Public Finance Management Colombia, Reform Process, Phase II

Well-integrated and coordinated PFM systems are key to manage public finances effectively and efficiently. In Colombia, these systems and processes are highly fragmented. Institutions currently operate in silos with a limited articulated vision and sometimes competing and overlapping mandates. Public investment and expenditure is also highly fragmented due to the existence of multiple budgets resulting in inefficient allocation of public funds. With the support of the donor community (with SECO and the World Bank as key actors) the previous government defined a roadmap to implement a comprehensive PFM reform.

The overall objective of the project is to improve public service delivery in Colombia by strengthening quality and transparency of public finance management and increasing public expenditure efficiency. The project addresses the key underlying challenges by five pillars: (1) Governance, strategy, inter-institutional coordination and policy dialogue- (2) Quality and transparency of PFM information- (3) Efficient public expenditure- (4) Coordinated and integrated capacity building- and (5) Change management.

(1) Governance structure for successful implementation and steering of PFM reform processes in place, including institutional coordination and high-level policy dialogue arrangements among relevant stakeholders.

(2) Finalized integrated public financial management system (SIGFP) aligned with international standards, implementing it, ensuring appropriate coordination and system interoperability across government levels.

(3) Improved public expenditure by harmonizing and integrating budgeting instruments, improving inter-institutional collaboration and strengthening operational processes.

(4) Integrated capacity building approach in place to serve the needs of the subnational entities.

(5) Effective change management in place capacitating institutions and individuals to implement the on-going PFM reforms.

Expected results:  

(1) Detailed reform roadmap, PFM governance structure, definition of institutional and legal arrangements.

(2) Definition of core PFM functions and administrative processes, strategic guidelines, peer-learning exchange, PFM data models and risk-based control tools, partnership agreements with civil society organizations.

(3) Harmonization of budgeting instruments, development of: results-based budgeting methodologies, strategic costing models, strategy to reduce budget inflexibilities, shared service strategy, strategic supplying analysis, asset management methodologies.

(4) Institutional framework to coordinate capacity building, PFM certification program, strengthened service providers, peer-learning exchange.

(5) Design of change management strategy for PFM reform including organizational structure, dissemination workshops.

Results from previous phases:  

The external evaluation conducted in 2018 concluded that the project phase I was relevant, highly effective and efficient, with a satisfactory sustainability level. It has proven to be timely and valuable for Colombian authorities and started at a time when significant financial management reforms were in progress in the country and with Switzerland as almost the only donor in this area. The project phase I has achieved following main results from 2013-2019: (i) Improved inter-institutional coordination- (ii) Fundament for the design and implementation of an integrated public financial management system and the basis for the draft policy document- and (iii) Strengthened subnational capacities mainly through national government tools and capacity building measures.

Phase 2 (2019-2024) builds upon achieved results and includes the lessons from the external evaluation, the PEFA assessment and the post-PEFA dialogue.