Strengthening Public Financial Management Program, Subprogram 1
Because of capacity constraints and experiences in legal drafting, legal and regulatory developments require a longer time which future ADB programs need to consider.
Because of capacity constraints and experiences in legal drafting, legal and regulatory developments require a longer time which future ADB programs need to consider.
Public financial management reform is complex and requires long-term commitment and flexibility to maximize development impacts while remaining relevant to the changing environment.
Comprehensive and robust diagnostics providing the rationale for the selection of policy actions are important. Using the results of these diagnostics during consultations helps stakeholders gain appreciation of the reasons for introducing policy reforms and this aids in building consensus
A well-thought-out project communications plan, backed by local capacity building, is needed for the successful implementation of projects in FSM. Information is often not widely shared in the FSM, and securing support for reforms can be particularly complex in this context. The Chuuk Public Utilities Corporation was able to effectively carry out its communications and outreach activities and secure support for reforms with the help of a well-defined operation, maintenance, and management contract. Project delays affected the momentum of activities in the other three states.
The political economy of the country as well as of the local areas where projects are to be sited needs to be thoroughly understood and considered in the design of projects. The project assumptions that institutional and financial reforms would be adopted within a reasonable time frame and that demand for the improved water supply services could be established in Kosrae state proved false. Project preparation could have supported a more thorough understanding of the political economy, and the scope based on a stronger rationale and expressed demand.
Compliance with financial covenants on institutional reforms and asset valuation and reconciliation, need a high level of commitment, capacity, and resources from the executing agency. Further, substantial changes in state-owned enterprises take time to get implemented in full. Despite efforts made by executing agency, the Assam Power Generation Corporation Limited (APGCL), lack of capacity and resources resulted in some of loan covenants to be achieved only partially.
Continued investment in policy dialogue is essential to ensure sustainability and the best resilience outcomes for the country. The policy actions identified in the program’s policy matrix, as well as future target actions identified in the follow-on program’s post-program policy framework, provide an opportunity to further strengthen DRM in Palau and to identify gaps and needs for future support in DRM. The program initiated a long-term policy dialogue with Palau for ADB assistance for DRM.
A structured, holistic, and sequential approach, backed by a comprehensive, medium- to long-term program and sufficient technical assistance (TA,) is critical to the success of financial market reforms. A wide range of reforms covering key pillars of the financial system was incorporated in this program nto enhance legislation, improve regulatory frameworks, introduce new initiatives, and support sustainable capacity building using a structured and sequential approach over the medium term.
Continued engagement with the government on macroeconomic and structural reforms will maximize program benefits. This program was an integral part of ADB’s overall country support activities and backed the government’s strong commitment to state-owned enterprise reform and structural macroeconomic reform. Particularly through technical assistance to strengthen economic management, it supported macroeconomic stability, sustained growth, and project preparation.
In fragile states such as Tuvalu, all phases of the project cycle are likely to require technical assistance (TA) support. The TA was a key support during both the formulation and implementation of the Improved Fiscal and Infrastructure Management Program. Tuvalu faces difficulties due to its size, its fragility, and its vulnerability to climate change and other natural disasters. The country will continue to require consistent TA support to overcome its capacity constraints if it is to achieveits vision for a more resilient economy.