IMPLEMENTING INTEGRATED FINANCIAL MANAGEMENT SYSTEMS
AS INSTITUTIONAL REFORM:
THE CASE OF GUATEMALA´S SIAF
Richard J. Moore
July, 2000
Prepared as part of the World Bank study on Comparative Efforts in the Implementation of
Integrated Financial Management Systems in Latin America. Prepared for the Poverty and
Economic Management Division, LAC.
SIAF Guatemala
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Implementing Integrated Financial Management Systems
as Institutional Reform:
The Case of Guatemala´s SIAF
Introduction
As has been noted in numerous sources, Guatemala´s Integrated Financial
Management System (SIAF) is a relative success story of both design and implementation.
While it is too early to render a definitive judgement on the overall success and
sustainability of the effort, it appears clear to this author that SIAF is here to stay, the
institutional changes that have already occurred are irreversible, and that the technical
sustainability of the major subsystems that have been implemented have transformed
financial management in the country permanently. The Bank-funded Integrated Financial
Management Projects (I & II) in Guatemala have been recognized as important examples
of successful IFMS implementation and were awarded the 1999 World Bank President´s
Award for Excellence. The recent Implementation Completion Report for IFMS I
(February, 2000) notes that, from a technical standpoint, the establishment of an integrated
financial management system has been satisfactory or highly satisfactory in most of the
major subsystems that form part of the system:
 the institutional structure of public financial management, including both the
legal and regulatory structure and the administrative procedures and structures
in the target agencies of the central government, have been strengthened and the
achievement of these changes would appear to be irrevocable;
 the budget system in both formulation and execution has become an effective
tool for planning and programming in the central Finance Ministry and in most
line ministries;
 the accounting system provides a common accounting framework on both a
cash and accrual basis for all ministries and has allowed both a real time
information base for recorded transactions and an effective means for internal
control;
 a modern cash management system has resulted in the reduction of untimely
payments, provides a means for reducing/eliminating "floating debt" for
Treasury to control receipts, and has led to the reduction of the multiplicity of
Government cash accounts;
 transparency and timeliness in transactions have improved the quality and
efficiency of cash programming, and have contributed to a new credibility in
Government finance;
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 significant progress has been made in the modernization of the procurement
system and the linking of procurement to other modules or subsystems in the
financial management system;
 while the development of the debt management system has lagged considerably,
initial design of linkages to the basic modules of budget, accounting, and cash
management are in process;
 less successful has been the development and integration of the auditing system,
and the institutional reforms necessary for modernizing the Contraloría General
de Cuentas, yet even in this area significant beginnings can be noted;
 initial actions to develop and integrate administrative modules (SIAD) for
procurement, inventories, and human resource management hold great promise
for the extension of the linkages of SIAF to other management information
systems;
 the parallel development and modernization of the tax system (SAT) and its
integration with public expenditures offer Guatemala for the first time an ability
to program expenditures on the basis of identifiable revenues;
 the number of competent and trained technicians in the management of SIAF,
and by extension the financial management of Government, has increased
dramatically, with the training of more than 9,500 civil servants in the use of the
system;
 the success of SIAF´s implementation is more than a story of successful reform
of information systems at the central finance ministry as SIAF has allowed the
successful decentralization of financial decision-making and management to
line ministries;
 the implementation of SIAF has contributed significantly to a revolution in the
modernization of organizational culture and behavior in significant parts of the
central government -evident in Finance but also in key line ministries- a
modernization process that is likely to be sustained even in the face of dramatic
shifts in the political order with the recent national elections and change in
Government; and finally,
 the success of implementation is more pronounced given the initial context in
which these reforms were introduced and the relatively short time frame for this
implementation.
And the list could go on. In the course of this paper we will discuss these and other
advances in the implementation of Guatemala´s Integrated Financial Management System.
However, the story of SIAF in Guatemala is more than a technical success story. It is a
story of an approach to public financial management that aims to introduce institutional
reform through the introduction of improved information systems linking the various stages
of public financial management from a relatively narrow accounting perspective. It is also
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the story of the forces and actions that came together to provide the basis for a successful
case study in the implementation of reform.
Finally, by examining the record of Guatemala´s implementation of SIAF, we hope
to gain insight into those factors that have supported the introduction of significant changes
in budgetary and financial management outcomes at three levels. As is noted in the World
Bank´s Public Expenditure Management Handbook, theory and practice show that a
country’s institutions - both formal and informal - have a decisive influence on budgetary
outcomes at three levels. At one level, the introduction of institutional reforms in public
financial management aims to improve aggregate fiscal discipline and planning and the
traditional control functions of public expenditure management to establish budget
parameters. At a second level, these reforms aim to improve the planning function of public
expenditure management through improvements in the capacity to allocate resources in
accordance with strategic priorities and baseline data from prior expenditures and revenue
patterns. While budgeting can be seen as a technical exercise, ultimately it is the
expression and platform for political decision-making over the utilization of scarce
resources for selected priorities. Finally, in a more narrow sense, reforms aim to improve a
management and accounting function, the effective and efficient use and monitoring of
resources to achieve strategic priorities.
Thus, a useful purpose of this paper is to respond to the following questions: To
what degree has the implementation of SIAF and complementary reforms improved the
budgetary outcomes at all three levels? How have overall macroeconomic planning,
priority setting, and budget execution and control improved as a result of the
implementation of SIAF. What (technical, administrative, economic, political, and social)
factors help to explain both the success of implementation and the improvements in
outcomes? To understand the sustainability of reforms all three levels of budgetary
outcomes need to be considered in the context of the broader political, social, and
economic environment.
What explains the successful execution of Guatemala´s SIAF? In accordance with
Terms of Reference (TORs), the objectives of this paper are twofold:
1. to assess the extent to which the IFMS projects have contributed to improving
broader institutions of Guatemala’s public expenditure management system, in
terms of their impact on changes in procedures and behaviors of public officials
dealing with public expenditure management, and;
2. to identify factors that have facilitated the successful implementation both in terms
of broader political and social factors that generated and sustained the demand for
and commitment to the reform and of micro bureaucratic factors that permitted the
new system’s implementation.
To answer these questions and to achieve these objectives, the paper is divided into
four sections. First, it is imperative to understand the context of reform initiatives: how did
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the pre-existing public financial management system perform and what were the critical
weaknesses in the system? Second, the processes of design and implementation of the
particular system adopted in Guatemala proffer insight into the reasons for success. Third,
how has public financial management and bureaucratic behavior changed as a result of the
implementation of reforms? Finally, what are the prospects for sustainability and what key
lessons can be drawn from the Guatemalan experience?
One of the principal arguments of this paper is that while the Bank´s approach to
the design of the integrated financial management system in Guatemala and the technical
expertise applied both to design and implementation are significant factors in success, they
are not the most significant. Rather, the real success of the implementation of SIAF in
Guatemala resides in several complementary factors, including the following:
 A cohesive and committed political leadership within Guatemala that
provided strong support for the program and which continued throughout the
life of the implementation of the initial project (1996-1999). Strategic policy
making during the period increasingly demanded that public expenditures and
reliable monitoring of those expenditures focused on a clear social agenda. Key
line Ministries also provided significant support to the agenda of reform, if not
always to the specific instruments of public financial management. The
legitimation of this Executive and Legislative leadership found significant
impetus and stimulation from the need to implement monitorable actions
specified in the Peace Accords;
 If the political leadership faltered in the course of establishing policy, the
backdrop of demands of the social agenda (Peace Accords) served as the
forum for linking policy making to establishing strategic priorities and
managing the use of resources for the achievement of specific outcomes;
 Parallel to the reforms in public financial management, there was a strong and
continuous push toward Modernization of the State. Ironically, the push for
State Modernization from line ministries, and the relatively narrow focus on
administrative reform by the Government´s Presidentaial Commission for
Modernization of the State, never interfered with nor created alternative
agendas for actions to promote financial management reform. No mixed signals
nor alternative focus of resources affected support for implementation of SIAF;
 Strong, if not always technically convinced, political leadership within target
line ministries: Health, Education, Communications and Transport,
Agriculture. The desired devolution of the public financial management system
was facilitated (in the first instance) and eventually and aggressively pursued by
both the political and technical leadership in these line ministries. The goals of
devolving programmatic decisions to line ministries with clear resource bases in
the context of an effort to exercise fiscal restraint met the requirements of SIAF
and the stated strategy of decentralization and deconcentration of the
Government;
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 The existence of a fresh and continuous technical leadership to carry out the
implementation of public financial management reform. This technical
leadership emanated from the Bank and key consultants contracted for
designing and implementing SIAF, from within the higher levels of the Ministry
of Finance, from key second level technical leadership within Finance, and
eventually from technical leadership in several line ministries;
 The decision to build a cadre of technical expertise within the Ministry of
Finance (first) and then to expand the trained human resource base quickly and
effectively to line ministries. The emigration of qualified technical personnel
from Finance to line ministries in technical leadership and operational positions
proceeded rapidly;
 A willingness to build small in terms of the scope of public financial
management reforms yet with a similar willingness to impose system wide
decisions that affected the speed and scope of implementation. The approach to
SIAF in Guatemala was to introduce the system in the three basic modules
(budgeting, accounting and treasury) with minimal lag time between their
introduction, and in all line ministries without parallel systems that often
produce confusion and disorder. This was possible because of the growing
maturity of IFMS´ and the new information technologies offered by the
Internet;
 A results-oriented approach that emphasized the need to produce outcomes in
a relatively short period of time. The initial and dramatic results of the
implementation of SIAF were felt within the first year of full implementation;
 The positive and aggressive role of the Bank, and the existence of the Bank as
the sole provider of technical assistance throughout the period provided for
continuity and singular direction to the implementation of the project and the
reforms. While in other IFMS contexts, joint agency participation (IDB,
USAID, World Bank) may have served well, in the Guatemalan context the
existence of a sole provider of technical assistance seems to have reduce
difficulties in project management and offered this continuity and singularity of
direction; and finally,
 A willingness to assure that the implementation of SIAF was contextual, in
line with both the Government´s overall policy agenda and with efforts to
modernize the State.
The Context of Reform: Public Financial Management Prior to SIAF
To suggest that a system of public financial management existed in any integrated
fashion even at the central Ministry of Finance level prior to 1996 would be an
exaggeration. In fact, a more accurate description of the status of public financial
management would be "chaos". But in many ways this was deliberative chaos because the
"system" provided a feudal array of insulated fiefdoms, each with the capacity to generate
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its own internal power structure and able to reward and penalize under rules of high
discretion at the operational level.1 The shortcomings and weaknesses of the system read
like a "to do" list of public financial management. Prior to 1996, public financial
management and the key institutions and agencies involved were characterized by an
operating system and organizational culture that encouraged the persistence of centralized,
vertical, patrimonial, unconnected and non-transparent fiefdoms incapable of establishing
fiscal discipline, priority setting and planning, or effective management and monitoring of
action.
 Few links existed among policy making, planning and budgeting. At the same
time, there existed fewer links between the process of budget formulation and
budget execution, and no effective means of evaluating budget outcomes.
While line ministries might be involved in the process of bottom-up
establishment of sectoral priorities (usually simply in terms of funding last
year´s programs) in fiscal terms, limited access to central finance decisions as to
the actual budget has always meant "ask for the max and expect the worse."
Perhaps worse, the pressure on spending (immediately) by line ministries was
high because budget cuts, uncertainty in revenues, and high discretionary power
in the Ministry of Finance meant that one could never be sure nor could one
plan effectively.
 An ultimate irony in the budgetary and payment processes resulted in the worst
of all possible worlds. While too much flexibility and too little restraint (or
control) leaves the financial system open to corruption, the opposite - too little
flexibility and too much restraint - builds rigidities and inhibits either
innovation or change and affects the capacity for political decision-making. In
Guatemala, rigidities in the contracting and budgetary processes inhibited action
or innovation, but the impossibility to control accounting or treasury actions
meant that the standard commitment and payment mechanism - ordenes de
compra y pago (OCP) or purchase orders - entered the system without the
availability of funds to pay. The result of restraint and rigidity in procedures,
and limitless flexibility and discretion in payment was a license for corruption.
 Few expenditure controls or even coordination among key functions existed,
oftentimes encouraged by personnel in technical directorates as a means for
increasing their own discretionary control over financial actions. Within the
Ministry of Public Finance, each of the key subsidiary systems (budget,
accounting, treasury) maintained separate data bases in relatively obsolete and
closed systems that prevented the process of conciliation prior, during or
subsequent (audit) to any financial transaction. Most transactions, and the
multitude of supporting evidence, remained manual.
1
The terminology of chaos is drawn directly from interviewed participants in both the Ministry of Finance
and in line ministries.
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 As an extension of the above, there existed within the accounting and treasury
(cash management) functions little capacity to monitor in a timely basis actual
commitments or even expenditures.
 Funding decisions and execution were highly centralized in the Ministry of
Public Finance. Bureaucratic centralism without effective control further fueled
abuses in the system. A clear example was the obsolescence in the 1980 Ley de
Contrataciones which required that virtually any contract be administered by the
Ministry of Finance regardless of size. The existence of some 1,100 budget
categories, as well as four times as many budget line items (activities) (from
which funds could not be moved) controlled line ministry implementation. In
spite of a "programmatic budget" in theory, the extreme rigidity and limited
authority to move funds from one category to another placed line ministries and
cost centers in the unenviable position of relying on central Finance Ministry
intervention for the smallest of details. For example, a school Director might
petition the purchase of aluminum roofing from the Ministry of Education
through the Director of Finance, one of thousands of solicitations received. The
Director of Finance would request price quotes for the expenditure, no matter
the size, and a purchase order was made by the selected provider. Since there
was little capacity for control over the licitation process, the Finance Director
within the Ministry of Education had substantial discretion, even though
procedurally he/she was bound. The purchase order would be transmitted
directly to the Ministry of Finance (Accounting Department) where the payment
order was registered on a mainframe virtually inaccessible to the payee
(Treasury) which maintained a different archival and registry system. But a
cost was now registered in the system. For lack of control, the same OCP might
be - and often was - reintroduced for lack of payment, but now could be
registered twice! The Treasury Department was now responsible for payment,
but which of the 240,000 monthly checks, with a perennial shortfall of
resources, should be paid? The procedures led to highly personalized
discretion, lack of internal control, lack of shared information, limited relation
to budget or priorities, the invitation to corruption, and a "floating debt" of
enormous proportions.
 The system encouraged long delays and uncertainty in payments to suppliers
due to failures in the cash management system and the absence of clear links
between resources available and commitments made. Payments took a
minimum of 20 days, but more likely would be paid within six months…if at
all.
 The lack of credibility of payment meant that suppliers were often unwilling to
"trust" government payments. They would either withhold delivery until actual
cash payment had been made, would seek less transparent means to assure their
place in the payment line, or would increase costs to cover the eventuality of
late or non-payment. One clear result was the increase in paperwork: to assure
payment suppliers would demand separate Actas de Confirmación verifying the
avilability of government funds for each check issued.
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 There existed a constant crisis of liquidity fueled by a centralized system of
individualized (paper) payments unconnected to either the budget decision or
the availability of funds. Prior to actions to reengineer administrative procures
and processes, there were some 130 steps in the conciliation process. Until
1996, all documentation related to individual expenditures was sent from line
ministries to the Ministry of Public Finance for (primarily manual) review,
registration and payment. The Treasury Department issued an average of
240,000 checks monthly (primarily payroll).
 As a result, there existed a "floating debt" equal to approximately 20-25% of
budget. In 1996, floating debt was equal to 1,200 million quetzales, 25% of
budget. In 1996-97, that floating debt was reduced to 600 million quetzales,
and by 1997-98 it had disappeared.
 The lack of credibility of government finances was not limited to suppliers
external to government. The abuses, inefficiencies and the inability of the
central Ministry of Finance to assure the predictability of transactions in terms
of either time or resources meant that line ministries sought means for
bypassing the Ministry of Finance. One such means that further exacerbated the
incapacity of the public financial management system was the maintenance of
multiple separate bank accounts outside the purview of the Treasury. By 1996,
some 1,300 separate accounts existed outside the control of either the
accounting or budget planning functions of the central government. Ministries
would jealously guard resources by maintaining "private" accounts and income
streams that would never enter the reporting system. Rotating funds, loans,
donations -- all existed at the line ministry and deconcentrated agency level.
These separate accounts had several effects in the system: they increased the
personal fiefdom and discretion of ministers unrequired to subject expenditures
to review; they created idle accounts that generated high interest charges for
government; and, they reduced the capacity of the financial management system
to manage resources effectively. Further, the failure to report and the
maintenance of hidden budgets by line ministries meant that the relationship
between revenues and expenditures and the levels of public credit/debt was
unknown. The strengthening of the Consolidated Fund - Unique Account in
Treasury as the means for the receipt and custody of public funds has been a
strong force in the elimination of these abuses. While funds reside in the
Central Bank, the management and control of funds through dedicated
information lines and daily reconciliation add to this control. While idle
balances in accounts still exist, the process of consolidation is well advanced, as
noted earlier.
 Uncertainty generated yet another deficiency in the system: ministries
(especially the Ministries of Health and Communications, Transportation and
Public Works) maintained inventory levels well beyond reasonable levels or
needs as a means to insulate themselves from the uncertainty of the flow of
funds and as a conscious means to maintain high levels of operational
discretion. These inventories increased administrative costs, led to waste in
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some cases, and in others allowed discretionary purchasing outside the
framework of timely budgeting and expenditures.
 Another major weakness in the public financial management system was in
human resource terms. Civil servants involved in the financial management
system were poorly motivated, poorly paid, and poorly trained, even in the
central Ministry of Finance. In the Technical Directorate of the Treasury, there
were only three college graduates or professionals! While the situation was
somewhat improved in the Budget Directorate and in Accounting, the lack of
professional personnel hampered any effort to improve the technical quality of
actions internally. If these problems were evident at the center, in line
ministries the situation was more severe. Virtually no line ministry had
professional personnel (graduates) in the administration of finances (pericontadores). Worse still, in a number of ministries, the financial administration
function had no institutional home. In the Ministry of Education financial
administration until 1996 was carried out by a part-time administrator whose
institutional relationship was as personal advisor to the Minister.
 Finally, the absence of timely and accurate information had profound effects on
the policy-making process in another sense: even within the leadership of the
Ministry of Public Finance, the capacity to establish the fiscal parameters for
effective an effective policy framework was hampered. Worse still, timely and
accurate information transmitted to the Presidency or to Congress was less
available, and policy decisions continued to be made in an informational
vacuum. Even the annual report for the fiscal year was not completed for as
much as three months into the following year.
Clearly, this was a public financial management system in crisis and had been for
years, although perhaps not distinct from other Finance Ministries in the region.
Recognition of the failures at all levels was evident among both bureaucrats and policymakers, and yet the system persisted. Part of the persistence of the system was the fact that
it indeed worked for some players, both within government and as clients of government!
In addition, the highly centralized, highly patrimonial and non-innovative nature of
government, and especially within the organizational culture of the Ministry of Public
Finance, meant that there were few incentives to change. A paradigm of control and
limited integration of financial functions had existed for a long time and the immediate
prospects for reform in the early 1990s were not promising.
The Initiation of Reform: Precursors to the Design and Implementation of SIAF
While recognition of the need for change in the way that public financial
management was rampant by the early 1990s, action to bring about change was not yet
forthcoming. It was not until 1994 that any concerted action to attack the problems of
weak public financial management began to take shape. In these initial efforts it is
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important to point out the key role played by the World Bank in the formulation of an
organized response to a growing fiscal crisis.
Throughout the development of initial internal awareness, institutional response,
system design and implementation of actions to improve public financial management in
Guatemala, it is hard to underestimate the positive and preponderant role played by the
World Bank. This positive role, as we will note at several junctures, provides an important
lesson from the Guatemalan experience. The Bank´s aggressive presence in this area, and
the absence of other international players for financial and technical support throughout the
period from 1994-1999, has allowed the development of the system in a consistent manner.
The absence of crossed signals, consistent and coherent support, an established line of
communications with Government officials, and the continuity of an international and
national team of experts are all results of this consistent, and sole, support by the World
Bank. While this may not be a lesson for other contexts, it is clear that in Guatemala the
effect was positive.
Much of the initial impetus for action in 1994 was the result of discussions between
Government and the World Bank on ways in which the performance of the public financial
management system could be improved. Out of these early discussions, the Government
requested technical diagnostic assistance, and the Bank responded through the utilization of
an Institutional Development Fund (IDF) grant. An international team of experts under the
leadership of the Institute for Public Administration carried out an initial diagnostic
mission with great impact. That mission focused on the budgeting, accounting, treasury,
public credit, auditing, and procurement functions of the central government and the degree
of integration of these functions. The conclusions of that study were stark. The report
identified some 17 vulnerable areas in the financial management system and pointed to
significant deficiencies and a lack of integration in the legal framework, the regulatory
structure, procedures and standards, human resource capacity and information technology.
Particular attention in that initial diagnosis focused on shortcomings in the budget process.
This initial study had wide circulation and credibility within parts of the Finance
Ministry bureaucracy and the World Bank, and translated into internal and external action.
Internally, the unit most capable of providing leadership (in terms of human resource
capacity) began to do so: the Dirección Técnica de Presupuesto in the Ministry of Finance
formed a Comisión Presupuestaria to begin to address major concerns offered and to begin
to strengthen internal human resource capacity. Neither Accounting nor Treasury had the
internal capacity nor the will to provide this leadership. Moreover, clear resistance to any
change in the status quo was strong in both areas. And why not? Each of these internal
bureaucracies was a major benefactor of the current procedures, structure and paradigm!
It is less evident that Budget was able to generate the discretionary control over funds than
the former two entities. In the period subsequent to the diagnostic study, three internal
working groups were formed in Budget:
(a) to examine and offer revisions to the clearly obsolescent Organic Budget Law of
1986 (D.L. 2-86);
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(b) to examine and revise of the budget classifiers in order to provide a more dynamic,
flexible and modern approach to budget classification; and
(c) to promote new proposals for budget execution.
At the time, it was not clear within the Ministry of Finance that integrated financial
management was the route. In fact, resistance to such an approach at technical and
bureaucratic levels was evident because of the apparent threat to the power of fiefdoms.
Even within Budget, integrated approaches were not viewed as the answer. The concern
from their perspective was to improve the workings of the budget system and institution.
Externally, the diagnostic provided strong support for the initiation of discussions
with Government on financing for more comprehensive reform and the integration of the
public sector financial management system. While the approaches proffered by the Bank
in these initial stages fell on Government ears that were often deaf or that had limited
understanding of the implications of an integrated approach, project preparation proceeded.
The Integrated Financial Management Project I: Project Objectives and Rationale2
Guatemala´s SIAF was originally conceived of as a relatively narrow approach to
reform of public financial management based upon the development and integration of
disparate information systems into a common and reliable data base, generally applied
standards and procedures for recording and reporting financial data, and the development
of open microcomputer based information technology systems capable of transmitting data
across the various financial sub-systems. The relative emphasis was on improving the
quality and flow of information at and between different aspects of government financial
management with particular emphasis on the accounting subsystem. The initial premise
from the Bank´s perspective was that better information was critical to restore some
credibility to public financial institutions and that this would lead to developing better
institutions.
As described in the Project Identification Document, the overall goal was to
strengthen the financial management capability of the Government of Guatemala and to
help restore public confidence in public sector integrity and competence. Within this
framework, one specific objective was to improve the efficiency, accountability and
transparency of the financial management functions of the public sector through
implementation of an integrated financial management system centered in the Ministry of
Finance and a modernized government auditing system in the Comptroller General’s
Office. This modernization of government financial management was to focus in six subsystems: budgeting, accounting, treasury or cash management, debt management, auditing
and procurement. A second objective was to improve the delivery of public services by
supporting the devolution to line ministries of primary responsibility for management of
2
This section draws heavily from the Project Identification Document (PID) of October 1994, subsequently
summarized in the Implementation Completion Report of February 2000. It is interesting to note that project
design from identification through approval changed little.
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their financial resources. Chief among these initial line ministries were to be the Ministries
of Health and Education.3
While the project was appraised and approved by the Bank between October, 1994
and June, 1995, much of the development of the project during this time period was carried
out by the Bank without strong input from the Ministry. Advances in the national Budget
team proceeded to evaluate budget reform from the narrow perspective of their needs.
However, it was clear that other institutional and agency elements within Finance still
clung to a more traditional perspective of "tinkering" without rocking the institutional boat.
Even worse, significant members of the technical and bureaucratic leadership within the
Ministry of Finance simply waited for the project (design and implementation) to run its
course, fully expecting that real change would not occur.4 This was perceived to be a
"World Bank project," not a national effort. The participation of this technical leadership
within the Ministry was not strong, and in some cases obstructionist. In more than one
interview, it was observed that a substantial level of cynicism and open resistance were
evident throughout the period from late 1994 through mid-late 1995.
Further, support from the leadership within the Finance Ministry was lukewarm
during this early period.5 Support or even awareness of the efforts being made to develop
the project or of the internal public financial reforms proposed was virtually non-existent.
Outside of the Ministry of Finance, SIAF was not a very meaningful concept. Demands for
public financial management reform from the Administration´s leadership or the larger
political leadership at a national level were non-existent at these early stages. While
transparency, efficiency, and corruption were concepts of increasing relevance in the
political vocabulary, how and what SIAF might mean were not linked to the debate.
Selling the idea of public financial reform became problematic. Thus, while Board
approval occurred in mid-1995, the project did not become effective until April, 1996. It
was not until the advent of the new Administration and the new majority Congress that the
project was approved in early 1996.
Right Model, Wrong Timing
The period throughout 1995 and early 1996 proved to be an example of good ideas
and efforts caught in the context of social and political events that overshadowed
3
At the time, both ministries were gearing up for prospective new World Bank loans. While the Health loan
never materialized, the Education loan designed in late 1996 and approved in early 1997 strongly emphasized
restructuring, financial management and decentralization, all in tune with the goals of SIAF. Similarly, the
IDB Health loan provided the impetus for the modernization of financial management in that ministry.
4
Drawn directly from interviews within the Ministry of Finance.
5
It is significant to note that during a three and one half year period (1994-1997) , under two Administrations,
Guatemala had five Finance Ministers, each of whom had different reactions to the project during early
development and design: Richard Aikenhead, Ana de Molina, José Alejandro Arévalo, Pedro Lamport, and
finally Irma Luz Toledo. Each change meant the need to "resell" the project and to reestablish linkages, even
while some technical personnel remained.
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meaningful progress. A number of contextual factors help to explain the delays in initial
efforts.
 The year 1995 was an election year in which electoral debate itself was caught
in the larger context of efforts to resolve with some credibility and finality the
end to some thirty years of civil war. While the several years of the De León
Carpio Administration had seen a dramatic lessening of open violence from the
days in the 1980s while still a period of rancorous accusations, there was the
beginning of consensus building in society. However, a focus on public
financial reform was not high on the electoral agenda.
 As noted above, the presence of five Ministers of Finance in a three and one
half year period, across two Administrations meant that little consistent
leadership in support of the project´s development and design was immediately
forthcoming. In some cases, leadership support was lukewarm, in others more
concerted, but rarely consistent across Ministers.
 The social agenda and the development of the Peace Accords occupied the
attention of most of the significant actors during the pre- and post-electoral
period. While there was growing concern with the levels of social expenditures,
both technical and political, this was more often expressed in terms of absolute
levels, not the monitoring of expenditures. Even as a growing agenda for
decentralization became evident in 1995, the implications of SIAF were not
linked in the political leadership of the major political forces.
Right Model, Better Timing!
Even as the year and one-half from 1995 to mid-1996 represented a period of
lukewarm advances in the development of even the design stages of SIAF, a number of
major factors were developing which would change permanently the approach to SIAF and
the capacity to design and implement the project. Perhaps the two most significant factors
were the change in Government as the result of the elections of late 1995 and the
continuing persistent and aggressive leadership of the World Bank in promoting the
approach and the agenda of public financial management reform.
A Change in Regimes: Public Sector Modernization and the Social Agenda
The advent of the Arzú Administration in January 1996 and the period 1996 marked
the most profound change in the prospects for IFMS I and for SIAF more generally. The
new Administration marked a clear break with the past, evident in terms of the social,
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administrative and political agenda, but also evident in a new understanding of what the
State´s responsibility and accountability would be in the process of change.6
Perhaps the most significant factor was to be new emphasis on Modernization of
the State, led by significant new leadership within the Government and Cabinet and with
new technical leadership in significant positions within the Ministry of Finance and key
line Ministries. While the outline of SIAF had been presented to the leadership of both
principal parties prior to elections (1995), it was not until the new leadership took office in
January 1996 that the significance of public financial management reform began to
penetrate the Administration.7 Early support (even prior to elections) of the Presidential
Commission for the Modernization of the State (CPME) kept the link between financial
reform and modernization initiatives on the table.8 But eventually, it was the presence of
new political and technical leaderships that promoted implementation.
Policies and Lines of Action
1.
Redefine the role of the State: subsidiary, solidarity, promoting competitiveness, citizen
participation and administrative excellence.
2. An emphasis on efficiency in social service delivery, with an increased role on non-government
organizations and decentralization of government delivery to more localized levels.
3. Decentralization through community participation and local government operationalization with
a central government responsible for normative functions.
4. Identification of services to be decentralized, creation of new mechanisms for financing and the
development of information systems for design and evaluation.
5. Administrative deconcentration of the Ministries to enhance responsibility and functional
deconcentration of budget and human resource management.
6. Modernization of the Executive to guaranteee efficincy, managerial capacity and effectiveness in
public policy.
7. Rationalization of the Presidency.
8. Modernize human resource management and centralize normative functions in public human
resource management.
9. Rationalize public employment.
10. Implementation of integrated public financial management (SIAF) under the normative
responsibility of the Ministry of Public Finance.
11. Establishment of the System of Government Auditing (SAG) linked to SIAF equally based on
principles of normative centralization and operational decentralization.
12. Creation of a system of procurement under the same principles.
13. Reform of administrative procedures in each institution.
14. Demonopolize the actions of the subsidiary State.
6
The Arzú Administration´s Programa de Gobierno 1996-2000 of June, 1996 provides clear insight into the
15. Simplify, modify and modernize the regulatory framework in each Ministry.
agenda of the Administration, and outlines a number of arenas in which SIAF would eventually play a major
16. Fortify the mystique of government service and public employment emphasizing total quality
role.
management and better service for less cost.
7
In November of 1995, the newly appointed International Director developed a Conceptual Design
17. Recognition of the values of public employees.
document, presented to the parties and the eventual new political leadership, as well as the Bank. The design
18. Fortification of the capacity of revenue collection in simple and effective ways.
document emphasized an integrated approach along the lines of the earlier Argentine IFMS.
8
Ironically, the CPME played little role later in the implementation of SIAF or in the major modernization
initiatives in key ministries. The absence of multiple leaderships facilitated SIAF´s implementation, and the
existence of self-contained modernization initiatives in key line ministries allowed for the introduction and
implementation of SIAF at that level to occur unperturbed.
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 Modernization of the State for the new Government meant a clear redefinition
of the role of the central government, of line ministries, of decentralization and
deconcentration in the process of Modernization. It also meant a renewed
emphasis on "public service…an example of effectiveness…honesty,
transparency, modernity, and a high capacity to take decisions…[with] …clear
and stable norms, against corruption….with decentralization and
deconcentration [of Government action]."9 In the Government's eighteen point
discussion of "Policies and Lines of Action" for Modernization,
Decentralization and Deconcentration, a clear redefinition of the role of the
central government as rector, regulator and policy formulator and of other levels
of government and civil society as the operational instruments and guarantors of
action emerged.
 More significant for the project, points 10-13 legitimated the public financial
reform agenda:
 "Implement the financial administrative system of the State (SIAF): budget,
accounting, treasury, public credit, information systems and human
resources, under the normative responsibility of the Ministry of Public
Finance.
 "Establish the Governmental Audit system (SAG) linked to SIAF, also
based upon the principles of normative centralization and operational
decentralization…
 "Create an acquisitions system that responds to the general philosophy of
the program: normative centralization and operational decentralization.
 "Reform procedures and processing requirements in every institution."10
The content of the project had become part of the official program of the
Government.
 Within the Ministry of Finance, new political leadership in early 1996 provided
at the very least a positive reinforcement for the actions of the initial design
stages of the project, albeit the most significant political support from within
Finance would come somewhat later.
 In Finance, both in Accounting and Treasury, new technical leadership replaced
earlier personnel at the Director level. A program of early retirement led to the
removal of some lower level technicians. The promotion of progressive
technical personnel within Finance strengthened the new paradigm (the case in
Budget). Thus, in all three key modules, the institutional and technical support
for moving ahead now existed. And an aggressive training program provided
human resource capacity for deepening this support to technical personnel at
lower levels.
9
Programa de Gobierno, 1996-2000, p. 40.
Ibid, p. 43.
10
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 In key line ministries, progressive ministerial leadership proved to be the closest
allies of the President (Education and Health in particular). In Health,
reorganization (supported by an IDB project) quickly led to the establishment of
public financial management as the key to modernization, led by a talented and
committed Administrative Vice Minister and an equally talented and committed
Director of General (and Financial) Administration. SIAF had developed an
early ally for design and implementation at the line ministerial level. In
Education, an initially reluctant key financial advisor to the Administrative Vice
Minister proved to be a valuable ally in later stages of implementation. SIAF
had acquired a technically sound participant, if not an initial ally.
 Progressive movement toward the confirmation of the Peace Accords
throughout 1996 provided strong impetus for the development of monitorable
indicators of expenditure outcomes. The eventual signing of the Accords in
December of 1996 reinforced the trend. Real physical and financial targets now
required the linking of financial inputs and physical outcomes, well prior to the
capacity of the system to link the two.
From the Government´s side, the stage for a positive and reinforcing environment
for the implementation of SIAF was increasingly set throughout 1996.
A Significant Partnership: The Fundamental Role of the Bank
The second most significant factor in providing impetus for the design and
implementation of IFMS I in this period was the World Bank itself. The Guatemala IFMS
may be somewhat unique in Bank experience because of the confluence of a number of
internal factors that provided positive reinforcement for success throughout the period from
1994-2000.
 First and foremost, perhaps, has been the continuity and consistency in the
internal leadership in support of the development of SIAF. From the initial days
of project identification in 1994 through the present, country management, sector
leadership, and even task management has involved the same team, virtually
without exception, and the consistent message of public financial management
and public sector reform. In this observer's experience, this continuity is rare.
Not only has this meant clear learning and understanding on the part of
leadership within the Bank, it has resulted in a strong technical bond and respect
with national counterparts who have also been active in the implementation of
reform for at least a four year period.
 This continuity and consistency in project design and implementation has been
supported further by similar Bank continuity in-country. The establishment of a
Bank office in Guatemala in 1997 with local office management in the hands of
the same leadership throughout the period has strengthened implementation. The
management of the Country Office resides in the hands of one of the key early
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technical supporters of the project, and a key contributor to the development of
the country economic strategy (CEM) and the subsequent public investment
review advocating the strategy of IFMS.11
 The Bank provided key technical inputs at critical times that helped to strengthen
the resolve of the national team to focus on public financial management reform.
Ironically, it is often argued that within the Latin America & Caribbean Region
(LCR), the World Bank has eschewed a broad approach to reforming public
financial institutions such as a medium-term expenditure framework (MTEF) in
favor of a more focused approach on promoting IFMS. However, during the
period of early design and implementation of IFMS in Guatemala, the
development of both a Country Economic Memorandum (1996) and a Public
Investment Review (1997) each of which emphasized IFMS and broader
institutional reforms in public expenditures reinforced implementation. The
aggressive pursuit and support provided during the preparation and promotion of
these reports aided immeasurably.
 Ironically, part of the success during this period, and subsequently, has been the
fact that within the international community the World Bank has acted alone in
this endeavor. The result has been a singular purposefulness without the often
confounding presence of multiple international partners. Virtually all technical
assistance, all lending operations, key international advisors, and the
identification of the program effort are the result of one sole international
cooperant. While at times this may have led to a perception that this was a Bank
rather than a national effort, for the most part the result has been consistency and
singularity of focus and purpose. Similarly, even within national institutional
arrangements, the Ministry of Finance supported solely by the Bank has carried
out these reforms. For example, while the presence of the CPME in other
contexts (Honduras for example) has provided the mechanism for Bank
implementation of SIAF within the Ministry of Finance, in Guatemala the
Ministry of Finance has been the executor and sole counterpart to the Bank.12
 Another contributing factor was the complementarity between the SIAF project
and several related Bank-financed public sector reform projects developed and
implemented during both the initial (1996) period and during the subsequent
three years.
While each of these projects dealt with separate and definable
targets, each proved complementary to SIAF initiatives and each was imbued
with a sense of the relevance of SIAF implementation to the implementation of
distinct objectives. Once again, the confluence of the existence of a significant
and unified country and sector team built upon and linked to progressive forces
within the national context to carry out significant related reform initiatives.
11
World Bank, "Guatemala: Building Peace with Rapid and Equitable Growth." Report No. 15352-GU
(August, 1996) and "Guatemala: Investing for Peace: A Public Investment Review" Report No. 16392-GU
(July, 1997).
12
In fact, the Commission has focused on administrative reform, re-engineering and has provided only
marginal technical assistance to a number of efforts, including SIAF and modernization programs within
sectoral ministries.
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Early support for modernization implemented through the CPME provided
substantial intellectual and programmatic input into complementary reform
efforts in institutional modernization, civil service reform, social
communications and the administrative management of reform.13 The initiation
of a Tax Administration loan supported the parallel development of an additional
component of public financial management reform --the successful development
of the Superintendencia de Administración Tributaria (SAT). Bank support of
various privatization efforts paralleled the SIAF efforts. In addition, two sector
loans under preparation at this early stage of project development (1996)
supported the design for the devolution of financial responsibilities to line
ministries. The loans for restructuring in the Ministry of Education and the
Ministry of Communication, Transport and Public Works both included
components in support of strengthening core ministerial financial structures and
processes.14 These loans, and other efforts in the Ministry of Health (supported
by the IDB), helped to prepare the institutional capacity necessary for the
eventual decentralization of financial management responsibilities to these pilot
ministries.
 A major factor of success at this and subsequent stages was strong project
leadership. If any single effort assisted in the successful design, implementation
and acceptance of the project it was Bank decisions and action to advance
implementation through the approval of advanced funding (PHRD grant) and the
contracting of the principal international advisor in late 1995. Rather than
contract a consulting firm for project implementation, the Bank opted for a
strategy of individual advisors. The principal international advisor arrived in late
1995 and immediately began to develop the necessary framework for action,
initial project design and building national support for the project both within the
Ministry of Finance and within the larger context.15 During the first six months
subsequent to his arrival, the advisor provided literally sole hands-on leadership
of the project's framework on the ground with uncompromising support of the
Washington-based project leadership and management.
 The establishment of the organizational structure for project implementation, the
links with the Ministry of Finance and oversight committees, and even the
selection of national counterparts from within the Ministry became the technical
responsibility of the advisor with very strong authority and political support from
both the Ministry and the Bank. In addition, the advisor was able to develop his
own team of both national and international advisors and counterparts. In the
second six months of 1996, the hand-picked team of international (all Latin
American) experts in each of the functional areas of project design and
13
While the efforts and the focus of the CPME did not accomplish these goals, early leadership of both
proved invaluable as complementary support. One area in particular was thwarted: civil service reform.
14
Ironically, a third sector loan in the health sector was discontinued. However, the restructuring of an
existing IDB loan for the sector supported the financial management and decentralization efforts.
15
Licenciado Oswaldo Albano, the principal international advisor and Project Director, has been with the
project since late 1995. Similarly, a number of the key international advisors have also played a continuous
resident role in this process from mid-1996.
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implementation began to arrive. Members of this team brought with them
valuable years of experience in the design and implementation (both successful
and less successful) of SIAF efforts in other parts of Latin America: Argentina,
Bolivia, Venezuela, etc. Yet, they brought with them the mandate to assure that
Guatemala´s SIAF was indeed Guatemalan. By late August 1996 the new team
had developed important design characteristics of the program, and in particular
emphasized new information technologies for SIAF design.
The stage for successful implementation was now set. The confluence of positive
contextual forces, strong internal and external leadership and commitment, a clear policy
agenda, a technically sound international team with increasing technical personnel as
national counterparts, and an assertive Bank approach proved to be a winning combination
to proceed.
Implementation: Three Years of Decisive Action
The period from mid-1996 through January 1998 was one of intensive efforts on the
part of the newly formed team of international experts and the national technical
counterparts (particularly within the Ministry of Public Finance) to carry out the design and
strategy for implementation of this now fully accredited and politically legitimated effort. 16
By August of 1996 a "functional approach paper" had been prepared by the international
team as a means to begin the process of not only internal organization of SIAF but also as a
document to be utilized for promotion of the project inside and outside Finance. This early
period was marked by significant efforts, primarily led by the international team, to
establish the groundwork:
 The effort at "re-egineering" of procedures within Finance was significant.
Efforts to streamline valid procedures, eliminate superfluous and
counterproductive procedures, and to place appropriate technical personnel in
relevant positions was fundamental. These early efforts preceded the design of
the actual modules.
 Parallel to these administrative efforts, the Administration began a program of
voluntary retirement throughout the public sector. While the package offered
was not overly attractive to many, the effort resulted in the disengagement of a
number of lower level technicians who had been "in the system" and often were
obstructionists to the new paradigm of modernization and change. In Finance,
as in other ministries, the effect was to open some technical space.
 A massive effort within Finance to provide training early in the period proved
very significant throughout the period. A paradigm shift was in process,
technical personnel were being prepared within finance, and many of this early
16
This international team of experts included specialists in information technology, budget, treasury,
accounting, auditing, public credit, and financial decentralization or deconcentration. In essence, this team of
individual consultants quickly took the role of leadership in design.
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cadre provided the means to expand the system to other ministries in the post1998 period. It is difficult to exaggerate the eventual impact of this new cadre
throughout the system: a sea change in the attitudes of mid-level technicians
was occurring. More than 40% of the technical staff in the various UDAFs are
former employees of the Ministry of Finance.17 Not only has the technical level
improved fundamentally, but clear alliances exist between UDAFs and the
Ministry of Finance.
 To support the efforts of promotion of SIAF at the line ministerial level, a
Deconcentration Group was formed to provide support to the UDAFs. Within
the ministries, "consultants" from SIAF were placed as resident advisors to
assist the process of implementation.18
 Technical progress was being made in the design of the modules and the
introduction of the new information technologies for these modules at a rapid
pace, again due primarily to the efforts of the international team. In particular,
technical progress in the design of systems of fiscal control was high on the
agenda. As a result, the accounting and cash management modules became the
focal point, in spite of continuing resistance from within.
In spite of tremendous efforts at training and promotion, this early period was still
viewed by many with reservation and cynicism, even within Finance. These efforts to
introduce the new system clearly were led by the international team, albeit with political
support from above. Ironically, two of the ministries outside Finance that were keys to
both the new political and organizational agenda of modernization and eventual pilots in
SIAF shared a skepticism of the changes. While in favor of change, the potential impact of
SIAF on policy making and a healthy skepticism of "implanted systems" meant a
lukewarm reaction in 1997. The absence of technical counterparts in any line ministry
meant that the promotional efforts often fell on deaf ears. In the case of the Ministry of
Education, the Minister was not a clear ally in these early days, although a willing change
agent. The Financial Advisor to the Despacho was not convinced of the technical utility of
the project and was vocal in his objections.
Others, in Education and elsewhere, were even more skeptical of the leadership by
international experts. One comment demonstrates an attitude that was not insignificant at
the time: "SIAF is like our war, foreigners provide the bullets." In Health the political
leadership that remained somewhat skeptical received strong endorsement of the potential
17
This was true during the Arzú Administration. A number of the Directors of UDAFs were removed with
the new Portillo Administration in March-April of this year.
18
Interestingly, the continuing lack of certainty in the system and the institutional jealousies sometimes
became manifest. In the Ministry of Education, conflict between the resident advisors from Deconcentration
with personnel in UDAF and the Ministry as a whole led to their "expulsion" as advisors. And this was a
pilot ministry oriented toward decentralization and change! While no new "resident advisor" replaced the
earlier advisor, the appointment of a new Director of UDAF - former SubDirector of Treasury and a
technician - meant that continuity was assured.
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of the new public financial management system from the Director of General
Administration, a former employee and consultant to the Ministry of Finance. As a result,
the Ministry of Health moved more quickly and played a more key role in the adaptation of
SIAF to line ministry needs.
Three significant changes occurred in 1997 that resulted in a more concerted effort
and an improved institutional ambience for the introduction of SIAF:
 Significant changes in leadership within the Ministry of Finance and consequent
changes in the status of the leadership of SIAF;
 A new Law for the Organization of the Executive Branch
 The new Organic Law of the Budget
The first, and perhaps most significant from the perspective of Finance, was a
change in Ministers. The then Vice Minister of Finance, Irma Luz Toledo, became
Minister in the wake of the resignation of Pedro Lamport. The then Vice Minister had
been the strongest supporter of SIAF and of the efforts of the International Director and
wielded strong influence over advances in the design of the subsystems, the placement of
key personnel at the disposal of the system, and in advocating the system. However, upon
becoming Minister this support became a mandate for results, a mandate left in the hands
of the International Director. The Director had all of the requisite conditions: legitimacy
from the World Bank, authority within Finance and beyond, credibility in his technical
expertise, an international team that was hand-picked by him, and even relative control
over the national team that would participate.19 Rarely has an international consultant
received such unabashed authority for change: the International Director was given license
to proceed. And proceed he did.
With this new-found political support, the SIAF team moved quickly and
aggressively to strengthen the internal (national) team, to develop the modules, and to
promote SIAF in the larger political arena. The Director could virtually name and remove
ministerial personnel from involvement in key positions in the development of the internal
organizational needs for implementation. Advances in the design of modules took on yet
greater flexibility with advances in information technologies. As a result prospects for
decentralization improved significantly.20 Similarly, as opposed to earlier SIAF efforts in
19
At one stage early in the project evidence of the International Director´s influence came when a debate
occurred over the selection of the individual international team members with UNDP. Through his base of
support in the Bank and with the Vice Minister, the Director was able to prevail- his team would be selected.
Further evidence of this unfailing support is that while SIAF I and II called for the naming of a National
Director as counterpart, until early March 2000 no such National Director had ever been named.
20
In 1996-97, the introduction of new information technology under a negotiated agreement with Microsoft
permitted the development of compatible non-ORACLE based systems for conversion. As a result, SIAFito
(non-ORACLE based) could be introduced simultaneously with SIAF local (ORACLE based) without undue
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other countries (Bolivia, for example), the balance between the development of information
systems and re-engineering of processes and procedures within Finance moved together.
SIAF had moved from a system of information management and coordination to a system
of institutional change.
The agenda of promoting SIAF moved off of the Finance Ministry platform into the
larger political and technical-political arena. Continued technical and political opposition,
or at least skepticism, remained a problem in expanding the base for acceptance for
implementation. However, by late 1997 and early 1998, efforts by the Minister of Finance
to push the envelope and the decision to present to full Cabinet the model provoked
profound new political support. The Cabinet presentation, full and open endorsement by
the Minister of Finance, and full support from the President himself to move ahead swiftly
prompted aggressive implementation. Awareness that the decision to implement fully
SIAF in 1998, a technical decision but one that had the full endorsement of the President,
further stimulated active support even among reluctant Cabinet members.
A second factor unrelated to the development of SIAF per se led to significant
impacts on implementation: the passage in 1997 of the Law of Executive Organization at
the national level. This new law changed the organizational structure of the Executive
branch and openly promoted decentralization to line ministries of control over their own
internal structure and function. Implicit in the new law was decentralization of financial
authority and responsibility to line ministries for the first time in Guatemala´s history.
Explicit was the push to decentralize to other levels the operational authority of line
ministries. In two cases, the new law was a strong endorsement of ministerial efforts to
decentralize and reorganize profoundly that had begun in 1996. In the Ministry of
Education, the creation of Departmental Directorates of Education in 1996 and their
reglamentation in mid-1997 had focused on strengthening key organizational subsystems
internally and had laid the groundwork for a new programmatic framework and for
planning and financial administration for operational responsibilities. At the central
ministerial level, reorganization had focused on strengthening these same functions and
linking them to the functions of the Departmental Directorates.
In the Ministry of Health, a similar reorganization and decentralization had
strengthened the role and operational responsibilities of Areas of Health in 1996-97 under
the technical leadership of the Director of General Administration. The authority to
reorganize and assume responsibilities further forced these ministries to promote the
training of personnel in planning, financial management, educational and health
administration and the creation of fully staffed and trained Unidades de Administración
Financiera (UDAFs or Financial Administration Units). Efforts on the part of SIAF and
the Ministry of Finance to train line personnel in the new financial management had begun,
disruption at the ministerial level. As we will see, this prompted a fundamental decision to introduce SIAF
across the board in 1998, rather than simply introduce pilots and maintain dual systems initially.
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and the two efforts coincided. Two of the most significant and largest ministries had laid
much of the groundwork for receiving SIAF in their own institutional environments.
Change in the legal framework for the implementation of SIAF was also a
significant contributing factor for implementation. The most significant of these changes
was the passage in October 1997 of the new Organic Budget Law (D.N. 101-97) and its
reglamentation (A.G. 240-98). As noted above, a focus on the change in the obsolete
budget law of 1986 (D.L. 2-86) had begun early in this process, although in 1995 SIAF was
not seen as the mechanism for integration. Perhaps the most significant aspect of the new
budget law was that it was a law for financial administration more than simply budget. In
it responsibilities and procedures within an integrated framework for each of the major
institutional actors within Finance (Budget, Accounting, Treasury, Public Credit) were
clearly defined, as well as the endorsement for the deconcentration of financial
administration. This deconcentration of financial administration is operationalized through
the creation within each dependency of the public sector of Unidades de Administración
Financiera (UDAFs).
The introduction of the UDAF- and its corollary at the decentralized level within
ministries - provides the mechanism for the decentralization of financial management for
Guatemala and for the further strengthening of the program of modernization and
decentralization of operational responsibilities to secondary levels within government. It
takes administrative, programmatic, execution and evaluation responsibilities out of the
immediate hands of the Ministry of Finance and places them at the level of executing units.
This decentralization of financial decision making effectively has begun to permit
"operational decisions to be made as close as possible to where transactions are carried out,
while assuring appropriate accountability and transparency." In doing so, the philosophy
of reform of "normative centralization and operational decentralization" is enacted.21
The added significance of UDAF in relationship to SIAF is that the incredible
delays, confusion and potential corruption existent in the Ministry of Finance (Treasury
and Accounting in particular) had been reduced through (a) the new single point of entry of
transactions that reverberated throughout the system and the strengthening of the
Consolidated Fund under Treasury, (b) the paperwork reductions through the elimination of
the Orden de Compra y Pago and the creation of the Single Entry Account (CUR), and (c)
the fact that now UDAFs would retain the accompanying paper trail that had plagued the
system for so long. No longer would the failure to link entry of a OCP imply discretion in
time. No longer would unlinked data for single transactions be possible. No longer would
suppliers and providers need to form lines at the Ministry of Finance and seek out
advantage in the system. And the electronic link to the banking system meant that no
longer (in many case) would the multitude of checks be necessary.
21
SIAF, "Integrated Financial Management and Control System: Project Characteristics." July, 1999.
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The formation of UDAFs in the various ministries in 1997 introduced profound
changes not only in the execution of the budget, but paved the way for further
strengthening of policy formulation and budget planning in the ministries. In Education,
the early creation of UDAF in 1997 led to a professionalization of finance and the linkages
of planning/budget/execution/control in the ministry. The planning function was clarified
in the creation of a planning unit (UPE - Unidad de Planificación Educativa) which reduced
the earlier chaos. A new technical team within UDAF was contracted and empowered as
the coordinator and arbiter of budget execution. Within this team several former members
of the Ministry of Finance who had been trained in SIAF were recruited (at substantially
higher salaries than their former peers within Finance!). Annual Operating Plans (POAs)
were introduced as the mechanism for consolidating budget preparation. A Project
Committee incorporating educational programming, planning, financial administration,
audit and legal functions was created as a means of providing both policy planning and
program execution functions in an integrated fashion. For the first time, and prior to the
formal initiation of the first SIAF budget year (1998), policy, planning and budget had
become integrated.
In the Ministry of Health a parallel reorganization altered these relationships
through the creation of a General Finance and Administration Management Unit
integrating UDAF, a Department of Administration, and a Department of Acquisitions and
Maintenance. Again, significant numbers of the technical staff had migrated from the
Ministry of Finance, lured by contracts that offered substantial increases in salary. The
result was a cadre of personnel familiar with SIAF and more professional in their approach
to financial management. Here too, the integration facilitated the introduction of SIAF at
the ministerial level.
As significant in the case of Health and Education has been the decentralization of
budget decisions and transactions within the Ministry. While in other ministries the stage
of further deconcentration of financial management functions to executing agencies has not
occurred, in these ministries there has been movement. In Education, Departmental
Directors now have full responsibility (if still somewhat nascent in terms of quality) for the
development of budget, for providing indicators of budget performance, and for budget
execution. While the consolidation and presentation of budgets occurs at the central
ministry level, and quarterly transfers based upon budget execution remains central in the
ministry. Similarly, in Health several of the major hospitals (Roosevelt, San Juan de Dios,
Totonicapán, Izabal) are responsible for budget formulation and execution, receiving their
funds on a quarterly basis from UDAF central. Reallocations of funds on a quarterly basis
occurs, subject to UDAF approval, and the process of reducing UDAF control has begun.
At the same time, in the new Budget Law the central functions of key subsystems in
the Ministry of Finance are forever altered. No longer is Budget simply the arbiter of
money available, but is now linked to the policy planning process; no longer are Treasury
and Accounting simply issuers and registers of checks. The normative and regulatory
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functions of each are clarified. Further, the links between policy formulation, planning and
financial administration are clear (Art. 8-9) and cemented. While programming and control
functions are clarified in the relationship between Finance and line ministries (among other
dependencies), so too are the links to the policy planning function resident in SEGEPLAN.
Similarly links between revenues and expenditures are forged. Finally, the creation of the
Technical Committee for Public Finance in the Budget Law creates an instrument for truly
integrated financial administration in the context of revenue generation, fiscal policy
formulation, budget formulation and execution, and financial control and management.
The basic legal instrumentation of SIAF was complete, although there remained and still
remain a number of important legal instruments necessary to reinforce the administrative
apparatus necessary to assure the overall institutional environment of the new public
financial management system.
What had begun in 1995 with relatively little fanfare as an effort to unify the a set
of regulations, classifications and procedures across the various financial management subsystems (budget, accounting, cash management, procurement, public investment, public
credit) through the use of an integrated modern information technology and a relational
data base which permits a single point of entry was rapidly becoming a system of public
management, policy formulation and review, and a model for installing "good government"
(transparent, efficient, democratic, responsive).
Among the more significant changes have been those in Treasury. These include
to date:
 Implementation of modern management of the Public Account through financial
programming: regularized Flows of Accounts, monthly accounts reconciling
fund availability and ceilings;
 Adoption of the concept of the unity of cash flows through the consolidation of
income and payments in the Consolidated Fund (resident in the Central Bank)
and the National Treasury as the sole payor of the State;
 Dedicated lines to the Central Bank, and now to private banks in inception;
 Elimination of payment discretionality through the development of the
Comprobante Unico de Registro as the sole mechanism for payment from
public accounts (and achieved on a 24 hour basis) and daily reconciliation of
accounts;
 Procedural changes for payments reduced from some indefinite time frame prior
to 1996 to six days in 1997 to twenty four hours in 1998;
 Electronic payments through the regular banking system (for example the public
payroll);
 The elimination of floating debt by 1998 which had amounted to Q1.2 billion in
1995 and Q684 million in 1996. This, the result of real time accounts and the
CUR;
 The maintenance of liquidity in the Treasury: in 1996 the Consolidated Fund
showed balances of zero!
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The legal framework that was beginning to develop included or was intended to
be completed in 2000 the following:
 Law for the Organization of the Executive (implemented)
 The Budget Law (implemented)
 Administration of Goods and Services Law (Procurement) (implemented)
 Organic Law for the Comptroller General (pending)
 Administrative Probity and Responsibility Law (pending)
 A new Civil Service Code (pending and unlikely in the near future) as part of
the effort to integrate human resource management in the program
The real test of the success of SIAF has been the period 1998-1999. In January
1998 SIAF was implemented within the entire ministerial structure of government.22
While there had been partial modifications during the design stages,23 as late as November
of 1997 the technicians of Finance had not seen the system operate fully. The SIAF team
had worked without involving much of the technical staff of the ministry. In November
there was a presentation of the full model and intensive training increased in preparation
for January.
One of the more significant decisions for the implementation of SIAF occurred in
late 1997. Originally, the technical decision had been to introduce SIAF partially on a pilot
basis in four key ministries: Education, Health, Communication, and Interior
(Gobernación).24 As a result, for at least the initial period of implementation a dual system
of financial management would exist with the concomitant difficulties of the resolution of
information in all key subsystems. However, a key decision to introduce the system across
the board, albeit with two modalities, proved crucial for cementing the system both in
technical and political terms. Once again, the political influence and unyielding support of
the Minister of Finance was the crucial factor.25 It was clear that parallel systems would
allow backstepping and would allow critics of the system ammunition for postponing
implementation. Support from the Minister, concomitant support generated in the
President, and the convincing argument of new technologies paved the way for the
decision: in January 1998 we begin.
22
In point of fact, only the treasury and accounting modules were implemented at that time. The budgeting
module remained incomplete and did not become effective until the FY99 budget.
23
For example, in Treasury a small cash management program had been implemented earlier. The impact of
even small changes was positive as the effect of the introduction of the program increased transparency in
transactions immediately. Results bred support.
24
These four ministries represent close to 80% of the budget (excluding debt service, funds for the Office of
the President and funds retained by Treasury).
25
The technical capacity to introduce the two modalities came as a result of very recent changes in
information technology.
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However, beginning in January 1998 was no easy chore and the period from
November 1997 through March 1998 was one of extreme growing pains and anxiety. The
result was the introduction of two variations in the decentralization of SIAF to the
ministries: SIAF LOCAL and SIAFito. In the four pilot ministries26 that had been
reasonably prepared for the introduction of the full system, SIAF LOCAL was introduced.
SIAF LOCAL linked the ministries directly to Finance through dedicated (Internet) lines
that allowed for the full implementation of decentralized (UDAF) operationalization of the
system. In particular, the paper reconciliation and verification of information occurred
locally (no paperwork in Finance). In the remaining ministries, an innovative partial and
compatible alternative was introduced that still required the transmission of supporting
paperwork for transactions to the Ministry of Finance (Accounting) for reconciliation and
verification. Literally, the transaction information was transmitted by disk and the
supporting paperwork hand-carried to Finance. While the early months meant confusion
and continued rejections of Ordenes de Pago (CURs in the new system), the results by midyear were indeed impressive.
The effect of very positive and very immediate results solidified political and
technical support for the new system. No longer was the question "if" but rather "when"
and "how to refine and extend." By the end of 1998 the extremely positive results meant
that moving from "Phase 1" of implementation to "Phase 2" could proceed as a purely
technical exercise and not a set of political decisions. We will discuss these positive results
in the next section.
In Phase 1 of implementation the intent has been to develop SIAF at the central
level of government in the Ministry of Finance and to implant the sistem in key entities.
Initially, the "pilots" for complete integration of the system were the Ministry of Finance,
Ministry of Education, Ministry of Health, Ministry of Communications, and Gobernación
(in part) and the Contraloría de Cuentas (SIAF Local). Simultaneously, the effort in the
first two years of this phase has been to implant an alternative and totally compatible
system (SIAFito) in the remaining ministries. In both cases this implementation has
occurred through the structuring of UDAF. In a second phase, the current intention is to
extend SIAF to executing units within line ministries, extend the system to other relevant
dependencies of the State, and refine elements of the existing modules (eg., use of physical
indicators) while developing complementary modules. In a third stage, it is contemplated
that SIAF will be extended to the municipalities of Guatemala, develop the additional
modules (eg., human resources) and refine the entire system.27
26
Three of the pilots were introduced in complete form. In Gobernación major difficulties still remain
because there is still no Planning Unit and because the National Police still have not introduced SIAF. One
clear reason has been the continuing corruption within Gobernación and in particular in the PNC.
27
This decentralization has begun. As noted above, in hospitals and in Departmental Directorates of
Education SIAF is installed and functioning. In 2000 a pilot for municipal SIAF in Chimaltenango is
planned. Efforts to strengthen links to other subsystems, and in particular SAT are in the process of
implementation as new internet information technologies have permitted the direct linking of the systems.
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DECONCENTRATION OF FINANCIAL ADMINISTRATION
LINE
CENTRAL
SIAF
MINISTRIES
Central
Local
Executing Unit
Source: SIAF, "Desconcentracion" in Web Page Presentations, March, 2000.
Key Lessons in Implementation
In summary, a number of key elements account for the success of implementation
in the past three years. At the outset we noted that more than simply the quality of
technical design, a number of contextual factors account for success. In the account of the
development of SIAF we have exemplified a number of these as summarized below.
 Beginning in particular with the advent of the new Administration, the
relevance of a cohesive and committed political leadership has been
fundamental in success. This leadership is evident at the highest levels (the
Presidency), within the Ministry of Finance (and in particular Minister
Toledo)28, and in a number of key line ministries (the pilots).
28
It is worth noting that Licda. Toledo left office with the change in Administration in 2000 and immediately
became Finance Director for the Municipality of Guatemala. The potential implications of her presence in
the municipality for the third phase of SIAF were of some importance. Unfortunately, within a month she
took a new position as Director of Finance for the Judiciary. What might have been unfortunate in one
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 The backdrop of social pressures (Peace Accords) and a program of
Modernization of the State have created the appropriate environment and
complementary activities that have proved crucial for success.
 At the same time, a committed and high quality technical leadership at various
levels has resulted in a rapid deepening of the program.
 Continuity has been a key, both political and technical.
 The building of an ever expansive cadre of technical personnel linked to the
Ministry of Finance and imbued with the technical skills to absorb change and
with the new paradigm has served implementation well.
 While building small is relevant, aggressive comprehensive decisions have also
been critical. Building small may be exemplified from the initial strategy to
opt for an information system to instill institutional change, but the global
decisions such as introducing all ministries in 1998 have cemented the
sustainability of the system.
 Results count. From the very small results of initiating a change in cash
management to the larger results of the first year of implementation, the
benefits of producing results early have been effective.
 Finally, the role of the World Bank team, both in-country and in LAC have
played a critical role throughout the process. The continuity of this team
further has assured the short term success of implementation.
SIAF in the Year 2000: From Integrated Financial Management to Institutional
Change
As was noted at the outset, from almost any standpoint the introduction and
implementation of the Integrated Financial Management System in Guatemala has been a
success. While only two years of actual implementation have passed, the results and the
impact are impressive. In the recent "Implementation Completion Report" for the initial
Integrated Financial Management Project (February, 2000) an excellent summary of the
major technical achievements of the project are provided, as well as a summary of the
impact of the project.29 These principal achievements include:
 The deconcentration of financial administration to the ministerial level. As of
2000, deconcentration to 34 ministries and other dependencies of budget
execution is reasonably consolidated, and especially in the key (pilot) ministries
where deconcentration has proceeded partially to a second level (eg.,
respect, may now become an opportunity. The financial management system of the Judiciary is at least as
chaotic as was the Executive in 1995.
29
See also, SIAF, "Integrated Financial Management and Control System: Project Characteristics," July,
1999, and SIAF, "La Modernización de la Gestión Pública en Guatemala," July, 1999.
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Departmental Directorates in Education and Areas of Health in Health). The
UDAFs have implemented the basic modules of SIAF and all are currently
operating with SIAF LOCAL. While personnel may change the modules will
remain and budget execution, accounting functions and cash management
functions will continue.
 The capacity for public management at the ministerial level has been fortified,
or more realistically, created. Real time reliable information has permitted
ministerial leadership to carry out planning and policy functions, although the
institutional structure of these functions and their relationship to UDAF vary
among ministries.
 Real time registry of revenues and expenditures permits not only for more
efficient planning and evaluation at the ministerial level, but has reduced the
potential for abuse. In addition, at the Ministry of Finance level, daily
conciliation of transactions with the principal banks and monthly programming
and consolidation permit an accurate picture of "where do we stand financially."
 Transparency in budget operations in a single system permit better control. The
development of the single Comprobante Unico de Registro (CUR) simplifies
transactions, reduces paperwork, speeds payments and eliminates a number of
former bottlenecks in the system. This transparency is more impressive because
it is available to the public, interested parties and Congress. The trimestral
programming of budget expenditures and the establishment of known budget
thresholds permits, in fact, requires better programming.
 Simplification of procedures has reduced the time required in payments and
registration of expenditures. In 1996, the 130 steps in the registration of
payments and actual payments have been reduced to 12, and the time involved
in payments from some 3-6 months to a maximum of eight days.
 The elimination of the "floating debt" from the 1996 high of some Q1,200
million has cleaned the financial system of a major ongoing burden. As a part
of this simplification and cleaning, the reduction of the number of government
accounts and the real utilization of the Consolidated Fund improve control.
 A major source of corruption, delay, cost and frustration in the payment system
has been eliminated through the changes in the Procurement procedures and
law.
 SIAF has provided the possibility for improved macroeconomic policy making
and financial management and control throughout the system. While much
remains to be done, the advances are remarkable.
 Success breeds success. The rapidity and credibility of advances have permitted
movement toward other related modules and toward a real system of integrated
public management.
 Finally, democratic participation has been served well by the system. In
September 1998 Congress was presented with budget projections for FY99 (on
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CD ROM) and actual expenditures for 1998 which became the basis for
budgeting in 1999. Budget reconciliation, markup and the final budget for 1999
were now subject to rational political decisions and debate. In addition, the
potential for public participation in the debate was assured. In 1999, the
smoothness of the process from a technical (if not always political) standpoint
further assured public input into the debate. The final proposed budget for 2000
was presented on August 31, 1999, and presented to Congress in orderly and
elecronic fashion on September 1. The final budget for FY2000, approved by
Congress on November 24 1999 was available to the public in printed form in
January, 2000. An accomplishment of major significance for the future.
The ramifications of these accomplishments in line ministries is of equal
significance. A dramatic change has occurred in the quality and effectiveness of financial
management in most line ministries.
For example, in the Ministry of Education, budget execution increased from 56%
in 1995 to 79% in 1996 to 93.2% in 1997 to 95% in 1998. The process of budget
consolidation within the Ministry has proceeded from a rather haphazard set of estimates
made within the Planning Unit to a systematic process. In 1999, the process of budget
formulation began in March. Training in developing annual financial plans for finance
officers within all executing units began even earlier. In the Departmental Directorates
similar training and development of plans for FY2000 also began. Annual Operating Plans
with numbers were submitted by all executing units within the Ministry by April. While
some two months were spent in refining the expenditure estimates, the orderly process of
negotiation and consolidation was carried out for the first time. Similarly, in 1999 a
process of evaluation of budget execution became routinized although rudimentary. The
Project Committee including all central executing units began to meet monthly under the
leadership of the Administrative Vice Minister. A program in MS Project for tracing
program and project results by activity was developed and discussed regularly. For the
first time, an evaluation mechanism had been implemented. More importantly from a
financial standpoint, the introduction of new classifiers, and the capacity to decentralize in
flexible fashion these budget classifiers, has created the capacity to evaluate expenditures.
An interesting comparison of the impact of SIAF on the reduction of paperwork
and the simplification of payments is the impact on the quality and efficiency of the
execution of Ordenes de Pago. Because of SIAF and the introduction of the CUR, in 1999
the Ministry was able to process 14,700 ODPs with a staff of 20 persons in UDAF. In the
Municipality of Guatemala in the same year some 500 ODPs were processed with a staff of
70!
Similar changes in the Ministry of Health are instructive. Budget execution has
improved dramatically. Coupled with increases in budget allocations the results are
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noteworthy. Budget execution increased by 14.4% in 1995, 28.6% in 1997, 17% in 1998,
and preliminary estimates for 1999 are an increase of 30.4%. Between 1995 and 1998,
expenditures in Areas of Health increased by 134% and even in hospitals (without the
benefit of much of the innovations and systems) by 95%. The demonstration effect has
been profound. In Areas, financial managers have been contracted to assure the
implementation of new financial procedures in the expectation of SIAF.
One of the most significant changes in the Ministry of Health has been the
administration of medicines. The high cost of medicine had resulted in the exclusion of
large portions of the population from obtaining supplies and medicines. Even the Peace
Accords recognized and demanded solution to this significant problem.30 While the
changes that have occurred are not a direct result of SIAF, the introduction of the financial
management system has supported these changes. Since 1996, six major changes have
occurred resulting in a reduction in the price of medicine by 80%, a reduction in Ministry
costs in medicines by 60% and a massive expansion in coverage. These changes include:
 The formation of a Multisectorial Commission on Medicines (A.G. 333-96).
 Strengthening of the regulatory regime and quality control.
 Changes in the legal framework assuring competitiveness and transparency in
purchasing (in line with legal changes in procurement more generally).
 New transparency in procurement, access, distribution and user participation in
the administration of medicine.
 A system of vigilance of pharmaceuticals with careful monitoring and a
regulatory framework.
 The inclusion of the budgeting, accounting and cash management of medical
procurement in SIAF to assure transparency and efficiency in the process.
However, the story of success should be tempered by two significant shortfalls in
implementation. In the integration of the various subsystems of financial management and
the linkages to the planning function there have been serious delays. Part of the delay is a
function of institutional jealousies and preservation of power. In the case of the integration
of public investment and the planning function as noted in the earlier graphic, the
resistance of SEGEPLAN is noteworthy. The existence within SEGEPLAN of an
alternative information system (SII), incompatible with SIAF has been a continuing
stumbling block. Not only does the linkage of public investments to expenditures present a
problem, but the absence of physical indicators necessary for outcome and impact
evaluation has been slowed as a result. As a reslt, in the short term the SIAF team has
begun to develop physical indicators linked to financial indicators in order to improve
efficiency and effectiveness. The reluctance to relinquish the power of separate
30
"Promoción de medidas que aseguren el abastecimiento, abaratamiento y calidad de los mismos," Acuerdo
de Paz sobre el Sector Salud, 1996.
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information and of decisional control is apparent reasons for the failure to integrate. As
late as February of this year, efforts by SIAF to negotiate the entry of SIAF were met with
resistance.
Perhaps of equal significance has been the failure to integrate the audit function into
the system. SIAF-SAG is really SIAF, and attempts to advance in the general audit system
as a means for external control continue to fall short. Again, the failure is not technical but
political and institutional. As of February 2000, the failure to progress rapidly in
integrating the audit subsytem has resulted in informal decisions internally to bypass the
Comptroller for the short term and to strengthen internal control functions.
In spite of some shortfalls, the overall impact of SIAF is profound, and is notable in
changes in behaviors and outcomes as can be seen from the above. In behavioral terms,
one need point only to changes in the level of professionalism in both the financial
management community, but also in the approach to planning and programming in
executing units in line ministries. The obvious transparency of the system has encouraged
an approach to transactions by individuals in the public bureaucracy that is notable at all
levels. While corruption certainly has not been eliminated, the moral imperatives of
transparency have acted as a damper on behaviors in many cases. Clearly, a sense of
public service in reducing delays, in responsiveness, in actions are profound sea changes, in
part a result of the new financial management ethos.
Finally, SIAF has had a profound influence not only on budgetary outcomes but has
been decisive in contributing to institutional change. At a purely technical level, the
implementation of SIAF has provided the capacity to ensure reasonable aggregate fiscal
discipline. Reliable estimates, predictable availability and reasonable generation of
revenues both within government as a whole as well as at the specific level of line
ministries has brought fiscal control closer to reality. While much remains at this level in
terms of the refining of information the institutional apparatus has been put in place. It is at
this level where SIAF has made the greatest impact at the macro level. But in addition the
system has greatly improved (or perhaps introduced!) the capacity to plan in accordance
with an understanding of available resources. In addition, the capacity to allocate these
resources in accordance with established strategic priorities is evident both at the
government-wide level (both Executive and Legislative branches), but at the ministerial
and even subministerial level. The introduction of new budget classifiers in itself has
produced dramatic changes in programmatic content and evaluative potential. Examples of
newly found capacities to program and allocate within the Ministry of Education suggest
the potential impact. However, the use of available information still requires deep changes
in organizational culture. In addition, this capacity is more than technical exercise and the
need for increased political maturity in the use and evaluation of the allocation of scarce
resources remains in the future. While this has begun, much remains. . Finally, at a
management level, there is no doubt that SIAF has created the capacity to both utilize and
monitor the use of resources to achieve strategic priorities. However, the need for linking
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financial outcomes to physical impact has not come to fruition to date. At the macro level,
the failure to integrate as of yet the functions of SEGEPLAN with SIAF have affected
advances. While indicators at the ministerial level exist in many ministries (linked to
budget classification, they have not become institutionalized. This is a challenge for the
very near future.
In terms of the development of the various subsystems envisioned at this stage, the
following two graphics provide a clear picture of the linkages and intent to improve an
overall system of public management and the integration of the various information
systems relevant to public management. The three basic subsytems include the
administrative, expenditure and revenue systems. To date, the administrative subsystem is
the least advanced, and is the immediate target for development in the next phase of
development. Within the revenue generation system and the linkages of the system to the
banking system great progress has been made within the tax system and the
institutionalization of the Superintendancy of Revenue Administration (SAT). Finally, the
internal functions in the financial management (expenditure) system are the most advanced.
There remain three functional systems to be designed and implemented. In the case of
public credit, the design is well advanced. In the case of public investment, the need to
integrate SEGEPLAN remains a serious obstacle. Similarly, the audit function remains in
the future, both in design and implementation terms.
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INTEGRATED PUBLIC MANAGEMENT SYSTEM
SIAD
SIAF
ORGANIZATION
/PROCEDURES
PROJECT
EXECUTING
UNITS
BUDGET
ACQUISITIONS
SAT
TAX
ADMINISTRATION
ACCOUNTING
PROJECT
MANAGEMENT
CONTRACTORS
AND
SUPPLIERS
INVENTORIES
TREASURY
GOVERNMENT
PROPERTIES
PUBLIC
CREDIT
HUMAN
RESOURCES
PUBLIC
INVESTMENT
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SYSTEM
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Much of the development of the integrated management of various information
subsytems has been accomplished. These information systems and the linkage among
them are preented below:
Information Systems Comprising SIAF













Budget Formulation and Programming (physical and financial)
Integrated Government Accounting (SICOIN)
Budget Execution
Treasury
Public Credit (SIGADE)
Integrated Administration System (SIAD)
Project Management (SIGEPRO)
Interface with Autonomous Systems
Central Bank
Private Banking System
Superintendancy of Internal Revenue (SAT)
Autonomous Statistical Systems
Human Resources
SICOIN
BUDGET
FORMULATION
BUDGET
ACCOUNTING
PUBLIC
CREDIT
TREASURY
PUBLIC
INVESTMENT
INTERNAL CONTROL
Source: Documents SIAF, Web Page, 1999
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GOODS/SERVICES
AUTONOMOUS
SYSTEMS
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Final
Sustainability and the Unfinished Agenda
In January 2000 a new Administration took office in Guatemala and, as is often the
case, a rather dramatic sweep of personnel has taken place in the early days of the new
Government. The sweep in Guatemala has been, and continues to be, a serious issue for
the sustainability of a number of programs begun in the last Administration. More relevant
here is that in the decentralized units of financial administration - UDAFS - virtually all of
the previous Directors have been replaced, as well as a number of second level technicians.
The issues of sustainability and the agenda of what remains to be done become even more
relevant. As this paper is being written (March), questions of the political and social
agenda of the new regime remain unsettled. However, what is apparent is that the basic
structure, procedures and instruments of SIAF are irreversible. From a technical
perspective of SIAF as an internal management and control system it will remain intact.
However, more unclear is the extension and consolidation of related modules and
institutions, as well as the extent and rapidity with which SIAF becomes the tool of policy
formulation and public management that it has the capacity to become. These, in some
sense, are political decisions that remain unclear at the present time.
The extension and consolidation of SIAF remains a question. In discussions with
personnel in the Ministry of Finance and the SIAF team in the first three months of the new
Administration, the strategy that seems to emerge is that extension and consolidation will
continue although at a slower pace than had been projected. Even more unclear at this
stage is the development and implementation of the third phase of SIAF, in particular the
extension to municipalities. While the new Administration has made much both prior to
elections and in the first two months of office of the desire to strengthen municipal
government, politics may slow intentions. In the most important case, the Municipality of
Guatemala, the extension of SIAF in terms of technical design will proceed without doubt.
However, uneven relations between the municipality and the Administration at a political
level may affect advances.
Within the overall framework of SIAF as a system of public management, there
remain a number of outstanding modules to be developed and implemented as is suggested
above. Perhaps most important among these from a financial standpoint are the
incorporation of both the audit and public investment components of the system. Key
negotiations to resolve institutional differences are in process as this paper is being written.
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SIAF-SAG." n.d.
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Ministerio de Finanzas Públicas, Tesorería Nacional "Principales Normas de Control
Interno de Tesorería." August, 1999.
Ministerio de Finanzas Públicas, Tesorería Nacional, "Instructivo para Responder el
Cuestionario sobre el Clima Organizacional de Tesorería Nacional." January, 2000.
Ministerio de Finanzas Públicas, Tesorería Nacional,
Administración Financiera: Sistema de Tesorería." n.d.
"Sistema
Integrado
de
Ministerio de Finanzas Públicas, Tesorería Nacional, "El Sistema de Tesorería Pública: La
Experiencia de Guatemala." March, 1999.
Ministerio de Finanzas Públicas, Tesorería Nacional, "Informe de la Gestión del Tesoro,
Enero-Noviembre, 1999." January, 2000.
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Final
Ministerio de Finanzas Públicas, Tesorería Nacional, "Plan Operativo Anual 2000:
Principales Metas y Actividades." January, 2000.
Ministerio de Finanzas Públicas, Dirección Técnica de Presupuesto, "Indicadores de
Gestión: Sistema Integrado de Administración Financiera." March, 2000.
Ministerio de Finanzas Públicas, Presupuesto General de Ingresos y Egresos del Estado,
2000. January, 2000.
Ministerio de Finanzas Públicas, Dirección Técnica del Presupuesto, "Decreto Número
101-97 - Ley Orgánica del Presupuesto." October 1997.
Ministerio de Finanzas Públicas, Dirección Técnica del Presupuesto, "Acuerdo
Gubernativo No. 240-98." April, 1998.
Ministerio de Finanzas Públicas, "Sistema Integrado de Administración Financiera y
Control (SIAF-SAG) Guatemala: Una Presentación." 1999.
Ministerio de Salud Pública, "Ejecución Presupuestaria Ejercicio Fiscal 1998"
Ministerio de Salud Pública, "Reglamento Orgánico Interno del Ministerio de Salud
Pública y Asistencia Social," November, 1998.
Ministerio de Salud Pública, "Reordenamiento Funcional del Ministerio de Salud Pública y
Asistencia Social," January, 1995.
Ministerio de Finanzas Públicas/SIAF-SAG, SIAF-SAG Website, www.siafsag.gob.gt.
Presidencia de la República de Guatemala, Secretaría General de Planificación, Programa
de Gobierno, 1996-2000. June, 1996.
World Bank, "Integrated Financial Management Project II," December, 1997
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15352-GU, August, 1996.
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16392-GU, July, 1997.
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Project I" February 2000.
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June, 1995.
World Bank, Public Expenditure Management Handbook, Washington, D.C., 1998.
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Persons Interviewed
During the preparation of this paper the author conducted formal semi-structured
interviews of approximately two hours each with a number of key personnel involved in
the design and implementation of SIAF-SAG. In some cases, second and less structured
interviews were conducted as a follow-up. The list of persons interviewed with this semistructured format is attached. In addition, the author relied upon a number of informal
interviews and conversations with relevant persons during the 1999-2000 period. Finally,
the author´s own observations on the development, design and implementation of SIAFSAG are incorporated, particularly from his vantage points in the Ministry of Education
where he served as advisor on modernization from 1997-1999, and the Ministry of Health
where he was involved with the evaluation and development of IDB institutional
modernization initiatives.
Interviews
SIAF:
Licenciado Oswaldo Albano Landesa, International Director, SIAF
Licenciado Edgar Orlando Rosas Rodríguez, International Expert, Informatics
Licenciado Carlos Cardozo Flores, International Expert, Programming and Analysis
Licenciado Juan Gali Coll, International Expert, Budget
Licenciado Hector Ruiz Perez, International Expert, Treasury
Licenciado Marco Antonio Fión Castellanos, National Consultant, UDAF
Ministry of Finance:
Licenciado René Arturo Orellana, Director, National Treasury
Licenciado Angel Rodriguez Tello, Technical Director, Budget
Licenciado Edgardo Pesquiera Ochoa, National Consultant, Budget
Licenciado Carlos Girón, Technical Director, Accounting
Others:
Dr. Carolina Roca, Former Advisor, Ministry of Finance and CPME
Licenciado Mario Ruben Farfán, Advisor, Ministry of Public Finance (Public Credit) and
Former Principal Financial Advisor, Ministry of Education
Licenciado Alfredo Garcia, SubDirector of Finance, Municipality of Guatemala and
Former Director, UDAF, Ministry of Education and Former SubDirector of the
Treasury
Licenciada Eugenia Rosales Chavarría, Former Manager of Modernization, Ministry of
Education
Licenciado Alfredo Privado, Former General Director of Administration, Ministry of
Health
Licenciado Tito Rivera, Former SubDirector of Administration, Ministry of Health
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