This Public Expenditure Review starts bylooking at the country s macro-fiscal performance in chapterone, it examines the implementation of the Nam Theun 2 (NT2)Revenue Management Arrangements (RMA) by which thegovernment committed itself to continued strengthening ofPFM and the selection ofeligiblepro-poor andenvironmental conservation projects to be funded from NT2revenues in chapter two, and takes stock of issues relatingto expenditure prioritization and centralization of tax,treasury, and customs department in chapter three on PublicFinance In this way, the PER responds to the commitment madeto stakeholders in the hydropower dam project thatimplementation of the RMA would be reported on in successivePublic Expenditure Reviews (PER).The PER then review theintergovernmental fiscal arrangements, as they have evolvedsince the new organic Budget Law was promulgated in 2006.Currently, central, provincial and district governments areconsidered deconcentrated elements of a single levelexecutive. In practice provincial governors enjoyconsiderable autonomy, causing variation in theimplementation of national policies. The government,however, is moving towards a more transparent, rules basedintergovernmental fiscal system. PER-IFA-2007 provided someinitial analysis and comments on such a transformation.Finally, Chapter four look in greater detail at the currentsystem of revenue and expenditure assignments and transfers,and how they work in practice. It then discusses thechallenges in designing a new system of inter-governmentalrelations with reduced vertical and horizontal imbalances.
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