Republic of Panama : Public Expenditure and Financial Accountability

Abstract

Panama's public financial
 management (PFM) system displays several strengths with
 respect to the fiscal position, debt management, and payroll
 administrative controls, but from a systemic perspective
 budget preparation and budget credibility issues undermine
 the efficiency of sectoral investment plans and make it
 difficult to advance on other improvements in the public
 sector. An efficient and transparent allocation of budgetary
 resources allows the government to achieve value for money
 in delivering public services. This assessment is undertaken
 at the request of the Government of Panama (GoP) which is in
 the process of reforming and modernizing its public
 finances, and is therefore interested in establishing both a
 baseline for future PFM performance measures and the degree
 of management alignment to internationally accepted best
 practices. The public expenditure and financial
 accountability (PEFA) methodology provides relevant
 information on current management and will allow
 establishment or adjustment of a reform strategy to improve
 PFM quality. This PEFA assessment provides a reference and a
 baseline for two projects and a baseline for the GoP to
 measure progress of the current reform. The projects are:
 (i) the program to strengthen fiscal management financed by
 Inter-American Development Bank (IADB), and (ii) the
 enhanced public sector efficiency technical assistance loan
 financed by World Bank (WB).