Pacific Island countries benefit from a “technical assistance experiment in action”

• Author: Nigel Bradshaw
• Position: IMF Technical Assistance Secretariat
• Pages: 15-16

Page 15

Six years ago, the IMF and the United Nations Development Program (UNDP) launched a unique experiment to provide technical assistance on a regional basis. In 1993, the Pacific Financial Technical Assistance Center (PFTAC) was established as a regional office, based in Suva, Fiji, to implement the UNDP-financed, IMF-executed Fiscal and Monetary Management Reform and Statistical Improvement Project. Approximately every two years, the project is reviewed and reappraised by representatives from the 15 Pacific Island countries, the donors (the Asian Development Bank, Australia, New Zealand, and the Pacific Forum), the UNDP, and the IMF. The 1999 review, held on November 18–19 in Suva, provided an opportunity for participants to reflect more broadly on the past six years with the PFTAC experiment, to draw conclusions about the continued effectiveness and relevance of its operations for the countries of the South Pacific, and to provide guidance for its future direction and priorities.

A seminar preceded the review. Five papers were presented—an overview by the project coordinator, Klaus-Walter Riechel, the IMF’s Resident Representative in Fiji, and four papers by PFTAC technical advisors. The specific topics that the PFTAC technical advisors commented on were public financial management (Brian Thornton), tax administration and policy (Colin Walker), banking regulation and supervision (Alan E. Gee), and macroeconomic and financial statistics (Howard Murad). Each presentation, which included a panel discussion, was followed by open floor sessions. The seminar provided a forum to share views and led to the adoption of a clear set of recommendations for PFTAC’s future direction.

Public financial management

Discussion of public financial management centered on the difficulty of engaging politicians in budget formulation. Effective budget management, it was pointed out, requires a cabinet system in which priorities and financial limits are agreed upon. All too often in the Pacific, participants suggested, budget formulation is undertaken by officials with no political involvement; consequently, ministers have no feeling of “ownership,” leading to frequent recourse to supplementary budgets. Added to this, weak regulatory frameworks governing use of public funds and adherence to proper accounting standards...