First PEFA Open Forum Miami May 3rd 2012

10 years of the PEFA Framework: What has PEFA achieved and the way forward

Linda Van Gelder, Chair of PEFA Steering Committee

Founded in 2001 as a Partnership

PEFA Partners
The World Bank, European Commission and International Monetary Fund The UK Department for International Development, French Ministry of Foreign and European Affairs, Norwegian Ministry of Foreign Affairs and Swiss State Secretariat for Economic Affairs.

10 years a multi-donor initiative in PFM: The Approach

Promote results-orientation in PFM development work Harmonize the support to PFM systems provided to governments by international development agencies Build on the principles of the Strengthened Approach to Supporting PFM Reform, as an approach to aid effectiveness in the area of PFM (Paris Declaration, Accra Agenda for Action, Busan Declaration) Work closely with OECD Development Assistance Committee Task Force on PFM for collaboration with a wider group of stakeholders

The Strengthened Approach in Reform of Public Financial Management
Ownership : a country-led agenda reflecting country priorities and implemented through government structures A coordinated program of support from donors and international finance institutions A shared information pool on public financial management based on a common assessment framework

The PEFA Performance Measurement Framework
C. Budget Cycle C(1)
Policy-based budgeting (PI-11-12)

D. Donor Practices

A. PFM Outturns C(4)
External scrutiny and audit (PI-26-28)

Comprehensiveness and Transparency (PI-5-10)

Predictability and control in budget Execution (PI-13-21) Budget Credibility (PI-1-4)

Accounting, Recording and Reporting (PI-22-25)

The PEFA Framework
To determine if a country has the tools to deliver three main budgetary outcomes: • aggregate fiscal discipline • strategic resource allocation • efficient use of resources for service delivery

PEFA in PFM Reform Cycle
Implement PFM reforms High level performanc e overview

Formulate PFM reform program

PEFA Assessment
Identify main PFM weaknesses Investigate underlying causes

• • • • •

Measures progress through a Recommend PFM reform set of standardized indicators measures Builds capacity for PFM reform through diagnostic and periodic progress monitoring Facilitates donors‟ decision on use of country systems Promotes joint country analytical work Fosters stakeholder coordination around one common assessment tool

Global adoption by partner countries and donors

Credibility in coverage: 285 assessments prepared in 135 countries including 28 government-led and 103 Sub National assessments: PEFA Framework used by governments in most countries to take control of their PFM reform agendas Effectiveness: adopted globally by 83% of LICs and 89% of MICs at the baseline level and more than 96 repeat assessments at a completed or planned stage.
PEFA experience by country group
83% 88% 89% 18%
Not Covered

Country focus and decision

Planned Commenced

Substantially Completed

Low Income Countries

Lower Middle Income Countries

Upper Middle Income Countries

High Income Countries

Application entirely decentralized to the country level (if, when, how to use Framework) The Framework does not „belong‟ to ; any single organization Applicable for central government level as well as sub-national level PEFA data provides opportunity for peer learning and research

% of Group

Relevance to all development stakeholders: – Supports the reform agenda by providing common platform for PFM stakeholder dialogue at country level – Contributes to internal processes among international development agencies:  adopted by most development agencies as tool for fiduciary risk assessments processes  Determining use of country systems in aid operations (Budget support, investment lending)  IDA country allocation (WB) or borrowing limits (IMF) Credibility and Effectiveness: – High country coverage rates and steady flow of repeat assessments – provides a standard and evidence-based and comparable over –time diagnostic that manages to be comprehensive in its coverage yet easy for non PFM user to understand

Institutional development impact: – Adopted as a tool for design of country-owned PFM reforms – Building Monitoring and Evaluation mechanism for the progress of PFM reforms over time: “Repeat assessments” demonstrate changes in performance – results of reform efforts

Global Public Good: a unique and valuable Common Pool of Information on PFM performance: – New source of information for research purposes – Evaluation of technical and financial capacity-building programs – Basis for regional peer-learning : sharing experience about PEFA process and results

BUT future challenges and risks identified:
Challenges  the transition from PEFA assessment to elaboration of a PFM reform plan;  keeping the PEFA Framework relevant to users, both in relation to the evolution of international standards and good practices in PFM and in relation to the progress made by and increasing aspirations of user countries;  the need for more analysis of global trends in PFM systems performance, including learning on what type of reforms work and which do not and why this is the case. Risks  quality assurance of PEFA assessments and the reputational risk associated with this: even though quality concerns relate to only a minority of the assessments;  the continued representativeness of the current PEFA Partners as guardians of an increasingly international product, which in many ways has the nature of a public good.

What’s next?: Strategic Direction

Dissemination and use of PEFA assessment reports following completion: a basis for reform dialogue and planning

Comprehensive review and revision of the PEFA Framework itself
Draw lessons on the use of the PEFA Framework as a mechanism to advance the Strengthened Approach – country ownership and harmonization of external support Quality Assurance issue will be addressed by the introduction of a new standard for the assurance process – PEFA CHECK Broadening the voice of stakeholders outside the PEFA partner group with more transparency of program direction and management

What’s next?: PEFA Phase 4 – 2012-2017
New orientations: – Guidance on how to use PEFA assessments for PFM reform program formulation – Comprehensive review and revision of the Framework while recognizing need for comparability over time – Encourage research institutions to use the Common Information Pool and database of PEFA information – Strengthen the Quality Assurance mechanisms and thereby trust in the PEFA assessment reports through new process endorsement called PEFA CHECK – Respond to the increasing need and use for PEFA at the SubNational level through guidance and support capacity – New outreach modalities: Open Forum, Stakeholder Network, Community of PEFA Practitioners

What’s next?: PEFA Phase 4 – 2012-2017
Many activities will continue as before: – Support and guidance to the users of the Framework – Promotion of the PEFA methodology through training – Monitoring of the roll-out of the application of the Framework – Disseminate on PEFA information and experience Further mainstreaming of PEFA training; Research on PEFA data where possible: – Focus is on stakeholders working together through their normal structures and processes – PEFA Program/Secretariat is facilitating, not replacing – Phase 4 of five years for more continuity and time to reach objectives – Mainstreaming facilitates long term sustainability of the PEFA initiative

Thank You

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