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Strengthening governance in the Occupied Palestinian Territories

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Martin Rimmer

Albert Pijuan Martin Rimmer Nick Travis

This three-year capacity building project provided technical assistance to the Ministries of Finance (MoF) and Planning and Administrative Development (MoPAD) in the Occupied Palestinian Territories (OPTs), to improve public financial management (PFM) processes and practices. There is an urgent need to modernise PFM and planning systems and establish institutional arrangements that support reform within the Territories. We managed the delivery of a three-year Palestine Governance Facility (PGF), funded by the UK Department for International Development (DFID). Work was focused around strengthening the tax administration and re-engineering the system of planning and programme budgeting. By adopting a staff and organisational capacity building approach, the project aimed to ensure the sustainability of key reforms.

Challenges

Despite significant progress over the last few years, public financial management and planning in the OPTs remains weak. Effective governance is hindered by long-term political instability and unrest and the revenue environment remains uncertain and tightly bound by the overarching political environment. This is compounded by an outdated tax administration system and a lack of awareness of taxation responsibilities and procedures amongst the general public. In terms of planning, the relationship between budget programmes and the major service delivery functions is often not clear and the definition of a budget programme varies significantly both within, and between, ministries.

There is an urgent need to strengthen systems and institutions and build the capacity of ministries to deliver governance reforms in these areas.

Our approach

Work was focused around building staff and institutional capacity to improve revenue administration, strengthen planning and budgetary processes, and macro-fiscal forecasting. This capacity building approach aimed to ensure the sustainability of reforms and was measured against a ‘baseline’ of existing capacity established through extensive stakeholder consultations.

Specific services provided included:

  • Strengthening of revenue systems, including the establishment of a dedicated Revenue Management System (RMS).
  • Support to the Macro Fiscal Unit, including institutional development and staff mentoring to strengthen macro-fiscal forecasting.
  • Development of guidelines for programme planning and budgeting and review and revision of budget preparation forms.
  • Support for the development of a new National Development Plan based on sector strategies that link national policy targets with budget programmes.
  • Design and implementation of a Project Cycle Management System to improve the management of public investment.
  • Delivery of formal and on-the-job training for MoF, MoPAD staff, for example, in the assessment of programme budget submissions.
  • Support visits to line ministry and agency staff to deliver dedicated mentoring on programme budget design.

Outcomes

This project has already generated significant results. Strengthened management of revenue systems will help improve the efficiency of revenue mobilisation over the longer term. In addition, more effective fiscal planning is also being supported through the adoption of a new macro-fiscal framework.

More broadly, strengthened relationships between the Ministries of Finance and Planning are helping to promote a common, integrated approach to planning and budgeting. Over the longer term, these reforms will support the achievement of the PA’s policy objectives, including reducing its budget deficit and dependence on foreign aid, increasing transparency and improving the delivery of public services.