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The PEFA Initiative

& PFM Performance


Measurement
Framework
ICGFM Conference
Miami – May 21, 2009

PEFA Secretariat
Content
 The PEFA Program
 PFM Performance
Measurement Framework
 Global Roll-Out of the
Framework
 PEFA support to users

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Content
 The PEFA Program
 PFM Performance
Measurement Framework
 Global Roll-Out of the
Framework
 PEFA support to users

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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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What is the PEFA program?
 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

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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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Content
 The PEFA Program
 PFM Performance
Measurement Framework
 Global Roll-Out of the
Framework
 PEFA support to users

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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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STRUCTURE OF THE PERFORMANCE INDICATOR SET
C. Budget Cycle
PI-11 to 28

D. Donor Practices
Policy D-1 to 3
Based
budgeting
A. PFM Out-turns
PI-1 to 4

B. Cross-cutting features
PI-5 to 10 Predictabilit Budget
External y and control credibility
scrutiny and Comprehensiveness in Budget
audit and Transparency Execution

Accounting,
Recording,
Reporting

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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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Content
 The PEFA Program
 PFM Performance
Measurement Framework
 Global Roll-Out of the
Framework
 PEFA support to users

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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 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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Evolution of Number of Assessments

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PEFA Assessments Map

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PEFA Framework adoption
 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
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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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Content
 The PEFA Program
 PFM Performance
Measurement Framework
 Global Roll-Out of the
Framework
 PEFA support to users

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PEFA Phase III 2009-2011
 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

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Support to assessment managers
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

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Support to Assessors
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

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Stay in touch with PEFA

 Visit our website: www.pefa.org

 Send us questions: pefa@worldbank.org

 Get on our news distribution list: Send us your


name and email address

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Thank you for your attention