Application of the PEFA Framework at country-level Issues for consideration PFM Performance Measurement Framework Washington DC November 2006 Franck BESSETTE PEFA Secretariat

Application of of the PFM Performance Measurement Framework Introducing the Framework at country level requires a careful and collaborative planning process, so that: The application of the Framework at country level will be dependent from country circumstances. However, core principles should guide the process of planning and undertaking the assessment and a series of issues need to be discussed and agreed at the outset. It provides a common information pool for rigorous, evidence based and consistent measurement and monitoring of PFM performance progress and, It supports a strategic dialogue between the donors and the government.

Core principles 1.Planning and undertaking of the Framework through a collaborative process Coordinated between the donors Government involvement sought as far as possible, while ensuring that donor accountability requirements are met This involves up-front agreement over the purpose and core organizational modalities of the assessment. 2. Planning and undertaking of the assessment to ensure rigorous and consistent measurement and monitoring of PFM performance progress and facilitates comparability over time. 3. Assessment is undertaken in a manner that minimize costs to government and donors.

Collaborative process Clarify the purpose and objectives of the assessment – to support the dialogue on the PFM reform process between the donors and the government and to contribute effectively to donor accountability requirements. Define the participation and consultation modalities - to allow wide recognition of the assessment while allowing a cost- effective assessment process. Agree a common timetable for the assessment– to meet both the needs of the group as a whole and avoid operational requirements of individual donors driving the repetition of the assessment.

Important Steps to be taken GOVERNMENTGOVERNMENT Workshop Field Mission Quality Review Workshop Draft Final Draft Inception Report Initial Work DONORS DONORS

Government involvement Interest and capacities of government, determinant factor Fulfillment of some donor accountability needs require external validation of final results. Involvement of government may increase consideration by government of the results and lead to more effective policy dialogue. Options for involving government may include: External assessment with Cooperation of the government. Self-assessment by government followed by external validation by donors. Joint government-donor process giving sufficient guarantee to donors of rigorous assessment.

Examples of proactive Government Zambia & Nicaragua  Self-assessment  Technical support & external validation by donors  Zambia assessment issued as government document Tanzania  One assessment, One process Ghana  Inserting differing opinions in donor-led assessment report

Full donor collaboration 19 donor agencies involvement so far.. Six agencies leading donor work (mainly WB/EC) Thirteen others: team members, funding, review but partial collaboration in many cases works well where budget support donor group already firmly established partial in small countries, middle-income, no GBS Donor reference group is essential ! ensure that needs of all parties are addressed lead to common acceptance of findings be established early in the planning stage

Packaging and sequencing of diagnostic products / reporting of the indicators Role of various parties in conducting the assessments Related financial and personnel resources required Time for finalization of reports Quality assurance arrangements Report disclosure arrangements. Packaging and sequencing of diagnostic products / reporting of the indicators Role of various parties in conducting the assessments Related financial and personnel resources required Time for finalization of reports Quality assurance arrangements Report disclosure arrangements. Early Considerations for Donor Reference Group

Which definitions? Central government (GFS definition?); Autonomous Governmental Agencies; Public Enterprise; Arrears; Sub- National governments; Deconcentrated administrations; Extra-budgetary activity Why define? Scope of assessment; Transparency; Sharing of findings and results; Cross-indicator consistency; Comparability overtime Which definitions? Central government (GFS definition?); Autonomous Governmental Agencies; Public Enterprise; Arrears; Sub- National governments; Deconcentrated administrations; Extra-budgetary activity Why define? Scope of assessment; Transparency; Sharing of findings and results; Cross-indicator consistency; Comparability overtime Agreement on key definitions

Sources of Information 1-Ministry of Finance : Budget directorate, Revenue administration, Income tax, Property tax, VAT, Customs, Internal Audit office, Accountant General Office 2-Parliament : Public Accounts Committee, Clerk 3-Line ministries 4-Local governments 5-Supreme Audit Institution 6-Courts 7-Private sector : Tax lawyers, accountants, chamber of commerce 8-NGOs and Associations 9-Multilateral and bilateral donors

Team Composition and Management Ideally, one Team under the authority of one Team leader– the assessment process needs coordination, methodological consistency and must be cost- effective. Team size and field mission duration depend on country specifics. The Team must cover the whole spectrum of PFM system - the Team should at least be comfortable with budgetary, taxation, accountancy and procurement issues.

Time Schedule Final results out within reasonable time (6 months generally enough) Allow time for all stakeholders to participate in planning and review Work should be integrated with government budget calendar and avoid busiest periods Final results out within reasonable time (6 months generally enough) Allow time for all stakeholders to participate in planning and review Work should be integrated with government budget calendar and avoid busiest periods

Frequency of the assessment Frequency must be discussed – so that the Framework contributes to streamlining donor information requirements In between, different options to monitor progress. Yearly monitoring of a selected number of indicators (e.g. focus on the indicators that are most likely to be impacted by on-going reforms). Focus monitoring of progress on the implementation of reform measures. Any significant changes in the scoring of the indicators are likely to take more than one year (high-level indicators, four- point scale). It is expected that the full indicator set would be applied every second or third year.

Available as booklet and on the PEFA website Bank website www1/worldbank.org/publicsector/pe Languages: English, French, Spanish, Portuguese, Russian (Arabic soon) Support tools available on the websites : Calculation spreadsheets for indicators PI-1 & PI-2 & D-1 Guidance on information / evidence for assessment Clarifications and additional guidance Support by PEFA Secretariat on request: Advice/ VC briefings to country teams on assessment planning Advice to assessors during implementation Quality reviews of draft reports Application Support

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