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LGU PFM Reform Roadmap

What is the PFM Reform Roadmap?

A strategic guide on what LGUs want to do and achieve with their PFM in the immediate, medium and long term periods to attain their desired end-state (vision) complemented by a well-designed action program that details the activities and timeframe on how and when they could reach their PFM goal and vision.

  

 

Why develop the PFM Reform Roadmap?

 

Need for a single and comprehensive guide to address weak PFM
  • Lack of fiscal sustainability
  • Inadequate accountability mechanisms
  • Weak coordination among oversight agencies (OAs) and between OAs and LGUs


Uses of the reform roadmap

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Provide LGUs with strategic directions to strengthen their PFM system towards improved revenue generation and expenditure management

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Assist the OAs to strengthen their coordination in better supporting PFM reforms identified, designed and being implemented by the LGUs

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Guide Development Partners in identifying possible entry points for financial support and other interventions

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What is PFMAT?

What is PFMAT?

PFMAT stands for the Public Financial Management Assessment Tool. The PFMAT for LGUs is a self-assessment, evidence-based instrument which describes the characteristics of an open and orderly PFM system.

The tool describes the characteristics of a good PFM system, identifies performance indicators to gauge how the LGU is actually doing in a particular area of PFM, and identifies the sources of information which will help the LGUs establish their compliance with graduated levels of performance. This will help the LGUs identify the strengths and weaknesses in their PFM system as bases for improvement measures. (DBM Local Budget Circular No. 2012-101, October 12, 2012)

To facilitate the PFM assessment undertaken by the LGUs using the PFMAT, a software version of the tool has been developed under the auspices of the European Commission (EC) Grant for PFM Reforms.

The software has been further enhanced as part of the institutionalization of the PFMAT and PFMIP under the European Union (EU) funded project, “Support to the Local Government Units for More Effective and Accountable Public Financial Management.”

The enhancements to the software include a Data Management Module which would facilitate the analysis of the results of the assessments undertaken by the LGUs at the regional and national levels.

 

 

Value of the PFMAT for LGUs

The results of the PFM assessments using the PFMAT can:

  • Help the LGUs determine the strengths and weaknesses in their PFM systems, and provide bases for the adoption and implementation of improvement measures; (see sample PFM Improvement Plan)
  • Provide baseline information on the state of LGU PFM and serve as bases for benchmarking with other LGUs;
  • Encourage the development and replication of best practices in PFM; and
  • Serve as bases/criteria for inter-governmental transfers.

 

Critical Dimensions of Performance of a Good PFM System

Given the seven (7) key elements of the PFM system, the framework identifies the critical dimensions of performance of an open and orderly PFM system, as follows:

01Policy Based Budgeting  The LGU prepares its budget with due regard to government policy.

02Comprehensiveness and Transparency  contains indicators that measure if budget information provide a complete picture of revenue forecasts, prior, current and budget years’ expenditures, and the expected outputs. They also measure whether fiscal and budget information are accessible to the public.

03Credibility of the Budget  contains indicators that measure whether or not the budget is realistic and is implemented as intended.

04Predictability and Control in Budget Execution  The LGU prepares its budget with due regard to government policy.

05Accounting, Recording and Reporting  contains indicators that measure whether or not adequate records and information are produced, maintained, and disseminated for purposes of decision-making, control, management, and reporting on operations.

06Internal and External Audit  contains indicators that examine the arrangements for scrutiny of public finances and follow-up by the LCE and/or the Local Sanggunian.

07Citizens’ Participation  contains indicators that measure the extent by which the LGU encourages concerned citizens organized as Civil Society Organizations (CSOs) become partners of the LGU in the formulation, monitoring, evaluation and improvement of the local budget.

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About the LGU PFM 2 Project

This project is funded by the European Union with a grant of eight(8) million Euro and is implemented by the Government of the Philippines. Under the name, "Support to the Local Government Units for more Effective and Accountable Public Finance Management", otherwise known as the LGU PFM 2 Project.

Objectives

The overall objective of the project of which this contract will be a part is to contribute to the achievement of the MDGs and poverty reduction in the Philippines, in line with the 2011-2016 Philippine Development Plan, through improved public finance management resulting in improved delivery of basic services by local governments.

Purpose

The purpose of this contract is to support the Government at national and regional level to enhance capacity of local governments to generate revenue and to allocate and spend public funds more effectively and efficiently.

Expected Results

The Project will assist the Department of Budget and Management, the Department of Finance/Bureau of Local Government Finance, Department of Interior and Local Government and potentially the Commission on Audit and the National Economic Development Authority to achieve the following results:

Component 1

Improved institutional capacities of the oversight bodies at national level

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Component 2

LGU PFM policy agenda and action plan developed

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Component 3

Strengthened capacity of the Regional Offices

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Component 4

Improved revenue generation and management at LGU level

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Component 5

Improved budget, planning and execution

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Component 6

Strengthened Internal Control Systems/Internal Audit Services at LGU level

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Component 7

Localized procurement reforms

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Component 8

Strengthened budget monitoring and evaluation at LGU level

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Component 9

Enhanced effectiveness of LGU performance monitoring systems

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Component 10

Financial management leadership developed at LGU level

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project results
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