Contribution to the Public Finance Management MDTF Bhutan



Contract partner: World Bank Institute Country: Bhutan Funding amount: € 1.000.000,00 Project start: 01.12.2015 End: 31.07.2021

Short Description:

Overall goal


The performance, transparency and accountability in public financial management in Bhutan are strengthened.


A multi donor fund (basket funding mechanism) will provide a common platform for development partners to come together by pooling their resources and efforts in strengthening public finance management in Bhutan. The multi donor fund has received commitments of Euro 1 mn from the Austrian Development Agency and of Euro 3 mn from the European Union.


The contribution is in line with Austria’s programmes under the Austria – Bhutan Country Strategy 2015 and projected under the 11th Five Year Plan of the Royal Government of Bhutan.

 


Expected results


The multi donor fund is likely to achieve

- revenue administration, fiscal management and budget formulation are strengthened

- accounting and reporting systems are improved

- public procurement systems through automation are scaled up

- accountability institutions are strengthened.

 


Target group / Beneficiaries


The multi donor fund is likely to benefit

- over 2,500 civil servants and parliamentarians directly resulting from enhanced skills and capacity in governance, and indirectly impact over 20,000 civil servant in various ways

- about 100,000 tax payers (both business and individual) due to improved tax administration and management, including tax payer services and revenue IT systems

- about 1,000 procuring agencies and 15,000 registered bidders due to upgrading of e-procurement system of RGoB and strengthening of procurement legal and institutional framework.

The indirect benefit to all citizens in Bhutan (745,153) are at large due to improved efficiency in public procurement services resulting in faster procurement cycle and expected reduction in cost of public goods and services.


The multi donor fund will be governed by a Program Coordination Committee to provide management oversight. The Committee will be co-chaired by the Royal Government of Bhutan and the World Bank and would include representatives from each of the contributors to the fund.

 


Activities


Windows of reforms target by the multi donor fund

- upgrading/replacing the outdated and stand-alone PFM IT systems into an Integrated Financial Management System

- modernizing the country’s revenue administration and management

- scaling up public procurement systems including automation

- developing capacity in budget analysis, allocative efficiency and program budgeting. improving in-year budget execution reports, strengthening internal audit function, introducing commitment controls, consolidated reporting on fiscal risks and enhancing capabilities in cash and debt management.

 


Context


Bhutan has a strong commitment to Good Governance agenda and has progressed well in strengthening public finance management in the country over the last few years. Yet, there is an unfinished agenda and public finance management challenges remain. Crucial areas that call for focus and strengthening over a medium-term outlook include

- upgrading/replacing the outdated and stand-alone public finance management IT systems into an integrated financial management system

- modernizing the country’s revenue administration and management

- scaling up public procurement systems including automation

- developing capacity in budget analysis, allocative efficiency and program budgeting

- improving in-year budget execution reports, strengthening internal audit function, introducing commitment controls, consolidated reporting on fiscal risks and enhancing capabilities in cash and debt management.

 

project number 2793-00/2015
source of funding OEZA
sector Staatsführung & Zivilgesellschaft, allgemein
tied 0
modality Basket funds/pooled funding
marker Democracy: 2
  • Policy marker: are used to identify, assess and facilitate the monitoring of activities in support of policy objectives concerning gender equality, aid to environment, participatory development/good governance, trade development and reproductive, maternal, newborn and child health. Activities targeting the objectives of the Rio Conventions include the identification of biodiversity, climate change mitigation, climate change adaptation, and desertification.
    • 1= policy is a significant objective of the activity
    • 2= policy is the principal objective of the activity
  • Donor/ source of funding: The ADA is not only implementing projects and programmes of the Austrian Development Cooperation , but also projects funded from other sources and donors such as
    • AKF - Foreign Disaster Fund of the Austrian federal government
    • BMLFUW - Federal Ministry for Agriculture, Forestry, Environment and Water
    • EU - Funds of the European Commission
    • Others - various other donors are listed in ADA’s annual business report.
  • Type of Aid – Aid modalities: classifies transfers from the donor to the first recipient of funds such as budget support, core contributions and pooled programmes and funds to CSOs and multilateral organisations, project-type interventions, experts and other technical assistance, scholarships and student costs in donor countries, debt relief, administrative costs and other in-donor expenditures.
  • Purpose/ sector code: classifies the specific area of the recipient’s economic or social structure, funded by a bilateral contribution.
  • Tied/Untied: Untied aid is defined as loans and grants whose proceeds are fully and freely available to finance procurement from all OECD countries and substantially all developing countries. Transactions are considered tied unless the donor has, at the time of the aid offer, clearly specified a range of countries eligible for procurement which meets the tests for “untied” aid.