Rwanda
Technical Assistance Report-Government Finance Statistics
Author: International Monetary Fund. Statistics Dept.
Publication Date:
28 Mar 2018
eISBN:
9781484348963
ISBN:
9781484348963
Language:
English
Keywords:
ISCR; CR; GFSM; government; data; GFS production process; GFS expert; extrabudgetary units; data capture; GFS training course; CoA classification
Download PDF (1.1 MB)

This Technical Assistance Report discusses the findings and recommendations made by the IMF mission about compilation and dissemination of government finance statistics (GFS) in Rwanda. The mission reviewed the roadmap of the interagency GFS technical working group, the structure of the public sector, the GFS compilation process, and the conversion of source data to standard fiscal tables consistent with international standards. The mission fully endorsed the authorities’ work program going forward, and agreed that the step-by-step approach starting with producing solid and credible budgetary central government data. The mission cautioned that increasing frequency and expanding coverage of fiscal reports to include the local government sector and, eventually, the extrabudgetary units, will need to be an iterative process requiring continued determined efforts.

Abstract

This Technical Assistance Report discusses the findings and recommendations made by the IMF mission about compilation and dissemination of government finance statistics (GFS) in Rwanda. The mission reviewed the roadmap of the interagency GFS technical working group, the structure of the public sector, the GFS compilation process, and the conversion of source data to standard fiscal tables consistent with international standards. The mission fully endorsed the authorities’ work program going forward, and agreed that the step-by-step approach starting with producing solid and credible budgetary central government data. The mission cautioned that increasing frequency and expanding coverage of fiscal reports to include the local government sector and, eventually, the extrabudgetary units, will need to be an iterative process requiring continued determined efforts.

Executive Summary

A government finance statistics (GFS) technical assistance (TA) mission, comprising Mr. Johan Mathisen (East African Regional Technical Assistance Center (AFE) GFS advisor) and Mr. Ismael Ahamdanech Zarco (GFS expert), visited Kigali during the periods July 15–24, 2014 and January 12–16, 2015. The missions focused on (1) aligning the compilation and dissemination of GFS under the guidance of the Government Finance Statistics Manual 2014 (GFSM 2014); (2) developing a GFSM 2014 implementation plan; (3) developing a bridge table to be used for the compilation of GFS data using Rwanda’s source data; (4) reviewing and aligning the institutional table of Rwanda’s public entities; (5) discussing methodological issues as the recording of grants; (6) filling the GFS questionnaires and updating the General Data Dissemination System metadata template; and (7) providing GFS training to counterpart staff. (Mr. Zarco provided GFS training to counterpart staff during July 21–24, 2014).

The mission is part of the AFE/East African Community (EAC) collaboration program that aims to assist EAC Partner States achieve the fiscal data requirements associated with the East African Monetary Union Protocol.

The mission strongly welcomes the recent establishment of a formal interagency GFS technical working group and the development of a detailed roadmap based on the EAC fiscal data development (GFSM 2014 implementation) plan. Timely implementation of the roadmap will enable Rwanda to meet ahead of time the fiscal and debt statistics requirement associated with the East African Monetary Union protocol. The broader coverage, increased frequency, and consistency of fiscal and debt data with international standards should help facilitate policy making, monitoring fiscal risks and attaining the Special Data Dissemination Standard.

The authorities’ ambition to automate GFS compilation to produce uniform, timely, comprehensive, and comparable data in the near future is commendable. The recent progress on improving source data—the expansion of the electronic budget execution system (Integrated Financial Management Information System) to cover all budgetary and local government (LG) transactions and the implementation of a GFSM 2014-consistent Chart of Accounts to be used by all government units—makes the authorities’ objective feasible yet ambitious. Achieving this objective will require determined government efforts and a close TA engagement.

Jointly with the authorities, the mission reviewed the roadmap of the interagency GFS technical working group, the structure of the public sector, the GFS compilation process, and the conversion of source data to standard fiscal tables consistent with international standards. The mission fully endorsed the authorities’ work program going forward, and agreed that the step-by-step approach starting with producing solid and credible budgetary central government data. The mission cautioned that increasing frequency and expanding coverage of fiscal reports to include the LG sector and, eventually, the extrabudgetary units (EBU), will need to be an iterative process requiring continued determined efforts. To complete this phase of the TA efforts, trial runs of the bridge table with budgetary central government source data would be required. This process could then be expanded to include the LG sector and the EBU, to eventually produce trial general government data.

Timely implementation of the below recommendations would ensure that Rwanda satisfies the fiscal data requirements associated with the East African Monetary Union Protocol. The automated production of GFSM 2014-compliant fiscal data will also obviously lower the burden to produce fiscal data, ensure up-to-date data and high frequency fiscal statistics, and should help Rwanda meet the fiscal Special Data Dissemination Standard requirements.

The mission’s main recommendations are as follows:

  • Implement as envisaged the authorities’ own plans to improve coverage, frequency, and timeliness of fiscal reporting consistent with international standards.

  • Fully align sectorization of government and classification of revenue and expenditure with international standards.

  • Finalize and integrate the GFSM 2014 bridge table in the GFS production process.

  • Develop and implement seamless reporting mechanisms to capture EBU and social security funds data.

  • Expand fiscal reporting to include stocks of financial assets and liabilities.

The mission would like to thank the authorities for their hospitality and support, which contributed greatly to the success of the missions.

I. Introduction

1. In response to a request from Rwandan authorities and in consultation with the IMF’s African Department, Mr. Johan Mathisen, East African Technical Assistance Center (AFE) government finance statistics (GFS) advisor, and Mr. Ismael Ahamdanech Zarco (GFS expert) visited Kigali during July 15–24, 2014, and January 12–16, 2015. Mr. Michael Gitau from the East African Community (EAC) Secretariat participated in the July 2014 mission. The work is part of the AFE/EAC collaborative program that aims to assist EAC Partner States in achieving fiscal data requirements associated with the East African Monetary Union Protocol.1

2. The overall objective of the missions was to review Rwanda’s compilation and dissemination of GFS and provide recommendations for improvement to align current practices with the Government Finance Statistics Manual 2014 (GFSM 2014)2 analytical framework, and provide GFS training to counterpart staff. The specific tasks included

  • Providing advice on improving the institutional, bridge, and derivation tables3 on Rwanda’s General Data Dissemination System and plans for improvement; and also assist in the efforts to review and update, as necessary, Government Finance Statistics Yearbook and International Finance Statistics questionnaires.

  • Assisting authorities in assessing the current status of the reforms in the GFSM 2014 implementation plans and setting realistic targets to widen data coverage, increase data frequency, and include balance sheet data.

3. The remainder of the report is structured as follows. Section II discusses the institutional framework. Section III reviews the institutional structure of the general government sector and data coverage of the public sector. Section IV provides a short description of Rwanda’s fiscal accounting and statistical systems. Section V presents Rwanda’s GFSM 2014 implementation plan. Finally, Section VI builds up on the training provided and the forthcoming technical assistance (TA).

II. Institutional Framework

4. The key legislation concerning the budget is the Organic Law on State Finances and Property (Law No. 12/2013, issued on 12/09/13), which sets out the financial regulations to be followed by government units. The law establishes the principles and modalities to be observed in the planning, execution, monitoring, and reporting of the budget. It assigns to the minister in charge of finance the responsibility for carrying out the provisions of the law.

5. In particular, the law “establishes principles and modalities for sound management of State finances and property” and “relates to public financial management of Central Government, local administration, public institutions, and parastatal organizations.” Article 63 of the law also states that “the Accountant General shall be responsible for monitoring and coordinating accounting activities and for setting and promoting compliance with the accounting and financial reporting standards applicable to public entities.”

III. Institutional Coverage of the Public Sector

6. The public sector in the Republic of Rwanda is formed by the general government and the public corporations. The general government is integrated by the central government (comprising the budgetary central government (BCG) and the extrabudgetary central government), the local government (LG), and the social security funds.

7. As seen in Figure 1, the central government sector covers the BCG (chamber of deputies, 18 ministries, national public prosecution authority, president’s office, prime minister’s office, 4 provinces, senate, and supreme court, as well as 63 other government bodies) and 19 extrabudgetary units (EBUs)—mainly higher learning institutions, hospitals, and research institutions (Appendix III). The LG covers 30 districts and the Kigali City Council. The social security funds sector is formed by the Rwanda Social Security Board.

Figure 1.
Figure 1.

Institutional Structure of the Public Sector

Citation: IMF Staff Country Reports 2018, 087; 10.5089/9781484348963.002.A001

Source: IMF mission team and GFS Interdepartmental Working Group.

8. The public corporations sector in Rwanda is composed of 12 public corporations. The classification of 9 of these enterprises seems to follow the sectoring guidelines of the GFSM 2014, as the majority are government owned institutional units, and their operation is based on market prices. The Military Medical Insurance (MMI) and the Rwanda Social Security Board (RSSB) should be classified in line with the draft regional GFS guidelines, as social security funds and part of general government. Also, the Rwanda Utilities and Regulatory Agency (RURA) should be reclassified in the general government as it mainly provides licenses to perform activities such as internet provision and motorbikes and taxi licenses in exchange for fees. These classifications would align Rwanda’s fiscal statistics with international standards.

Recommendations:

  • The full list of government entities, consistently sectorized with GFSM 2014 guidelines, should be verified, promulgated across government agencies, and submitted to the IMF.

  • Going forward, the institutional table should be verified annually to classify new entities, remove non-existing entities, and reassess any borderline cases as needed to ensure consistency with GFSM 2014, including on the scope of the public sector.

IV. Accounting and Statistical Systems

9. The coverage of the Integrated Financial Management Information System (IFMIS) has recently been expanded and now broadly covers all BCG and LG revenue and expenditure, with some notable exceptions. In particular, tax and non-tax revenue from the Rwanda Revenue Authority (RRA), and inflows from external grants and project loans are not covered by IFMIS. EBUs and the social security funds are also not recorded in IFMIS, except for transfers received from the central government.

10. The expense is recorded in IFMIS on a payment order basis. Any entity issues a payment order when it buys a good or service, but the payment order is registered in the Ministry of Finance (Treasury) only when the good or service is received. Then, there is a float until the cash outflows from the single treasury account. To compile GFS data on a pure cash basis, expenses would need to be moved from payment order to cash basis of recording.

11. There are two sources of revenue: tax and non-tax revenue (both types are recorded on a cash basis). The RRA collects all taxes and uses their own system to record information. This system (which divides domestic and external tax revenue) is not yet included in IFMIS, but the RRA has introduced a classification which is the same as the Chart of Accounts (CoA) of the BCG, so the mapping table developed by the mission can be used. On the other hand, it is important to recall that the RRA also collects taxes on behalf of the LG, so the proper reassignment has to be applied to consider such income as revenue of the LG and not of the BGG.

12. One of the pending tasks for the compilation of central and general government GFS data is the inclusion of EBUs. These units do not report in IFMIS and, while some use the same classification as the BCG CoA, others do not. For this reason, the Subcommittee on Compilation (SCO, see paragraph 20 in Section VI) has developed a set of reporting tables to be sent to such entities not reporting in IFMIS to gather common information on GFS. The mission has reviewed and helped the SCO to complete those reporting tables.

13. The authorities are working to improve statistical treatment of external grants and (concessional) project loans. Both types on external aid can be disbursed either as a direct payment to a third party such as a contractor, upon request from the government ministry or other institution that is an implementation unit, or as a cash transfer to the government. Information on cash transferred to government is easily obtained as deposits to a government account in the National Bank of Rwanda (BNR). However, this is not the case for cash disbursed directly to contractors, which cannot be directly tracked.

14. The Rwandese authorities are trying to improve recording of external grants with a more proactive attitude toward donors and the agencies in charge of project grants. The External Finance Unit collects information on all budgeted direct payments to contractors from donors and this information is included in the budget. For budget execution, information is collected from donors and from the agencies in charge of the projects and, where discrepancies exist, an adjustment to conciliate both figures is made. On the other hand, Single Project Implementation Units are being established in each ministry and it is expected that for the 2015/16 budget, they will introduce the information on the projects’ budget execution in IFMIS (which facilitate timely and more reliable yearly and quarterly information). However, a Single Project Implementation Unit has not been put in place for the Ministry of Infrastructure yet.

Recommendations:

  • Include in the GFS compilation framework data from EBUs, the RRA, and the social security funds.

  • Use the templates developed for the reporting of EBUs and public corporations so data can be timely incorporated in the GFS compilation.

V. Chart of Accounts and Bridge Table

15. The new CoA was introduced in 2011/12 and covers most government units. The mission found the CoA is sufficiently detailed and broadly consistent with GFSM 2014, but that some items are not classified in line with the GFSM codes. A bridge table was therefore developed to fully map the CoA so consistent aggregates with the GFS methodology could be derived. The developed bridge table is shown in Appendix V.

16. The mission worked with the Rwandese authorities to develop a CoA-GFS mapping table that can be integrated into the IFMIS framework. This work is ongoing, and will enable GFS data to be directly obtained for all entities reporting in IFMIS. Procedures for updating the framework and regular reviews should also be established.

17. For entities not reporting in IFMIS such as the RRA and EBUs, a channel of timely sharing information should be established if they cannot be integrated into IFMIS. The same applies for external project grants and loans.

18. The budget CoA is sufficiently detailed for revenue and expense. However, when coming to transactions on assets and liabilities and the related stocks, this is not the case as some splits are not available. For this reason, the mission has worked with the Rwandese authorities to build a sufficiently detailed CoA for such items. The mission has left a draft proposal with the authorities, which should be fine-tuned. The CoA will then be revised and mapped by the mission.

Recommendations:

  • Establish procedures for updating the framework and regularly review the CoA-GFS mapping table integrated in IFMIS. For entities not reporting in IFMIS but using the budget CoA, timely channels of sharing information should be established.

  • Use the developed templates for other reporting entities and items (EBUs, project grants and loans) to obtain consistent and timely GFS data.

VI. GFSM 2014 Implementation Plan

19. Jointly with the authorities, the mission reviewed progress on the implementation of GFSM 2014 and agreed on a detailed timetable for gradually expanding the coverage and frequency of GFS in line with GFSM 2014. Implementation of the plan will ensure that Rwanda satisfies the fiscal data requirements associated with the East African Monetary Union.

20. The Ministry of Finance and Economic Planning has set up an interagency technical working group in charge of the development of the GFSM 2014 implementation plan shown. The technical working group is divided into three subcommittees and is chaired by the Deputy Accountant General. The three subcommittees are (i) the Subcommittee on Monitoring and Planning, in charge of the development of a roadmap for the compliance with the implementation plan and its monitoring; (ii) the Subcommittee on Classification, in charge of the classification of units and flows and stocks; and (iii) the SCO, in charge of the development of reporting templates and the data compilation.

21. Some of the tasks of the different subcommittees have been already implemented, such as the development of a road map for migration to a GFSM 2014 framework or the linkage of the CoA classifications with the corresponding GFSM 2014 economic classifications. There are other tasks which are foreseen to be implemented in the coming months, such as the mapping of historical series to the updated fiscal reporting framework, and the preparation and publishing of GFSM 2014-compliant fiscal and debt data.

22. The mission has reviewed and agreed with the Rwandese authorities on the technical working group’s roadmap. It was emphasized that GFS compilation is a step-by-step process, requiring determined efforts.

Recommendation:

  • Apply the technical working group’s road map and maintain efforts to compile general government GFS data on a timely basis.

Project Objectives

Project Outputs

VII. Resources, Training, and Technical Assistance

23. A training course was provided to staff of the Ministry of Finance and Economic Development, the RRA, and National Institute of Statistics Rwanda during July 21–24, 2014. The course had participants from all agencies and institutions involved in the compilation and dissemination of GFS. Due to the restructuring and enlargement of the GFS technical working group, a new GFS training course was requested by the authorities and will take place in July 6–10, 2015.

24. The mission will return as agreed during January 12–22, 2016 to take stock of progress on implementing the recommendations and provide further support for Rwanda’s fiscal data (GFSM 2014) development plan. Continued TA will focus on supporting efforts to improve the coverage, timeliness, and frequency of Rwanda’s GFS. The mission confirmed some of the planned activities, including Rwanda’s participation in the regional TA activities, and extended the program until January 2016 as depicted in Table 1:

  • The next full GFS TA mission is expected to occur in January 2016. A short focused technical visit by a GFS expert is scheduled to overlap with the November workshop in Rwanda.

  • Rwanda will continue to be invited to regional GFS workshops. It is expected that Rwanda’s delegates will gradually assume a larger role and responsibility in the regional activities. Such work will be important to provide peer-to-peer learning, to foster the sharing of experiences, and to help promote regional GFS harmonization.

  • A joint EAC/AFE GFS training course focusing on junior GFS compilers and financial officers will take place in Rwanda in July 2015.

Table 1.

GFS Technical Assistance Activities for 2015/16

Source: Mission team.

Appendix I. List of Officials Met during the Mission

Appendix II. Classification Code Changes from the GFSM 2001 to GFSM 2014 Update

The following is a list of the new GFSM 2014 classification codes from the GFS Revenue, Expense, and Net Transactions in Assets and Liabilities accounts (memorandum items are excluded).

Appendix III. Institutional Structure of the General Government

Appendix IV. List of General Government Entities and Public Corporations

Appendix V. Bridge Table(s) Linking National and GFSM 2014 Classifications