Strengthening public financial management : a in the Maldives / Ali Rasheed Ibrahim

Executive Summary

Government of the Maldives has been paying special attention to improve fiscal discipline, efficient and effective service delivery, strategic planning and budget credibility during the past decades by strengthening PFM system. Several reform measures were taken to strengthen overall PFM system in the country during the past decades. However, continuous effort to strengthen the PFM system in the Maldives over the years, have not benefited as anticipated. The main objective of this research is to study the strength and weakness of the PFM system in the Maldives, by using PEFA framework. Hence, this research aims to assess the effectiveness of PFM system in the Maldives and success and failures in its PFM reform implementations. Then to provide, an action plan to implement PFM reform strategy with implementation guideline. The highlights of the current ongoing reforms are Strengthening PFM project, legal reform project and implementation of the BPC module. The outcome of these projects will have a major impact on improving PFM performance in the country, once they are completed. Adaptation of the Single treasury account, implementation of SAP accounting system, introduction of FRL Act and New Audit Act helped to improve PFM performance in the past. However, the assessment shows there is no major improvements. In addition, scores of some indicators are lower than 2014 assessment. For example, during the last budget process, there was no consultation with government agencies to finalise the budget. Implementation of the macro-fiscal framework is very weak, as a result link between budget and policy has been distorted. Furthermore, execution of the medium-term budget has been very poor and medium-term expenditure framework has not been adopted. This report offers guidance to improve PFM performance by implementing the reform strategy provided with this report.