1 the pefa program – and the pfm performance measurement framework public financial analysis and...
TRANSCRIPT
1
The PEFA Program – and the PFM Performance Measurement
Framework
Public Financial Analysis and Management (PFAM) CourseWorld Bank
Washington DC, April 24, 2007
Frans RonsholtPEFA Secretariat
2
Content
What is PEFA ? The Strengthened Approach to Supporting
PFM Reform The PFM Performance Measurement
Framework Roll-out of the Framework Assessment Process Issues The Role of the PEFA Secretariat
3
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
4
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
5
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
6
The PFM Performance Measurement Framework
7
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
8
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
9
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
10
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
11
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
12
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
13
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
14
Roll-out of PEFA based Assessments
15
Roll-out of PFM Assessments
PFM Performance Measurement Framework launched June 2005
Assessment Status as at March 2007– 45 substantially completed i.e. draft/final report– 24 on-going but report not yet issued– 27 agreed with government but not started– Roll-out rate: a steady 2-3 new assessments per month
Outlook for mid 2008– 75-80 countries covered– 8-10 repeat assessments
16
Geographical distribution
17
Assessment Process Issues
18
Decentralized Process
Application of the PEFA Framework to be decided at country level. Decisions to be made:
– If and Why ?– When ?– How ?
Recommended by international organizations as good practice (e.g. OECD-DAC, ComSec)
No supra-agency mandates or responsibilities. Each country and organization decides its interest in a PEFA assessment and ability to contribute.
19
Government Involvement
Government’s role Self-assessment (with external validation) Joint assessment (joint team) Collaboration with donor-led assessment
Determined by interest and capacity What are the benefits to government? Government staff may need training
20
Donor Collaboration
A donor reference group is essential to ensure that needs of all parties are addressed to ensure common acceptance of findings
The reference group to agree internally and with the government on:
Diagnostic packaging Resources for assessment work Stages and timing of the assessment work Quality assurance arrangements
21
Diagnostic Packaging -
Purposes of Standard Diagnostic Tools
PER CFAA CPAR Fiscal ROSC
TA report
FRA PFM-PR
Review of public expenditure policies & budgetary outcomes
X
Review of political incentives
X X
High level overview of PFM performance
X
Identification of PFM strengths/weaknesses
X X X X X X
In-depth analysis of capacity factors
X X X X X
Recommendations for reform
X X X X X
Assess risk to public funds
X X
Track progress over time * * * X * if performance indicators are incorporated
22
Implement PFM reforms
Recommend PFM reform measures
Identify main PFM
weaknesses
High level performance
overview
Diagnostic Packaging – Coverage of PFM Performance Report
Investigate underlying
causes
Formulate PFM reform program
Identify main PFM
weaknesses
Recommend PFM reform measures
PFM-PR
23
Diagnostic Packages
Stand-alone PFM-PR - Recommended -e.g. input to decision on focus of subsequent in-depth
analysis PFM Performance indicators integrated into other
product - in combination with PER, CFAA or PEMFAR/CIFA
- a problematic concept; rarely working well PFM-PR as a separate/early module of a broader
analytical product - often works well (e.g. Afghanistan PER, Ghana
ERPFM)
24
Quality Assurance
Terms of Reference & Draft Report to be Q.A.’d Government and donor reference group
– Should ensure that information is used correctly and reflects the situation in the country
Donor specific arrangements to be respected e.g. World Bank peer review mechanism
The PEFA Secretariat can contribute as peer reviewer, if requested
– Will consider if the product respects the Framework’s standards and methodology
25
The PEFA Secretariat
26
Mission of the PEFA Secretariat
To disseminate information on the Strengthened Approach to Supporting PFM Reform and the PEFA Performance Measurement Framework.
To support applications of the PEFA Framework at country level for quality and usefulness of the assessments.
Reports to the seven-agency PEFA Steering Committee
27
Activities of the PEFA Secretariat
Development of the Framework; interpretation and clarification of the indicators
Provision of support and guidance for quality in implementing the assessment in each country
Development of training programs and materials Monitoring roll-out of the strengthened approach for
lesson learning and input into training and guidance
28
Support Services and Tools
Support tools for assessment managers on the website (www.pefa.org):
List of completed, ongoing and planned assessments – updated 3-4 times annually
Links to completed reports, if they are made public
Support to assessment managers on request: Advice / Video-conference briefings to country teams on
assessment planning List of consultants with PEFA assessment experience Review of terms of reference Quality reviews of draft assessment reports
29
Support Services and Tools
Support tools for assessors & trainers on the website: Translations of the Framework (English, French, Spanish,
Portuguese, Russian, Arabic) Calculation spreadsheets for some indicators Guidance on information / evidence for assessment Clarifications and additional guidance on indicators Training materials
Support to assessors on request: Indicator interpretation and other advice to assessors
during implementation
30
Thank You for Your Attention