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Introduction
Structure of the Study Tour
Summary and Conclusion

Annex 1 - List of Participants
Annex 2 - Program of Study Tour  [ United Kingdom (UK) & Republic of South Africa (RSA) ]




1 - INTRODUCTION

A study tour for Government of Pakistan (GoP) officials had been included as part of the original terms of reference (ToRs) for the medium-term budgeting (MTBF) implementation project. The decisions on the specifics of the study tour were largely decided between the GoP, the Department for International Development (DFID), and PricewaterhouseCoopers (PwC) in the context of the January 2004 six-monthly project review.

The objectives of the study tour were to:

1. Provide the delegates with first-hand exposures to preparing medium-term budgets in the United Kingdom (UK) and the Republic of South Africa (RSA)
2. Provide delegates with first-hand exposure to budget execution procedures in UK and RSA
3. Provide an insight into the ‘Resource Based Financial Management System’ in the UK
4. An overview of the processes and procedures surrounding an MTBF
5. An opportunity to view the interrelationships between budgeting at various levels of government, primarily in the RSA

2 - Structure of the Study Tour

The countries selected for the study tour were the UK and the RSA.  While these were excellent choices from a relevance viewpoint they did represent something of a challenge from the logistics viewpoint necessitating four full days of travel for seven days of actual meetings.

The Additional Secretary, Budget Wing asked that the tour be scheduled for the end of February, early March in order to ensure that participants were back in Islamabad for the International Monetary Fund (IMF) review of the Poverty Reduction Growth Facility (PRGF) in March. This left a window of about two weeks between the earliest practical departure date and the required date of return.

The general focus was on MTBF experience in both the central agencies (Treasury/Finance), and the line ministries of the countries visited with a preference for the line ministry experience to be with the Ministry of Health where possible. There was also interest in the MTBF development in a federal country which was a feature of the RSA leg of the tour.

The tour focused more on the preparation of the expenditure budget than on the macroeconomic or revenue side of budget making since this emphasis corresponded more closely to the interests of the majority of participants. In both the UK and in RSA the meetings began with a general briefing from PwC, moved on to the central agency and from there to the line ministries. In RSA the final round of meetings were at the provincial level.

Two meetings with the participants were held ahead of departure and the Additional Secretary, Budget Wing, Finance Division met with the participants after the Tour to discuss his draft paper “Adoption of a Medium Term Budgetary Framework in Pakistan”. If this paper is in any way representative of the general level of understanding of MTBF principles and procedures then it is clear that the participants developed a very high level of comprehension as a result of the study tour.

Annex 1 gives the list of participants.  Annex 2 contains the programme of the study tour.

3 - Summary and Conclusions

Because of the compressed nature of the tour it was not possible to compile all feedback from participants at the end of each leg of the tour and it took a while to get feedback from all participants on their return to Pakistan.

Detailed comments from participants appear in Annex 4. The overall reaction was positive although a general sense emerges that participants found some aspects of the logistics less than fully satisfactory. There was also a general view that the tour was too intensive and the restrictions on free movement in RSA were irksome. The program in RSA involved travel between Johannesburg and Pretoria and back again because of the visits to provincial government in Gauteng (Johannesburg).

Overall satisfaction with the programme and the tour overall was high.

The choice of the UK and the RSA has been highly successful. However, given the logistics of travel from Pakistan it might have been better had it been possible to have either allocated more time to the tour or to have split it into two separate tours noting that because travel to both the UK and RSA was routed through Dubai this would have added rather little to the cost of the overall cost. It was time that dictated the back-to-back nature of what was, effectively, two tours.

The overall arrangements for the tour both in terms of logistics and substantive content was high, great credit is due both to the organizers and to the officials and others who made themselves available to the participants.

It has also been clear since the return that there is considerable interest in the experience that the tour represented since a number of GoP officials have expressed regret that they were not able to participate.

The paper drafted by the Additional Secretary, Budget Wing, Finance Division synthesizes the relevance the GoP of the experience gained on the tour better than any report prepared by the resident advisors could hope to do.

Annex 1 - List of Participants

1. Mr Arif Mansur, Additional Secretary, Budget Wing, Finance Division
2. Mr Muhammad Asif Sheikh, Chief Planning, Planning & Development Division
3. Mr Abdul Jaleel, Deputy Financial Advisor, Health, Finance Division
4. Mr Rafiq Ahmed Saleh, Assistant Economic Advisor, Budget Wing, Finance Division
5. Mr Iqbal Ahmad, Director, Finance, Population Welfare Division
6. Mr Muhammed Sharafat Ali Zia, Deputy Secretary Budget, Health Division

Annex 2 - Study Tour Programme

United Kingdom

Delegates arrived in London on February 23 and the UK sessions began on Wednesday, February 25:

London, 25 February

These sessions took place at the PwC Offices at Southwark Tower. Luc Moens on behalf of PwC (UK) made introductory remarks. Following presentations were made:

• Andrew Dyer, “UK Government – an Overview”.  This presentation gave an overview about the functioning, structure and key changes in the UK Government – financing and delivering public services. It also covered the parliamentary system of government.
   

• Steve Clark and Sheetal Vyas, “Trends in UK Government Financial Management”.  The subjects covered under this presentation were history of reforms in UK (1990-2005) and the impact of Resource Accounting and Budgeting in the UK government. A discussion was held on the implementation experience, tools and techniques used and trends for future developments.
   

• Nicky Leach and Karen Bryson, “Performance Management in the National Health Service”.  This session covered various aspects of the performance management and its applicability in the social sectors. The overall structure of the NHS and the performance framework was discussed. It showed how star ratings are set for Health Trusts.
   

• Carolyn Stanforth, “Public Expenditure Management Systems Project – Sri Lanka”. Carolyn Stanforth was the team leader for this project funded by the ADB in Sri Lanka. Detailed discussions were held on the approach used, deliverables and the application software used for this project.
   

• Ciaran McLaughlin, “The Role of Audit Commission in the UK”.  This presentation gave details about the role and functioning of the Audit Commission in the UK. The participants drew parallels to the Public Accounts Committee in Pakistan.
   

• Chris Frost, “Implementation of Public Sector Reforms in Pakistan & Linking Spending to Policy Objectives, the UK Experience”.  Chris gave a presentation on the experience for public sector reforms in Pakistan with special reference to lessons learnt in PIFRA. He stressed the importance of effective change management in public sector reform projects.
   

• Nick Johnson, “Performance Management in Local Government”.  Nick gave an overview of the system and functioning of the local governments in the UK. Status of performance management reforms in the 80s, 90s and then from 1997 onwards were discussed.

The morning of the second day was spent at the UK Treasury.  The afternoon was spent at a line ministry, the Department for Education and Skills (DfES). The following presentations were made:

• Graham Addicott, “General Expenditure Policy”.  Graham gave a presentation on the expenditure planning and the public sector spending frameworks. The working of the U.K. Treasury was discussed. Departmental Expenditure Limits (DEL) and Annually Managed Expenditure (AME) were explained in details. Participants raised questions on the Golden Rule, carry forwards and re-appropriation rule.
   

• Paul Bilton, “Whole of Government Accounts”.  Paul explained the overall concept behind the Whole of Government Accounts (WGA) project, the timetable, benefits and the deliverables. A discussion was held on the need and methodology of consolidating accounts. The use of functional classification was also explained to the participants.
   

• David Beardsworth, “Performance Management in the UK Public Spending Framework”.  David gave a presentation on the use of Public Service Agreements, target setting and methods of conducting spending reviews (comprehensive sector reviews and spending reviews). The importance of setting ‘SMART’ (specific, measurable, agreed, realistic, timed) outputs/outcomes and performance frameworks was discussed.
   

• Jane Geraghty, “Managing Resources in Government Departments” and “An overview of Education Funding”.  These presentations covered the resource management framework and how the departments allocates and manages resources internally. Aims and objectives of DfES were discussed and how it fits into the budget and the PSAs. The system of parliamentary accountability was also discussed.
   

• Stephen Kingdom, “Spending Reviews – A Departmental Perspective”.  This presentation gave an insight about the mechanics of conducting the spending reviews. Stephen also explained how medium-term planning has helped them in making effective utilization of resources. The complete cycle of developing spending proposals, the role of the central government, the meetings, and all resource allocation were also discussed.

London, 27 February

This was the last day in UK. The time spent was divided between the DFID offices and the Office of the Constitutional Affairs.

• Martin Johnson and John Short – “Public Expenditure Management – Developments Since 1997” and “International Experience in Establishing MTBFs”.  Martin and John presented their experiences of implementing the MTBF in Albania and other countries. A discussion was held when the parallels were drawn between Pakistan and other countries.
   

• Lindsey Fussell, Financial functions at the Department of Constitutional Affairs.  Lindsey presented their relationship with the Treasury. Other topics covered were the Public Service Agreement (PSA) framework, Medium Term Planning, Annual Budgeting Process, Financial Control Totals, Resource Accounting and Finance Skills and Competence.

REPUBLIC OF SOUTH AFRICA

The delegates arrived in Johannesburg on 29 February and the South African sessions began on Monday 1 March.

Pretoria, 1 March

The sessions took place at the headquarters building of PwC (SA). Doug Franke on behalf of PwC (SA) made introductory remarks. Arif Mansur replied on behalf of the Pakistani delegation. Modal rating was 1 on content and 1 on delivery. Three presentations were made:

• Grant Searle, “Current Budgetary Trends and Focus”.  This presentation was an overview of the budget reform process in South Africa from the PwC (SA) perspective. The presentation gave an accurate and complete overview of the budgetary reform process and gave delegates a good orientation for the subsequent sessions with government officials on days 2-4 of the programme in South Africa.
   

• Danie Fourie, “Cash to Accrual Accounting: the South African Perspective”.  This subject had been included as a result of the request from the Additional Secretary, Budget. The transition from cash based to accrual based accounting in South Africa is an ongoing process and much remains to be done. The session pointed out that full accrual accounting is a major exercise in its own right quite apart from the implications for budget reform of moving from a cash-based to an accrual system.
   

• Hanlie Kennaugh, “Government Financial System Implementations: Lessons Learned”.  This session was also included as a result of a request from the Additional Secretary, Budget who had expressed interest in hearing about an Enterprise Resource Planning (ERP) project in a government context. The project described was one undertaken by Gauteng South Africa’s richest and most urbanized province (20% of population but 40% of GDP).

After the presentations there was a discussion since PwC (SA) had invited a number of South Africans to the session like Gerrit Muller CFO, Health and the Head of the DFID programme in South Africa. Afterwards PwC (SA) hosted a reception for all who had attended the sessions during the afternoon.

Pretoria, 2 March

The second day was spent with the National Treasury who described the origins and evolution of the new budget system which went back to 1998. The delegation also had the benefit of Mr Taz Chaponda’s presence for most of the time as facilitator and commentator.

• Neil Cole, “MTEF Budget Process: Presentation to Pakistani Delegation”.  This presentation gave an overview of the budget reform process in South Africa.
   

• Jeffery Smith, “Presentation to delegation from Pakistan Ministry of Finance: Introduction of a New Economic Reporting Format”.  This presentation dealt with the introduction of the new Chart of Accounts in the South African context and proved to be a good tool for integrating the experience of the visits to the line ministries and provincial treasury.
   

•  Kuben Naidoo, Chief Director, Fiscal Policy made a presentation on how three year budgeting works from a fiscal perspective.
   

• Kenneth Brown, “South Africa’s Intergovernmental Fiscal System: Presentation to the Pakistani Delegation”.  This presentation explained how intergovernmental finance works in the RSA. Of particular note was that in areas of provincial jurisdiction the national government provides policy coordination and funding for provinces tied to specific policy objectives while the vast majority of provincial funding comes from unconditional block transfers. Essentially all programme delivery is a provincial responsibility.
   

• Thys Theron, “Budget Execution (Expenditure Management): Presentation to Pakistan Delegation”.  This presentation covered the budget execution including important matters like adjusted (supplementary) estimates and virement.
   

• Nkosana Mashiya was present to discuss National Savings Schemes.  Mr Mashiya was present as a result of a special request from the Additional Secretary, Budget who is also responsible for providing advice to the GoP on the National Savings Scheme.

Pretoria, 3 March

• Mr Gerrit Muller, who played a major role in pulling the tour together, was present throughout and made his introductory remarks.
   

• Pamela Ntutela, “Background to Multi-Year Budgeting (MTEF): The MTEF in the Health Sector.”
   

• Luvuyo Baba, “Health Financing and Resource Allocation in South Africa”. This presentation looked at the problems of inter governmental finance from the more specialized perspective of the Health sector. It raised some interesting issues like the support given by the national government to those provinces which provided services to out of province residents or to provinces providing a disproportionate share of medical training through, say, teaching hospitals.
   

• Gerrit Muller, presentation on Chapter 5 of the Inter Governmental Fiscal Review which deals with Health.  This presentation was concerned with an important publication which reviews provincial spending by sector and which is published annually. It pulls together comparative spending and key health indicators in a way that is valuable as a guide to public policy development.
   

• Siyabonga Jikwana, presented the Department of Health, RSA, “Essential Health Care for All South Africans: An investigation into Public Health Financing and Provincial Health Resource Distribution”.
   

• Andre Venter gave a presentation on the practical operation of the MTEF process in the National Department of Health.  This presentation was a view ‘from the trenches’ on the operation of the system in a world in which accounting systems were still relatively primitive.

Gauteng, 4 March

• Gert Krombout gave a presentation on the provincial perspective on health budgeting from the provincial perspective including the difficulties encountered. It was a good counterpart to the presentation by the national Department of Health and demonstrated a high degree of collegiality between national and provincial government.
   

• In the last session in the afternoon Mr Itumeleng Mogorosi led a discussion on the provincial budget process from the perspective of the provincial treasury. It was a good complement to the national presentations and illustrated the time and effort that went into policy and budget coordination between the levels of government. They also demonstrated a macro budget allocation model at the request of the delegates.

A trip to a health facility in one of the black townships which was to have taken place on March 5 was cancelled at the request of the delegates.

STUDY TOUR REPORT

Final output of the study tour was comprehensive strategy paper for adoption of Medium Term Budgetary Framework in Pakistan prepared by the study tour delegates

Click Here to open the  Study tour report in PDF Format.


 

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