Bosnia

1
Bosnia HerzegovinaFiduciary Update
Dissemination Workshop

• Presentation by
• Sanjay Vani
• The World Bank
• Washington DC

2
Fiduciary Update Report

• Introduction
• based on the findings of a series of missions
• maps various developments since the previous
  assessments, identifies success factors in
  implementation of reforms, and provides a road
  map to implement remaining reforms
• Final report submitted to the government/s in
  February 2007

3
Fiduciary Update Report

• Scope
• Covers strategic planning, MTEF, and annual
  budget preparation and downstream budget
  management including procurement, treasury and
  cash management, internal controls and internal
  audit, accounting and reporting, external audit,
  and parliamentary scrutiny
• State and the two Entities

4
Fiduciary Update Report

• Key findings
• good progress in establishing modern public
  financial management institutions and systems
  since the war
• fiscal policy remains fragmented among the State,
  the two Entities, and the Brcko District
• Strategic planning has improved yet the link
  between policy and budget is still very weak

5
Fiduciary Update Report

• Key findings
• preliminary steps to move from line-item-based
  budgeting process to a program-based approach
• improved budget execution and cash management
  thanks to the automated treasury system
• Public Procurement Law based on international
  best practice yet public procurement remains weak

6
Fiduciary Update Report

• Key findings
• Compliance with internal controls needs to be
  improved
• legislative and organizational framework for an
  internal audit system does not yet exist
• newly enacted Supreme Audit Institution laws
  unify key principles and eliminate contradictions

7
Fiduciary Update Report

• Key findings
• Corruption is reportedly widespread
• Parliament has specialized committees to review
  the budget, but its influence is extremely
  limited

8
Fiduciary Update Report

• Key recommendations
• Fiscal Council should establish a medium-term
  macroeconomic and fiscal strategy
• Build capacity within the finance and line
  ministries in the area of fiscal management
• Extend the treasury system to local government
  level and to extrabudgetary funds
• Establish a procurement review body

9
Fiduciary Update Report

• Key recommendations
• Establish a joint Government Accounting Standards
  Board
• build capacity in tax audit and enforcement
• Stipulate within the law explicit accountability
  for ministers, heads of departments, and managers
  (PIFC)
• Adopt a legislative and organizational framework
  for a sound internal audit system

10
Fiduciary Update Report

• Key recommendations
• Develop a strategic development plan for the SAIs
• Establish a joint parliamentary research service

11
Drivers of future PFM reforms

• Entry into the EU will increasingly shape the
  future reform program of BH in several areas
• Committed leadership
• Efforts of BH authorities
• Sustained external technical assistance