## _cr0570

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### EXECUTIVE SUMMARY — Assessment overview
- Assessment date: as at the end of November 2003.
- Basis: requirements of the IMF Code of Good Practices on Fiscal Transparency; discussions with the authorities and other organizations; the authorities’ response to the IMF fiscal transparency questionnaire; and other sources of information.
- Reference manual: IMF Manual on Fiscal Transparency (http://www.imf.org/external/np/fad/trans/manual/).
- Main conclusion: "Samoa has made substantial progress in improving fiscal transparency and now meets the standards in the Fiscal Transparency Code in a significant number of areas."

### Key strengths and positive developments
- Legal and institutional framework:
  - "There is a comprehensive and modern legal framework for fiscal management."
  - The PFMA (Public Finance Management Act 2001) codifies responsibilities and gives the minister of finance primacy in fiscal issues.
- Central bank:
  - "The central bank has effective independence."
  - Central Bank Act 1984 (amended 2001) and operational independence in monetary policy.
- Budget and reporting:
  - "The budget is comprehensive and reliable, the Public Accounts are timely and comprehensive, and there is quite extensive reporting of non-cash items."
  - Government spending increasingly focused on accountability and performance.
- Reforms and modernization:
  - "In recent years considerable efforts have gone into modernizing the legal framework, in some instances in line with international best practice."
- Public reporting of investments:
  - PFMA requires a Statement of Investments; Public Accounts identify percentage government ownership and historical cost; disclose new investments, capital injections, doubtful investments, and sale/disposal of investments.

### Main weaknesses and accountability gaps
- Implementation lags:
  - "There is a lag in the implementation of recent legislation, for example on governance of state-owned enterprise."
  - Not all enhanced budget information and fiscal reporting required by law is being presented to Parliament.
- Macroeconomic framework:
  - "The macroeconomic framework for budget preparation is still qualitative in nature and does not include medium-term budgetary projections."
- Public Accounts and audit:
  - "The latest publicly available report of the controller and chief auditor on the Public Accounts is for the year ended 30 June 1999, which is a serious breakdown of the accountability framework."
- Executive/legislature role blurring:
  - Some members of parliament serve as departmental under-secretaries and sit on parliamentary select committees responsible for oversight of their own departments.
  - Example: "The Undersecretary of Finance is the Deputy Chair of the Public Accounts Committee of Parliament."
- Boards and conflicts of interest:
  - Ministers and officials currently chair or serve on numerous Boards of Directors of public bodies, though "the extent of this is being reduced."
  - Public Bodies Act provisions on director appointments, ad hoc Independent Selection Committee, and cessation of attendance allowances not yet fully operational.
- Central bank financial reporting:
  - Government grant and the cost of open market operations "has not been shown in the central bank’s financial statements."
- Regulatory clarity:
  - Need to clarify and codify foreign investment reserved and restricted lists and issue Regulations under the Foreign Investment Act 2000.

### Specific institutional and procedural findings
- Definition and scope:
  - Samoa is a unitary state; "the central government budget corresponds with the general government sector."
  - No sub-national government; general government defined in accordance with GFS 1986.
  - Gross revenues and expenditures of trading activities conducted within departments (e.g., Government Printing Office and Treasury Stores) are excluded from fiscal statistics reported on a GFS basis.
- Community Service Obligations (CSOs):
  - Some CSOs now financed by transfers included in the government's budget.
  - Public Bodies (Performance and Accountability) Act 2001 contains framework for CSOs; "full implementation of this law is still ongoing."
  - 2003–04 budget contains grants for CSOs to the Samoa Water Authority and the Electric Power Corporation.
  - Intended practice: CSOs to be conducted in terms of legally enforceable contracts between the government and the individual public bodies concerned.
- Central Bank operations and limits:
  - Overdraft facility: "Any overdraft must be repaid by the end of the financial year and is limited in size to 25 percent of General Fund revenue collections in the previous year."
  - Overdraft use: only in anticipation of current budget revenue (or payments relating to membership in international financial institutions).
  - Central Bank does not conduct quasi-fiscal operations.
  - Recent practice: cost of open market operations met from the government budget, drawing on Asian Development Bank financing under a financial sector development loan, but neither the government grant nor the cost of open market operations has been shown in the central bank’s financial statements.
  - Memorandum of Understanding (MOU) (to take effect from 2005): Bank to assume responsibility for meeting the cost of open market operations and for management of all foreign exchange reserves; MOU contains initiatives to strengthen the balance sheet through a waiver (undefined period) of transfers to the government required under the Central Bank Act of a share of the Bank’s net profit and of the balance in the Revaluation Account.
- Government shareholdings:
  - PFMA requires financial statements to include a Statement of Investments showing nature/type and current/non-current split; in practice Public Accounts identify percentage government ownership and historical cost.
- Regulatory alignment:
  - Prudential regulation of non-bank financial institutions strengthened since 2001 by assigning responsibility to the central bank.
  - Need to clarify sectors included in the foreign investment reserved and restricted list and to issue Regulations under the Foreign Investment Act 2000.

### Budget structure, off‑budget activity, and funds
- No extra-budgetary funds; capital spending and donor‑funded expenditure are fully integrated into the budget.
- Within the General Revenue Fund there are: the Treasury Fund, the National Loans Sinking Fund, the Insurance Fund, and the Special Purpose Funds.
- No separate development budget exists; capital spending and aid‑financed expenditures are integrated into the annual budget.
- Payments to statutory authorities as operational subsidies and/or to finance CSOs are separately identified in budget appropriations.
- Historically, NPF lending to state‑owned enterprises with a government guarantee constituted quasi‑fiscal activity and is reported in the Public Accounts Statement of Contingent liabilities.
- Most state‑owned enterprises remain exempt from income tax.

### Legislative and administrative framework for taxation and customs
- Constitutional principle: no taxation shall be imposed except by parliament.
- The Income Tax Act 1974 and the Income Tax Administration Act 1974 described as poorly structured, somewhat internally inconsistent, and not in line with best practice; modernization, improved clarity, and review of tax exemptions are needed.
- The Income Tax Administration Act 1974 subjects the Commissioner of Inland Revenue to ministerial control and does not provide statutory independence in assessment of tax liabilities.
- Customs administration strengthened: approved importers input data directly to the Customs computerized information system.
- The merger creating the new ministry of revenue (MoR) in mid‑2003 combined tax and customs functions to improve compliance and administration.
- An internal auditor monitors internal control environment in the ministry; customs and tax officials are subject to specific codes of conduct.

### Taxpayer services and dispute resolution
- Initiatives to improve taxpayer services include Income Tax and VAGST advisory services funded in the 2003–04 MoR budget (seminars, media announcements, pamphlets).
- Compliance with the Value Added Goods and Services Tax (VAGST) is considered low but improving.
- There is a stock of overdue VAGST refunds (on which no interest is payable); no estimates of the amounts are available.
- Current objection mechanism: taxpayers may object by writing to the Commissioner or Comptroller; recourse beyond that is through the courts.
- No low‑cost independent administrative review mechanism exists.
- A Service Charter for the ministry of revenue is being developed.

### Public availability and coverage of fiscal information
- Budget documents and public accounts cover all central government fiscal activities; donor financed off‑budget expenditure is presented.
- Minor exception: school fee collections held in a Special Purpose Account; expenditures amounting to $700,000 in 2001–02 (or about 0.2 percent of total government spending) were reported in the Public Accounts but remain undisclosed in the budget documents.
- The 2003–04 Estimates disclosed estimated utilization of foreign project aid by sector and individual project, and estimated utilization of foreign soft term loans by individual loan agreement; departmental Estimates showed outputs financed by donor cash and soft loans but generally did not show donor aid‑in‑kind.
- The budget documents disclose main fiscal aggregates for the year prior to the budget year but present no information for the year(s) following the budget year.
- The PFMA requires projection of expenditures and revenues for the budget year and the following two years; this was not provided in the 2002–03 or 2003–04 budget documents.
- No contingent liabilities are disclosed in the budget documents, though government guarantees are reported in the final accounts.

### Quasi‑fiscal activity, debt reporting, and financial assets
- Quasi‑fiscal activities are being reduced by incorporating CSOs into the budget; some CSO grants now specify purpose and performance targets.
- Regular reporting on public external debt exists:
  - The Estimates book contains a schedule of external debt (no internal public debt), showing for each loan the amount of interest and principal but not loan currencies.
  - Total estimated external debt servicing for the budget year is disclosed, including a sum to allow for currency fluctuation.
  - Quarterly reporting of external debt and debt servicing appears in MoF’s Quarterly Economic Review (QER), published around four months after quarter end.
- No information on government financial assets or liabilities is included in the budget documents.
- Public Accounts include schedules of cash balances and receivables, payables, and unexpended aid project funds; Public Accounts contain a Statement of Foreign Term Debts showing tala amounts owing under each loan and corresponding previous period amounts.

### Fiscal reporting framework, timeliness, and public dissemination
- PFMA reporting requirements:
  - Quarterly summaries of receipts and payments are to be published within one month of quarter end.
  - Audited final accounts must be presented to the Legislature within six months of year‑end.
  - The Financial Secretary must certify whether financial statements present fairly the matters required by the PFMA.
  - The controller and chief auditor must prepare an annual report identifying irregularities found.
- In practice, MoF’s QER is published approximately four months after quarter end.
- Samoa advised the IMF in November 2003 of intent to join the Fund’s General Data Dissemination System (GDDS); Samoa currently exceeds GDDS standards for in‑year fiscal reporting but falls short on in‑year reporting on public debt.
- No freedom of information legislation exists in Samoa.
- Fiscal information release practice: primary reliance on Parliament and the free press; little government fiscal information is released to the general public until tabled in Parliament.
- MoF and the central bank maintain up‑to‑date websites with fiscal data; most documents are publicly available against a cost recovery fee.

### Budget transparency, forecasts, and fiscal risks
- Strategy for the Development of Samoa 2002–2004 (SDS) budget rules:
  - maintain a surplus between current revenue and current expenditure of no less than 3.5 percent of GDP, and
  - an overall deficit of no more than 3.5 percent of GDP on a GFS basis.
- No explicit discussion of fiscal sustainability in the SDS or annual budget documents; no medium‑term fiscal forecasts or longer‑term debt servicing projections presented in budget documents.
- Budget is presented with a qualitative macroeconomic framework; no medium‑term economic forecasts are presented in budget documents.
- PFMA requires fiscal forecasts to disclose details of fiscal risks and quantify them where possible; this has not yet been implemented in the budget.
- The 2003–04 Budget estimates disclose projected guarantee fee rates: 3 percent of the amount guaranteed at time of granting, 1 percent of the outstanding amount each year the guarantee is in effect.

### Performance budgeting and reporting (output budgeting)
- Expected performance increasingly specified; outputs and sub-outputs are being funded in the budget.
- Development of measures of quantity, quality, and timeliness indicators for each output and sub-output.
- Some departments beginning to consider outcome-related performance measures.
- Performance management system still in early stages; information systems often not in place to capture and report actual performance against budget estimates.
- Most departments are behind in submitting their Annual Reports to Parliament; reporting of actual performance against budget targets is often incomplete.
- PSC is developing a pro forma departmental annual report to improve quality of performance reporting.
- The SDS reports progress on outcome targets; government released in November 2003 a report on hardship and poverty with key poverty indicators and MDG progress.

### Accounting, audit, procurement, and internal controls
- Accounting basis: cash accounting, supplemented by reporting of non-cash elements (Statements of Assets and Liabilities of the Treasury Fund, Receivables, Investments, Contingent Liabilities).
- Accounting system limitations:
  - Current accounting software is no longer supported by the developer; early replacement required.
  - Aid‑in‑kind transactions and cash transactions financed directly by donors are not captured in the accounting system.
  - Accounting system does not capture arrears in tax collection, arrears in payment of tax refunds, or deferrals/payments of customs duty.
- Internal and external audit:
  - MoF financial inspectorate and the controller and chief auditor undertake ex post reviews focused mainly on transactional level.
  - PFMA 2001 requires pre‑audit of all ministry expenditures by the controller and chief auditor; separation of pre‑audit and ex‑post audit functions should be considered.
  - Three year backlog in annual reports of controller and chief auditor, though Public Account Report for year ended 30 June 2002 was tabled in January 2003 with certification that the financial statement was free from material misstatement.
  - External audit appears to function independently in practice; constitutional amendment shortened the term and removed dismissal protection of controller and chief auditor.
- Procurement:
  - PFMA requires establishment of a Government Tenders Board with role over contracts over 50,000 tala.
  - Two private sector members required under the PFMA have not been appointed to the Board.
  - 2003 procurement guidelines were issued to complement the legal framework.

### Statistics and data dissemination
- Responsibility for national accounts and GFS: MoF.
- In 2003 the Statistics Department was disestablished and responsibilities and staff transferred to MoF.
- Head of the Statistics Office, and the chief statistician, is a deputy secretary in MoF.
- The Statistics Act 1971 does not give the government statistician independence in production and dissemination, although in practice no external interference in technical issues reported.
- Samoa formally adopted the IMF’s GDDS in November 2003; commitment includes publishing an Action Plan for improving the quality of official statistics.

### Short-term priorities (1–2 years)
- Update Treasury Regulations and instructions consistent with the new PFMA.
- Improve the quality of budget documentation:
  - enhanced fiscal balance and expenditure information;
  - medium-term fiscal forecasts;
  - simplified reporting of fiscal risks and tax expenditures.
- Progressively establish a more arms length relationship with state owned enterprises.
- Improve the quality and timeliness of fiscal reporting.
- Re-establish the Parliamentary accountability process.
- Strengthen the capacity and independence of the controller and chief auditor.
- Improve the transparency of the tax system.

### Medium-term priorities
- In budget documents:
  - introduce a medium-term revenue strategy and expenditure framework;
  - present a full statement of fiscal risks;
  - progressively quantify the impact of tax expenditures.
- Strengthen the capability of the accounting system.
- Eliminate remaining un-funded Community Service Obligations of public enterprises.
- Remove all remaining public officials from public body boards.
- Re-establish the legal independence of the controller and chief auditor.

### Recommended actions — short-term implementation (one to two years)
- i. Complete and promulgate the new Treasury Regulations and Instructions to make them consistent with the new PFMA.
- ii. Improve the quality of information presented to Parliament with the annual budget, by including:
  - a reconciliation table showing the derivation of the GFS balance from the appropriations balance;
  - the fiscal balance net of foreign aid grants;
  - a table of expenditures by function, and by GFS-consistent economic type;
  - a summary table of all new revenue and expenditure measures being introduced in the budget, together with the estimated fiscal impact of each measure;
  - aid in kind for each department;
  - macroeconomic forecasts for the budget year and two years beyond the budget year, and medium-term forecasts of the main fiscal aggregates;
  - longer-term debt servicing projections;
  - a list of tax expenditures; and
  - a statement of fiscal risks.
  - For the first year the statement of fiscal risks should include a list of all government guarantees, showing their nominal value, the value in the previous period, and the value of calls on guarantees in the previous period; and disclosure of all key assumptions underpinning the macroeconomic and fiscal forecasts.
- iii. Initiate briefings for Parliament, the Public Accounts Committee, the media and civil society on the financial management reforms, and disseminate a plain language guide to the budget and the Public Accounts.
- iv. Reestablish the parliamentary accountability process: ensure annual reports of the controller and chief auditor on the Public Accounts are submitted within six months of year end; introduce formal government responses to Chief Auditor findings via a report to the Public Accounts Committee.
- v. Improve reporting quality and timeliness, including meeting GDDS standards for in‑year fiscal and public debt reporting (quarterly reports within one quarter of period end); report spending and revenue during the year in the same format used in the budget; submit a formal mid‑year review to Parliament on budget implementation (including use of the Unforeseen Expenditure Appropriation); ensure all departments and public bodies submit Annual Reports to Parliament within legislative deadlines; ensure Annual Reports systematically report actual performance against targets and a simple list of significant physical assets (progressively expanded to show acquisition date and cost).
- vi. Strengthen the capacity and perceived independence of the Office of Controller and Chief Auditor: refocus on timely ex‑post auditing of the Public Accounts, strengthen institutional capacity, and introduce some mechanism for parliamentary involvement in establishing the Office’s annual budget and staffing.
- vii. Expand appointment of private sector members to Boards of key Public Bodies by establishing the Independent Committee on Appointments to Public Bodies; public servants who sit on Boards should cease to be paid attendance allowances.
- viii. Expand identification, costing, coverage and reporting of CSOs in the budget and outturn documents; review the income tax exemption currently enjoyed by most public trading bodies.
- ix. Consider changes to parliamentary practice: legislative provision for out of session tabling of fiscal reports; reconsider membership of undersecretaries on Parliamentary Select Committees responsible for oversight of their own department.
- x. Improve tax transparency: publish details on stock of arrears of tax refunds owed by MoR, and on stock of customs duty deferrals and arrears of tax owed to MoR; modernize the Income Tax Act 1974 and the Income Tax Administration Act 1974; provide Commissioner of Revenue and Comptroller of Customs with explicit legal independence in assessment of tax and duty liabilities; publish a service charter for MoR; introduce a low cost independent mechanism for resolving disputes between individual taxpayers and MoR; consider an institutional strengthening project for MoR.

### Recommended actions — medium-term implementation
- i. Further enhance information presented to Parliament and the public with the annual budget: present a medium-term revenue strategy; include in the Estimates the cost of delivering individual outputs for the budget year and two years beyond the budget year; present the Public Sector balance; enhance the statement of fiscal risks through sensitivity information; progressively enhance reporting of tax expenditures by including estimated fiscal impact of each tax expenditure.
- ii. Strengthen the capability of the accounting system by introducing a new FMIS; progressively expand reporting on non-cash items.
- iii. Progressively replace remaining cabinet ministers and officials from Boards of Public Bodies over the five year transition period envisaged in the Public Bodies Act.
- iv. Incorporate all remaining CSOs in the budget as required by the Public Bodies Act.
- v. Enhance accountability of departmental performance by subjecting planned performance against actual results by individual output to audit by the controller and chief auditor; attribute costs more accurately to individual outputs.
- vi. Consider strengthening perceptions of legal independence of the controller and chief auditor by extending the term of office beyond the life of a single Parliament, and extending the same protection from removal as applies to the Chief Justice.

### Follow-up actions by the authorities
- "The authorities have advised that since undertaking the ROSC, the authorities have developed a Financial Management Improvement Project 2003–2008 Implementation Plan to address many of these issues."

### Contextual and statistical data included
- Fiscal year: From 1 July to 30 June.
- Unit of currency: tala (dollar). As at 23 Jan 2004 1 tala = US$0.3616.
- Population (2003): 170,000.
- Real GDP (2002): 698.6 million tala.
- Government Debt/GDP (2002): 54%.
- Legislation cited: Public Finance Management Act 2001 (PFMA); Public Bodies (Performance and Accountability) Act 2001; Central Bank Act 1984 (amended 2001); Public Service Amended Act 2002; Companies Act 2001 (not in force and under review).

*Source: EXECUTIVE SUMMARY and selected sections (assessment of fiscal transparency practices in Samoa, as at the end of November 2003).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Assessment overview
- Assessment date: as at the end of November 2003.
- Basis: requirements of the IMF Code of Good Practices on Fiscal Transparency; discussions with the authorities and other organizations; the authorities’ response to the IMF fiscal transparency questionnaire; and other sources of information.
- Reference manual: IMF Manual on Fiscal Transparency (http://www.imf.org/external/np/fad/trans/manual/).
- Main conclusion: "Samoa has made substantial progress in improving fiscal transparency and now meets the standards in the Fiscal Transparency Code in a significant number of areas."

### Key strengths and positive developments
- Legal and institutional framework:
  - "There is a comprehensive and modern legal framework for fiscal management."
  - The PFMA (Public Finance Management Act 2001) codifies responsibilities and gives the minister of finance primacy in fiscal issues.
- Central bank:
  - "The central bank has effective independence."
  - Central Bank Act 1984 (amended 2001) and operational independence in monetary policy.
- Budget and reporting:
  - "The budget is comprehensive and reliable, the Public Accounts are timely and comprehensive, and there is quite extensive reporting of non-cash items."
  - Government spending increasingly focused on accountability and performance.
- Reforms and modernization:
  - "In recent years considerable efforts have gone into modernizing the legal framework, in some instances in line with international best practice."
- Public reporting of investments:
  - PFMA requires a Statement of Investments; Public Accounts identify percentage government ownership and historical cost; disclose new investments, capital injections, doubtful investments, and sale/disposal of investments.

### Main weaknesses and accountability gaps
- Implementation lags:
  - "There is a lag in the implementation of recent legislation, for example on governance of state-owned enterprise."
  - Not all enhanced budget information and fiscal reporting required by law is being presented to Parliament.
- Macroeconomic framework:
  - "The macroeconomic framework for budget preparation is still qualitative in nature and does not include medium-term budgetary projections."
- Public Accounts and audit:
  - "The latest publicly available report of the controller and chief auditor on the Public Accounts is for the year ended 30 June 1999, which is a serious breakdown of the accountability framework."
- Executive/legislature role blurring:
  - Some members of parliament serve as departmental under-secretaries and sit on parliamentary select committees responsible for oversight of their own departments.
  - Examples: "The Undersecretary of Finance is the Deputy Chair of the Public Accounts Committee of Parliament."
- Boards and conflicts of interest:
  - Ministers and officials currently chair or serve on numerous Boards of Directors of public bodies, though "the extent of this is being reduced."
  - Public Bodies Act provisions on director appointments, ad hoc Independent Selection Committee, and cessation of attendance allowances not yet fully operational.
- Central bank financial reporting:
  - Government grant and the cost of open market operations "has not been shown in the central bank’s financial statements."
  - Overdraft and cost arrangements described but some elements not reflected in statements.
- Regulatory clarity:
  - Need to clarify and codify foreign investment reserved and restricted lists and issue Regulations under the Foreign Investment Act 2000.
  - Some uncertainty in other regulatory areas (example given: legislation related to a supplier’s exclusive petroleum supply contract that ultimately was not used).

### Specific institutional and procedural findings
- Definition and scope:
  - Samoa is a unitary state; "the central government budget corresponds with the general government sector."
  - No sub-national government; general government defined in accordance with GFS 1986.
  - Gross revenues and expenditures of trading activities conducted within departments (e.g., Government Printing Office and Treasury Stores) are excluded from fiscal statistics reported on a GFS basis.
- Community Service Obligations (CSOs):
  - "Some of the community service obligations (CSOs) of enterprises are now financed by transfers included in the government's budget."
  - Public Bodies (Performance and Accountability) Act 2001 contains framework for CSOs; "full implementation of this law is still ongoing."
  - 2003–04 budget contains grants for CSOs to the Samoa Water Authority and the Electric Power Corporation.
  - Intended practice: CSOs to be conducted in terms of legally enforceable contracts between the government and the individual public bodies concerned.
  - Public Bodies Act: principal objective of public trading bodies is to be a successful business; procedures for ministerial direction on CSOs; CSOs to be included in annual reports.
- Central Bank operations and limits:
  - Overdraft facility: "Any overdraft must be repaid by the end of the financial year and is limited in size to 25 percent of General Fund revenue collections in the previous year."
  - Overdraft use: only in anticipation of current budget revenue (or payments relating to membership in international financial institutions).
  - Central Bank does not conduct quasi-fiscal operations.
  - Recent practice: cost of open market operations met from the government budget, drawing on Asian Development Bank financing under a financial sector development loan, but neither the government grant nor the cost of open market operations has been shown in the central bank’s financial statements.
  - Memorandum of Understanding (MOU) (to take effect from 2005): Bank to assume responsibility for meeting the cost of open market operations and for management of all foreign exchange reserves; MOU contains initiatives to strengthen the balance sheet through a waiver (undefined period) of transfers to the government required under the Central Bank Act of a share of the Bank’s net profit and of the balance in the Revaluation Account.
- Government shareholdings:
  - PFMA requires financial statements to include a Statement of Investments showing nature/type and current/non-current split; in practice Public Accounts identify percentage government ownership and historical cost.
- Regulatory alignment:
  - Prudential regulation of non-bank financial institutions (e.g., National Provident Fund and Samoa Development Bank) strengthened since 2001 by assigning responsibility to the central bank.
  - Some labor market regulation applied uniformly across public and private sectors.
  - Need to clarify sectors included in the foreign investment reserved and restricted list and to issue Regulations under the Foreign Investment Act 2000.
- Roles and responsibilities:
  - Constitution and Standing Orders of Parliament set out roles of branches of government; PFMA further codifies stakeholder responsibilities.
  - Budget must be presented to Parliament by the Executive before the start of the fiscal year.
  - Parliament, except with Head of State consent on Executive advice, may vote only to reduce expenditure in the Budget presented and may not increase expenditure or revenue or transfer funds from one vote to another.
  - Constitution provides for expenditure in anticipation of appropriation if the budget has not been passed by the first day of the financial year; PFMA contains provisions to give effect to this.
  - Judges' salaries are statutory expenditures not subject to annual appropriation.
  - PFMA gives minister of finance control over government borrowing and lending, and granting of guarantees, when authorized by Parliament or Cabinet.
  - Financial Secretary responsibilities: advice on and oversight of public spending (capital and current), monitoring of public enterprises, chair of the Revenue Board, power to access records relating to public money or property.
  - PFMA includes Part XV penalty and enforcement provisions for handling public moneys.

### Short-term priorities (1–2 years)
- Update Treasury Regulations and instructions consistent with the new PFMA.
- Improve the quality of budget documentation:
  - enhanced fiscal balance and expenditure information;
  - medium-term fiscal forecasts;
  - simplified reporting of fiscal risks and tax expenditures.
- Progressively establish a more arms length relationship with state owned enterprises.
- Improve the quality and timeliness of fiscal reporting.
- Re-establish the Parliamentary accountability process.
- Strengthen the capacity and independence of the controller and chief auditor.
- Improve the transparency of the tax system.

### Medium-term priorities
- In budget documents:
  - introduce a medium-term revenue strategy and expenditure framework;
  - present a full statement of fiscal risks;
  - progressively quantify the impact of tax expenditures.
- Strengthen the capability of the accounting system.
- Eliminate remaining un-funded Community Service Obligations of public enterprises.
- Remove all remaining public officials from public body boards.
- Re-establish the legal independence of the controller and chief auditor.

### Follow-up actions by the authorities
- "The authorities have advised that since undertaking the ROSC, the authorities have developed a Financial Management Improvement Project 2003–2008 Implementation Plan to address many of these issues."

### Contextual and statistical data included
- Fiscal year: From 1 July to 30 June.
- Unit of currency: tala (dollar). As at 23 Jan 2004 1 tala = US$0.3616.
- Population (2003): 170,000.
- Real GDP (2002): 698.6 million tala.
- Government Debt/GDP (2002): 54%.
- Legislation cited: Public Finance Management Act 2001 (PFMA); Public Bodies (Performance and Accountability) Act 2001; Central Bank Act 1984 (amended 2001); Public Service Amended Act 2002; Companies Act 2001 (not in force and under review).

*Source: EXECUTIVE SUMMARY (assessment of fiscal transparency practices in Samoa, as at the end of November 2003).*

### 12. To date, the subordinate Treasury Regulations and Instructions have not been

### _cr0570 - 12. To date, the subordinate Treasury Regulations and Instructions have not been

### Implementation of the Public Finance Management Act (PFMA)
- Subordinate Treasury Regulations and Instructions have not been revised to reflect the PFMA, and some PFMA requirements remain unimplemented.
- Unimplemented provisions are primarily related to the content of budget and outturn reporting (examples include publication of forward estimates of outputs by departments, government debt servicing obligations, details of fiscal risks, and timeliness of annual reports of public bodies).
- A Financial Management Improvement Project (FMIP) 2003–08 Implementation Plan has been endorsed by the CEO of Finance, focusing on operationalization of the PFMA; development of subordinate regulations and instructions commenced and was expected to be completed by the end of 2005 to tie in with FMIS and procurement instruction development.
- The PFMA establishes a National Revenue Board (NRB), chaired by the Financial Secretary, to advise the minister on revenue policy and to consider departmental proposals for revenue policy changes; ministers with discretionary powers in Revenue Acts must consult the NRB before exercising that discretion.
- The PFMA requires financial statements to include a Statement of Borrowings showing total debt (broken down by current and non-current), opening and closing balances, and the nature of movements during the reporting period; similar disclosure requirements apply to loan drawdown balances and Special Purpose Fund balances.

### Budget structure, off‑budget activity, and funds
- There are no extra-budgetary funds; capital spending and donor‑funded expenditure are fully integrated into the budget.
- No social security institutions or off‑budget fiscal entities exist, aside from small fees charged by public schools for limited spending (e.g., purchase of books).
- Within the General Revenue Fund there are: the Treasury Fund, the National Loans Sinking Fund, the Insurance Fund, and the Special Purpose Funds.
- The PFMA permits temporary transfers between certain funds but requires particulars to be reported in the Public Accounts.
- No separate development budget exists; capital spending and aid‑financed expenditures are integrated into the annual budget.
- Payments to statutory authorities as operational subsidies and/or to finance CSOs are separately identified in budget appropriations; quasi‑fiscal activities undertaken by statutory authorities from internally generated revenues are only required to be reported in those authorities’ reports.
- Historically, NPF lending to state‑owned enterprises with a government guarantee constituted quasi‑fiscal activity and is reported in the Public Accounts Statement of Contingent liabilities.
- Most state‑owned enterprises remain exempt from income tax.

### Legislative and administrative framework for taxation and customs
- Constitutional principle: no taxation shall be imposed except by parliament.
- The Income Tax Act 1974 and the Income Tax Administration Act 1974 are described as poorly structured, somewhat internally inconsistent, and not in line with best practice; modernization, improved clarity, and review of tax exemptions are needed.
- The Income Tax Administration Act 1974 subjects the Commissioner of Inland Revenue to ministerial control and does not provide statutory independence in assessment of tax liabilities.
- Elements of discretion exist in the Customs Act (e.g., provision for deferral of duty payment), actively used by the Comptroller under delegated authority.
- Customs administration has been strengthened: approved importers now input data directly to the Customs computerized information system, reducing irregularities and accelerating import clearance.
- The merger creating the new ministry of revenue (MoR) in mid‑2003 combined tax and customs functions to improve compliance and administration (including creating a combined tax and customs database).
- An internal auditor monitors the internal control environment in the ministry; customs and tax officials are subject to specific codes of conduct.

### Taxpayer services and dispute resolution
- Initiatives are under way to improve taxpayer services, including Income Tax and VAGST advisory services funded in the 2003–04 MoR budget (seminars, media announcements, pamphlets).
- Compliance with the Value Added Goods and Services Tax (VAGST) is considered low but improving.
- There is a stock of overdue VAGST refunds (on which no interest is payable); no estimates of the amounts are available.
- Current objection mechanism: taxpayers may object to an assessment by writing to the Commissioner or Comptroller; beyond that, recourse is through the courts.
- No low‑cost independent administrative review mechanism (e.g., a taxation tribunal) exists.
- A Service Charter for the ministry of revenue is being developed.

### Public service governance and charters
- The Public Service Act requires merit‑based appointment, establishes public service values and a Code of Conduct.
- PSC has conducted internal and external surveys on public service conduct; all departmental vacancies are publicly advertised and an independent appeals mechanism exists.
- Ministries are required to develop and disseminate Service Charters; about one third of ministries and constitutional offices have completed their Service Charter.

### Public availability and coverage of fiscal information
- Budget documents and public accounts cover all central government fiscal activities; donor financed off‑budget expenditure is presented.
- With minor exception (school fee collections held in a Special Purpose Account), all government expenditures are covered in the central government budget.
- The school fee exception: expenditures amounting to $700,000 in 2001–02 (or about 0.2 percent of total government spending) were reported in the Public Accounts but remain undisclosed in the budget documents.
- The 2003–04 Estimates disclosed estimated utilization of foreign project aid by sector and individual project, and estimated utilization of foreign soft term loans by individual loan agreement; departmental Estimates showed outputs financed by donor cash and soft loans but generally did not show donor aid‑in‑kind.
- The budget documents disclose main fiscal aggregates for the year prior to the budget year but present no information for the year(s) following the budget year.
- Comparative prior‑period numbers in budget documents are sometimes original budget estimates and sometimes estimates after Supplementary Estimates; the basis of comparison is not always clear.
- No detailed current estimated outturn for the year prior to the budget year is presented in budget documents.
- The PFMA requires projection of expenditures and revenues for the budget year and the following two years; this was not provided in the 2002–03 or 2003–04 budget documents.
- No contingent liabilities are disclosed in the budget documents, though government guarantees are reported in the final accounts; Public Accounts disclose face values of guarantees for previous and current reporting periods and calls made, but do not provide estimates of likely costs nor include all contingent liabilities (e.g., legal actions).
- Estimates of fiscal impact of some new tax expenditures have been produced for Cabinet but are not publicly available.

### Quasi‑fiscal activity, debt reporting, and financial assets
- Quasi‑fiscal activities are being reduced by incorporating Community Service Obligations (CSOs) into the budget; some CSO grants now specify purpose and performance targets (some included in the 2002 budget).
- Regular reporting on public external debt exists:
  - The Estimates book contains a schedule of external debt (no internal public debt), showing for each loan the amount of interest and principal but not loan currencies.
  - Total estimated external debt servicing for the budget year is disclosed, including a sum to allow for currency fluctuation.
  - PFMA’s required three‑year projection of government debt management responsibilities has not been provided.
  - Quarterly reporting of external debt and debt servicing appears in MoF’s Quarterly Economic Review (QER), published around four months after quarter end.
- No information on government financial assets or liabilities is included in the budget documents.
- Public Accounts include schedules of cash balances and receivables, payables, and unexpended aid project funds; Public Accounts contain a Statement of Foreign Term Debts showing tala amounts owing under each loan and corresponding previous period amounts, and schedules of balances and annual flows of government Funds (e.g., National Loans Sinking Fund and Insurance Fund).

### Fiscal reporting framework, timeliness, and public dissemination
- The PFMA sets requirements for content and periodicity of within‑year and end‑of‑year fiscal reporting:
  - Quarterly summaries of receipts and payments are to be published within one month of quarter end.
  - Audited final accounts must be presented to the Legislature within six months of year‑end.
  - The Financial Secretary must certify whether financial statements present fairly the matters required by the PFMA.
  - The controller and chief auditor must prepare an annual report identifying irregularities found.
- In practice, MoF’s QER is published approximately four months after quarter end (short of the GDDS requirement of reporting public debt within a quarter of period end).
- Samoa advised the IMF in November 2003 of intent to join the Fund’s General Data Dissemination System (GDDS); Samoa currently exceeds GDDS standards for in‑year fiscal reporting but falls short on in‑year reporting on public debt.
- Samoa has participated in the OECD/ADB anti‑corruption initiative and submitted a country Action Plan.
- No freedom of information legislation exists in Samoa.
- Fiscal information release practice: primary reliance on Parliament and the free press; little government fiscal information is released to the general public until tabled in Parliament.
- MoF and the central bank maintain up‑to‑date websites with fiscal data; most documents are publicly available against a cost recovery fee, but internet and other costs are significant relative to local incomes.

### Budget transparency, forecasts, and fiscal risks
- The Strategy for the Development of Samoa 2002–2004 (SDS) states macroeconomic stability as the primary strategic objective; the budget strategy aims to:
  - maintain a surplus between current revenue and current expenditure of no less than 3.5 percent of GDP, and
  - an overall deficit of no more than 3.5 percent of GDP on a GFS basis.
- These fiscal rules are reported in the SDS, but there is no explicit discussion of fiscal sustainability in the SDS or annual budget documents, nor medium‑term fiscal forecasts or longer‑term debt servicing projections to assess sustainability.
- The budget is presented with a qualitative macroeconomic framework; no medium‑term economic forecasts are presented in budget documents.
- Some medium‑term economic forecasts and underlying assumptions are produced for Cabinet consideration (based on the MRMSX module developed by the World Bank); disclosure in Budget Papers is to be considered as part of FMIP.
- New initiatives are often identified in the Budget Address, but their fiscal impact is not always disclosed in the budget or clearly distinguished from ongoing policy costs.
- The PFMA requires fiscal forecasts to disclose details of fiscal risks and quantify them where possible; this has not yet been implemented in the budget.
- The 2003–04 Budget estimates disclose projected guarantee fee rates: 3 percent of the amount guaranteed at time of granting, 1 percent of the outstanding amount each year the guarantee is in effect.
- The PFMA requires fiscal forecasts to include details of fiscal risks and, where they cannot be quantified, a statement of possible impacts; no budget information on fiscal risks (such as government guarantees) or sensitivity of revenues/expenditures to key forecast parameters was provided.

*Source: _cr0570 - 12. To date, the subordinate Treasury Regulations and Instructions have not been (IMF PDF content).*

### 32. The move to output budgeting has seen an increasing focus on specifying

### 32. The move to output budgeting has seen an increasing focus on specifying

### Performance budgeting and measurement
- Expected performance is increasingly specified, with line ministries and MoF clearly specifying outputs and sub-outputs being funded in the budget.
- Considerable development of measures of quantity, quality, and timeliness indicators has occurred for each output and sub-output.
- Some departments are beginning to consider outcome-related performance measures.
- The performance management system is still in relatively early stages; information systems are often not in place to capture and report actual performance against budget estimates.
- Compliance with reporting achievements against performance measures has been limited to date.

### Reporting formats, annual reports, and social outcome reporting
- Reporting formats and methodologies to measure and monitor output costs, outputs, and outcomes require further development.
- Most departments are behind in submitting their Annual Reports to Parliament; reporting of actual performance against budget targets is often incomplete.
- The PSC is developing a pro forma departmental annual report to improve the quality of performance reporting.
- The SDS systematically reports progress on outcome targets set for the previous SDS period.
- The government released in November 2003 a report on hardship and poverty containing key poverty indicators and a summary of Samoa’s progress toward achieving the Millennium Development Goals and Targets.

### Fiscal indicators, presentation, and fiscal rules
- Two main indicators of the fiscal position in the budget: the budget balance on a cash accounting/appropriation basis and on a GFS (1986) basis.
- The PFMA requires all financial statements to include a statement of government transactions prepared under the GFS format.
- The 2003–2004 Budget Speech references the need to constrain the budget deficit to no more than 3.5 percent of GDP on a GFS basis.
- Both GFS-based deficit and the appropriation/accounting-based deficit are presented in budget documents, though sometimes without clear specification of which measure is used.
- No reconciliation is presented between the two alternative deficit measures, complicating assessment of consistency with fiscal rules (see paragraph 27).
- There is no presentation of the budget balance net of foreign grants, nor of the balance of the non-financial public sector.

### Internal controls, accounting coverage, and system limitations
- Accounting coverage is reasonably comprehensive for payments for domestic and donor-financed transactions; costs are sometimes coded to the wrong output.
- Centralized payments system records transactions at purchase order and cheque payment stages; outstanding purchase orders of a specified age are reviewed by MoF.
- Except for minor remote-location advance accounts, all government transactions are undertaken through a single treasury account with acquitted advance accounts used for certain overseas operations or remote locality transactions.
- The current accounting software is no longer supported by the developer; early replacement required to accommodate increasing informational requirements.
- Aid-in-kind transactions and cash transactions financed directly by donors are not captured in the accounting system, though estimated development assistance is presented in the budget.
- Accounting system does not capture arrears in tax collection, arrears in payment of tax refunds, or deferrals/payments of customs duty.

### Internal and external audit, inspectorate, and audit timeliness
- MoF has a financial inspectorate undertaking ex post reviews of ministry expenditure transactions; controller and chief auditor also carries out ex post reviews—both focus mainly on transactional level.
- Both inspectorate and the controller and chief auditor need to undertake more testing and validation of systems and procedures; current audit processes do not provide system/procedural checks to give management full confidence.
- PFMA 2001 requires the controller and chief auditor to undertake a pre-audit of all ministry expenditures; this may compromise ability to perform ex post reviews—separation of these functions should be considered in future amendments.
- An internal audit function is being established in an increasing number of ministries.
- The controller and chief auditor reported improvements in adherence to systems and procedures for the year ending June 30, 1999 (most recently available annual report at that time).
- There is a three year backlog in the annual reports of the controller and chief auditor containing detailed management reports on Public Account transactions, though the Public Account Report for the year ended 30 June 2002 was tabled in January 2003 with certification that the financial statement was free from material misstatement.
- External audit appears to function independently in practice, but the legal framework weakens assurance: the Constitution amendment in [1996] shortened the term and removed dismissal protection; controller and chief auditor now on a three-year contract and can be removed by Cabinet.
- The Office focuses on financial compliance auditing and conducts a pre-audit of every government payment; it trialed audit of output performance measures in one department in 2003.
- The PFMA provides the controller and chief auditor mandate to initiate performance audits of public trading or beneficial bodies, and to audit privatizations; he may contract work out.
- The Audit Office budget and staffing are subject to MoF, Cabinet, and Public Service Commission processes; difficulties in attracting qualified accounting staff noted.
- The controller and chief auditor intends to submit annual reports for 1999–2000, 2000–01, and 2001–02 to the Speaker in December 2003; long lags in producing reports have impaired the Public Accounts Committee’s oversight function.

### Procurement, employment, and governance arrangements
- PFMA explicitly requires adherence to procedures in procurement and for establishment of a Government Tenders Board with role over contracts for acquisition, disposal, or management of goods, services and construction works over 50,000 tala.
- As yet, the two private sector members required under the PFMA have not been appointed to the Board.
- 2003 procurement guidelines were issued to complement the legal framework.
- Employment and pay regulations are well defined. Cabinet has full discretion over engagement of Chief Executives, including special posts (Public Service Commissioner, controller and chief auditor, Heads of Departments); these appointments are not made on advice from the bureaucracy.
- For non-chief-executive positions, centralised oversight by the Public Service Commission exists; delegation of some employment powers to line departments has occurred with central oversight.
- Public Service Act contains a Code of Conduct including disclosure of interests and proper use of government resources; Act specifies principles of employment (merit appointment, advertising vacancies, fair grievance system).
- Pay rates and position classifications tightly controlled by the Public Service Commission; a Remuneration Tribunal is being established to independently review relative remuneration of public employees and constitutional office bearers.

### In-year reporting, mid-year review, and accounting basis
- Accounting basis is cash accounting, supplemented by reporting of a number of non-cash elements (Statements of Assets and Liabilities of the Treasury Fund, Receivables, Investments, Contingent Liabilities).
- Investments shown at historical cost causing significant discrepancies between value of investments and government shareholder equity, notably for Polynesian Airlines.
- Departments maintain physical asset registers, but these lack consistent acquisition date and cost information; quality of physical asset information has improved recently in the context of rationalization.
- PFMA requires financial reports to be in accordance with generally accepted accounting principles and practice as approved by the International Federation of Accountants.
- There is regular quarterly reporting of fiscal outturn; quarterly reports are publicly released and published on the MoF website within four months of the end of each quarter.
- Quarterly reporting is undertaken only on a GFS basis and not on an appropriation/accounting basis, limiting direct comparison with the primary presentation of budget estimates.
- The legislature does not undertake a mid-year review of the budget; limited outturn information for the first four months is provided with the first round of supplementary estimates, typically tabled in December.
- The mid-year review prepared by MoF for Cabinet is not published.
- Aggregate budget estimates have been reasonably close to outturn in recent years: total revenue outturns generally close to forecast; main discrepancy on expenditure side due to under-expenditure on external loan funded projects from implementation delays.
- There has been a tendency to under-spend on current expenditures because budgeted costs included filling vacant staff positions; PFMA introduced a cash-limited Unforeseen Expenditure appropriation but there is no within-year reporting of actual expenditure under this appropriation.
- Automated reconciliations between bank accounts and Treasury general ledger are undertaken; daily reconciliation of revenue collections and monthly reconciliation of centralized payment system expenditure transactions are in place.
- Planning Division procedures provide comprehensive reconciliation between above-the-line fiscal accounts and below-the-line monetary data.

### Oversight, PAC, and macroeconomic forecasting
- The Public Accounts Committee (PAC) comprises seven members of Parliament, including one opposition member; it is chaired by a government member and includes the Undersecretary of Finance.
- PAC considers the budget and the Public Accounts and reports findings to the Assembly; long delays in controller and chief auditor reports have limited PAC effectiveness.
- Official macroeconomic forecasts are not subject to external scrutiny: MoF and the central bank prepare independent forecasts, reconcile them to consensus forecasts presented to the NRB and then to Cabinet.
- No external review of macroeconomic forecasts or methodology exists; central bank and MoF produce forecasts using different formal macroeconomic models.
- Tax and customs revenue estimates are produced independently by MoF and MoR, then discussed by NRB; budget revenue estimates are based on revised MoF numbers.

*Source: _cr0570 - 32. The move to output budgeting has seen an increasing focus on specifying*

### 50. Responsibility for national accounts and government finance statistics rests with

### _cr0570 - 50. Responsibility for national accounts and government finance statistics rests with

### Responsibility for national accounts and government finance statistics
- Responsibility rests with the MoF.
- MoF has produced and disseminated national accounts and GFS statistics.
- In 2003 the Statistics Department was disestablished and its responsibilities and staff transferred to MoF as part of the rationalization of the number of departments.
- The head of the Statistics Office, and the chief statistician, is a deputy secretary in MoF.
- The Statistics Act 1971 does not give the government statistician independence in the production and dissemination of official statistics, although in practice there has been no external interference in technical issues.
- Samoa formally adopted the IMF’s GDDS in November 2003. This entails a commitment to adopting an internationally-recognized framework for official statsitics, and to publish an Action Plan for improving the quality of official statistics.

### IMF staff commentary — overview
- Samoa meets the standards in the Fiscal Transparency Code in a substantial number of areas.
- Reforms to the legal framework and sustained, but still not completed, implementation efforts over a number of years, have produced substantial progress and a fairly high degree of fiscal transparency.
- The government has adopted a broad consultative approach to the preparation of its Development Strategy.
- There is a comprehensive and, in many ways, modern legal framework for fiscal management, with clearly assigned accountabilities and detailed disclosure requirements in budget documents and fiscal reports.
- The central bank has effective independence in the conduct of monetary policy, and does not play a fiscal role.
- The budget is comprehensive, and the main budget aggregates are a reasonably reliable indication of the likely outturn.
- The output budgeting system is imparting more of a focus on performance and results.
- The accounting system records all the cash transactions of government, and there is quite extensive reporting of non-cash items.
- There are reasonably effective centralized controls over expenditure and procurement, and accounting, banking, and monetary sector data are reconciled.
- The Public Accounts are timely and comprehensive.

### Progress in legal and institutional reforms
- The PFMA 2001 modernized the legal framework for fiscal management, improving budget presentation, budget execution, and fiscal reporting.
- End of year financial statement requirements cover a wide range of cash and non-cash information, in line with international best practice.
- The Public Bodies Act 2001 aims to place public enterprises and other public bodies at more arms-length from government, by removing ministers and officials from Boards, and funding CSOs from the budget.
- Legal provisions on transparency and accountability of CSOs are in line with international best practice.
- Output specification quality in the budget has improved; some departments report on delivery against performance standards.
- In November 2003, Samoa committed to participating in the IMF’s General Data Dissemination System.

### Remaining weaknesses and implementation lags
- Considerable lags exist in implementing recent legislation; annual reporting is overdue in many areas.
- The macroeconomic framework for budget preparation is still qualitative and does not include medium-term budgetary projections.
- The arms-length relationship with state-owned enterprise still needs further concrete steps.
- There is overlap between executive and legislative functions.
- A sizable number of CSOs still need to be reported in the budget.
- Treasury instructions have yet to be revised and are still based on the repealed Public Monies Act 1964.
- Not all enhanced budget information required under the PFMA has been presented to Parliament.
- Contingent liabilities are not reported in the budget.
- Fiscal reports do not contain all the non-cash information required under the Act.
- Most departments and public bodies have not met legal requirements for timeliness of annual reports.
- The latest publicly available report of the controller and chief auditor on the Public Accounts is for the year ended June 30, 1999, which is a serious breakdown of the accountability framework.

### Recommended actions — short-term implementation (one to two years)
- i. Complete and promulgate the new Treasury Regulations and Instructions to make them consistent with the new PFMA.
- ii. Improve the quality of information presented to Parliament with the annual budget, by including:
  - a reconciliation table showing the derivation of the GFS balance from the appropriations balance;
  - the fiscal balance net of foreign aid grants;
  - a table of expenditures by function, and by GFS-consistent economic type;
  - a summary table of all new revenue and expenditure measures being introduced in the budget, together with the estimated fiscal impact of each measure;
  - aid in kind for each department;
  - macroeconomic forecasts for the budget year and two years beyond the budget year, and medium-term forecasts of the main fiscal aggregates;
  - longer-term debt servicing projections;
  - a list of tax expenditures; and
  - a statement of fiscal risks.
  - For the first year the statement of fiscal risks should include a list of all government guarantees, showing their nominal value, the value in the previous period, and the value of calls on guarantees in the previous period; and disclosure of all key assumptions underpinning the macroeconomic and fiscal forecasts.
- iii. Improve the understanding of fiscal policy and administration by the non-government sectors, by initiating a briefing by officials of the Parliament, Public Accounts Committee, the media and civil society on the financial management reforms, and disseminating a plain language guide to the budget and the Public Accounts.
- iv. Reestablish the parliamentary accountability process, through ensuring that the annual reports of the controller and chief auditor on the Public Accounts are submitted within six months of the end of the year; and by introducing the practice of a formal response by the government to the findings of the Chief Auditor, in the form of a report to the Public Accounts Committee.
- v. Improve the quality and timeliness of reporting, including meeting GDDS standards for in-year fiscal and public debt reporting (quarterly reports within one quarter of the end of the period); reporting spending and revenue during the year in the same format used in the budget presentation; submitting a formal mid-year review to Parliament on implementation of the budget (including the use of the Unforeseen Expenditure Appropriation); ensuring all departments and public bodies submit their Annual Reports to Parliament within the deadlines set by legislation; and ensuring the Annual Reports of departments contain a systematic reporting of actual performance against targets, and a simple list of significant physical assets (which should be progressively expanded in subsequent Annual Reports to show acquisition date and cost).
- vi. Strengthen the capacity and perceived independence of the Office of Controller and Chief Auditor. Consideration should be given to refocusing the role of the Office on the timely ex-post auditing of the Public Accounts, to strengthening the institutional capacity of the Office, and to introducing some mechanism for parliamentary involvement in the process of establishing the annual budget and staffing for the Office.
- vii. Expand the appointment of private sector members to the Boards of key Public Bodies. This will require establishing the Independent Committee on Appointments to Public Bodies. As provided in the Public Bodies Act, public servants who sit on Boards should cease to be paid attendance allowances.
- viii. Expand the identification, costing, coverage and reporting of CSOs in the budget and outturn documents. Review the income tax exemption currently enjoyed by most public trading bodies.
- ix. Consider some changes to parliamentary practice with respect to fiscal management: a legislative provision for out of session tabling of fiscal reports in Parliament; and reconsider the membership of undersecretaries on the Parliamentary Select Committees responsible for oversight of their own department.
- x. Improve the transparency of the tax system, through publishing details on the stock of arrears of tax refunds owed by MoR, and on the stock of customs duty deferrals and arrears of tax owed to MoR; modernizing the Income Tax Act of 1974 and the Income Tax Administration Act 1974; providing the Commissioner of Revenue and the Comptroller of Customs with explicit legal independence in the assessment of tax and duty liabilities of individual taxpayers; publishing a service charter for MoR; and introducing a low cost independent mechanism for resolving disputes between individual taxpayers and MoR. An institutional strengthening project should be considered for MoR.

### Recommended actions — medium-term implementation
- i. Further enhance the information presented to Parliament and the public at large with the annual budget through presenting a medium-term revenue strategy; including in the Estimates the cost of delivering individual outputs for the budget year and two years beyond the budget year; presenting the Public Sector balance; enhancing the statement of fiscal risks through incorporation of information on the sensitivity of the main fiscal aggregates to variations in key forecasting parameters; and progressively enhancing the reporting of tax expenditures by including the estimated fiscal impact of each tax expenditure.
- ii. Strengthen the capability of the accounting system by introducing a new FMIS; and progressively expanding the quality of reporting on non-cash items.
- iii. Progressively replace remaining cabinet ministers and officials from the Boards of Public Bodies over the five year transition period envisaged in the Public Bodies Act.
- iv. Incorporate all remaining CSOs in the budget as required by the Public Bodies Act.
- v. Enhance the accountability of departmental performance, by subjecting the planned performance against actual results by individual output to audit by the controller and chief auditor; and attributing costs more accurately to individual outputs.
- vi. Consider strengthening the perceptions of the legal independence of the controller and chief auditor by extending the term of office beyond the life of a single Parliament, and extending to the office the same protection from removal as applies to the Chief Justice.

*IMF staff commentary as presented in the source document.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr0570.pdf_