IMF ON PUBLIC FINANCE MANAGEMENT EFFORTS IN RWANDA

UNCLAS KIGALI 000935 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON EFIN RW SUBJECT: IMF ON PUBLIC FINANCE MANAGEMENT EFFORTS IN RWANDA REF: A. KIGALI 743 ¶B. KIGALI 209 ¶1. (SBU) Summary. On October 12 a visiting International Monetary Fund (IMF) team described for local diplomatic missions its efforts to assist the Ministry of Finance and other Rwandan ministries and agencies in improving Public Finance Management (PFM --the effective and efficient use of public funds by the government). The team described budget offices at the Finance Ministry as well as program implementing ministries and agencies as understaffed and undertrained, despite being expected to use complicated financial procedures and a new Organic Budget Law most officials have never seen and do not understand. Better coordination between the Auditor General's office, the Finance Ministry and line ministries, and direct policy linkages between individual ministry plans and directives (which are often multi-year initiatives) and the annual budget process, would improve the effective use of pubic funds. According to the team, small concrete steps would do much to improve PFM in Rwanda. End summary. ¶2. (SBU) Mission officers attended the October 12 briefing by a visiting two-person IMF team at the local IMF offices. The visiting team described a financial management system that was overly complicated for Rwanda's needs, and operated by small staffs who lacked proper training and oversight. For example, the team said, line ministries typically had only two PFM officers, an accountant and a budget execution officer, to oversee large public programs with extensive expenditures. The officers usually had only limited qualifications for their duties. The Ministry of Finance and the Auditor General's Office typically had staff assigned to each line ministry, but they too lacked proper training, and had limited linkages with their home offices. ¶3. (SBU) According to the team, the recently passed Organic Budget Law was a solid piece of legislation, but was little understood by those expected to implement it. A complicated set of financial procedures further compounded the difficulties these under-trained officers faced in carrying out their legally prescribed duties. Said one IMF staff member, regarding the four volumes of financial procedures, "they are too long, and almost no one has been properly trained in their use. They are fine for London or Washington, but Kigali needs a simpler set of regulations." The team noted that the Government of Rwanda's (GOR) extensive decentralization plans put added pressure on district budget offices, who had even less training and smaller staffs to contend with increasing financial responsibilities. (Note: last October a report by the Auditor General expressed considerable concern at the lack of proper documentation and auditing of the use of public funds -- see ref B. The Prosecutor General this spring launched a broad probe of 46 government entities, with several criminal prosecutions begun, and some offices cleared of any wrongdoing -- see ref A. End Note). ¶4. (SBU) The IMF team offered a series of small concrete steps toward better PFM, including revised and simplified financial regulations, focused training in those simplified procedures, better coordination between the Auditor General's Office, the Ministry of Finance, and line ministries, better integration of line ministries plans (often multi-year) and the annual budget cycle managed by the Ministry of Finance, and more staff with higher qualifications. They described Rwandan budget staff at various ministries and agencies as "willing and enthusiastic," and noted these modest improvements would be of "enormous" help to them. The IMF team had formally presented these proposals to the Minister of Finance, said the team, and the Minister had agreed with many of them. At the conclusion of the meeting, the assembled diplomatic missions agreed upon an informal "policy" group of economic officers to track GOR efforts to improve PFM. ¶5. (SBU) Comment. This IMF effort, coupled with assistance from the European Union and other missions (ref A),are the soft hand of advice and training, as an accompaniment to the formal criticism of the Auditor General and indictments by the Prosecutor General. Better training, better procedures, and more staff should mean less errors and less temptation to stray by government officers. End comment. SIM