Workshop Session I: Public Expenditure Financial Accountability (PEFA) Assessment

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Workshop Session I: Public Expenditure Financial Accountability (PEFA) Assessment
Frans Ronsholt, Head, PEFA Secretariat and Franck Bessette, PFM Expert PEFA
Secretariat
The first session presents the background, objectives and activities of the PEFA program as
well as the content and methodology of the PFM Performance Measurement Framework.
The session also discusses implementation issues and global adoption of the Framework

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Workshop Session I: Public Expenditure Financial Accountability (PEFA) Assessment

  1. 1. The PEFA Initiative & PFM Performance Measurement Framework ICGFM Conference Miami – May 21, 2009 PEFA Secretariat
  2. 2. <ul><li>The PEFA Program </li></ul><ul><li>PFM Performance Measurement Framework </li></ul><ul><li>Global Roll-Out of the Framework </li></ul><ul><li>PEFA support to users </li></ul>Content
  3. 3. <ul><li>The PEFA Program </li></ul><ul><li>PFM Performance Measurement Framework </li></ul><ul><li>Global Roll-Out of the Framework </li></ul><ul><li>PEFA support to users </li></ul>Content
  4. 4. PFM Diagnostics in the 1990s <ul><li>Large amount of PFM work undertaken, </li></ul><ul><ul><li>mostly by development agencies </li></ul></ul><ul><ul><li>a good deal of knowledge generated. </li></ul></ul><ul><li>LIMITATIONS </li></ul><ul><li>Duplication and lack of coordination led to heavy burden on partner governments. </li></ul><ul><li>Not possible to demonstrate if PFM performance is improving over time in a country </li></ul><ul><li>Monitoring of PFM reforms focused on inputs and activities , rather than performance </li></ul>
  5. 5. <ul><li>PEFA Public Expenditure & Financial Accountability </li></ul><ul><li>Objective: Results orientation in development of PFM systems & harmonization of PFM analytical work </li></ul><ul><li>Established: in 2001 by seven agencies. Today working in tandem with the 25 members of OECD-DAC Joint Venture on PFM </li></ul><ul><li>Strategy: Strengthened Approach to support PFM reform, aligned with Paris Declaration </li></ul>What is the PEFA program?
  6. 6. The Strengthened Approach to Supporting PFM Reform <ul><li>A country-led PFM reform program </li></ul><ul><ul><li>including a strategy and action plan reflecting country priorities; implemented through government structures </li></ul></ul><ul><li>A donor coordinated program of support </li></ul><ul><ul><li>covering analytical, technical and financial support </li></ul></ul><ul><li>A common information pool </li></ul><ul><ul><li>based on a framework for measuring performance and monitoring results over time </li></ul></ul><ul><ul><li>i.e. the PEFA PFM Performance Measurement Framework </li></ul></ul>
  7. 7. Implications of the Strengthened Approach? <ul><li>Focus on improvements in country PFM systems: </li></ul><ul><ul><li>Emphasizing country leadership and ownership for result </li></ul></ul><ul><ul><li>Common information pool , fewer duplicative diagnostics </li></ul></ul><ul><ul><li>Joint donor work in country , reducing transaction costs and creating consistency in analysis </li></ul></ul><ul><ul><li>Less emphasis on diagnostics, more on capacity-building </li></ul></ul><ul><ul><li>With performance measurement framework, more learning of what works and why </li></ul></ul>
  8. 8. <ul><li>The PEFA Program </li></ul><ul><li>PFM Performance Measurement Framework </li></ul><ul><li>Global Roll-Out of the Framework </li></ul><ul><li>PEFA support to users </li></ul>Content
  9. 9. COMPONENTS OF THE FRAMEWORK <ul><li>A standard set of high level PFM indicators (including revenue, expenditure, procurement, financial assets/ liabilities) </li></ul><ul><ul><li>28 government performance indicators, covering all aspects of PFM </li></ul></ul><ul><ul><li>3 donor indicators, reflecting donor practices influencing the government’s PFM systems </li></ul></ul><ul><li>A concise, integrated report – the PFM performance report developed to provide narrative on the indicators and to draw a summary from the analysis </li></ul>
  10. 10. FOCUS OF THE FRAMEWORK <ul><li>Focused on central government operations </li></ul><ul><ul><li>but also applicable at sub-national level, special guidelines available </li></ul></ul><ul><li>Links to other parts of the public sector </li></ul><ul><ul><li>Sub-National Governments </li></ul></ul><ul><ul><li>Public Enterprises, </li></ul></ul><ul><ul><li>to the extent these have implications for Central Government </li></ul></ul>
  11. 11. Budget credibility <ul><li>PFM Out-turns </li></ul><ul><li>PI-1 to 4 </li></ul>External scrutiny and audit Accounting, Recording, Reporting Predictability and control in Budget Execution Policy Based budgeting C. Budget Cycle PI-11 to 28 D. Donor Practices D-1 to 3 Comprehensiveness and Transparency STRUCTURE OF THE PERFORMANCE INDICATOR SET B. Cross-cutting features PI-5 to 10
  12. 12. CALIBRATION AND SCORING <ul><li>Calibrated on a Four Point Cardinal Scale (A, B, C, D) </li></ul><ul><li>Reflecting internationally accepted ‘good practice’ </li></ul><ul><li>Determine score by starting from ‘D’ going upwards </li></ul><ul><li>Do not score if evidence is insufficient </li></ul><ul><li>Arrow ▲ </li></ul><ul><li>Can indicate an improvement not reflected in a change of the indicator score </li></ul>
  13. 13. INDICATOR DIMENSIONS <ul><li>Most indicators have 2, 3 or 4 dimensions </li></ul><ul><li>Each dimension must be rated separately </li></ul><ul><li>In total 76 dimension ratings to be determined </li></ul><ul><li>Aggregating dimension scores to indicators; two methods M1 or M2, as specified for each indicator </li></ul><ul><li>Intermediate scores (B+, C+, D+) for multi-dimensional indicators, where dimensions score differently </li></ul>
  14. 14. Content of the PFM Performance Report <ul><li>An integrated narrative report including: </li></ul><ul><li>Introduction with the context for the assessment </li></ul><ul><li>Country background information </li></ul><ul><li>Evidence and justification for scoring the indicators </li></ul><ul><li>Country specific issues </li></ul><ul><li>Description of reform progress and factors influencing it </li></ul><ul><li>Summary assessment of PFM system impact – bringing the analysis together </li></ul>
  15. 15. Strengths of the PEFA Framework <ul><li>Rigorous/transparent framework for consistent and objective assessment – fixed content, rating methodology, international standards/accepted good practice </li></ul><ul><li>Provides a high level overview of all aspects of PFM systems performance – cost-effective </li></ul><ul><li>Provides a focus for PFM reform dialogue and subsequent analysis of selected subjects </li></ul><ul><li>Allows tracking of performance changes over time </li></ul><ul><li>Widely applicable to countries at different levels of development </li></ul>
  16. 16. Limitations of the PEFA Framework <ul><li>The Framework does NOT provide: </li></ul><ul><ul><li>An assessment of underlying causes for good or poor performance i.e. the institutional, organizational and human resource capacity factors </li></ul></ul><ul><ul><li>An assessment of public fiscal and financial policies </li></ul></ul><ul><ul><li>Full details for each PFM topic (refer to specialized drill-down indicator sets) </li></ul></ul><ul><li>Risk of inappropriate application of the Framework – e.g. tick box approach; lacking evidence </li></ul>
  17. 17. <ul><li>The PEFA Program </li></ul><ul><li>PFM Performance Measurement Framework </li></ul><ul><li>Global Roll-Out of the Framework </li></ul><ul><li>PEFA support to users </li></ul>Content
  18. 18. Implementation modality <ul><li>Country focus and decision </li></ul><ul><ul><li>Application of the PEFA Framework is entirely decentralized to the country level (if, when, how to use Framework) </li></ul></ul><ul><li>Inclusiveness </li></ul><ul><ul><li>All stakeholders can be involved and any agency can in principle undertake any role in its implementation; it does not ‘belong’ to any organization </li></ul></ul><ul><li>Supported by a neutral body - the PEFA Secretariat </li></ul><ul><ul><li>offers support to any user of the Framework without representing a particular interest </li></ul></ul><ul><ul><li>does not undertake or finance assessments </li></ul></ul><ul><ul><li>support is free of charge </li></ul></ul>
  19. 19. Important Steps of a Typical Process 0. Agree the intention to undertake a PEFA based assessment 1. Agree purpose, scope and stakeholder roles 2. Prepare TOR 3. Mobilize assessment team 4. Introduction workshop for stakeholders 5. Review of existing information 6. Inception Report 7. Main field work 8. 1 st Draft Report 9. Quality Review 10. Supplementary field work 11. Draft Final Report 12. Presentation seminar 13. Final report 14. Use of the report for reform dialogue
  20. 20. Evolution of Number of Assessments
  21. 21. PEFA Assessments Map
  22. 22. <ul><li>Very good progress – globally </li></ul><ul><ul><li>By February 2009: Completed in 95 countries, ongoing in a further 8, repeat assessments emerging </li></ul></ul><ul><li>Increasingly used for Sub-National government </li></ul><ul><ul><li>India, Pakistan, Iraq, Brazil, Colombia, Tanzania, Uganda, Ethiopia, Nigeria, Senegal, Switzerland </li></ul></ul><ul><ul><li>Guidelines for SN application issued March 2008 </li></ul></ul><ul><li>High country coverage in many regions </li></ul><ul><ul><li>Africa and Caribbean 85-90% of countries </li></ul></ul><ul><ul><li>Latin America, Eastern Europe, Asia, Pacific 45-65% </li></ul></ul><ul><li>Wide stakeholder involvement </li></ul><ul><ul><li>About 25 donor agencies involved (leading, financing reference group) </li></ul></ul><ul><ul><li>World Bank and EC taking the lead in 85% of all assessments </li></ul></ul><ul><ul><li>Government leadership/self-assessment increasing, but not yet the norm </li></ul></ul>PEFA Framework adoption
  23. 23. Publication of Reports <ul><li>Common information pool – facilitated by publication </li></ul><ul><li>Publicized by the leading organization – usually on a website </li></ul><ul><li>Hyperlinks placed on the PEFA website – for easy access to all public reports </li></ul><ul><li>As at April 2009, 52 reports publicly available (out of 77 finalized) </li></ul>
  24. 24. <ul><li>The PEFA Program </li></ul><ul><li>PFM Performance Measurement Framework </li></ul><ul><li>Global Roll-Out of the Framework </li></ul><ul><li>PEFA support to users </li></ul>Content
  25. 25. <ul><li>New Focus: Support to the use of PEFA reports for </li></ul><ul><ul><li>Tracking of performance changes over time </li></ul></ul><ul><ul><li>Prioritization and sequencing of PFM reforms </li></ul></ul><ul><ul><li>Peer learning </li></ul></ul><ul><ul><li>Utilization by stakeholders beyond central finance agencies and donors </li></ul></ul><ul><li>… . and enhancing country ownership / donor collaboration for assessments & subsequent reform formulation / implementation </li></ul><ul><li>Other objectives will continue as under Phase II: </li></ul><ul><ul><li>Support to quality assurance - training, advice, guidance on good practice, peer review and technical maintenance of the Framework = core services of the Secretariat </li></ul></ul><ul><ul><li>Monitoring of roll-out & quality ; impact assessment </li></ul></ul><ul><ul><li>Expansion of country coverage, espec. MICs and HICs </li></ul></ul>PEFA Phase III 2009-2011
  26. 26. <ul><li>Support tools on the website ( www.pefa.org ): </li></ul><ul><li>List of completed, ongoing and planned assessments – updated periodically </li></ul><ul><li>Links to completed reports, when public </li></ul><ul><li>Support on request: </li></ul><ul><li>Advice / Video-conference briefings to country teams on assessment planning </li></ul><ul><li>List of consultants with PEFA experience </li></ul><ul><li>Review of terms of reference </li></ul><ul><li>Quality reviews of draft assessment reports </li></ul>Support to assessment managers
  27. 27. <ul><li>Support tools on the website: </li></ul><ul><li>The Framework ( English, French, Spanish, Portuguese, Russian, Arabic ) </li></ul><ul><li>Calculation spreadsheets for some indicators </li></ul><ul><li>Guidance on information / evidence for assessment </li></ul><ul><li>Clarifications and additional guidance on indicators </li></ul><ul><li>Training materials </li></ul><ul><li>Support on request: </li></ul><ul><li>Indicator interpretation and other advice to assessors during implementation </li></ul>Support to Assessors
  28. 28. <ul><li>Visit our website: www.pefa.org </li></ul><ul><li>Send us questions: [email_address] </li></ul><ul><li>Get on our news distribution list: Send us your name and email address </li></ul>Stay in touch with PEFA
  29. 29. Thank you for your attention

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