us during the process of the legislative review and approval. What this has done is put together an overarching frame of laws for public financial management.”
Raising revenues is key to help Liberia rebuild. Money is needed to build roads, bridges, and schools, and to fund social programs.
“When the government took over we had revenue of $88 million, and we’re now at $340 plus million U.S. dollars,” said Elfrieda Stewart Tamba, Deputy Minister in the Revenue Department at the Ministry of Finance. “Our modernization strategy has a three-year life span, and we hope that within the third year we could have achieved the level of professionalism and built the integrity of our organization to the point that Liberia could become an African reference for the delivery of professional services to tax payers and for the revenue we collect.”
Building local knowledge and expertise
For progress to continue, Liberia needs to build on its success by sustaining the training and development passed on through IMF technical assistance. For example, peer-to-peer exchanges among African countries with good practices and experiences to share have helped in the modernization of Liberia’s shipping ports.
“One of the things we need to work on is to ensure a robust transfer of knowledge mechanism in technical assistance,” said Ngafuan. “As I usually tell our technical assistance advisors, your relevance is seen by how quickly you make yourself redundant.”