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New Public Financial Management Act presented in Parliament

New Public Financial Management Act presented in Parliament

The new Public Financial Management Act was presented to Parliament for its second reading by the Minister of Finance and Treasury, Honourable Rick Hou.

In reiterating the relevance of the new Public Financial Management Act, the Minister said, “The current Act has been in effect since our Independence and has served us through the life of all our sovereign Governments to this day.” He added “Government can only learn from all the trials and tribulations we have encountered in the past in administering the legislation and the importance of government finances in achieving stability and growth in the Solomon Islands.”

Honourable Rick Hou highlighted that as the Solomon Islands economy started to stabilize fiscally and economically after the civil unrest, the need for a new Act gathered momentum, especially after the onset of the global financial crises four years ago and its significant impact on our economy. “These crises attested to the vulnerability of the Government finances to such shocks and the Act tries to provide the legally enabling framework for Government to increase its resilience to such shocks”, said the Minister

In this regard, the Minister further explained, “The intent of the Public Financial Management Bill 2013 is to implement a modernized financial and legislative framework that defines, enables and promotes high quality public financial management and administration. Consequently, the new Act is written in such a way that it is relatively easy to understand and to administer. This will improve delivery of public services for the people of the Solomon Islands.”

Four key policy objectives which the new Act will aim to achieve were highlighted by the Minister and they include:

1) instilling more fiscal discipline, by prescribing prudent policies and rules to help maintain sustainable levels of Government expenditure, revenue and public debt;

2) facilitating the efficient allocation of budgetary resources according to policy priorities and priority needs, through requirements for more pre-set timelines and documentation for the key phases of annual budget formulation and its reporting to Parliament;

3) ensuring efficient, effective and ethical use of public resources for its intended purposes, by clarifying the duties and responsibilities of those in charge, and having more specific sanctions to be applied for the loss of public resources due to non-performance of that duty.

4) The requirement of more accountability in making decisions and the responsibility for the use of public resources by having clearer reporting and publishing requirements in the new Act.

In summary, these objectives therefore strive to have a more controlled and efficient process in the allocation of budgetary resources; ensuring that budgets are allocated and spent in priority areas that will improve socio-economic well-being and economic growth. Furthermore, the Act focuses on transparency and accountability in the effective and ethical use of public funds.

ENDS

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