Public Financial Management Performance Measurement Framework The primary objective of the strengthened approach is improved PFM performance in partner countries, which then contributes to achievement of development outcomes. CORE COURSE ON PUBLIC SECTOR GOVERNANCE AND ANTICORRUPTION April 23-26, 2007 Presentation by Nicola Smithers, AFTPR Slides provided by PEFA Secretariat

WHAT IS THE PFM PERFORMANCE MEASUREMENT FRAMEWORK ? WHAT WE’LL COVER WHAT IS THE PFM PERFORMANCE MEASUREMENT FRAMEWORK ? WHERE IS IT BEING USED? HOW IS IT APPLIED? The PFM work was used mainly for two purposes: To guide PFM reform preparation To feed into the fiduciary risk assessments of individual donor/financing agencies

CONTEXT - 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 assessment and monitoring framework the PEFA* PFM Performance Measurement Framework *Public Expenditure and Financial Accountability Program This approach was adopted by the Bank through the memorandum issued to all sectors jointly by the Vice Presidents of PREM and OPCS in July 2005

PFM Performance Measurement Framework A standard set of high level PFM indicators to assess performance 28 government performance indicators 3 donor indicators, reflecting donor practices influencing the government’s PFM A concise, integrated report – the PFM Performance Report Standard content and format provides the narrative to support the indicator assessments (the evidence) draws a summary from the analysis

COVERAGE OF PFM INDICATORS C. Budget Cycle Policy Based budgeting D. Donor Practices A. PFM Out-turns B. Cross-cutting features External scrutiny and audit Predictability and control in Budget Execution Budget credibility Budget credibility indicators reflect outputs of the system as a result of the institutional and more qualitative assessment covered by the remainder of the indicator set. Understanding links between the institutional strengths/weaknesses and budget credibility is important for summarizing the assessment. Similar for donor indicator ratings’ relations to government performance and budget credibility. Comprehensiveness and Transparency Accounting, Recording, Reporting

Calibration and Scoring Calibrated on four point ordinal scale (A, B, C, D) Requirements for each score explicitly specified Scoring based on extent of internationally recognized ‘Good Practice’ Indicators have 1, 2, 3 or 4 dimensions in total 74 dimensions to provide detailed information & transparency of score each dimension must be rated separately Aggregation only from dimensions to indicator Aggregation of indicator scores is not encouraged because: An overall score (number) does not assist in identifying strengths and weaknesses to guide reform dialogue on priorities and more detailed analytical work needed; such an aggregate mainly serves country comparison which is not the intention of the Framework; standard aggregation assumes that all indicators should be given the same weight in all countries which is not the case (e.g. importance of SN government, SOEs and external aid) aggregates mainly serve for individual donor decisions on allocation of aid and modalities of aid implementation. Different agencies assign different weight to the individual parts of the PFM system and therefore use different weights.

Roll-out of PEFA based Assessments

Roll-out of PFM Assessments PFM Performance Measurement Framework launched June 2005 Assessment Status as at March 2007 45 substantially completed i.e. draft/final report 24 on-going but report not yet issued 27 agreed with government but not started Roll-out rate: a steady 2-3 new assessments per month Outlook for mid 2008 75-80 countries covered 8-10 repeat assessments

Geographical distribution

Assessment Process Issues

Decentralized Process Application of the PEFA Framework to be decided at country level. Decisions to be made: If and Why ? When ? How ? Recommended by international organizations as good practice (e.g. OECD-DAC, ComSec) No supra-agency mandates or responsibilities. Each country and organization decides its interest in a PEFA assessment and ability to contribute.

Government Involvement Government’s role Self-assessment (with external validation) Joint assessment (joint team) Collaboration with donor-led assessment Determined by interest and capacity What are the benefits to government? Government staff may need training

Donor Collaboration A donor reference group is essential to ensure that needs of all parties are addressed to ensure common acceptance of findings The reference group to agree internally and with the government on: Diagnostic packaging Resources for assessment work Stages and timing of the assessment work Quality assurance arrangements

Quality Assurance Terms of Reference & Draft Report to be Q.A.’d Government and donor reference group Should ensure that information is used correctly and reflects the situation in the country Donor specific arrangements to be respected e.g. World Bank peer review mechanism The PEFA Secretariat recommended as a peer reviewer Will consider if the product respects the Framework’s standards and methodology Can also provide advice and guidance In-country assessment reference groups (typically including the government and donors beyond those directly participating in the assessment team) provide an important review mechanism in that they should have the best impression of the quality and completeness of the information provided in the reports and the extent to which appropriate professional judgment has been exercised in areas of limited data availability. Such arrangements have been made in Kyrgyz, Moldova, Uganda and Mozambique. A weakness of a very comprehensive team of donor agency staff is that few, if any, informed donor representatives will be left in-country to take an arms-length view of the quality of the assessment (Tanzania). Some donors have specific quality assurance arrangements which their teams will have to also comply with. For example the World Bank’s institutionalized peer review system. The PEFA Secretariat’s contribution to the peer review process is mainly to offer an opinion on the extent to which the Framework’s assessment scope, methods and report provisions have been met. The Secretariat usually cannot judge the accuracy and completeness of the data used for the exercise, but does assess adequacy of data presented to justify the scoring.

THANKS QUESTIONS/DISCUSSION