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Financial Cents At Your Fingertips

Cooperate with auditor general’s office, IMF tells govt

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Farai Mabeza

Local authorities, government departments and state owned enterprises are not fully co-operating with the Auditor-General’s resulting in poor financial accountability in Zimbabwe, the International Montery Fund (IMF) has reported.  

In a report based on findings from a government finance statistics technical assistance mission to Zimbabwe which was conducted from April 15–26, 2019, the IMF said Zimbabwe may need to enhance co-ordination and co-operation across ministries in terms of sharing of financial information for all public sector entities as defined in the Zimbabwe Public Finance Management Act, 2009 (PFMA).

“At present, co-operation with the AG’s office in the Ministry of Finance and Economic Development (MoFED) from several ministries is extremely limited leading to a lack of financial accountability for local authorities, extra-budgetary funds, and state-owned enterprises (SOEs),” the IMF said.

The IMF recommended that government, through the Ministry of Finance and Economic Development, formulates, and enforces, clear punishment mechanisms for lack of compliance with the laws of Zimbabwe which govern GFS, mainly the PFMA and the Public Debt Management Act (2015) (PDMA).

“At present, there is a severe, and persistent, lack of compliance with reporting requirements laid out in the PFMA and PDMA. Part of this persistent is rooted in the lack of credible enforcement mechanisms which allows public entities to continually operate with very little accountability,” the IMF said.

The Bretton Woods institute recommended that the AG’s office expand the compilation of financial statistics to include all extrabudgetary funds, local authorities, and social security funds using a standardized Government Finance Statistics Manual 2014 format.

In the short term, this can be done by converting existing data into a GFSM 2014 (IMF’s Government Finance Statistics Manual 2014) presentation. In the medium term, all entities should report using a GFSM 2014 compatible template or the new chart of accounts.

The IMF also called for a clear classification of government subsidies in financial records.

“More detailed statistics would need to be compiled to reflect all subsidies provided by government to public corporations.

“At present, budgetary central government outturn data broadly classifies these as capital transfers which does not allow for a clear understanding of the extent to which subsidies are being provided and to whom they are being provided.”

The IMF further called on authorities across all ministries and other public entities to formulate, and publish, an updated list of all public sector entities including extra-budgetary units, local authorities, and State Owned Enterprises.

The mission recommended that the authorities compile and publish a complete and accurate list of all general government units, including, all local government units and extra-budgetary units.

“The government’s most significant challenge in terms of institutional coverage remains an accurate and comprehensive recording of EBUs across all ministries in Zimbabwe.”

Another recommendation was that Zimbabwe expands coverage of government finance statistics to include local authorities, extra-budgetary units, and the social security fund.

This will require greater cooperation and communication across ministries and should ensure compliance with the PFMA and the transmission of financial statistics in a unified framework to the AG’s office, the IMF said. 

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