[{"bbox": [96, 152, 1135, 366], "category": "Text", "text": "by the WB notes additional critical areas where PFM procedures need improvement to achieve efficiencies in public spending, namely: manual, duplicate and cumbersome payment processes that lead to delays in payments and an increase in the cost of services; and monthly budget releases for all expenditure categories, which provide an inadequate time horizon to plan commitments — and may ultimately lead to payment arrears. In terms of transparency and accountability the following issues persist: the **absence of a legal backing on OAGS ability to operate as an independent accountability institution**; expenditures incurred through cash advances or advances to bank accounts outside of the main TSA account, hence bypassing the internal controls embedded in the FMIS. Additionally, a large portion of donor-funded operations implemented by MDAs are still off-plan and off-budget."}, {"bbox": [96, 376, 1135, 774], "category": "Text", "text": "More generally, state-building efforts signify that the **size of the public sector has been growing**. Indeed, it will continue to grow, as the state expands its operations in the security, economic and social sectors. As such, the government is confronted with new PFM challenges of both scale and technical complexity as it benefits from scaled-up development finance post-HIPC Decision Point. **Donor funded TA and capacity development has been instrumental** in the significant progress to date, but further sustained support is needed to continue and deepen the implementation of PFM reforms which need to focus on strengthening the legal and regulatory framework; improving PFM procedures for effective budget implementation; and promoting greater transparency and financial accountability. To guide reform efforts, several assessments have been conducted (especially by the WB), and the FGS has also issued a detailed PFM Action Plan capturing ongoing and planned activities for strengthening PFM. WB and IMF conditionalities also target pressing PFM/DRM challenges. Starting from this year, regular FMS-specific diagnostics are also planned, to inform agreements on fiscal transfers (a recently agreed formula for determining horizontal allocations foresees progress against three PFM dimensions as one of the criteria). Going forward, a new large WB programme (US$ 75m) will support nationwide reform efforts in PFM, DRM and civil service reform, complemented by TA projects by the African Development Bank and FCDO (with a focus on customs and subnational PFM)."}, {"bbox": [96, 786, 1135, 921], "category": "Text", "text": "The EU will engage in this space through upcoming programmes in support of the external audit function, of vertical financial accountability through support to CSOs, as well as a contribution to the IMF Somalia Country Fund, which will provide TA in the areas of macro-fiscal policy, PFM, DRM, Central Banking operations and AML/CFT. These interventions will be funded under a complementary decision (the “Economic Governance and Anti-Corruption Programme”)."}, {"bbox": [96, 931, 1135, 987], "category": "Text", "text": "In conclusion, the public finance management reform strategy is sufficiently relevant and credible, including on domestic revenue mobilisation, and the eligibility criterion is met."}, {"bbox": [85, 1011, 553, 1039], "category": "Section-header", "text": "### 2.3.4 Transparency and Oversight of the Budget"}, {"bbox": [96, 1053, 1135, 1135], "category": "Text", "text": "**The entry point is considered to be met:** the FGS publishes both the Executive's budget proposal and the enacted budget on the Ministry of Finance website (https://mof.gov.so/publications/appropriation-act-2023-budget). Overall, budget **transparency and oversight remain very weak by international standards**."}, {"bbox": [96, 1146, 1135, 1253], "category": "Text", "text": "However, there have been **important improvements in recent years in the transparency and comprehensiveness of the budget**, availability of financial reports, and quality of oversight by the OAGS (thanks in part to EU funded TA). These were reflected in improved scores in the 2022 OBI's transparency and budget oversight dimensions."}, {"bbox": [96, 1263, 1135, 1372], "category": "Text", "text": "Budget documentation and the structure of the budget covers the basic elements to meet minimum levels of transparency and the SFMIS facilitates the production of regular financial and fiscal reports. The FGS has been publishing quarterly budget execution reports and annual financial statements on a timely basis; monthly consolidation reports of fiscal outturns for the FGS and the FMS are also now issued on the MoF's website."}, {"bbox": [96, 1382, 1135, 1490], "category": "Text", "text": "**Important progress in the establishing a modern external audit function** has also been observed in recent years. OAGS is aligning the audit methodology to international standards. Annual OAG reports on the annual accounts of the FGS have been gradually enhancing their alignment to international standards and the coverage of audited entities has also greatly increased, as has the number and scope of compliance and special audits."}, {"bbox": [96, 1501, 1135, 1609], "category": "Text", "text": "These notable achievements have occurred in the absence of a modern legislative framework that can ensure adequate SAI independence. A new Audit Bill that had been submitted for presidential assent under the two previous legislatures, has yet to be signed into law, based on disputed interpretations over procedures for appointing and removing the Auditor General. **Audit follow-up also remains very limited**, and parliament does"}, {"bbox": [1027, 1680, 1144, 1706], "category": "Page-footer", "text": "Page 10 of 26"}]