Syrian Arab Republic : Modernization of Public Financial Management

The authorities have made good recent progress in important public financial management (PFM) areas. They have strengthened the overall regulatory framework of the budget process by adopting a new basic finance law, and further deepened budget integration by transferring the responsibilities for the capital budget from the State Planning Commission (SPC) to the Ministry of Finance (MoF). They have also improved the budget presentation by providing information to parliament for selected ministries on the base of a simple program structure.The main purpose of this report is to assist the authorities in advancing their reform agenda for modernization of the PFM system. To this end, the report: Develops an action plan for PFM reform. The plan sets out specific activities in a selection of reform areas identified as priorities in discussion with the Minister of Finance, as well as the suggested timing and possible requirement of technicalassistance (TA); and elaborates, in detail, actions that need to be undertaken in four broad PFM areas as identified in the plan: (i) medium-term orientation of the budget; (ii) budget integration reforms; (iii) budgetary treatment of public economic entities; and (iv) treasury reforms. Key recommendations of the report include:Prepare a three-year fiscal forecast and link fiscal projections to an approved debtsustainability and fiscal strategy framework; present as part of the budget documentation information on the revenues and expenditures of the public economic entities; and progressively strengthen governance of the sector; gradually extend the use of programs for presentation purposes in the budget by adding up to five to six new ministries in 2010, including the MoF and the ministry of local administration (MoLA); further integrate the management of the recurrent and capital budgets by the budget department in the MoF; the reform areas included in the action plan reflect initial priorities and are not an assessment of all areas in which the PFM system in Syria might be improved. Strengthen the government banking arrangements by introducing a treasury single account (TSA) system; develop accounting and cash management functions at the MoF, by establishing accounting and cash management units in the treasury department; and introduce new budget classification and chart of accounts (CoA) to be integrated into a new integrated financial management information system (GFMIS).