The PEFA Initiative & PFM Performance Measurement Framework

ICGFM Conference

Miami – May 21, 2009

PEFA Secretariat

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The PEFA ProgramPFM Performance

Measurement FrameworkGlobal Roll-Out of the

FrameworkPEFA support to users

Content

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The PEFA ProgramPFM Performance

Measurement FrameworkGlobal Roll-Out of the

FrameworkPEFA support to users

Content

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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 if PFM performance is

improving over time in a country• Monitoring of PFM reforms focused on inputs and

activities, rather than performance

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PEFA Public Expenditure & Financial Accountability

Objective: Results orientation in development of PFM systems & harmonization of PFM analytical work

Established: in 2001 by seven agencies. Today working in tandem with the 25 members of OECD-DAC Joint Venture on PFM

Strategy: Strengthened Approach to support PFM reform, aligned with Paris Declaration

What is the PEFA program?

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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 performance and monitoring results over time

– i.e. the PEFA PFM Performance Measurement Framework

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Implications of the Strengthened Approach?

Focus on improvements in country PFM systems:– Emphasizing country leadership and ownership for result– Common information pool, fewer duplicative diagnostics– Joint donor work in country, reducing transaction costs and

creating consistency in analysis– Less emphasis on diagnostics, more on capacity-building– With performance measurement framework, more learning of

what works and why

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The PEFA ProgramPFM Performance

Measurement FrameworkGlobal Roll-Out of the

FrameworkPEFA support to users

Content

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COMPONENTS OF THE FRAMEWORK

A standard set of high level PFM indicators (including revenue, expenditure, procurement, financial assets/ liabilities) – 28 government performance indicators, covering all

aspects of PFM– 3 donor indicators, reflecting donor practices

influencing the government’s PFM systems A concise, integrated report – the PFM

performance report developed to provide narrative on the indicators and to draw a summary from the analysis

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FOCUS OF THE FRAMEWORK

Focused on central government operations but also applicable at sub-national level, special

guidelines available

Links to other parts of the public sector – Sub-National Governments– Public Enterprises, – to the extent these have implications for Central

Government

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Budget credibility

A. PFM Out-turnsPI-1 to 4

External scrutiny and

audit

Accounting, Recording, Reporting

Predictability and

control in Budget

Execution

Policy Based

budgeting

C. Budget CyclePI-11 to 28

D. Donor PracticesD-1 to 3

Comprehensiveness and Transparency

STRUCTURE OF THE PERFORMANCE INDICATOR SET

B. Cross-cutting featuresPI-5 to 10

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CALIBRATION AND SCORING

Calibrated on a Four Point Cardinal Scale (A, B, C, D)

Reflecting internationally accepted ‘good practice’ Determine score by starting from ‘D’ going upwards Do not score if evidence is insufficient

Arrow ▲

Can indicate an improvement not reflected in a change of the indicator score

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INDICATOR DIMENSIONS

Most indicators have 2, 3 or 4 dimensions

Each dimension must be rated separately In total 76 dimension ratings to be determined Aggregating dimension scores to indicators; two

methods M1 or M2, as specified for each indicator Intermediate scores (B+, C+, D+) for multi-

dimensional indicators, where dimensions score differently

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Content of the PFM Performance Report

An integrated narrative report including:

Introduction with the context for the assessment Country background information Evidence and justification for scoring the indicators Country specific issues Description of reform progress and factors

influencing it Summary assessment of PFM system impact –

bringing the analysis together

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Strengths of the PEFA Framework

Rigorous/transparent framework for consistent and objective assessment – fixed content, rating methodology, international standards/accepted good practice

Provides a high level overview of all aspects of PFM systems performance – cost-effective

Provides a focus for PFM reform dialogue and subsequent analysis of selected subjects

Allows tracking of performance changes over time Widely applicable to countries at different levels of

development

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Limitations of the PEFA Framework

The Framework does NOT provide:

– An assessment of underlying causes for good or poor performance i.e. the institutional, organizational and human resource capacity factors

– An assessment of public fiscal and financial policies– Full details for each PFM topic (refer to specialized drill-

down indicator sets)

Risk of inappropriate application of the Framework – e.g. tick box approach; lacking evidence

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The PEFA ProgramPFM Performance

Measurement FrameworkGlobal Roll-Out of the

FrameworkPEFA support to users

Content

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Implementation modality Country focus and decision

– Application of the PEFA Framework is entirely decentralized to the country level (if, when, how to use Framework)

Inclusiveness– All stakeholders can be involved and any agency can in principle

undertake any role in its implementation; it does not ‘belong’ to any organization

Supported by a neutral body - the PEFA Secretariat – offers support to any user of the Framework without representing a

particular interest– does not undertake or finance assessments– support is free of charge

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Important Steps of a Typical Process0. Agree the intention to undertake a PEFA based assessment

1. Agree purpose, scope and stakeholder roles2. Prepare TOR

3. Mobilize assessment team4. Introduction workshop for stakeholders

5. Review of existing information6. Inception Report

7. Main field work8. 1st Draft Report

9. Quality Review10. Supplementary field work

11. Draft Final Report12. Presentation seminar

13. Final report14. Use of the report for reform dialogue

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Evolution of Number of Assessments

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PEFA Assessments Map

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Very good progress – globally– By February 2009: Completed in 95 countries, ongoing in

a further 8, repeat assessments emerging Increasingly used for Sub-National government

– India, Pakistan, Iraq, Brazil, Colombia, Tanzania, Uganda, Ethiopia, Nigeria, Senegal, Switzerland

– Guidelines for SN application issued March 2008 High country coverage in many regions

– Africa and Caribbean 85-90% of countries– Latin America, Eastern Europe, Asia, Pacific 45-65%

Wide stakeholder involvement– About 25 donor agencies involved (leading, financing reference

group)– World Bank and EC taking the lead in 85% of all assessments– Government leadership/self-assessment increasing, but not yet

the norm

PEFA Framework adoption

Publication of Reports

Common information pool – facilitated by publication

Publicized by the leading organization – usually on a website

Hyperlinks placed on the PEFA website – for easy access to all public reports

As at April 2009, 52 reports publicly available (out of 77 finalized)

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The PEFA ProgramPFM Performance

Measurement FrameworkGlobal Roll-Out of the

FrameworkPEFA support to users

Content

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New Focus: Support to the use of PEFA reports for– Tracking of performance changes over time– Prioritization and sequencing of PFM reforms– Peer learning– Utilization by stakeholders beyond central finance agencies

and donors …. and enhancing country ownership / donor

collaboration for assessments & subsequent reform formulation / implementation

Other objectives will continue as under Phase II: – Support to quality assurance - training, advice, guidance on

good practice, peer review and technical maintenance of the Framework = core services of the Secretariat

– Monitoring of roll-out & quality ; impact assessment– Expansion of country coverage, espec. MICs and HICs

PEFA Phase III 2009-2011

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Support tools on the website (www.pefa.org):

List of completed, ongoing and planned assessments – updated periodically

Links to completed reports, when public

Support on request: Advice / Video-conference briefings to country

teams on assessment planning List of consultants with PEFA experience Review of terms of reference Quality reviews of draft assessment reports

Support to assessment managers

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Support tools on the website: 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 on request: Indicator interpretation and other advice to

assessors during implementation

Support to Assessors

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