2004年-世界发展银行全球_West_Bank_and_Gaza___Country_Financial_Accountability_Assessment_62页_4mb

Summary of the Country Financial Accountability Assessment (CFAA) for West Bank and Gaza (WB&G)

Core Content

This Country Financial Accountability Assessment (CFAA) report, published in June 2004, evaluates the progress and challenges in the public financial management (PFM) system of the West Bank and Gaza (WB&G). The assessment was conducted through two missions in 2003 and 2004, with extensive engagement with the Ministry of Finance (MOF), the Palestinian Authority (PA), and various international donors such as the World Bank, IMF, DFID, and the European Union (EU). The report highlights both improvements and areas requiring further reform in the PFM system of WB&G.

Main Report Structure

1. Recent Areas of Improvement

• Central Treasury Account (CTA): All PA revenues are now collected into the CTA, which serves as a single treasury account. This has eliminated non-transparent spending from off-budget petroleum, tobacco, and alcohol excise accounts.
• Budget Process: The 2003 and 2004 budgets represent a significant shift toward more transparent and manageable expenditure limits. The budget process is now more systematic, with budget speeches and data regularly posted on the MOF website.
• Internal Controls: MOF has established a Director-General of Financial Control and placed financial controllers in each ministry to ensure ex ante controls on expenditures.
• Payroll Management: MOF now controls the central payroll system, and all 73,000 civil servants and, from March 2004, all 56,000 security establishment staff receive salaries via direct deposit.
• Budget Reallocation: The large discretionary transfer to the President's Office was reduced from $49.75 million in 2003 to $0.62 million in 2004, with the funds redirected to service ministries.
• Palestine Investment Fund (PIF): The PIF was established to manage PA commercial investments, including state-owned enterprises (SOEs), and has published its first annual report and audited financial statements.
• Revenue Capture: Measures to reduce PA monopolistic activities in cement importation and the direct management of the Petroleum Commission (PC) have led to better revenue capture and reduced opportunities for non-transparent allocation.

2. Areas Requiring Improvement

• Financial Statements: The PA has only recently published consolidated financial statements for 2002, and these are not yet reliable. The 2003 financial statements should include debt, arrears, contingent liabilities, and financial assets.
• Audit Systems: There is no adequately functioning external or internal audit system. The General Control Institute (GCI), the current external audit body, has limited capacity and poor quality. A new Council of Administrative and Financial Control is being drafted to replace the GCI.
• PLC Oversight: The Palestine Legislative Council (PLC) lacks the information, resources, and experience to effectively monitor financial accountability.
• Security Service Staffing: MOF has strong controls over civil service hiring, but security service staffing remains uncontrolled.
• Donor Integration: Donor projects are not well integrated into the PA budget, limiting the ability to set clear spending priorities. Donors should channel funds through the CTA unless there are specific reasons not to.
• Cash Management: MOF’s Treasury Department needs to improve aggregate cash flow forecasting and management, including daily revenue and expenditure sweeping, and systematic cash planning.

3. Proposed Program and Timetable

• By June 30, 2004, the following actions should be implemented:
  • Improved control over security service staffing.
  • Publication of 2003 consolidated financial statements with improved format and content.
  • Presentation of a new External Audit Law to the PLC.
• Reforms under way will take longer to implement fully, with benchmarks proposed for fulfillment by December 31, 2004 and June 30, 2005:
  • Internal audit development.
  • External audit capacity building.
  • PLC capacity building.
  • Integration of donor programming into the PA budget.
  • Improved cash management.

4. Overall Risk Assessment

• The PFM system in WB&G is judged to be adequate under the World Bank’s criteria for budget support.
• The risk level is currently significant, but it is expected to be reduced to moderate if the proposed reforms are well implemented.
• A track record of improvement over the past two years and the PA's commitment to reform are key factors in this assessment.

Key Information

• Currency: New Israeli Shekel (NIS), with 1 NIS = $4.54 (US).
• Fiscal Year: January 1 – December 31.
• Donor Support: Total donor assistance to PA since 1994 is around $6 billion, with $1.3 billion in direct budget support by end 2003.
• Major Donors: The EU contributed $280 million (22% of total budget support), and Arab countries contributed $880 million over the same period.
• PFM Reforms: The reforms were initiated through the 100-day Palestinian Reform Plan in 2002, and are being monitored by the International Task Force on Palestinian Reform.

Conclusion

The PFM system in WB&G has made major strides in transparency, accountability, and institutional capacity building. However, significant challenges remain, particularly in audit systems, PLC oversight, and donor integration. The World Bank has played a leading role in shaping donor activity and supporting reform efforts, and is managing the Trust Fund for Gaza and West Bank (TFGWB). The report recommends a time-bound action plan to ensure that the PFM reforms are implemented effectively.