Public Financial Management Under Threat

As a former Permanent Sec­retary for Finance, I know that the strengths of our public financial management sys­tem are anchored in the universal principles of clear separation of roles, maintenance
18 Aug 2018 11:00
Public Financial Management Under Threat
Unity Fiji party leader Savenaca Narube.

As a former Permanent Sec­retary for Finance, I know that the strengths of our public financial management sys­tem are anchored in the universal principles of clear separation of roles, maintenance of a paper trail for accountability and the inde­pendence of the auditing agency.

The financial processes are clearly outlined in the Finance Instruc­tions (FI), which is a legal docu­ment that derives its authority from the main Finance Act. The FI is supported by other instruc­tions and manuals like the Stores Instructions and the Procurement Manual. Together, they collectively protect the integrity of the use and recording of taxpayers’ money.

In my view, there are clear evi­dences that the integrity of the en­tire public financial management system is seriously under threat.

The separation of roles is now blurred. Normally, the Minister and Cabinet sets strategies and policies. The officials in the Ministry of Fi­nance implement these policies in compliance with the Finance Act and the Finance Instructions.

The clear separation of roles is an essential framework of good gov­ernance. It ensures that the regula­tions and legislations are followed and there is accountability to the people. The universal best practice is that the Permanent Secretary for Finance (PSF) is the Accountable Officer, not the Minister. The PSF fronts up to the Public Accounts Committee (PAC) to defend any ad­verse findings of the External Au­ditor. If the Minister for Finance interferes in the operations of gov­ernment finance, it puts the Per­manent Secretary at a very risky position.

The public must be seriously con­cerned that the culture in the public service does not allow the Account­able officers to effectively protect the integrity of our government finance. As a former PSF, I was ob­ligated to advise my Minister when he stepped out of line. And they always respected and appreciated that advice. Unfortunately, anecdo­tal evidence shows that this is not allowed to happen now.

The voices of Accountable offic­ers are muffled by the heavy hand­edness of Ministers. We have seen several cases where Permanent Secretaries have lost their jobs when they dared challenge the Minister. This culture puts our fi­nancial system at great risks.

Another major weakness is the circumvention of written instruc­tions with verbal ones. These are deliberately done to hide the sourc­es of those instructions. The Finan­cial Supervisors are strangled by the culture of obedience lest they be dismissed from their jobs. The element of fear is strong and civil servants do not question the in­structions from above. As a result, the morale of civil servants has plummeted and delivery of service to the people has suffered.

Procurement is the largest area of risk in our financial management. I have stated before my concerns of the Minister’s interference in the award of tenders. In my time, I, as the PSF, was responsible for the in­tegrity of the tender processes. The Minister would refer his concerns to me if he had any issue on the tender process. I do not recall him intervening directly in the tender process. But now, we know of many cases where the current Minis­ter has intervened directly in the awards of tenders. This puts the fi­nancial system at great risks.

The environment of fear for their jobs sit heavily on the shoulders of our senior civil servants. I fully understand their situation. This climate does not give us confidence in the credibility of the use of our taxpayers’ money. It is an environ­ment that encourages wasteful ex­penditures, unlawful spending and misuse of our money.

In summary, in my assessment, our entire public financial man­agement system is under immense threat. Many processes that we have painstakingly strengthened over many decades are now being cast aside for political convenience.

The current vote-buying freebies are classical examples where the Finance Instructions have been ig­nored. The rear action by Govern­ment to persecute those who took advantage of their give-aways was, in my opinion, an afterthought to save them from the Auditor’s scru­tiny. In my opinion, the use of Heads 50 and 51 of the Budget are being abused. The law requires that all government spending must be appropriated by Parliament. How­ever, there is anecdotal evidence that the use of these two Heads of Expenditure are not appropriated in the budget of the relevant minis­tries that use these funds.

I understand that even salaries are being paid out of these two Heads. It is obvious that the Minister is running the entire financial show. Accountable officers are powerless to voice their concerns that the fi­nancial regulations are being disre­garded. The whole of Fiji must be concerned about the state of affairs in our public financial manage­ment. Government is spending like there is no tomorrow. Legal guide­lines are being disregarded. If we allow this situation to continue, in my view, this country is heading for a financial cliff. If we fall over this cliff, the burden on our young people and their families will be catastrophic.

Money is everything these days. If we run out of it, the whole econom­ic system implodes. Those who are responsible for the mess will not be there any longer. It is the people that will be left holding the pieces.

It is time to restore the integrity of our public financial system.

Source: Unity Fiji


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