OREANDA-NEWS. May 18, 2009. The World Bank Board of Executive Directors approved a US 5 million grant for Tajikistan’s Public Financial Management Modernization Project, to be funded by the International Development Association, the Bank’s fund for the world’s poorest countries, reported the press-centre of World Bank.

The total amount of the project is around USD 13 million, and it will be co-funded by the Government of Tajikistan (USD 1.3 mln), a grant from the Government of Japan (USD 0.97 mln), and the Multi-donor Trust Fund financed by the UK Department of Foreign International Development (DFID) and the European Commission (USD 5.8 mln).
 
Tajikistan needs an effective public financial management system that can help more efficiently allocate public finances and ensure their transparent and effective use to address development challenges, such as poverty alleviation and maintaining growth and macroeconomic stability. The global economic crisis reduces the amount of finances available through taxes, remittances and credits, posing additional constraints to growth and development. Therefore, better use of public resources through a modernized public financial management system makes a critical contribution for sustainable growth and social development.
 
The Public Financial Management Modernization Project will be implemented as a two-phase Adaptable Program Operation, supporting Tajikistan’s Public Financial Management Strategy, approved on March 20, 2009. The Program’s long-term objective is to improve effectiveness and transparency of public financial management in Tajikistan.
 
The Tajikistan Public Financial Management Strategy for 2009-2018 (PFM Strategy) lays out a comprehensive agenda for modernization of public financial management in Tajikistan. The immediate priority for Tajikistan is to reinforce stability, credibility, comprehensiveness and transparency of the budget. It is expected to be achieved by improving the quality of macroeconomic and fiscal forecasting, aligning borrowing with a debt management strategy, better managing fiscal risks, introducing integrated Budget Classification and Chart of Accounts, and improving adherence to the public procurement law.
 
The objective of the newly approved Project is to help establish basic processes for efficient and transparent management of public expenditures. The first phase of the Project, to be implemented during 2009- 2014, will support institutional reforms, legislative and organizational changes. It will finance a substantial capacity building program, redesigning core business processes, and operational and technological improvements in public financial management. The Project will be implemented by the Ministry of Finance of the Republic of Tajikistan. 
 
The second phase of the Program is expected to support the implementation of the Financial Management Information System (FMIS), which will automate budget management process, enhance the reliability of the budget execution process, and improve financial reporting.  This Project will be implemented in coordination with other on-going improvements in budget management, supported by the European Commission, the International Monetary Fund, and other donors. To improve coordination of various activities, the President of the Republic of Tajikistan has established a Public Financial Management Council, led by the Minister of Finance, which will be responsible for implementing the Government Public Financial Management Strategy.
 
“The Bank team is highly appreciative of the efforts that the Minister of Finance and its core team are investing in building effective system of public financial management.  The Ministry has developed a vision of reforms, consolidated a dedicated team to implement the Project and has established good contacts with other countries implementing public financial reforms,” said Ms. Svetlana Proskurovska, the World Bank’s Project Task Team Leader.  “The Ministry of Finance is committed to this project and this is a good basis for overcoming implementation challenges. After the Project is complete, public administration will be operating more professionally and efficiently in Tajikistan.” 
 
The World Bank’s mission in Tajikistan is to promote economic growth, reduce poverty, and encourage a better quality of life.  The World Bank plays a role as the catalyst of change and an institution bringing global experience to developing countries.  The country became a member of the World Bank on June 4, 1993 and so far the Bank’s financial assistance to Tajikistan amounts to nearly US\\$478 million, in the form of grants and concessional credits.

The current portfolio of the World Bank in the country consists of 15 active projects. To date, the Bank has supported projects and carried out non-lending activities aimed at agriculture and rural development, health, education, social security, energy, water resources, infrastructure rehabilitation, and disaster management, among other things. World Bank assistance, in the form of soft loans, has helped the country rebuild the infrastructure destroyed during the civil war and has supported economic reforms.