ZAMBIA PEFA EXPERIENCE Governance Hub Training Strengthening Governance and Anti-Corruption Bank Work June 4 - 7, 2007 Patricia Palale Addis Ababa

Why PEFA? Zambia Carried out the first PEFA evaluation in 2005. Process started in June and only ended in December 2005 after several rounds of verification of data. Main reason for agreeing on the PEFA Assessment was for CPs to have one set of outcome indicators to measure PFM performance. CPs agreed that the PEFA would be the basis for measuring success of the PEM reforms being supported by 12 CPs Agreed that PEFA Assessment will be undertaken every 2 years.

Process Involved Government Leadership : Once ToRs were drawn up for the assessment (by CPs) Ministry of Finance a GRZ team to carry out the work. GRZ agreed to have a two consultants to build capacity of the GRZ to understand the instrument and to assist in data verification. Donor involvement was restricted to preparing the initial ToR, financing the cost of the TA and commenting on the draft reports. PEFA Secretariat played a major role in commenting on the draft report. CPs agreed that Sweden would coordinate the donor input into the process.

Ensuring Quality Data verification stage was rigorous and GRZ had to produce evidence for the measurements. This was the longest stage of the process and the most pensive as GRZ felt they had made several strides in improving PFM. PEFA assessment basically indicated that there was little improvement in PFM as compared to the initial HIPC AAP was carried out. Even then concessions had to be reached

The Results At the last Evaluation Zambia had: A - Revenue out-turn Vs budget B/B+ - 5 – Policy Based Budgeting C/C+ - 13 – Accounting Recording and Reporting, External Scrutiny and Audit and Policy Based Budgeting. D/D+ - 9 – Predictability and Control in Budget Execution and Donor Practices (including Procurement indicator). Not a pretty picture!

Critical Success Factors and Challenges Full Involvement of Government ensured acceptability of results. The Zambia government now has trained officials, who can contribute to monitoring the impact of PFM reforms, using the PEFA methodology. The government has also shown strong ownership of the assessment, and used it as a platform for dialogue concerning the reform program with the donors and other domestic stakeholders, including Parliament. Identification of the right consultants to support the Government through this process. Continued agreement on the using the PEFA indicators by stakeholders. Agreement between the GRZ / CPs on the process to be followed and on one indicator set for PFM.

Challenges. Sustainability of present and creation of additional capacity to carry out evaluation. Link of the PEFA outcome indicators to output indicators being supported under the PEM has been challenging. Procurement reform indicators are not adequately addressed. GRZ has volunteered for the OECD DAC Procurement Assessment Pilot to address this. Now addressing Capacity constraints to carry out assessment. Restructuring of PEM reforms to meet the area of greatest weakness has proved to be a challenge. Challenge being addressed by strengthening budget function, creation of a Treasury and Cash Management Department, continued enhancement of the FMS system (as GRZ awaits full implementation of IFMIS). Involvement of wider stakeholders in understanding the tool and be involved in monitoring (e.g Economic monitoring CSO’s?) Elections cycle!