Govt. has piecemeal approach to capacity building for oil sector

Apr 18, 2018 News

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By Kiana Wilburg

It appears that for the time being, the government has taken a piecemeal approach to capacity building for the oil and gas sector.
Finance Minister Winston Jordan during a press conference he held last week, reminded those present that US$3M from the US$18M signing bonus would be used for capacity building for the oil and gas sector.

In response to questions on how soon this money would be used, the Finance Minister said he would not be in a position to say at that time. He said that perhaps, at the next press conference, he would be able to give a better answer.
This newspaper then asked Jordan to say what development plan is in place for the use of this money. The economist admitted that, “There is no master plan.”
The Finance Minister explained that the Government informed various agencies on the areas that they would need to improve capacity, but he is not aware that those individual plans have been combined into a master plan.
In the interim, he noted, there are several persons who are in various countries on scholarships as regards training for oil and gas. He said that, technically, the government may very well only need to draw part of the US$3M. Jordan noted however that the money is fungible (mutually interchangeable) and that it could be used for other things such as workshops and conferences. He said that these are all part of capacity training.
IMF RECOMMENDS
The International Monetary Fund (IMF) has informed the government about the need to improve capacity in a number of areas, one of which includes financial management systems.
Strong Public Financial Management (PFM) systems are essential for any country to ensure effective and sustainable economic management and public service delivery. Guyana has been carrying out several assessments in an effort to achieve those objectives as best as it could. And while there were some improvements over the years, the International Monetary Fund noted that there is still more which needs to be done, especially since the nation is preparing to be an oil producer by March 2020.
During one of its assessments, the Fund noted that the limited capacity at all levels of the Ministry of Finance, and even in various line agencies, will pose significant constraints when the time comes for the implementation of needed reforms for Public Financial Management.
To ensure success going forward, the IMF said that reform measures will need to be carefully prioritized and sequenced so as not to overload the limited capacity.
The Fund said that the extent and wide-ranging nature of future PFM reforms perhaps requires a more coordinated approach to reform implementation. It said that many countries faced with an extensive body of work have formed a dedicated reform team to organize, coordinate, and facilitate the required reforms in many PFM areas.
It said that the reform unit/team will provide oversight, guidance and monitoring to the PFM reform plan, and act as a coordinator of the overall PFM reform programme. The Fund said that a substantial part of their work should be directed to upgrading the skills of staff in the Ministry of Finance and line agencies by developing a core PFM training programme.
The Fund also stressed that capacity building in the Ministry of Finance and in line agencies is an important prerequisite for sustainable PFM reform.
It said, “A comprehensive assessment of required skills is essential for successful implementation. It could be considered to appoint a small group to analyze the long-term capacity building needs, and to develop an overall plan for PFM capacity development, to be managed and coordinated within the reform unit in the Ministry of Finance.”
The Fund added, “The results of the assessment could summarize the skills required in every function. For example, for budget office skills in preparing baseline expenditure are crucial or for macro-fiscal division, the analysis of fiscal risks.”
The IMF further stated that capacity building efforts could be coordinated with local training institutions. In this regard, it said that the Ministry should explore further, the options to cooperate with local training institutions (e.g. recently-opened Bertram Collins College of the Public Service; University of Guyana) and other partners to deliver necessary training programmes on a continuous basis.
It noted that other cost-effective and efficient solutions, such as developing a partnership arrangement with other countries in the region could be a viable option as well.
The IMF also asserted that new capacity building actions should be designed to channel appropriate training programmes through these institutions, and to use staff to perform training. In this way, the Fund said that training skills could be further built up in those institutions to provide sustainable ongoing training in years to come.
ONGOING ASSESSMENTS
As of now, the IMF said that authorities here, in cooperation with the European Commission, are carrying out an assessment of PFM systems. The last integrated fiduciary assessment of PFM and procurement systems was carried out by a team of staff from the Ministry and three external consultants in 2012.
According to the Fund, the team used the Public Expenditure and Financial Accountability (PEFA) assessment methodology and the Methodology for Assessing Procurement Systems (MAPS).
The Fund said that the findings of the ongoing assessment of PFM systems will be used to update a PFM reform programme. In addition, several developments partners like the Inter-American Development Bank (IDB), World Bank, and the Commonwealth Secretariat have recently conducted assessments of PFM reform needs which will provide inputs to the PFM reform programme.
The IMF noted that the Office of Budget in the Ministry of Finance has been a focal point for the PFM reforms. At present, the IMF said, the planning and coordination of the PFM reform process seems to depend heavily on the Director of the Office of Budget and one or two heads of key departments.
It stressed that there is no dedicated reform unit or team in the Office of Budget or the Ministry to coordinate and guide the PFM reform efforts. At the same time, given current levels of staffing, the Fund observed that most of the staffers are fully engaged in day-to-day operations. It said that many of them are learning how to perform operations on the job as the staff turnover tends to be high.

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