PUBLIC FINANCIAL MANAGEMENT (PFM) REFORM PROJECT II

Sector Context: The Federal Government of Somalia (FGS) requested rapid support from development partners to help raise the capacity of the government as articulated in the Somali Compact. Core government functions are also prioritized within the Somaliland Special Arrangement. To respond to this need, the World Bank is proposing a suite of three complementary projects to be funded through the MPF to: (i) provide recurrent financing of the government’s budget; (ii) support PFM reform, and (iii) inject capacity to fill urgent capacity gaps for implementing programs and developing initial functionality.

Timeframe 2015-19

Financials Appraised Value: US$ 20 m

Components The PFM reform project aims at establishing systems for more transparent and accountable management and use of public funds. It focuses on the implementation of medium-term fiscal frameworks to underpin planning and annual budget preparation; revenue mobilization and tax administration; financial management information system; expenditure control; procurement, accounting and financial reporting; auditing; monitoring; and establishment of structures to oversee PFM reform in Somalia.

Component 1: Revenue mobilization, planning and budget preparation

  • Strengthen planning and budget preparation as well as to mobilize domestic resources to achieve development objectives.
  • Support the integration of the recurrent and capital budgets and capacity to prepare Medium Term Sector Strategies.
  • Support expansion of the tax base, whilst improving procedures to reduce compliance costs and increase integrity of the system. 

Component 2: Treasury management, budget execution, procurement, accounting and financial reporting

  • Strengthen controls needed for fiscal discipline and promote transparency and accountability.
  • Help ensure that all revenue collections and authorized payments are made through a Treasury Single Account in the Central Bank, improving payment system credibility.
  • Support the continued roll-out of a financial management system and the production of good quality in-year financial reports and annual financial statements. 
  • Support the FGS‘s public procurement reform and capacity building strategy preparation and implementation of immediate and medium term activities.
  • Pilot mobile money transfers as an alternative system for collection of targeted government and utility revenues and potentially later for disbursement of expenditures. 

Component 3: Strengthening of integrity pillars (e.g. audit modernization and manuals)

  • Strengthen key integrity institutions (Public Accounts Committee and Supreme Audit Institution) to hold government accountable for the use of public funds.
  • Strengthen Government’s internal audit.  

Component 4: PFM Professionalization

  • Build PFM competencies through a PFM Education and Training Program designed to build capacity at the individual level for planning and budget preparation officials, procurement officers, accountants and internal and external auditors. 

Component 5: Project oversight, coordination and management

  • Provide a structured approach to PFM institutional capacity strengthening, including support for change management, security and logistics and Monitoring and Evaluation (M&E) for the project.
  • Help establish a Somalia Association of Professional Accountants that will evolve to become a Professional Accountancy Organization

Component 6: Analytic and Advisory Services

  • Provide actionable PFM policy notes

Beneficiaries Direct beneficiaries: government counterparts; Indirect beneficiaries: citizens

Government Counterparts Ministries of Finance and Planning in the Federal Government, Somaliland and Puntland

Implementation Arrangements Recipient Executed (RE)

Geographic Coverage Mogadishu, Garowe, and Hargeisa

Links to other projects:  PFM Phase I