Strengthening Public Financial Management in Bhutan - On-Going Commitment; Continuous Improvement
- Sep 2015
Improving management of a country’s finances is not a simple matter. Nor is it accomplished through a single intervention that might address one aspect of a complex situation at a fixed moment in time. Things change—even in overwhelmingly rural Bhutan, which is better known for its Gross National Happiness Index and soaring mountaintop villages than for its advances in management of public funds – slowly and steadily towards best practices in PFM.
As things change, systems have to change as well. Through a continued engagement in Bhutan, starting with a Country Financial Accountability Assessment in 2002, followed by subsequent projects, all aimed at improving the nation’s capacity to handle its own public financial management.
Key aspects of the efforts include introduction of legislation that mandates public funds accountability. Multi-pronged initiatives are designed close skills gaps, through training and new certification programs for accountants and audit professionals, and capacity-building at the ministerial level. Additional work supports increased use of the country’s own systems and processes to manage the financial aspects of donor-funded projects.
The efforts are achieving clear and tangible results, with the nation scoring well on the last assessment of its public financial management, the Public Financial Management Performance Measurement Framework (PEFA). Among the positive outcomes to date:
- Development of public sector accounting standards, adopted in a phased manner
- Passage of a national public finance act
- Improvements in information systems and integration of computerized budgeting and accounting system into budgeting process for streamlined budgeting, accounting and reporting
- Strengthened internal audit, with presence in line ministries and dzongkhags, or districts
- Adoption of risk-based approaches and environmental audits by the Royal Audit Authority
- Production of reliable and timely financial statements and expanded availability of technical manuals to guide internal and external audits
- Increase in number of professionals trained in global best practices to manage critical public finance-related activities
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