1. PFM Reform Programmes Presentation by Mary Betley
WBI/CABRI/East AFRITAC PFM Training Seminar
18-20 June 2007

2. Outline Overview of PEFA Lessons from experience - Do’s and Don’t’s
Case Studies – Zambia and Ghana
What Next – Links to Budget Reform Programmes

4. Public Expenditure and Financial Accountability (PEFA) at a glance
Global, standardised set of high-level indicators to measure current status of PFM
Focus is mainly on PFM systems, not on budget policy
PEFA uses scored indicators (A, B, C, D) rather than statistical values
Can be used for:
Initial baseline assessment: snapshot of PFM systems: where are we now?
On-going monitoring of health of PFM: are we going in the right direction?

5. Key PFM Dimensions Assessed by PEFA
C. Budget Cycle
D. Donor Practices
Policy Based budgeting
A. PFM Out-turns
B. Cross-cutting features
Budget credibility
Predictability and control in Budget Execution
External scrutiny and audit
Comprehensiveness and Transparency
Accounting, Recording, Reporting

6. Assessment Do’s Be value neutral
Assess on basis of evidence, PEFA scoring criteria
Focus on operation of Government systems, not agencies’ or individuals’ performance
Government ownership
Triangulate information
Plan, plan, plan

7. Assessment Don’t’s PEFA is not for conditionalities
PEFA is not for grading systems as “good” or “bad”
Don’t review/update too often (< every 3-5 years)
Not for comparing countries
Assessment for current status, not for making recommendations

8. Undertaking Assessment - Methodology
DPs
Government
Government’s own
self-assessment
as stand-alone
Government’s own
self-assessment, then
external validation
External assessment only
no Government
involvement
possible antagonism
poss. incorrect scores
undermine ownership
overly optimistic scores if not guided sufficiently
undermine assessment’s credibility
entrenched positions
and “negotiations”
Joint Government-donor
exercise
from beginning
Ghana
Zambia
strengthen ownership
focus on evidence => robust assessment

9. Thus: Government ownership is critical
Preparation of all stakeholders is key
Quality of team is important

10. Other lessons Write-up of assessment
Assessment should be stand-alone diagnostic report, following the PEFA Guidelines, even if part of wider analytical work
If part of a wider review process, assessment should be separate but an accompanying report may be written, which can include recommendations and include “quick wins”
Peer review: role of PEFA Secretariat
PEFA reports are reviewed by PEFA Secretariat to provide quality assurance and ensure consistency across assessments
PEFA Secretariat provides clarifications to indicators from time to time

11. Case Study - Zambia
PEFA undertaken as first evaluation under PEMFA reform programme
Assessment carried out by team of Government (MoFEP) staff, facilitated by two external consultants
Close team work: 3 short field visits
Team worked with relevant departments to agree current status in relation to PEFA criteria
Relatively short elapsed time for assessment: October-December
One of first assessments to be published on PEFA website – shown as Government assessment
PEFA now part of on-going M&E framework for PEMFA

12. Case Study - Ghana
PEFA undertaken as part of annual multi-development partner review process
Collaborative process/ team approach, with both Government and DPs in discussions
Process led by senior MoFEP staff – strong Government ownership
Focus on documentary evidence
Triangulation of information, including civil society
Relatively short elapsed time for assessment: February-May
Outcome was assessment which was jointly agreed and Government owned. Areas of disagreement between assessors and Government explicitly noted.
PEFA has helped Government to focus greater attention on particular areas of weakness, facilitated joint Government-DP policy dialogue

13. After PEFA: What next? PEFA and Links to Budget Reform Programmes

14. Role in wider PFM programme
Designing a PFM programme
PEFA can help identify areas of strengths and weaknesses
However, in itself, it cannot provide the design for a reform programme, as it does not distinguish:
Government’s own reform priorities
Sequencing issues
Underlying causes for weaknesses
Capacity constraints, including absorptive capacity
Information needs and interplay of information
Refocussing a PFM programme
PEFA diagnostic can help with comparison of areas of weakness against those addressed by the reform
Monitoring a PFM programme
PEFA can have role in monitoring progress over time in reform programme, including specific areas addressed by reforms

15. PEFA is a diagnostic tool…..
…………not a menu for reform

16. From PEFA to Reform Programme: Recommended Analyses
PEFA indicator
PFM Area
Underlying causes
Potential Impact/Benefits
Prior Actions Required
Other timing/sequencing issues (e.g. capacities)

17. Reporting on trust funds
Areas of Weakness
Relevant Key PFM Issue
Potential Underlying Causes
Potential Impact/ Benefits
Prior Actions Required
Timing/Sequencing Issues
PI-24. Quality and timeliness of in-year budget reports: (i) Scope of reports (PEFA score: D)
Reporting on trust funds
Overall requirement for reporting on trust funds is more limited than for normal budget funds
Greater transparency in use of trust fund resources compared to plan. Improved external scrutiny over all public sector resources
Requires changes in business processes for trust fund resources,
Commitment to greater transparency
High priority to strength-en basic budget discipline

18. Broad Sequencing of PFM System Measures
Ensure basic (and appropriate) budget procedures in place
Enforce existing budget procedures
Upgrade, extend budget processes, including more advanced strategic elements

19. Potential trade-offs between priority and sequencing
High
Low