Financial Crime World

PEFA Report Highlights Quality Concerns in São Tomé and Príncipe’s Public Financial Management

The recent Public Expenditure and Financial Accountability (PEFA) framework evaluation has raised concerns about the quality of reports, monitoring, and procedural issues in São Tomé and Príncipe’s public financial management.

Evaluation Scope and Methodology

The PEFA assessment covered the entire General Government, including:

  • Budgetary Central Government
  • Local governments
  • Revenues collected by the Directorate of Taxes and the Directorate-General of Customs

The evaluation was conducted over a period of seven months from April to November 2019.

Key Findings

The report highlights several concerns in São Tomé and Príncipe’s public financial management, including:

  • Weaknesses in internal control mechanisms
  • Limited fiscal discipline due to unreliable revenue and expenditure forecasts
  • Technical limitations in tax collection
  • Economic weaknesses limiting the country’s ability to collect significant revenues

Internal Control Mechanisms

The report notes that the government’s fiscal discipline is limited by:

  • Absence of reliable revenue and expenditure forecasts
  • Weaknesses in internal control mechanisms, leading to treasury shortfalls and cash management weaknesses

This has resulted in mismanaged and uncontrolled internal debt.

Strategic Allocation of Resources

The report highlights concerns about the lack of a strong link between:

  • Government’s strategic plans
  • Mid-term Expenditure Frameworks (MTEFs)
  • Annual budgets

This has led to:

  • Lack of multidimensional expenditure analysis
  • Ineffective resource allocation

Procurement System and Public Services

The report notes shortcomings in the procurement system, including:

  • Competitive bidding process weaknesses
  • Shortcomings in internal control and accountability mechanisms

These issues have compromised the country’s financial integrity due to the absence of procedure manuals and up-to-date organic laws.

National Assembly Oversight

The report identifies concerns about the effectiveness of the National Assembly’s oversight of public accounts, including delays in elaborating consolidated annual and quarterly financial statements.

Recommendations

The PEFA assessment recommends:

  • Strengthening internal control mechanisms
  • Improving revenue forecasting
  • Enhancing strategic allocation of resources

It also emphasizes the need for:

  • Transparent and competitive procurement processes
  • Effective accountability and audit mechanisms

Conclusion

The PEFA assessment highlights the importance of strengthening public financial management in São Tomé and Príncipe to ensure transparency, accountability, and efficiency in the use of public resources.