Discussions on fiscal transparency were held in Suva during 28 January to 8 February, and November 11–18 2002. The mission team, comprising Messrs. Tom Wilson (PFTAC) and Murray Petrie (IMF panel expert) met with the Minister of Finance, the Governor of the Reserve Bank of Fiji and officials from the Department of Legislature, the Office of the Auditor General, the Ministries of Finance, Public Enterprises, Agriculture, Education, Health, the Reserve Bank of Fiji, the Public Service Commission, the National Planning Office, and the Fiji Islands Revenue and Customs Authority. In addition the mission met with representatives of the Fiji Employers Federation, and the Fiji Chapter of Transparency International.
There is an institutional table in the GFS Yearbook that describes the units of general government in Fiji based on information reported in 1997. General government currently consists of: (i) central government units covered by the general budget (parliament, the judiciary, the President’s office, the prime minister’s office, and 42 ministries, departments and offices); (ii) central government units with individual budgets (36 agencies, boards, councils and trusts) that are predominantly funded from grants/subsidies from the central government budget but whose budgets are not generally subject to the same level of parliamentary scrutiny and approval as the 42 ministries, departments and offices; and (iii) provincial and local governments (14 provincial councils, 2 city councils, 9 town councils, and 5 local authorities in rural areas). In addition, the public sector comprises the Reserve Bank of Fiji, 4 public financial institutions, 10 Government Commercial Companies, 5 Commercial statutory Authorities, 5 majority-owned government companies and 19 minority-owned enterprises. The authorities note that a project to establish conformity with the 2001 Government Finance Statistics Manual will commence in early 2004. A GFS mission is currently in the field and collaborating with PFTAC.
See “The Challenge of Statistical Capacity Building in the Pacific,” by R. Purdue and P. Turnbull, pp. 136-139 of which contains a discussion of the production of GFS data in Fiji and recommendations for improvements in timeliness.
While a number of CSOs undertaken by public enterprises are funded by a subsidy from the government budget, there are some significant unfunded CSOs. For instance, Air Fiji is required to cross-subsidize between different domestic airline routes. Similarly, the Fiji Electricity Authority cross-subsidies between different consumers through charging a uniform national tariff. The 2003 budget also introduces a requirement for private banks to contribute to a Banking Infrastructure Development Fund to finance the provision of banking services in rural areas.
Publications and other material are available on the RBF’s web site at http://www.reservebank.gov.fj/.
Government equity holdings in private companies are included in Appendix 4 of the Economic and Fiscal Update, which shows movements in government equity in public enterprises.
The legal framework for fiscal management comprises the Constitution, the Finance Act 1981, the Finance (Control and Management) Regulations 1982, and the Finance Instructions.
The authorities have indicated that no provision has been made for contingency funds in recent budgets.
The PFMA, which would have comprehensively modernized fiscal transparency and accountability, including the introduction of accrual and output budgeting and management, in Fiji, was introduced and passed in 1999, but was then suspended by the new government.
The authorities indicate that these contracting arrangements for CEOs will establish stronger accountability and require effective budget management within approved limits. These arrangements, they suggest, could also improve the accountability of trust funds.
The question of the comprehensiveness of the central government budget is discussed in paragraph 16 below.
There are statutory limits to appropriations from revolving funds and that limit is quite small compared to the size of the overall budget. However, the reporting on moneys set aside in trust accounts from grants from some foreign donors, to hold employee contributions or to meet the cost of multi-year capital projects is very difficult to establish as there is limited reporting of these transactions (and none separately identified in the budget)
The budget documents comprise the Budget Address, the Economic and Fiscal Update (a Supplement to the annual Budget Address), and the Budget Estimates (or Appropriations).
The Finance Act permits the MoF to approve the creation of trust accounts. As noted, however, the policy of the government is to reduce the number of such accounts and to tighten procedures for their use.
An action plan for improving Fiji’s national statistics is available at the IMF’s website at http://www.imf.org/external/standards/index.htm
The authorities indicated that partial information on these measures will be provided through the development of Annual Corporate Plans, recently introduced as part of the budget formulation process.
Head 50 are defined as appropriations not specifically allocated under any Ministry or Department budget. Apart from contingency provisions, these appropriations cover areas such as compensation for leave foregone; expenses of overseas recruitment; travel costs of ministers and public servants, some personal benefits; postage for all ministries; costs of consultants; certain grants and subsidies, fees and refunds of VAT; capital acquisitions; grants to statutory bodies; lending schemes. In total Head 50 comprises almost 8 percent of total appropriations.
The authorities indicate that the annual corporate planning instrument introduced in 2004 will aim to specify in broad terms the deliverables for each ministry as well as the costs of each deliverable.
The authorities indicated that the proposed new financial management system to be implemented with the help of the ADB, will help strengthen internal control and improve financial reporting.
Following the coup in May 2000, there was some difficulties in reporting.
The authorities indicate that steps have been taken over the past three years to reduce the budget for staff vacancies to a minimum level.
For much of the economic and financial statistics, the latest data available at the time of the ROSC was for 1998.
It should be noted that, in the staff’s view, some of the provisions in the PFMA were overly ambitious, given the current status of financial management in Fiji, in particular the provisions introducing full accrual budgeting and reporting.
The authorities indicated that while they broadly agree with the recommendations in this report, the availability of funds and level of human resource capacity may limit their ability to implement them all in the short run.
The authorities recently indicated that reports for the first two quarters of 2003 were circulated and that the report for the December quarter is under preparation.