Concentrating its efforts on the realization of the objectives and tasks of the Government strategy and starting from the needs and priorities set for improving the financial management in the public sector, the Ministry of Finance has initiated and is implementing Public Financial Management Project (PFMP) as the main tool in the realization of the public financial management consolidation objectives emphasized in the Economic Growth and Poverty Reduction Strategy (EGPRS).
The project supports the Government in the implementation of EGPRS by the World Bank within the Country Assistance Strategy 2005-2008; the offered credit was the first one out of the US $ 90 million reserved for the Republic of Moldova within the mentioned program.
In this regard, on 7 July 2005 between the Government of the Republic of Moldova and the International Development Association there was signed the Development Credit Agreement in value of 5,7 million Special Drawing Rights (US$ 8,548 million equivalent) to be used for the implementation of the Public Financial Management Project.
The Credit is provided to the Government of the Republic of Moldova according to the standard terms of the International Development Association, with a repayment period of 40 years inclusively with a grace period of 10 years and an interest rate of 0,75% annually.
The total cost of the Project is estimated at about US $ 15,331 million to be implemented with the co finance provided by the Government of Netherlands (grant in amount of US $ 4,028 million) and the Swedish International Development Agency (grant in amount of US $ 2,017 million) as well as from the contribution of the Government of the Republic of Moldova in amount of US $ 0,738 million (contribution already provided for the procurement of the computers for the Ministry of Finance needs).
Project implementation period: 2006-2009.
Project objective is the effective management of public finances which contributes to the development of economic growth and poverty reduction programs.
The project comprises 4 components:
Component 1, Budget planning and execution system, will deal with budget planning and system execution by improving medium term expenditure policies, modernizing budget classification and introducing a single chart of accounts for the public sector according to Government Finance Statistics 2001 as well as by implementing an integrated Financial Management Information System.
Component 2, Internal Control and Audit, will develop an internal control and audit system within government authorities in accordance with the best international practices and standards.
Component 3,Training capacity in financial management and training, will institutionalize the training capacity, as well as will develop and provide training to public servants in 18 modules related to financial management.
Component 4, Project management, monitoring and evaluation, will ensure effective project implementation, monitoring and reporting on its activities and results.
PFM Project beneficiaries will be:
The Minister of Finance is the authority responsible for Public Financial Management Project implementation. The Minister ensures the general management of Public Financial Management Project and takes on the role of Project Executive Officer. The Project implementation arrangements imply the existence of (i) A Steering Committee; (ii) Task Force and (iii) Project Office.
The Project Steering Committee aims at facilitating PFMP implementation by administering this one at strategic and decisional level. The Steering Committee will comprise representatives of central public administrative authorities who will be more or less involved in PFMP implementation and especially: the Government Office, the National Bank of Moldova, the Ministry of Economy and Commerce, the Ministry of Labour and Social Protection, the Ministry of Information Development and the Academy of Public Administration under the President of the Republic of Moldova. Representatives of the international financial bodies and donors (the World Bank, SIDA, DFID, the Netherlands Embassy in Kiev) will be invited at the Steering Committee meetings. The composition and the regulation of the Steering Committee shall be approved through a Government decision.
The Task Force is needed for the „technical” administration and implementation of Projects components. The Task Force was established within the Ministry of Finance in November 2004 and revised in April 2005. Its activity is coordinated by the Deputy Minister of Finance.
The Public Financial Management Project Office ensures the implementation of activities related to the daily administration of the project as well as provides support to the Task Force and the Project Executive Officer in the realization of PFMP activities especially in the development of the terms of reference for the procurement of goods, works and consulting services according to the World Bank procedures, bids evaluation, negotiation and conclusion of contracts, their administration, financial management and payments making. The Project Office was established during the project preparation stage (2004-2005) and comprises the Manager, responsible for project activity; the Procurement Specialist responsible for the implementation of the procurement procedures and policies in accordance with the World Bank requirements; the Financial Specialist (accountant) responsible for the economic and financial operations as well as the keeping of the accounting according to the national legislation and the World Bank requirements; the IT specialist assisting the Ministry in the organization and realization of activities related to the development of the communication and information solutions for the Financial Management Information System; the Office Assistant (secretary-translator/interpreter) ensures the keeping of the secretariat works, the editing of the project documentation and other similar documents, the spoken and written translation into/from English, into/ from state language/ Russian, the keeping of the Project records.