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Greenland’s Financial Management: A Mixed Bag of Progress and Challenges

A recent assessment of Greenland’s financial management has revealed a mixed bag of progress and challenges in the country’s ability to efficiently use resources for service delivery.

Positive Developments

Several areas where significant improvements have been made include:

  • Implementation of a new government-wide Enterprise Resource Planning (ERP) system, which has improved payroll controls, procurement processes, and financial reporting.
  • External accountability mechanisms, such as annual financial statements audited by Deloitte and scrutiny by Inatsisartut, are considered to be compatible with best practice.

Challenges and Areas for Improvement

However, there are also areas where progress has been limited or even declined. These include:

  • Procurement monitoring is an area that requires improvement, particularly in terms of recording and oversight of decentralized procurement processes.
  • Some indicators related to budget transparency and predictability have declined or remained unchanged.
  • Need for better domestic revenue mobilization and administration.
  • More effective control over non-payroll expenditure.

Key Indicators: A Comparison of Progress

The report presents a comparison of key indicators between 2014 and 2021, using the Public Expenditure and Financial Accountability (PEFA) framework. The results show that:

  • 10 indicators have improved
  • 5 indicators have declined
  • 13 indicators have remained unchanged

Notable improvements include:

  • PI-6: Budget information has improved
  • PI-8: New government-wide ERP system implemented
  • PI-9: Fiscal risk report produced by GoG
  • PI-10: Public access to key fiscal information has improved
  • PI-15: Monitoring of tax arrears has improved
  • PI-18: Payroll controls have improved

Notable declines include:

  • PI-2: Increased variability in outturn compared to budget
  • PI-5: Capital expenditure not budgeted on economic classifier
  • PI-12: Multi-year fiscal forecasting has declined
  • PI-21: Performance of internal audit has declined

Recommendations

The report recommends that Greenland continue to implement reforms aimed at improving its financial management, including:

  • Improving procurement monitoring and oversight
  • Strengthening external accountability mechanisms
  • Enhancing budget transparency and predictability
  • Implementing comprehensive plans and systematic set of indicators linked to outputs or outcomes in ministries

By addressing these challenges and building on the progress made so far, Greenland can continue to improve its financial management and ensure that resources are used efficiently for service delivery.