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The PEFA Framework – rationale, adoption and use

Jim Brumby, World Bank

PEMPAL Plenary Plus

Istanbul, February 27, 2008

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Content

Rationale for the PEFA Framework

Status on rolling-out

Challenges & Opportunities

Services provided by the PEFA program

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Rationale for the PFM Performance

Measurement Framework

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PEFA Objectives

To improve:

• government ownership

• harmonization

• donor alignment

• results orientation

in the area of public financial management

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The Strengthened Approach

A country-led reform program – including a PFM reform strategy and action plan

A donor-coordinated program of analytical, technical and financial support

A common information pool – based on a framework for measuring and monitoring results over time

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Creating a Common Information Pool

Creation of the Common Information Pool is facilitated by adopting the PEFA PFM Performance Measurement Framework

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

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The PFM Performance Measurement Framework

28 + 3 PFM performance indicators

Supported by an explanatory and analytical PFM performance report

Indicator scoring based on:Transparency

Evidence

Objective criteria

Internationally recognized good PFM practice

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What can countries use PEFA assessments for ?

Inform PFM reform formulation, priorities

Monitor results of reform efforts

Harmonize information needs by external agencies around a common assessment tool

Compare to and learn from peers

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Status on rolling-out

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PEFA Assessments : roll-out trend

PEFA Assessment Roll-Out

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5

10

15

20

25

30

35

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45

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60

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70

May'05

Aug'05

Nov'05

Jan'06

May'06

Oct'06

Mar'07

Aug'07

Update dates of PEFA Assessment

Nu

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of

Assessm

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Completed

On-going

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Roll-out status and outlook

Assessment Status as at August 2007

About 3 assessments completed every month

67 substantially completed reports, covering 60 countries 15 on-going but report not yet issued 30 agreed with government but not started Outlook for end of 2008

90 countries covered

10 repeat assessments

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Geographical distribution

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Geographical coverage

Large regional variations – High : (>80% of countries covered by completed or ongoing work)

Sub-Sahara Africa and Caribbean – Medium : (40-60% of countries covered)

Eastern Europe, Asia, Pacific, Latin America

– Low : (<25% of countries covered)Other (Middle East / North Africa & high

income)

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Eastern Europe / Central Asia

12 countries / territories implementing PEFA assessments (as of Feb. 2008):

Kyrgyz Republic 2005 completed, published

Albania 2006 (part of PEIR and CFA) completed Armenia 2006, update 2008 draft, update

starting Moldova 2006 completed, published Serbia 2006 completed,

published Ukraine 2006 completed,

published Kosovo 2007 completed,

published Tajikistan 2007 completed, published Azerbaijan 2007 draft final Macedonia 2007 (as part of CFA) completed Georgia 2007 draft report Belarus 2008 starting

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Challenges & Opportunities

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Global Issues

Tracking progress over time when will repeat assessments be implemented in ECA?

Sharing of assessment resultsdissemination of reports in ECA not a big issue. 6 out of 8 completed reports are publicly available

Quality of assessments and reportsimproving

Country comparisonnot the primary objective. May be done with caution.

How to move from assessment to reform action

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Quality is key to credibility and use

Ex-ante and ex-post factors affecting quality

Government engagement in planning and

implementing the assessment

Full donor collaboration

A well planned and managed process

Adequate resources, quantitative & qualitative

Comprehensive review arrangements for TOR and reports

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Country Comparison

Global trends and regional differences may be identified

Comparison of two countries must be done very cautiously.

Comparing the scores alone is dangerous:

Technical definitions may be differentCarefully read each report to understand performance differences behind the scores

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Relative Performance in PFM

Country characteristics affecting overall level of ratings:

Main factor: Economic developmentMinor factors: Population size, aid dependency, degree of democracy No significant link to: regional affiliation or administrative heritage

Comparing ECA countries to global average of 60 countries:

Overall level of ratings - close to global averageHigher than average - budget credibilityLower than average - external oversight

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From assessment to reform action

Analyze results and identify priorities what weaknesses are important, which ones less so? technical links – platform approach?what is the government politically motivated to address

The identify underlying causes for weak performance in selected areas and prepare capacity building plan

Peer discussion can be useful for identifying reform priorities

Country case – Norwayone of the richest countries in the world

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Norway’s self-assessment

Most indicators scored ‘A’ or ‘B’ but …

Several indicators rated ‘C’ or ‘D’ Weaknesses identified: No central collection of ex-ante budget information from

municipalities (PI-8iii) No central overview of risks from AGAs and SOEs (PI-9i) No multi-year program budgeting (PI-12) No data on use of open competition in procurement (PI-

19i) SAI criticism of procurement routines in agencies (PI-19ii) No comprehensive system of internal audit (PI-21) No central collection of info on funding of primary services

(23) Little follow up by agencies on external audit findings (PI-

26 iii) Little parliamentary scrutiny of external audit reports (PI-

28)

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Reform priorities for Norway ! Government reaction to low ratings: Need for improvements confirmed

procurement routines and system monitoring (PI-19) scrutiny / follow up on external audit reports (PI-26 &

28) Need for improvements questioned

Not the responsibility of central government because primary service delivery is decentralized to municipalities

PI-8 and PI-23because public administration is decentralized

PI-9 and PI-21Not a priority for central government

multi-year program budgeting (PI-12)

Will a domestic or international debate about the latter be initiated when the report is published

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Services provided by the PEFA program

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Support to assessment managersSupport 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 AssessorsSupport 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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