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1. RATIONALE FOR THE CREATION OF A PUBLIC INVESTMENT MANAGEMENT SYSTEM (PIMS) IN JAMAICA The Government has committed to strengthen Jamaica’s public investment management system, as part of a comprehensive public financial management (PFM reform) agenda. This reform has seen the incorporation of public investment management as part of an enhanced fiscal governance framework that seeks to increase fiscal surpluses over time and concurrently reduce the debt to gross domestic product (GDP) ratio so that public resources can be allocated to public investment and other activities that have the potential to contribute to growth in the economy.

Cabinet Decision No X of March 2014 gave approval for the institutionalization of the Public Investment Management System (PIMS) and, in doing so, standardize the treatment of public investment across the public sector with respect to the entire project cycle.

Public investment projects are investments that require planning, execution, monitoring and evaluation carried out as an integrated set of activities aimed at meeting a development objective, at a specific cost and within a defined timeframe(Section 48A, FAA Act Amendments 2014). The Financial Administration and Audit Act (FAA Act) (Amended), 20141 sets out the elements of the strengthened Public Investment Management System (PIMS) which will seek to create a common framework for the preparation, appraisal, approval and management of all public investments in Jamaica, irrespective of the source of funding or procurement and implementation modalities. A key element of the system is the Public Sector Investment Programme (PSIP); a rolling 5 year plan of Cabinet approved public investment projects.

Since these amendments, more legislative and regulatory work has been done to further refine the PIMS and, by extension, the PSIP. In February 2015, additional amendments to both the FAA and PBMA provided for exceptions to the definition of public investment. The exception limits public investment to those undertaken by entities within the specified public sector. The specified public sector is defined as the public sector minus those entities that will be certified as commercial by the Auditor General and, therefore outside of the fiscal rules, as at April 1, 2017. It is anticipated that only a few entities will qualify and the specified public sector will encompass much more than 90% of the public sector. The ambits of the PIMS and PSIP, therefore, is quite extensive in scope.

The Financial Administration and Audit (Amendment) Act 2014 – Fourth Schedule (Section 48B (2) provides that an element of the Public Investment Management System shall be a Public Investment Performance Report. This is a comprehensive performance report on the Government’s Public Investment Programme, which shall be produced and published periodically by the Minister.

1 Gazette 31st day of March 2014, enacted April 1, 2014

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Ministry of Finance and the Public Service Fiscal Policy Paper 2017 72 | P a g e

Appendix II

Public Financial Management (PFM) Reform Programme

Introduction

The GOJ remains committed to the comprehensive reforms of its public financial management (PFM) system during the current fiscal year and across the medium term. The overall objective of the reform programme is to ensure that the PFM system is fulfilling the key goals of:

 Aggregate fiscal discipline;

 Strategic allocation of resources;  Effective and efficient delivery of services.

To this end, the GOJ has established essential monitoring and oversight mechanisms, chiefly: (i) the PFM Oversight Committee, which provides strategic direction and (ii) the PFM Secretariat and Monitoring Team which provides administrative support, coordinates donor and technical support as well as monitoring and reporting on the PFM Reform Action Plan (RAP).

Summary of Progress in Key PFM Areas

The PFM system has been strengthened through the Fiscal Responsibility Framework legislation. Significant progress was made in FY 2016/17 to strengthen core PFM functions, namely: accounting and cash/treasury management; budget management; revenue administration and procurement. Some key activities completed were:

 Implementation of a new Treasury-linked accounting and reporting system alongside the Treasury Single Account (TSA) to facilitate centralization of the government cash management function within the Accountant General’s Department. A key focus going forward is the strengthening of this cash management function and the continuing modernization of the Accountant General’s Department.

 Establishment of an Oversight Committee to develop a Code of Conduct for Public Bodies. Cabinet Office is currently making arrangements to negotiate with the Management Institute for National Development (MIND) to commence the assignment.

 Implementation of a Budget Preparation and Management System (BPMS) which has been procured and is now being configured and tested so that medium term results based budgeting can be developed to sustain the results of the reform program.

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Ministry of Finance and the Public Service Fiscal Policy Paper 2017 73 | P a g e

 Undertaking of training sessions and workshops for Budget analysts, Budget Officers and Corporate Planners to enhance staff capacity to implement the change management programme being undertaken across the Ministry of Finance and the Public Service.

 Full implementation of new revenue administration systems at both the TAJ (RAiS) and JCA (ASYCUDA):

Enforcement and taxpayer services were strengthened, particularly in regard to improved physical accommodation, introduction of third party payment options and other online services;

Introduction of an Electronic Content Management System (ECMS) thereby allowing for the digitization of records of the JCA, the Accountant General’s Department (AGD) and the TAJ;

 Strengthening and modernization of the physical ICT infrastructure through upgrading and replacing IT equipment where necessary for the AGD, the Financial Systems Unit of the MFPS as well as the JCA.

 Launch of an e-tendering system. To enhance transparency, a procurement page was introduced in public media to provide procurement opportunities to potential suppliers.

 Establishment of a training lab at MIND to facilitate training in key PFM areas including the new Chart of Accounts (CoA), as well as the new Commitment and Purchase Order Modules.

 Establishment of the Revenue Appeals Division (RAD) with an organizational structure, business processes and automation (now integrated as part of the RAiS system).

Continued strengthening of the budget planning, preparation and execution capacity through:

(i) A new budget management system was procured and configured and is expected to be utilized during FY 2017/18.

(ii) Phase II of implementation of the Medium Term Results Based Budgeting (MTRBB) was completed in the December 2016 quarter. The consulting firm that was contracted to undertake the assignment has completed its deliverables and the contract is now 90% executed. The main outcomes of this phase are: a) Readiness assessment reports of the MDAs that are to be targeted during this phase

of the implementation; b) Selection of the Ministry of Education, Youth and Information; Ministry of

Industry, Commerce, Agriculture and Fisheries; Passport Immigration, and Citizenship Agency; and the JCA as the main MDAs for inclusion in the MTRBB process;

c) Selection of Officers for the “Training of Trainers” methodology that is to be used for the capacity Development elements;

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full time project management team is in place. A roll-out of the system to some fourteen (14)

MDAs took place in June 2016.

With respect to the public bodies, the following activities are being undertaken:

(i) A new structure of the Auditor General’s office was finalized in the first quarter for

FY 2015/16. Implementation has been ongoing since, with full implementation expected

by April 2019. This will allow for (a) more detailed and frequent audits of financial

statements for public bodies, in receipt of budget support and (b) better enforcement of the

six-month time line for submission of these financial statements to the Auditor General.

(ii) The GOJ in June 2016 approved a new policy for public bodies, consistent with PFM rules

for these entities. This policy will create classes of public bodies and outlines key PFM

principles/guidelines to be adhered to by each class of public body.

(iii) The GOJ will also review and evaluate the scope for the re-integration of certain public

bodies, based on their classification, back into Central Government. Consistent with this, a

strategy will be formulated to implement the rationalization by end September 2016 and

the placing of all public bodies into these new classes by February 2017.

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1 | P a g e

1.0. Background:

1.1. Rationale for the creation of a public investment management system (PIMS) in Jamaica: The Government has committed to strengthen Jamaica’s public investment management system, as part of a comprehensive public financial management (PFM reform) agenda. This reform has seen the incorporation of public investment management as part of an enhanced fiscal governance framework that seeks to increase fiscal surpluses over time and concurrently reduce the debt to gross domestic product (GDP) ratio so that public resources can be allocated to public investment and other activities that have the potential to contribute to growth in the economy. Public investment projects are investments that require planning, execution, monitoring and evaluation carried out as an integrated set of activities aimed at meeting a development objective, at a specific cost and within a defined timeframe (Section 48A, FAA Act Amendments 2014). The Financial Administration and Audit Act (FAA Act) (Amended), 20141 sets out the elements of the strengthened Public Investment Management System (PIMS) which will seek to create a common framework for the preparation, appraisal, approval and management of all public investments in Jamaica, irrespective of the source of funding or procurement and implementation modalities. A key element of the system is the Public Sector Investment Programme (PSIP); a rolling 5 year plan of Cabinet approved public investment projects. The Objectives of the PIMS are to:

Promote growth and development and encourage capital formation for future investment

Maximize efficiency of public investment “through better selection and management of investment expenditure.”

Improve the quality of social and economic infrastructure in the country. PIMS is an integrated approach to managing the public investment portfolio and projects, which is:

Extensive; extends across all public entities and sectors • Inclusive; includes all type of public sector expenditures (actuals and

contingencies) • Complete; covers all steps and phases that a project has to complete through

its productive life, including the interaction with other administrative systems (budget, treasury, procurement, human resources, others).

Strategic; all projects and overall portfolio will be selected and oriented to add value to a larger development purpose

1 Gazette 31

st day of March 2014, enacted April 1, 2014

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