Published On:Thursday, March 11, 2010

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas could "reduce the fiscal deficit and fiscal imbalance" by ensuring value for money in the public sector, an Inter-American Development (IDB) Bank report has revealed, with three out of four government ministries assessed not having "the practice and expertise to use planning systems".

The IDB, in a document outlining a $1.65 million Management for Results project proposed for the Bahamas and its public sector, said it had been called in by the Ministry of Finance in September 2009 to develop "an action plan" for "results-based management in the areas of planning, budgeting for results, financial management, sector development and public investment".

The results, the IDB said, showed the Bahamas "lacks a legal framework to regulate economic planning and, as a consequence, no strategic planning is introduced into public sector management.

"Similarly, the practice of budgeting for results is not utilised, since the current budget is line based and does not incorporate outcomes or evaluation criteria."

Essentially, the IDB assessment found that the Government and public sector had no system to prioritise projects, plus monitor and evaluate them, meaning that there was no way to assess whether the Bahamian taxpayer was receiving value for money on every dollar spent. Again, transparency and accountability were issues.

Prime Minister Hubert Ingraham in his Mid-Term Budget report said the Government planned to move ahead with the IDB project.

Zhivargo Laing, minister of state for finance, speaking to Tribune Business from Paris yesterday, said: "We are really focused on making the Bahamas an effective jurisdiction in terms of government operations.

"This is the type of grunt work that is necessary. It is not the sexy work. These are the necessary building blocks, so that whether we are the Government or not, it functions more efficiently and effectively. It is not stuff to talk about. It is stuff to do."

In its report, the IDB said: "Due to the absence of a public investment system, there is no integration between the project execution and the financial system. The country operates a central expenditure approval system or a payment system, but this does not integrate financial information with local governments.

"Public investment projects lack a prioritisation system for projects' programming and execution. Monitoring and evaluation still need to be carried out in a more systematic way. Three out of four line ministries encountered do not have the practice and expertise to use planning systems."

While statistics were sometimes used for planning, they were "not used to allocate funds according to expenditure effectiveness. Technology needs to be integrated into different areas in public administration, precisely to integrate the public financial system".

The IDB added: "Given the current situation, a restructuring of the Public Financial Management System, and the introduction of mechanisms for planning, executing and evaluating public investment projects according to the principles of management for results has the potential to generate important savings and reduce the fiscal deficit."

The report said the current economic environment, and the Government's determination to reform the Financial Administration and Audit Act to boost accountability and transparency in the public finances, showed there was support for the project as a way to "reduce the fiscal imbalance of the country".