Public Financial Management Reform in Kosovo
Congratulations to the Government of Kosovo on an excellent PEFA assessment! The recently released report from the Public Expenditure and Financial Accountability (PEFA) Secretariat demonstrates that Kosovo has made positive and steady progress in its Public Financial Management (PFM) reforms.
The report noted that “control activities in PFM are very well developed and applied. The unified Treasury operated software system ‘FreeBalance’ contributes for all expenditure operations to be carried out and controlled through the software. Control of payment rules for all budget performance operations enhances transparency and accountability.”
FreeBalance Involvement in Kosovo
FreeBalance has worked with Kosovo since the birth of the country in 1999 when the pilot version of the Government Resource Planning (GRP) system was implemented by FreeBalance in just 26 days. The multi-year partnership that FreeBalance and the GoK have since maintained has seen Kosovo achieve remarkable results in PFM reform. This post-conflict country once managed through a United Nations mandate has sequenced legal reform, improved governance, and achieved international PFM standards under difficult conditions.
The Kosovo Financial Management Information System (KFMIS) was built on the FreeBalance Accountability Platform™ and uses ten of the FreeBalance Accountability Suite™ modules including (PFPF) Core Public Financials, (PFBC) Budget Controls, (PEPR) Purchasing and Expenditure, (GTBR) Bank Reconciliation, (GTCM) Cash Management and (GRRV) Government Receipts Management.
Highlights of Kosovo 2022 PEFA Assessment
The Government of Kosovo maintained its ‘A’ rating in 18 indicators and achieved ‘A’ or ‘B’ scores in 18 of the 32 new indicators despite the new, more stringent PEFA assessment methodology. In addition, Kosovo improved its PFM performance in 11 indicators:
|(3.1) Aggregate revenue outturn||C||A|
|(7.2) Timeliness of information on transfers||B||A|
|(18.4) Rules for budget adjustments by the executive||B||A|
|(22.1) Stock of expenditure arrears||C||A|
|(22.2) Expenditure arrears monitoring||B||A|
|(23.1) Integration of payroll and personnel records||C||B|
|(23.2) Management of payroll changes||B||A|
|(23.4) Payroll audit||C||A|
|(25.2) Effectiveness of expenditure commitment controls||C||A|
|(26.1) Coverage of internal audit||C||B|
|(31.2) Hearings on audit findings||B||A|
Kosovo PFM Improvements
The dramatic Public Financial Management improvements that Kosovo has made over time are clearly evident by comparing the country’s first PEFA Assessment in 2007 to the current results.
This level of PFM reform success is not achieved overnight. Kosovo has pursued a structured and intelligent approach based on adopting ‘good practices’ best suited to its country context. The progressive activation of GRP functionality in line with legal reforms and government capacity building has meant that each reform milestone has had time to settle and is now fully adopted.