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Strengthening  Public Financial Management 
    through Transparency  in Timor‐Leste




       International Consortium on Governmental 
                 Financial Management
                      May 17, 2011
Confusion?




             Strengthening Public Financial 
                                               2
              Management in Timor‐Leste 
Congress cuts transparency funding




Strengthening Public Financial 
 Management in Timor‐Leste 
How can Timor‐Leste afford 
government transparency?
                     Timor‐Leste                    United States    Comparison
Independence            2002                                 1776       3.4%
GDP Per Capita         $2,600                            $47,400        5.5%
GDP Growth               8%                                  2.7%      338%
Unemployment            20%                                  9.7%      206%
Below poverty line      42%                                  12%       350%
Life Expectancy        67.95                                 78.92      86%
Literacy               58.6%                                 99%        59%




                           Strengthening Public Financial 
                                                                               4
                            Management in Timor‐Leste 
globalization




  Strengthening Public Financial 
   Management in Timor‐Leste 
= competition




            Strengthening Public Financial 
             Management in Timor‐Leste 
choice


Strengthening Public Financial 
 Management in Timor‐Leste 
citizens are watching
      Strengthening Public Financial 
       Management in Timor‐Leste 
empowered




 Strengthening Public Financial 
  Management in Timor‐Leste 
Democratic 
                                   Republic of 
                                   Timor‐Leste 
                                     (RDTL)
                                  Transparency 
                                    Objectives

Strengthening Public Financial 
                                            10
 Management in Timor‐Leste 
build civil society




Strengthening Public Financial 
 Management in Timor‐Leste 
build infrastructure




     Strengthening Public Financial 
      Management in Timor‐Leste 
build capacity




  Strengthening Public Financial 
   Management in Timor‐Leste 
build citizen involvement 
     in government



     Strengthening Public Financial 
      Management in Timor‐Leste 
improve government performance




           Strengthening Public Financial 
            Management in Timor‐Leste 
Strengthening Public Financial 
 Management in Timor‐Leste 
3
                                                          Benefits of Transparency




                                                                                                                                   AUSTRALIA
      HIGH


                                            2
                                                          Government Effectiveness and GDP*
Normalized Government Effectiveness Index




                                            1




                                                                            PAPUA NEW GUINEA
                                                 UGANDA




                                            0




                                            -1



                                                                                                 Higher the government effectiveness
                                            -2                                                   = higher the country GDP Per Capita

           LOW                                                         209 Countries

                                            -3
                                                                                                                  Source: The World Bank
                                                                    GDP Per Capita (PPP, logs)

                                                                                                               * At purchasing power parity
                                                                    Strengthening Public Financial 
                                                                     Management in Timor‐Leste 
3


        HIGH
                                                         Benefits of Transparency
                                                         Voice and Accountability and GDP*




                                                                                                                                 AUSTRALIA
                                            2
Normalized Voice and Accountability Index




                                                                           PAPUA NEW GUINEA
                                            1
                                                UGANDA




                                            0




                                    -1



                                                                                                Higher the government accountability
                                    -2                                                          = higher the country GDP Per Capita

           LOW                                                       207 Countries
                                                                                                                               .
                                    -3                                                                           Source: The World Bank
                                                                   GDP Per Capita (PPP, logs)

                                                                                                              * At purchasing power parity
                                                                   Strengthening Public Financial 
                                                                    Management in Timor‐Leste 
3
                                                       Benefits of Transparency




                                                                                                                            AUSTRALIA
      HIGH


                                         2
                                                        Control of Corruption and GDP*
Normalized Control of Corruption Index




                                         1




                                                                        PAPUA NEW GUINEA
                                         0
                                              UGANDA




                                         -1


                                                                                                  Higher the control of corruption
                                                                                                  = higher the country GDP Per
                                         -2                                                       Capita
                                                                   204 Countries
         LOW

                                         -3                                                                   Source: The World Bank
                                                                GDP Per Capita (PPP, logs)

                                                                                                          * At purchasing power parity
                                                                Strengthening Public Financial 
                                                                 Management in Timor‐Leste 
= stability




Strengthening Public Financial 
 Management in Timor‐Leste 
= investor confidence
      Strengthening Public Financial 
       Management in Timor‐Leste 
avoid the
resource curse



    Strengthening Public Financial 
     Management in Timor‐Leste 
technology leapfrog




      Strengthening Public Financial 
       Management in Timor‐Leste 
use what works




   Strengthening Public Financial 
    Management in Timor‐Leste 
skip what 
                            doesn’t work




Strengthening Public Financial 
                                           25
 Management in Timor‐Leste 
skip stages




 Strengthening Public Financial 
  Management in Timor‐Leste 
modernize




 Strengthening Public Financial 
  Management in Timor‐Leste 
rapidly




Strengthening Public Financial 
 Management in Timor‐Leste 
review




Transparency and Accountability
      The next generation of public financial 
 management technology will allow the public to 
track the budget live,  to see where every dollar is 
 being spent, and to gain renewed confidence in 
                    the process

   Democratic Republic of Timor‐Leste Vision


                   Strengthening Public Financial 
                    Management in Timor‐Leste 
sequenced
 Strengthening Public Financial 
  Management in Timor‐Leste 
Public Financial Management –
                       Foundation for Country Growth

                                            Public Financial Management


Decentralization
                                                                                  Human 
                            GoTL LAWS                                            Resource 
 Autonomous                                                   FMIS             Development
  Agencies                                               (software and 
                                                           hardware)
                           Procurement                                           Capacity 
   Ministries              Commission                                            Building
                                                                                (Training)




                   Strengthening Public Financial Management in Timor‐Leste 
Strengthening Public Financial 
 Management in Timor‐Leste 
1. International Standards
          Strengthening Public Financial 
           Management in Timor‐Leste 
IPSAS
International Public Sector Accounting 
              Standards




              Strengthening Public Financial 
               Management in Timor‐Leste 
EITI
  Extractive 
  Industries 
Transparency 
   Initiative




            Strengthening Public Financial 
             Management in Timor‐Leste 
GFS
Government Financial Statistics




          Strengthening Public Financial 
           Management in Timor‐Leste 
MTEF
                 Medium Term 
            Expenditure Frameworks




Strengthening Public Financial 
 Management in Timor‐Leste 
IATI
       International Aid 
    Transparency Initiative




Strengthening Public Financial 
 Management in Timor‐Leste 
2. Manager’s Dashboard




       Strengthening Public Financial 
        Management in Timor‐Leste 
review


                                                               examines budget execution data




                                                                             integration with 
                                                                             macro‐economic 
                                                                                   data


 integrated with back‐office 
procurement & commitment 
   accounting within IFMIS


               Strengthening Public Financial Management in Timor‐Leste                  40
3. Document Management




       Strengthening Public Financial 
        Management in Timor‐Leste 
manages 
correspondence with 
  senior managers




        repository for freedom of information
4. e‐Procurement 
      Portal




        Strengthening Public Financial 
         Management in Timor‐Leste 
review



            government tenders published
                                                                           vendor alerts




                                                             integrated with back‐office 
                                                            procurement & commitment 
                                                               accounting within IFMIS


                                                        tender results published
Strengthening Public Financial Management in Timor‐Leste                         44
5. Transparency Portal




      Strengthening Public Financial 
       Management in Timor‐Leste 
review




www.transparency.gov.tl




                  Strengthening Public Financial Management in Timor‐Leste    46
articles
                        subscribe




           drill down
Expenditures, Transparency Portal


            10 years of data


     drill through the chart of accounts
Expenditures, Transparency Portal
                          export to xls, doc, pdf, html, xml




                                       track commitments
Lessons Learned




   Strengthening Public Financial 
                                     52
    Management in Timor‐Leste 
1. Leadership




  Strengthening Public Financial 
   Management in Timor‐Leste 
Goodbye Conflict, Welcome 
              Development
Timor‐Leste will be the country that goes down in history 
   as the nation to put a stop to falling victim to large 
           companies and the resource curse

            Prime Minister Xanana Gusmão




                       Strengthening Public Financial 
                        Management in Timor‐Leste 
2. Learn from the mistakes of others
             Strengthening Public Financial 
              Management in Timor‐Leste 
Goodbye Conflict, Welcome 
              Development
When we in the developing world face these types of crisis, 
which we do on a more regular basis than our colleagues in 
   more economically advanced nations — then we are 
  repeatedly told to increase our openness to the global 
economy, to trust in the market but to regulate them well. 
         To be honest this approach has worked

              Minister of Finance Emilia Pires



                       Strengthening Public Financial 
                        Management in Timor‐Leste 
3. 
                                  Transparency 
                                      is not an 
                                        Option
Strengthening Public Financial 
 Management in Timor‐Leste 
citizen 
                                  auditors




                                  YouTube
                                  Facebook
                                   Twitter
                                    SMS




Strengthening Public Financial 
 Management in Timor‐Leste 
4. Transparency = 
Performance > Embarrassment 




          Strengthening Public Financial 
           Management in Timor‐Leste 
Strengthening Public Financial 
 Management in Timor‐Leste 
Role of Civil Society
• NGO’s can help organise literacy groups and provide
  materials.  They can provide private education and
   education for the blind.  They can provide school
materials for students, and assist with school equipment
                    chairs and books
• NGO’s can help us organise and run technical training
                  courses in our villages

              Timor‐Leste National Vision

                     Strengthening Public Financial 
                      Management in Timor‐Leste 
5. Sequenced Holistic Multiple‐
      Year PFM Strategy


           Strengthening Public Financial 
            Management in Timor‐Leste 
review
 Public Financial Management –
             Foundation for Country Growth
                                                                     Improve
                                                                     government
                                                                     performance


                                                    Improve
                                                    transparency
                                                    &
                                                    accountability



                         Improve
                         budget
                         execution




Improve
government
capacity




      Strengthening Public Financial Management in Timor‐Leste 
6. Build Capacity




    Strengthening Public Financial 
     Management in Timor‐Leste 
review
                 PFM Modernization
                Alignment with Capacity Building


• Training beyond                     • Intuitive systems
  software                                    – Translation including 
  – IT capacity                                 terminology
  – Project management                        – Simple & goal‐oriented 
  – Government accounting                       interfaces

• Beyond training                     • Mentoring
  – Adaptable help
  – E‐Learning
  – Knowledge management


                     Strengthening Public Financial 
                      Management in Timor‐Leste 
7. Require Sustainability in Partner 
           Performance




             Strengthening Public Financial 
              Management in Timor‐Leste 
8. Adopt International Standards




           Strengthening Public Financial 
                                             67
            Management in Timor‐Leste 
9. Leverage Open Systems




        Strengthening Public Financial 
         Management in Timor‐Leste 
Transition to Open Environment: 
                   Transparency
Domain                     Closed                   Transition                Open
Transparency        Access to Information          Document              Machine Readable
                                                                         Do not Publish as 
Data Availability       Data for Sale         Publish as Exception
                                                                            Exception
                     Publish, Audited &                                   Near Real‐Time 
Mode                                                  Mixed
                           Vetted                                           Publishing
                                            What are they going to do     Government as 
ROI Reason          Revenue Generation
                                                 with the data?             Platform
                                                                             Citizens
Target              Business Community         Civil Society & Press
Transition to Open Systems: 
                         Technology
Domain                  Closed                 Transition                   Open
                  Proprietary within      Support for Industry         Service Oriented 
Integration
                        Suite                 Standards                  Architecture
                     Proprietary =      Proprietary/Open Tactical     Open Standards = 
Middleware
                    Customer Lock               approach              Customer Choice
                 Open Systems reduce      Open Systems extend          Open Systems = 
Viewpoint
                 system performance              value                  Extensibility
                                            Need for vendor          Low Cost Application 
Extensibility         High Costs
                                              Ecosystem                   Assembly
10. Leapfrog is possible 

                       Timor‐Leste                         United States       Comparison
                   GFS, IPSAS, EITI, IATI, 
1. Standards                                                        ?            Leaped
                           MTEF
2. Performance                                         Various tools across 
                   Manager’s Dashboards                                          To leap
Management                                                 government
3. Document         Manager Document                    Various Records & 
                                                                               Catching Up
Management            Management                         Correspondence
4. e‐Procurement         August 15                              FedBizOpps       To leap
                                                       Data.gov & others ‐      Leaping
5. Transparency     Transparency Portal
                                                         underfunding




                              Strengthening Public Financial 
                               Management in Timor‐Leste 
www.revenuewatch.org




      Strengthening Public Financial 
       Management in Timor‐Leste 
How?
                                      Timor‐Leste                        United States
                                                                    1 Year Budgets, complex 
Strategic Vision                         Holistic
                                                                         election cycles
Government Structure                     Unitary                            Federal
Civil Society & Media        Seen as Improving Results             Seen as “Special Interests”
Government Intervention             Seen as Good                       Seen Suspiciously
                            Ease to Move to International         Long History of Entrenched 
1. Standards
                                     Standards                       National Standards
2. Performance Management
3. Document Management
                             Single system data source            Multiple entrenched systems
4. e‐Procurement
5. Transparency


                                Strengthening Public Financial 
                                 Management in Timor‐Leste 
Links
• Open Systems Enable Government Transparency 
  Leapfrog 
  http://www.freebalance.com/blog/?p=1559
• E‐Government Transparency in Developing Countries 
  http://www.cutter.com/offers/egovt.html
• Developing Countries can Leapfrog Developed 
  Countries in Government Transparency 
  http://tech.state.gov/profiles/blogs/how‐
  developing‐countries‐are
• More: dhadden@freebalance.com
                   Strengthening Public Financial 
                                                     74
                    Management in Timor‐Leste 
Goodbye Conflict, Welcome 
     Development




        Strengthening Public Financial 
         Management in Timor‐Leste 

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2011 05-17 government financial transparency in timor-leste

  • 1. Strengthening  Public Financial Management  through Transparency  in Timor‐Leste International Consortium on Governmental  Financial Management May 17, 2011
  • 2. Confusion? Strengthening Public Financial  2 Management in Timor‐Leste 
  • 4. How can Timor‐Leste afford  government transparency? Timor‐Leste United States Comparison Independence 2002 1776 3.4% GDP Per Capita $2,600 $47,400 5.5% GDP Growth 8% 2.7% 338% Unemployment 20% 9.7% 206% Below poverty line 42% 12% 350% Life Expectancy 67.95 78.92 86% Literacy 58.6% 99% 59% Strengthening Public Financial  4 Management in Timor‐Leste 
  • 5. globalization Strengthening Public Financial  Management in Timor‐Leste 
  • 6. = competition Strengthening Public Financial  Management in Timor‐Leste 
  • 8. citizens are watching Strengthening Public Financial  Management in Timor‐Leste 
  • 9. empowered Strengthening Public Financial  Management in Timor‐Leste 
  • 10. Democratic  Republic of  Timor‐Leste  (RDTL) Transparency  Objectives Strengthening Public Financial  10 Management in Timor‐Leste 
  • 12. build infrastructure Strengthening Public Financial  Management in Timor‐Leste 
  • 13. build capacity Strengthening Public Financial  Management in Timor‐Leste 
  • 14. build citizen involvement  in government Strengthening Public Financial  Management in Timor‐Leste 
  • 15. improve government performance Strengthening Public Financial  Management in Timor‐Leste 
  • 17. 3 Benefits of Transparency AUSTRALIA HIGH 2 Government Effectiveness and GDP* Normalized Government Effectiveness Index 1 PAPUA NEW GUINEA UGANDA 0 -1 Higher the government effectiveness -2 = higher the country GDP Per Capita LOW 209 Countries -3 Source: The World Bank GDP Per Capita (PPP, logs) * At purchasing power parity Strengthening Public Financial  Management in Timor‐Leste 
  • 18. 3 HIGH Benefits of Transparency Voice and Accountability and GDP* AUSTRALIA 2 Normalized Voice and Accountability Index PAPUA NEW GUINEA 1 UGANDA 0 -1 Higher the government accountability -2 = higher the country GDP Per Capita LOW 207 Countries . -3 Source: The World Bank GDP Per Capita (PPP, logs) * At purchasing power parity Strengthening Public Financial  Management in Timor‐Leste 
  • 19. 3 Benefits of Transparency AUSTRALIA HIGH 2 Control of Corruption and GDP* Normalized Control of Corruption Index 1 PAPUA NEW GUINEA 0 UGANDA -1 Higher the control of corruption = higher the country GDP Per -2 Capita 204 Countries LOW -3 Source: The World Bank GDP Per Capita (PPP, logs) * At purchasing power parity Strengthening Public Financial  Management in Timor‐Leste 
  • 21. = investor confidence Strengthening Public Financial  Management in Timor‐Leste 
  • 22. avoid the resource curse Strengthening Public Financial  Management in Timor‐Leste 
  • 23. technology leapfrog Strengthening Public Financial  Management in Timor‐Leste 
  • 24. use what works Strengthening Public Financial  Management in Timor‐Leste 
  • 25. skip what  doesn’t work Strengthening Public Financial  25 Management in Timor‐Leste 
  • 26. skip stages Strengthening Public Financial  Management in Timor‐Leste 
  • 27. modernize Strengthening Public Financial  Management in Timor‐Leste 
  • 29. review Transparency and Accountability The next generation of public financial  management technology will allow the public to  track the budget live,  to see where every dollar is  being spent, and to gain renewed confidence in  the process Democratic Republic of Timor‐Leste Vision Strengthening Public Financial  Management in Timor‐Leste 
  • 30. sequenced Strengthening Public Financial  Management in Timor‐Leste 
  • 31. Public Financial Management – Foundation for Country Growth Public Financial Management Decentralization Human  GoTL LAWS Resource  Autonomous  FMIS Development Agencies (software and  hardware) Procurement  Capacity  Ministries Commission Building (Training) Strengthening Public Financial Management in Timor‐Leste 
  • 33. 1. International Standards Strengthening Public Financial  Management in Timor‐Leste 
  • 34. IPSAS International Public Sector Accounting  Standards Strengthening Public Financial  Management in Timor‐Leste 
  • 35. EITI Extractive  Industries  Transparency  Initiative Strengthening Public Financial  Management in Timor‐Leste 
  • 36. GFS Government Financial Statistics Strengthening Public Financial  Management in Timor‐Leste 
  • 37. MTEF Medium Term  Expenditure Frameworks Strengthening Public Financial  Management in Timor‐Leste 
  • 38. IATI International Aid  Transparency Initiative Strengthening Public Financial  Management in Timor‐Leste 
  • 39. 2. Manager’s Dashboard Strengthening Public Financial  Management in Timor‐Leste 
  • 40. review examines budget execution data integration with  macro‐economic  data integrated with back‐office  procurement & commitment  accounting within IFMIS Strengthening Public Financial Management in Timor‐Leste  40
  • 41. 3. Document Management Strengthening Public Financial  Management in Timor‐Leste 
  • 42. manages  correspondence with  senior managers repository for freedom of information
  • 43. 4. e‐Procurement  Portal Strengthening Public Financial  Management in Timor‐Leste 
  • 44. review government tenders published vendor alerts integrated with back‐office  procurement & commitment  accounting within IFMIS tender results published Strengthening Public Financial Management in Timor‐Leste  44
  • 45. 5. Transparency Portal Strengthening Public Financial  Management in Timor‐Leste 
  • 46. review www.transparency.gov.tl Strengthening Public Financial Management in Timor‐Leste  46
  • 47. articles subscribe drill down
  • 48. Expenditures, Transparency Portal 10 years of data drill through the chart of accounts
  • 49. Expenditures, Transparency Portal export to xls, doc, pdf, html, xml track commitments
  • 50.
  • 51.
  • 52. Lessons Learned Strengthening Public Financial  52 Management in Timor‐Leste 
  • 53. 1. Leadership Strengthening Public Financial  Management in Timor‐Leste 
  • 54. Goodbye Conflict, Welcome  Development Timor‐Leste will be the country that goes down in history  as the nation to put a stop to falling victim to large  companies and the resource curse Prime Minister Xanana Gusmão Strengthening Public Financial  Management in Timor‐Leste 
  • 55. 2. Learn from the mistakes of others Strengthening Public Financial  Management in Timor‐Leste 
  • 56. Goodbye Conflict, Welcome  Development When we in the developing world face these types of crisis,  which we do on a more regular basis than our colleagues in  more economically advanced nations — then we are  repeatedly told to increase our openness to the global  economy, to trust in the market but to regulate them well.  To be honest this approach has worked Minister of Finance Emilia Pires Strengthening Public Financial  Management in Timor‐Leste 
  • 57. 3.  Transparency  is not an  Option Strengthening Public Financial  Management in Timor‐Leste 
  • 58. citizen  auditors YouTube Facebook Twitter SMS Strengthening Public Financial  Management in Timor‐Leste 
  • 59. 4. Transparency =  Performance > Embarrassment  Strengthening Public Financial  Management in Timor‐Leste 
  • 61. Role of Civil Society • NGO’s can help organise literacy groups and provide materials.  They can provide private education and education for the blind.  They can provide school materials for students, and assist with school equipment chairs and books • NGO’s can help us organise and run technical training courses in our villages Timor‐Leste National Vision Strengthening Public Financial  Management in Timor‐Leste 
  • 62. 5. Sequenced Holistic Multiple‐ Year PFM Strategy Strengthening Public Financial  Management in Timor‐Leste 
  • 63. review Public Financial Management – Foundation for Country Growth Improve government performance Improve transparency & accountability Improve budget execution Improve government capacity Strengthening Public Financial Management in Timor‐Leste 
  • 64. 6. Build Capacity Strengthening Public Financial  Management in Timor‐Leste 
  • 65. review PFM Modernization Alignment with Capacity Building • Training beyond  • Intuitive systems software – Translation including  – IT capacity terminology – Project management – Simple & goal‐oriented  – Government accounting interfaces • Beyond training • Mentoring – Adaptable help – E‐Learning – Knowledge management Strengthening Public Financial  Management in Timor‐Leste 
  • 66. 7. Require Sustainability in Partner  Performance Strengthening Public Financial  Management in Timor‐Leste 
  • 67. 8. Adopt International Standards Strengthening Public Financial  67 Management in Timor‐Leste 
  • 68. 9. Leverage Open Systems Strengthening Public Financial  Management in Timor‐Leste 
  • 69. Transition to Open Environment:  Transparency Domain Closed Transition Open Transparency Access to Information Document Machine Readable Do not Publish as  Data Availability Data for Sale Publish as Exception Exception Publish, Audited &  Near Real‐Time  Mode Mixed Vetted Publishing What are they going to do  Government as  ROI Reason Revenue Generation with the data? Platform Citizens Target Business Community Civil Society & Press
  • 70. Transition to Open Systems:  Technology Domain Closed Transition Open Proprietary within  Support for Industry  Service Oriented  Integration Suite Standards Architecture Proprietary =  Proprietary/Open Tactical  Open Standards =  Middleware Customer Lock approach Customer Choice Open Systems reduce  Open Systems extend  Open Systems =  Viewpoint system performance value Extensibility Need for vendor  Low Cost Application  Extensibility High Costs Ecosystem Assembly
  • 71. 10. Leapfrog is possible  Timor‐Leste United States Comparison GFS, IPSAS, EITI, IATI,  1. Standards ? Leaped MTEF 2. Performance  Various tools across  Manager’s Dashboards To leap Management government 3. Document  Manager Document  Various Records &  Catching Up Management Management Correspondence 4. e‐Procurement August 15 FedBizOpps To leap Data.gov & others ‐ Leaping 5. Transparency Transparency Portal underfunding Strengthening Public Financial  Management in Timor‐Leste 
  • 72. www.revenuewatch.org Strengthening Public Financial  Management in Timor‐Leste 
  • 73. How? Timor‐Leste United States 1 Year Budgets, complex  Strategic Vision Holistic election cycles Government Structure Unitary Federal Civil Society & Media Seen as Improving Results Seen as “Special Interests” Government Intervention Seen as Good Seen Suspiciously Ease to Move to International  Long History of Entrenched  1. Standards Standards National Standards 2. Performance Management 3. Document Management Single system data source Multiple entrenched systems 4. e‐Procurement 5. Transparency Strengthening Public Financial  Management in Timor‐Leste 
  • 74. Links • Open Systems Enable Government Transparency  Leapfrog  http://www.freebalance.com/blog/?p=1559 • E‐Government Transparency in Developing Countries  http://www.cutter.com/offers/egovt.html • Developing Countries can Leapfrog Developed  Countries in Government Transparency  http://tech.state.gov/profiles/blogs/how‐ developing‐countries‐are • More: dhadden@freebalance.com Strengthening Public Financial  74 Management in Timor‐Leste 
  • 75. Goodbye Conflict, Welcome  Development Strengthening Public Financial  Management in Timor‐Leste