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1
The PEFA Program – and the PFM Performance Measurement
Framework
Washington DC, May 1, 2008
Bill DorotinskyIMF
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Content
What is PEFA ? The Strengthened Approach to Supporting
PFM Reform The PFM Performance Measurement
Framework
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What is PEFA ?
Public Expenditure and Financial Accountability Program
– aimed at harmonization and alignment– supporting the Monterrey, Rome and Paris Declarations
Established by a core group of international financial institutions and donor agencies
– World Bank, IMF, European Commission, UK, France, Norway, Switzerland
– Guides and finances the Program
Working closely with other donor agencies– through the OECD-DAC Joint Venture on PFM
PEFA Secretariat located within World Bank
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PFM Diagnostics in the 1990s
Large amount of PFM work undertaken, – mostly by development agencies– a good deal of knowledge generated.
LIMITATIONS Duplication and lack of coordination led to heavy
burden on partner governments. Not possible to demonstrate improvements in PFM
performance over time in a country Monitoring of PFM reforms focused on inputs and
activities, rather than performance
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The Strengthened Approach to Supporting PFM Reform
A country-led PFM reform program– including a strategy and action plan reflecting country
priorities; implemented through government structures
A donor coordinated program of support– covering analytical, technical and financial support
A common information pool– based on a framework for measuring and monitoring
results over time– i.e. the PEFA PFM Performance Measurement
Framework
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The PFM Performance Measurement Framework
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Components of the Framework
A standard set of high level PFM indicators to assess performance
– 28 government performance indicators– 3 donor indicators, reflecting donor practices influencing the
government’s PFM A concise, integrated report – the PFM
Performance Report – Standard content and format– provides the narrative to support the indicator assessments
(the evidence)– draws a summary from the analysis
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Coverage of the Public Sector
Focused on central government operations Links to other parts of the public sector
- Sub-National Governments- Public Business Enterprises
to the extent these have implications for Central Government
May be applied to sub-national government- Requires minor modifications
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Principles of Indicator Design
• High level system performance is measured• Assesses performance, but not underlying capacity factors
• Full overview of the PFM system• revenue, expenditure, procurement, financial assets/ liabilities
• Basis for design:
• The 16 HIPC Expenditure Tracking Indicators, but broader
• draws on IMF’s Fiscal Standards and Codes (ROSC)
• internationally accepted standards e.g. GFS, IPSAS, INTOSAI
• Widely applicable to countries at all levels of development, but not intended for cross-country comparison
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Budget credibility
A. PFM Out-turns
External scrutiny and
audit
Accounting, Recording, Reporting
Predictability and
control in Budget
Execution
Policy Based
budgeting
C. Budget Cycle D. Donor Practices
Comprehensiveness and Transparency
Structure of the Indicator Set
B. Cross-cutting features
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Content of Indicator Set
A. PFM Out-turnsCredibility of the budget Indicators 1- 4
Deviations from aggregate budgeted expenditure and revenue as well as expenditure composition. Level of expenditure arrears.
B. Key Cross-cutting issuesComprehensiveness and transparency Indicators 5-10
Coverage of budget classification, budget documentation, reporting on extra-budgetary operations, inter-governmental fiscal relations, fiscal risk oversight and public access to information.
C. Budget Cyclei. Policy-based budgeting Indicators 11-12
Annual budget preparation process, multi-year perspective in fiscal planning, expenditure policy and budgeting
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Content of Indicator Set (cont’d)
C. Budget Cycleii. Predictability & control in budget execution Indicators 13-21
Revenue administration, predictability in availability of funds, cash balances, debt & guarantee management, payroll controls, procurement, internal controls and internal audit
iii. Accounting, recording and reporting Indicators 22-25
Accounts reconciliation, reporting on resources at service outlet level, in-year budget execution reports, financial statements
iv. External scrutiny and audit Indicators 26-28
Scope, nature and follow-up on external audit; legislative scrutiny of annual budget law and external audit reports
D. Donor Practices Indicators D1- D3
Predictability of direct budget support; donor information for budgeting and reporting; use of national procedures
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Calibration and Scoring
Calibrated on four point ordinal scale (A, B, C, D)– Requirements for each score explicitly specified
Scoring based on extent of internationally recognized ‘Good Practice’
Indicators have 1, 2, 3 or 4 dimensions– in total 74 dimensions
– to provide detailed information & transparency of score
– each dimension must be rated separately
Aggregation only from dimensions to indicator