Executive Summary

This executive summary presents a synopsis of the key information, data, and analysis contained in sections 1 to 5 of the main report under five headings: (i) purpose and management, (ii) scope, coverage, and timing, (iii) impact of PFM on budgetary and fiscal outcomes, (iv) performance changes (if applicable), and (v) PFM reform agenda.

Purpose and management

This GoTG PEFA 2022 Assessment comprises a PFM assessment using the “PEFA 2016 Framework” and a gender responsive PFM assessment using the “Supplementary Framework for Assessing Gender Responsive Public Financial Management (GRPFM) 2020”, attached as an appendix to the main report.  This is the country’s first PFM assessment to comply with the PEFA 2016 Framework methodology; the 2019 self-assessment was merely a training and rehearsal exercise for a subsequent full-blown assessment, and it did not observe the quality assurance steps for obtaining the PEFA Check imprimatur.  The earlier 2014 assessment conducted by the country used the 2011 Framework and is not suitable as a baseline assessment for tracking PFM progress under the 2016 Framework.  Through its Public Finance Management Directorate (PFMD), the Ministry of Finance and Economic Affairs (MoFEA) initiated this exercise on behalf of the government, to produce a new PFM baseline to guide the government and development partners’ future PFM reform activities. 

The two PEFA PFM assessments have both scorekeeping and attention-directing purposes.  The scorekeeping purpose is to produce a baseline scorecard on PFM performance and its gender-responsiveness.  This includes identifying and keeping a record of the PFM strengths and weaknesses at the time of assessment for tracking future reform progress.  The attention-directing objective would guide further reform prioritization and intervention by directing the attention of policymakers to underperforming areas for further investigation and necessary corrective action, including through new reform initiatives.  Consequently, between these two overarching purposes, the current PEFA exercise has four distillable specific objectives, i.e.: to (i) produce an international standard PFM baseline assessment, (ii) keep a scorecard of current PFM strengths and weaknesses, (iii) provide a basis for coalescing future government and development partners’ reform efforts, prioritization, and intervention activities around identified areas of most pressing need, and (iv) track future PFM performance progress.

The outcome of this PEFA assessment will feed into the planned 2023 midterm review of the ongoing PFM Reform Strategy 2021 – 2025, if possible, and into the next phase of the PFM reform agenda.  The Gambia has a history of feeding PEFA and similar PFM assessments into its reform agenda.  For example, the PEFA 2015 report premised the subsequent PFM Reform Strategy 2016 – 2020 adopted in May 2016, under which MoFEA instituted key PFM reform initiatives, including the production and publication of several periodic analytical PFM reports on government websites, e.g., (i) quarterly expenditure reports (QERs), (ii) liquidity forecasts, (iii) the medium-term expenditure framework (MTEF), (iv) the medium-term debt strategy (MTDS), (v) the government borrowing plan, and (iv) the debt sustainability analysis (DSA).  The PFM Reform Strategy 2016 – 2020 also programmed the conduct of, at least, four key PFM analytics and diagnostics: (i) IMF-supported Tax Administration Diagnostic Assessment Tool (TADAT) tax assessment in May 2017, (ii) a USAID led PFM Impact Survey in 2018, (iii) an IMF-led and MoFEA-supported Public Investment Management Assessment (PIMA) in 2019, and (iv) a Pensions and Wages Assessment in early 2020.  The outcome of these analytics fed into the drafting of the ongoing PFM Reform Strategy 2021 – 2025. 

Two international experts commissioned by MoFEA with support from development partners undertook this assessment.  The African Development Bank (AfDB) is the lead development partner (DPs) for the exercise and is sponsoring it under its institutional support project to The Gambia titled, Inclusive Growth Promotion Institutional Support Project (IGPISP), implemented by MoFEA’s Project Coordinating Unit (PCU).  The Bank also played a lead role in the quality assessing the task by engaging throughout the process and providing detailed comments on the initial draft.  Other DPs that actively engaged in the data collection and draft review phases are the International Monetary Fund (IMF), the World Bank (WB), and the European Union.  The Association of Non-Governmental Organizations in the Gambia (TANGO) also engaged with the assessors during the data collection phase.

An oversight team of senior government officials, DPs, and the private sector managed the exercise.  The Minister of Finance and Economic Affairs chaired the team, which included the two MoFEA permanent secretaries, three deputy permanent secretaries, and all the directors of the ministry.  The country head of the IMF represented DPs in the team, which also included the chief executive office of the Gambia Chamber of Commerce, and Industry (GCCI), as the private sector’s representative.  MoFEA’s Director of PFMD was the project manager.  The quality assurance process involved review of the concept note/terms of reference by the government and invited reviewers, including the PEFA Secretariat, the AfDB, and the EU.  It also involved review of the early draft by government and its DPs (AfDB, IMF, WB, and EU).  The PEFA Secretariat conducted the final PEFACheck review. 

Scope, coverage, and timing

This is a national government assessment; it applies to local governments only to the extent of their inclusion in the higher government’s PFM activities, or their activities pose potential PFM risks to the government as defined and measured in the PEFA 2016 Framework.  Examples include PI-7: Transfers to subnational governments, and PI-10: Fiscal risks monitoring, especially Dimension 10.2. Monitoring of subnational governments.  The assessment covers all the budgetary entities and extrabudgetary institutions of the central national government, but not necessarily the Social Security and Housing Corporation (SSHFC) Limited.  The coverage of the SSHFC is as a public corporation, which is how the government classifies it.  The SSHFC does not receive support from the government budget; budgetary payments to it are only as a contribution on behalf of staff or other due contractual payments.  This PEFA assessment does not cover the central bank, public corporations (except to the extent of budgetary subventions they receive, and their activities pose risks to the central government as covered by PI-10.2: Monitoring of public corporations), and other public sector institutions outside the sectors described herein. 

Obtaining comprehensive information on extrabudgetary units proved problematic.   This affects the following four categories of institutions (i) agencies subvented through the budget but having independent accounting systems, (ii) agencies generate and spend their own resources per the constitution or other statute, (iii) donor funded and executed projects that operate outside the integrated financial management information system (IFMIS), and (iv) other extrabudgetary agencies that operate outside the regular accounting and reporting processes.  The consolidated annual financial reports of the government do not currently include the operations of these entities, and it was not possible to obtain independent information on them.  However, the assessment and scoring of each dimension duly considered the impact of the availability or otherwise of information on all covered agencies, including on subvented, self accounting, and extrabudgetary units.

The effective date of this PEFA assessment is November 30, 2022; that was the date the field mission for the collection of data for the exercise ended.  Additional useful information received outside the cutoff date has not formed part of the scoring in this report (however, the report reflects such information in footnotes wherever appropriate).  Consequently, the “last completed fiscal year” and the “last fiscal year” refer to the period that ended December 31, 2021[1].  The “last three (completed) fiscal years” refers to the FYs ending December 31, 2019, 2020, and 2021, respectively.  For practical reasons, however, the interpretation of this has meant FYs 2017, 2018, and 2019 in some cases, e.g., PI-31 (Legislative Scrutiny of Audit Reports).  Those were the latest years for which the audit of the financial statements is complete; PI-31 can only apply to years of completed audits.

This assessment experienced serious data quality and quantity constraints of various types.  These include extended delays in providing data, provision of insufficient data and information, and outright non-provision of necessary information; inconsistencies in data obtained from various official sources; reluctance in granting requests for interviews and clarifications, etc.  The assessment attempted to resolve these difficulties by alternatively sourcing information, e.g., from official government and development partner websites and social media platforms, and diagnostic reports, etc.  Wherever these efforts succeeded, the analysis and scoring reflect that.

Impact of PFM on budgetary and fiscal outcomes

Aggregate fiscal discipline - The potentials for promoting aggregate fiscal discipline exists in The Gambia’s PFM in, at least, seven areas: (i) limiting contingency votes to the two percent mark, (ii) a budget classification and chart of accounts (CoA) modelled after the IMF GFS 2014, (iii) adherence to a fixed budget calendar, (iv) consistent timeliness in approving the budget, (v) continuing scale-up in the use of technology to enhance budget formulation, execution, and reporting, (v) advances in cash management, including in the introduction of the Treasury Single Account (TSA) and Electronic Funds Transfer (EFT) systems, etc., and (vii) ongoing SOE reforms.  However, deep-seated systemic weaknesses in, at least, five key areas continue to override potential gains and perennially predispose PFM to fiscal discipline.  The weaknesses include (i) an irresponsive organic budget framework, including stale legal and regulatory frameworks; (ii) lack of appetite to enforce extant regulatory provisions, including on virement, revenue administration, procurement, etc.; (iii) revenue administration and accounting gaps, including (a) inefficient reconciliation, (b) weak supervision of revenue collection, posting, and banking, (c) inaccurate recording of revenues collected, (d) late banking of collected revenue, and (e) cash suppressions and banking shortfalls; (iv) a poor asset management culture; and (v) uncompetitive procurement practices. 

Strategic prioritization in resource allocation – potential PFM enablers here include the CoA that, with some changes, can embody transparent and comprehensive budget management information, and the traditions of adherence to a fixed budget calendar, timely passage of the budget, and national development programming.  These can support an orderly budget process under the right atmosphere.  The key weakness here is the ineffectiveness of the trio of macroeconomic and fiscal forecasting, fiscal strategy formulation, and medium-term expenditure programming.  This denies political and economic managers reliable data and policy analysis for decision-making on resource allocation.  Other similarly impactful weaknesses are: (i) nonadherence to legal provisions in intergovernmental fiscal relations, (ii) weak public assets and investments management that could affect resource allocation to socioeconomic priorities, (iii) weak monitoring and management of financial liabilities, especially those of SOEs, potentially diverting resources away from socioeconomic priorities to servicing of SOEs’ high debt burden, (iv) flaws in predicting in-year resource flow to MDAs and service delivery units arising from the unpredictability of the revenue base and flow of resources, (v) procurement weaknesses, implicating inefficiency in resource allocation and prioritization, and (vi) difficulties with fiscal data and reporting on financial information. 

Efficient delivery of public services - the use of standing committees to vet budget estimates can highlight inefficiencies in resource allocation and potentially impact positively on public services’ delivery (SD). Nascent efforts by the Ministry of Basic and Secondary Education (MoBSE)[2] to document information on planned and achieved budget performances and resources received can also promote SD efficiency when fully mature.  Nonetheless, flaws that could be undermining SD efficiency include these seven: (i) large deviations that could limit services in key areas, (ii) ) (especially capital) expenditure tracking difficulties that complicate transparency of operations, (iii) frequent and unpredictable in-year budget adjustments, (iv) procurement system weaknesses that could dent value for money, (v) lack of systems monitoring and risk assessment focus of internal audit, especially in major capital projects could hide weaknesses on the level and quality of public SD, (vi) weaknesses in financial data integrity and delayed fiscal reporting that affects the flow of good information for efficient management of SD, and (vii) delays in audit reporting and in legislative scrutiny of audit reports that delay the identification of inefficiencies in SD programs and corrective actions. 

Performance changes (if applicable) - using PEFA 2011 Framework

A “summary of the main performance changes since any earlier PEFA assessment” is not possible using the 2016 Framework since this is the baseline PFM assessment under the framework.  Therefore, this tracking uses the 2011 Framework information in Annex 4 (Tracking Change in performance based on previous versions of PEFA). 

Aggregate fiscal discipline – reforms aimed at strengthening fiscal discipline from the 2014 status quo are visible in several areas.  Examples include in (i) PFM legislation (enactment of new procurement law, ongoing preparation of a new organic public finance management law), (ii) IFMIS upgrade software from Epicor 9 to 10 to enable more IFMIS functionalities, e.g., integration of the Human Resources Management module and accounts of self accounting agencies and local governments, etc.), (iii) revenue administration (including the TSA roll out and expansion), (iv) expenditure management (including activation and ongoing expansion of electronic funds transfer (EFT)), etc.  However, these new reforms have not yet reflected in improved fiscal discipline, which in fact, deteriorated from the 2014 levels, caused by both internal and external factors.  The external factors include the COVID-19 pandemic that exerted severe adverse impact on domestic revenue generation, leading to the larger aggregate expenditure and composition deviations than was the case in the previous assessment.  The most important internal factor is the deterioration observed in several key areas, some with already weak performance in 2014, e.g., (i) excessive use of virements, (ii) uncompetitive procurement practices, (iii) orderliness and participation in the annual budget process (especially in the lack of political guidance on the preparation of budget submissions by MDAs, and reduction in time allowed for MDA budget preparation), (iv) multi-year perspective in fiscal planning, expenditure policy and budgeting (lack of extant medium-term strategic plans and costed sector strategies, weaker linkages between investment budgets and forward expenditure estimates, reduced reliability of periodic in-year information to MDAs on ceilings for expenditure), (v) fiscal risk from other public sector entities (failure to sustain the timely preparation and submission of local governments’ financial statements to the CG).

Strategic prioritization in resource allocation – the inclusion of fiscal policy review in legislative budget scrutiny in 2022, is a positive performance change that could have enhanced strategic prioritization in resource allocation.  Performance changes with the contrary effect also occurred, the most significant of which is the rollback of some budget formulation and multiyear fiscal programming reforms, with potential for adversely impacting on resource allocation.  This rollback is evident in the following five key areas (i) reduction in time allowed for MDAs’ budget preparation to two weeks, (ii) cabinet review of budget estimates only after finalization of MDA details, (iii) discontinuation of multiyear forecasts and fiscal programming, (iv) relapsing in medium-term sector strategic plans, and (v) weak alignment between expenditure policy proposals in the annual budget estimates and defined national priorities.  Expenditure tracking was also better in 2014 than in 2022; in 2014, both budget formulation and expenditure reporting used the recurrent and capital classification unlike in 2022, when budget formulation used recurrent and development expenditure classification while execution continued to use recurrent and capital expenditure, thereby complicating ability to track resource allocation between the budget and financial statements.  Other changes had less strategic significance, e.g., those affecting public access to fiscal information, where the public had access to in-year budget reports in 2022, instead of the budget documentation that they had access to in 2014.  The same goes for procurement, which remained as uncompetitive in 2022, with the only difference being the lack of information to assess the complaints process.  Some other aspects assessed the same in 2022 as in 2014, with no performance changes that could have optimized or undermined the level resource allocation and oversight decisions, e.g., budget documentation and transparency of inter-governmental fiscal relations

Efficient delivery of public services – the 2022 assessment witnessed performance improvements in three aspects of external scrutiny and audit, with potential for enhancing public service delivery efficiency.  These are (i) coverage of both systems and performance audits in 2022, unlike in 2014 when audit comprised “largely financial audits with little focus on systemic issues”, (ii) improved follow up on audit recommendations in 2022, with MoFEA formally responding to audit findings, even though “the evidence shows satisfactory resolution of only a small fraction of the issues”, and (iii) legislative budget scrutiny including review of fiscal policy unlike in 2014, when scrutiny was only of the budget numbers.  On the hand, some performances regressed and could have adversely affected service delivery efficiency.  An example is the 2014 reforms to track resources delivered to primary health and primary education services, which had stymied by 2022, making it difficult to measure resource availability to key primary services delivery units.  Reduced performance was also evident in the following five areas, with similar potential: (i) “widespread and routine violations of internal control rules and security protocols, including in the areas of virement, procurement, ICT, revenue administration, asset management, etc.”, (ii) less frequent or cessation of internal audit reporting in budget entities, (iii) reduced scope, quality, and timeliness of in-year budget reports, (iv)) decline in the timeliness of submissions of the financial statements for audit, and (v) decline in the legislative scrutiny of external audit reports.