Improving public financial management. Supporting sustainable development.

Fiscal Reforms and Governance – a PEFA Perspective

G-24 Technical Group MeetingLima, Peru, March 14-15, 2019 Jens Kromann Kristensen, Head of the PEFA Secretariat

www.pefa.org

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What is the Public Expenditure and Financial Accountability (PEFA) Program and Framework ?

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PEFA Public Financial Management performance assessment

3 OUTCOMES

7 PILLARS

31 INDICATORS

94 DIMENSIONS

PEFA has been used in 150 countries

Source: https://pefa.org/countries-regions#/ 4

G24 Member countries with PEFA assessments –march 2019

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National and Sub-national PEFA Assessments in G24 member countries

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1

5

1

5

76

1

3

6

21

32

5

12

3

12

14

8

11

54

19

3

7

12

0

2

4

6

8

10

12

14

16

18

20

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

National Assessments

Sub-National Assessments

Fiscal Reforms and Governance

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Average PEFA score, by country income level and region (most recent)

Source: World Bank, 2019, PEFA, Public Financial Management, and Good Governance.

(C) (C) (B)

Fiscal Reforms and Governance

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Deviation in overall expenditure by income group, BOOST data

Source: IBP, 2019, Can You Believe It? Tracing the Contours of the Budget Credibility Challenge. Presentation at Community of Practice Meeting, Feb 7-8, 2019 Washington D.C

Fiscal Reforms and Governance

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Deviation in overall expenditure and revenue PEFA Data

Source: IBP, 2019, Can You Believe It? Tracing the Contours of the Budget Credibility Challenge. Presentation at Community of Practice Meeting, Feb 7-8, 2019 Washington D.C

Fiscal Reforms and Governance

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Average overall PEFA score, 2005–17

Aggregate score Median score

Source: World Bank, 2019, PEFA, Public Financial Management, and Good Governance.

Fiscal Reforms and Governance

The highest scoring countries since 2016 (public reports – simple average of scores)

• Georgia

• Rwanda

• Philippines and Indonesia

• Albania

• Kazakhstan

The most improved countries since 2016 (public reports – simple average of scores)

• Philippines

• Tajikistan

• Uganda

• Rwanda

• Togo

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Fiscal Reforms and Governance

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Average overall PEFA score, by pillar, 2005–17

Source: World Bank, 2019, PEFA, Public Financial Management, and Good Governance.

Fiscal Reforms and Governance

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PEFA performance on “form” versus “function, 2005–17

Source: World Bank, 2019, PEFA, Public Financial Management, and Good Governance.

Fiscal Reforms and Governance

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What drives performance: PEFA performance and income ?

Source: World Bank Group, 2017, Political Economy of Public Financial, Management Reforms

PFM trends mirror development priorities

• Service delivery focus – human capital as driver of growth– PFM as enabler of service delivery – Focus on the “handover” between cross cutting PFM systems and PFM in delivering

agencies– Prioritizing PFM reforms that deliver on policy objectives

• Public investment management – infrastructure as a driver of growth – Alternative financing (PPP, concessions, private provision, SOE governance), – Re-introducing “the project” and “the project cycle” in budgeting and management

• GovTech (e-Government) – technological disruption as a driver of growth – IFMIS, e-procurement, HRMIS and beyond– Open data, feedback, transparency and dialogue– Cloud, AI, big data– Robotic process automation, internet of things, blockchains, etc. (TBD)

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PFM trends mirror development priorities

• PFM and climate change – climate change as a risk to growth– International focus (the 2019 Helsinki Declaration, ongoing OECD working

group)– Tax policy – Public Investment Management, fiscal policies, etc.

• PFM reform evergreens/foundations – macro fiscal pressures, assurance, anti corruption…– Debt management and debt transparency– Transparency and disclosure– MTEF, PPP, Accounting standards, cash management etc.

• New ways of prioritizing and implementing PFM reforms – Open source, project management approaches– Problem Driven Iterative Approaches (PDIA)– Political Economy, stakeholder analysis, working with the grain

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How can countries and their partners do better on Fiscal Reforms and Governance?

There is no PFM reform without solid technical foundation, but…

• Non-technical factors of ownership and interest should be understood, factored in and worked on. Continuously.

• Involve broader stakeholders groups before, during and after reforms

• Agility is key to relevance and impact

• Link and prioritize PFM reforms that support achievement of development policy objectives

• Ongoing monitoring, learning, feedback and adjustment during implementation is key to countering and/or leveraging the unforeseen

• For PEFA, the assessment process (end-to-end) should be leveraged to build capacity and common understanding of reform needs and goals

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Stay in touch with the PEFA Secretariat

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www.pefa.org