The President of the Federated States of Micronesia, H.E Emmanuel Mori welcomed the preliminary findings of the peer review conducted under the Cairns Compact on Strengthening Development Coordination (Forum Compact) 12 – 26 November 2012. The Government of the FSM is the 9th Forum Island Country that has volunteered for a peer review of its national development planning, budgeting, public financial and aid coordination processes and systems.
The FSM has also specifically requested that in recognition of the pressing challenges facing the country, that their Peer Review team should also consider the suitability of the existing policy environment for promoting private sector development.
Selected by the FSM Government, the FSM Peer Review Team consisted of Mr Catalino Kijiner from the Government of the Republic of the Marshall Islands, Ms Noumea Simi representing the Government of Samoa, Mr Johnson Naviti of the Vanuatu Government and Mr Asif Chida from the UNDP Pacific Centre in Fiji. The Team was assisted by staff of the Pacific Islands Forum Secretariat.
The team consulted with leaders and agencies of the FSM national and state governments as well as non-government organizations, the private sector and development partners.
The Forum Compact Peer Review Team presented its preliminary findings through an Aide Memoire to the government and key stakeholders of FSM on 26 November. The team’s draft report is scheduled to be completed in three weeks and it will be released after the government has approved the recommendations. In its presentation of its preliminary findings, the peer team acknowledged the support from both the national and state government agencies for the review and congratulated FSM on having chosen to host the peer review process after the completion of an FSM Partners’ Forum and a Public Expenditure and Financial Accountability Assessment (PEFA). This was a sign that the processes for reforms are underway in FSM and the team had tried to support this in its discussions and conclusions.
During the peer review, the team stressed that the review was not an assessment but was meant to be helpful to FSM by identifying existing starting points for progress and where there are missing elements, and most of all by putting FSM in touch with similar experience in the rest of the region.
The team was impressed by the common sense of urgency about the need for reforms and growth in FSM. Everyone, including the private sector and the NGOs were interested in how other countries are growing the private sector, managing aid and encouraging participation by all sections of society in inclusive development. The team also emphasised that the private sector and NGOs in the FSM are national development assets and encouraged both the national and state governments to foster close collaboration with in the years leading up to 2023.
On planning, the peer review team recognized the limited functionality of the FSM national Strategic Development Plan and national planning capacity but acknowledged some level of planning at the sector and state levels. The team had concerns about whether the current complex form of performance based budgeting was working for the FSM and suggested more simplified, targeted performance budgeting based on experience elsewhere in the Pacific. The FSM Forum Compact Peer Review team noted that for the private sector in the country, the main missing element (after tax reform underway) is a strategy for investment and domestic business growth. The team will recommend that such a strategy be driven by the private sector with appropriate assistance and drawing on the experience of neighbouring countries.
The team also acknowledged that the FSM Government has shown it takes aid management seriously through the establishment of the Department of Statistics, Budget, ODA and Compact (SBOC). The team welcomed the establishment of an aid management function at the state level noting that the key point is aid management and acknowledged that the draft FSM ODA or Aid policy was being set along the right policy lines.
Substantive recommendations will be made on the areas covered by the peer review’s terms of reference in the final report.
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