The PEFA Program
- an Overview
Presentation to be used by SC members
Prepared by the PEFA
Secretariat – June 2011
CONTENT
-
Program Overview
The PEFA Framework
Use & Impact
The PEFA Secretariat
2
PROGRAM OVERVIEW
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What is the PEFA program?

PEFA = Public Expenditure & Financial Accountability Program

Objective:
 Results orientation in development of PFM systems
 Harmonization of PFM analytical work

Established:
 Established in 2001 by seven agencies.
 Working in tandem with the OECD-DAC Task Force on PFM
 Contributing to development effectiveness through: The
Strengthened Approach to Supporting PFM Reform
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The PEFA stakeholders
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The Strengthened Approach to
Supporting PFM Reform
1. A country-led PFM reform program

including a strategy and action plan reflecting country
priorities; implemented through government structures
2. A donor coordinated program of support

covering analytical, technical and financial support
3. A common information pool


based on a framework for measuring performance and
monitoring results over time
i.e. the PFM Performance Measurement Framework
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THE PFM PERFORMANCE
MEASUREMENT
FRAMEWORK
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The PEFA Framework
PFM Performance Measurement Framework
• Better known as ‘the PEFA Framework’
• The ‘flagship’ product of the PEFA Program
• Launched in June 2005
Designed to measure performance of national PFM systems
• Applicable to countries and different stages of development
• Also applicable for Sub-National government systems
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PFM Links to Development Goals
MDGs, PRSP,
Political Manifesto
Other influencing factors
Dev
Goals
Service
Delivery Goals
Budgetary Outcomes
Fiscal/Exp Policy Goals
Budget deficit, Sector
allocations, Investment, Debt
ratio, Tax burden etc
Fiscal discipline,
Strategic allocation,
Operational efficiency
PEFA Framework
PFM system performance
Purpose of the PEFA Framework
Objective
• To determine if a country has the tools to deliver three main budgetary
outcomes (aggregate fiscal discipline; strategic resource allocation;
efficient service delivery)?
It provides:
• a high level overview of all aspects of a country’s PFM systems
performance
• includes revenue, expenditure, procurement, financial assets/ liabilities
It does not provide:
• Assessment of underlying causes for good / poor performance
• An assessment of government fiscal/expenditure policies
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Components of the PEFA Framework

A standard set of high level PFM performance
indicators (PIs)
 31 performance indicators (with 76 sub-indicators)
 Grouped in six critical dimensions
 A compromise between simplicity and
comprehensiveness

A standard report format

the PFM Performance Report (PFM-PR)

developed to provide country background, evidence on
the indicators and an integrated, analytical summary.
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Dimensions of PFM system performance
External scrutiny
& audit:
Budget credibility:
Is the budget realistic,
& implemented as
intended?
Comprehensiveness
and transparency :
6 critical
dimensions
of PFM
system
performance
Are the budget & fiscal risk
oversight comprehensive, &
is fiscal & budget information
accessible to the public?
Policy-based
budgeting:
Predictability & control in
budget execution:
Is the budget prepared with
due regard to government
policy?
Is the budget implemented in a
predictable manner & is control &
stewardship exercised in the
collection & use of public funds?
Are there effective
arrangements for
scrutiny of public
finances & follow up
by the executive?
Accounting, recording
& reporting:
Are adequate records &
information produced,
maintained & disseminated
to meet decision-making,
control, management &
reporting purposes?
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Implementation modalities


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
(managing, financing, quality review)
 The Framework does not ‘belong’ to any single
organization
 Due process is crucial to acceptance and use - Joint work
is encouraged
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Stages in 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. 1st 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
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USE & IMPACT
OF THE PEFA FRAMEWORK
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PEFA Framework adoption

Very good progress – globally



High country coverage in many regions



220+ assessments substantially completed, covering 120+ countries.
Since 2010, mostly Repeat assessments and Sub-National
assessments
Africa and Caribbean 90% of countries
Latin America, Eastern Europe, Asia, Pacific 50-80%
Used in many Middle Income Countries
Upper MICs: Brazil, Turkey, Belarus, Russian Federation, South Africa
 Lower MICs: India, Kazakhstan, Ukraine, Morocco, Egypt, Thailand,
Philippines, Indonesia, Colombia, Peru

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Stakeholder involvement

Government leadership/self-assessment




Active government participation in assessment is key to the use
in reform policy dialogue
Full self-assessment may be very demanding on govt. capacity
Increasing frequency of Self-assessment with expert assistance
and external validation – but still a minority of cases
Development Agencies



About 25 development banks and donor agencies involved
(leading, financing or in reference group)
World Bank and EU has taken the lead in 85% of all assessments
Increasing frequency of joint work and partner inclusiveness
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Coverage of PFM-PR in Reform Cycle
Implement
PFM reforms
High level
performance
overview
Formulate
PFM reform
program
PFM-PR
Recommend
Recommen
PFM reform
d PFM
measures
reform
measures
Identify main
main
Identify
PFM
weaknesses
Investigate
underlying
causes
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PEFA contribution to results orientation

Frequently used as basis for reform dialogue
Useful in deciding reform priorities
 Ownership means government decisions on priorities
 Indicators used to set targets for reform program results
but:
 PEFA assessment is one of several inputs
 Do not use Indicator scores simplistically
 Complementary analysis to PEFA required to identify root causes


Measuring performance change
 Results from 33 repeat assessments indicate pace of progress in different
areas of PFM – positive global trend but wide variation among PFM features

Peer learning
 Used as basis for discussions in regional groups of government PFM experts
(e.g. Eastern Europe, West Africa, Caribbean)
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Use of PEFA for Development Agencies’
Internal Processes





Used by all seven PEFA partners for internal processes
(GBS/DPL, FRA, CPIA, Debt Limits etc)
Similarly used by several other development agencies
Increasingly, PEFA assessments are directly mentioned in
internal guidelines as key or preferred input
PEFA assessment information is rarely considered the only
source of information to a process
Most of the processes have financial consequences for partner
countries – though the impact of PEFA is usually indirect.
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Assessment comparisons
PEFA Framework developed to measure progress over time in
one country
• ‘Summary assessment’ provides overview of strengths &
weaknesses as basis for reform prioritization in a country
• Comparison of assessments over time is robust where repeat
assessments are explicitly comparing to baseline
Country comparisons
• Comparing scores alone can be misleading
• Must be approached cautiously - ensure comparison of like
with like
• Aggregation - No method given for arriving at single measure
of ‘overall performance’ – no attempt to create ‘league table’
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Harmonization of PFM diagnostic tools

Common information pool being created



Considerable use of PEFA assessments for many different purposes
Several earlier instruments replaced by PEFA
Transactions costs in PFM diagnostics appear not to
decline, due to:




Still several overlapping assessment instruments
Many uncoordinated fiduciary assessments
Proliferation of new ‘drill-down’ PFM tools
Few countries have multi-year plans for analytical work
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THE PEFA SECRETARIAT
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Role of the PEFA Secretariat

Neutral body
 Supporting / advising any user of the Framework
 does not represent a particular interest
 does not undertake or finance assessments
 support services are free of charge
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Activities of the PEFA Secretariat (1)
Custodian of the PEFA Framework
 Development and maintenance of the Framework
 Issues guidance notes and clarifications
 Quality reviews of assessments
 Both at concept note and report stage, on request
 Training
 Develops and shares training materials
 Supports training institutes in delivering PEFA courses
 Delivers training selectively, mainly on a regional basis
 Dissemination
 Conference presentations, PFM blogs, PEFA Newsflash
 Sharing PEFA assessment reports through website

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Role of the PEFA Secretariat (2)

Monitoring
 Semi-annual updates of PEFA assessment status list
 Periodic monitoring reports
 Ad hoc surveys

Promotes harmonization in assessment of PFM systems
 Working with OECD-DAC Task Force on PFM
 Stocktaking study of PFM diagnostic instruments
 Supports developers of ‘drill-down’ assessment tools

Support PFM research
 Availability of PEFA indicators database
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PEFA Secretariat quality review
• On request, free of charge, quick feedback (10 business days)
• For Concept Notes/TOR and as well as Assessment Reports
• Appraises adequacy of background info (sections 1, 2 & 4)
• Appraises application of performance indicators (section 3)
• Review of each indicator: correctly interpreted, sufficient
evidence, scoring method correctly applied?
•
Considers whether summary assessment brings out clear
message consistent with indicator analysis and background
•
Follow-up reviews – evaluates responses to the initial review
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Stay in touch with PEFA

Visit the PEFA website: www.pefa.org

Send questions to the Secretariat: services@pefa.org

Get on PEFA’s news distribution list: Send your name and
email address to the Secretariat