[{"bbox": [97, 122, 1136, 203], "category": "Text", "text": "cases, arrest of civil servants including controlling officers in ministries. Coupled with the demand for fiscal consolidation and reforms under the planned IMF programme, the action would be operating under more favorable political framework conditions than those encountered in previous years."}, {"bbox": [97, 214, 1136, 269], "category": "Text", "text": "Inaccurate costing of delivering budget programs, leads to frequent requests for supplementary budgets (e.g. due to dramatic overspending on subsidies), causing disruption to planned expenditures."}, {"bbox": [97, 280, 1136, 706], "category": "Text", "text": "Regarding the budget execution processes, only one-fifth of the 500 procuring entities have switched from manual procedures to using the electronic procurement system (e-GP). Consequently, as of now, there is not enough overview available as to which procurement procedures are being used by the procuring entities. Weak cash management, and inefficient commitment controls have further eroded fiscal discipline. As a result of serious challenges to manage commitments, the MoFNP is unable to control expenditure beyond basic cash rationing. The Budget Office makes decisions about what gets paid on a daily basis, balancing submitted invoices and competing pressures from powerful MPSAs, suppliers, and politicians. In this context, MPSAs cannot enter commitments when they occur, up to the level of their appropriations limits, as expenditure transactions are typically only entered into Integrated Financial Management Information Systems (IFMIS) at the very final stage of the transaction, when payment needs to be disbursed. MPSAs override commitment and cash controls and incur excess expenditures through supplier credit to carry out their functions thereby generating arrears, without the knowledge of the MoFNP. In addition, the complex landscape of manual and digital accounting systems on national and sub-national levels of government, creates numerous touch points, which lead to delays in commitments' data transmission. Lack of accurate, comprehensive and timely information on cash, commitment or procurement plans, or liabilities and revenues leave the MoFNP making disbursements without key considerations, which ultimately impairs project/programme implementation and public service delivery."}, {"bbox": [97, 716, 1136, 874], "category": "Text", "text": "These weaknesses are compounded by the continued lack of alignment of budget execution processes, which are largely activity-based (ABB), with the OBB-oriented budget planning process. The OBB budget classification and the IFMIS Chart of Accounts are not harmonised. With inconsistent formats between the approved OBB budget and the executed budget as uploaded in IFMIS, effective expenditure control, as well as the timeliness, comprehensiveness, and reliability of financial reporting, and its use in budgetary decision-making, is severely constrained."}, {"bbox": [97, 887, 1136, 995], "category": "Text", "text": "The SAP-based IFMIS is fragmented and has important gaps both in coverage as well as functionality. Core modules such as the module for budget preparation, cash management and bank reconciliation, or commitment controls, have not been rolled out, and interfaces with important systems such as the e-GP or the Payroll Management and Establishment Control System (PMEC) are still missing."}, {"bbox": [97, 1007, 1136, 1193], "category": "Text", "text": "The Auditor General has been reporting recurring weaknesses in government's internal controls, resulting in issues of financial compliance, due to lack of adherence to internal procedures and guidelines, particularly in relation to procurement and contract. In response, Internal Audit has dedicated considerable resources on real-time 'pre-audits' which act as compliance checks before payments are released. Consequently, due to resource constraints, a limited number of 'post-audits' are being undertaken. The 2017 PEFA identified the limited coverage of internal audit and the weak follow-up on external audits' recommendations, as issues negatively impacting the effectiveness of the internal control and audit process."}, {"bbox": [97, 1205, 1136, 1312], "category": "Text", "text": "The current intergovernmental fiscal architecture is still to be put in place, as functions and financial resources have not yet been transferred. There is a need to ensure a predictable, transparent and accountable flow of funds from central to local level, including sector grants, overarching financial accounting and reporting requirements, and/or debt management frameworks."}, {"bbox": [97, 1323, 1136, 1404], "category": "Text", "text": "Gender equality perspectives have been largely ignored in the formulation and distribution of national financial resources in Zambia. Fiscal policies in support of gender mainstreaming require additional attention. In 2018, public funding for gender mainstreaming activities was reduced to 24% from 45% in the previous year."}, {"bbox": [97, 1415, 1136, 1470], "category": "Text", "text": "To address some of the key systemic and capacity constraints in PFM, the MoFNP has committed to designing a PFM Reform strategy, expected for the end of 2022."}, {"bbox": [97, 1481, 1136, 1641], "category": "Text", "text": "**Domestic Revenue Mobilisation (DRM):** Over the past few years, Zambia's tax regime was characterised by a large number of ad-hoc tax reforms, sparking numerous complaints from the private sector, especially mining companies, advocating for a stable and predictable tax and legal framework. The GRZ has announced plans to modernize the Zambian tax regime, making it more business friendly and reliable and to gradually move away from the focus on taxing income and increasingly rely on the taxation of consumption. This comprehensive review of the tax regime will soon be initiated through the development of a Medium-Term Revenue Strategy. This"}, {"bbox": [1038, 1680, 1143, 1705], "category": "Page-footer", "text": "Page 8 of 31"}]