Slide 1

Public Financial Management Performance Measurement

Framework

Public Financial Management Performance Measurement

Framework

June 5, 2007

Presentation by Nicola Smithers, AFTPRSlides provided by PEFA Secretariat

Slide 2

WHAT WE’LL COVER WHAT WE’LL COVER

# WHAT IS THE PFM PERFORMANCE MEASUREMENT FRAMEWORK ?

# AN EXAMPLE

# WHERE AND HOW IS IT APPLIED?

# CASE OF ZAMBIA

Slide 3

CONTEXT - The Strengthened Approach to Supporting PFM Reform

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

Slide 4

The link between the different elements of the Strengthened Approach to supporting PFM

reforms

The link between the different elements of the Strengthened Approach to supporting PFM

reforms

Government/Donor

Policy Dialogue

Government PFM Reform Strategy, Action Plan and Results

Coordinated program of

analytical/TA/funding support

Donor Country Assistance Strategy

and knowledge requirement

PFM Performance

report

PFM indicators

Slide 5

PFM Performance Measurement Framework

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

Slide 6

Budget credibility

A. PFM Out-turns

External scrutiny and

audit

Accounting, Recording, Reporting

Predictability and

control in Budget

Execution

Policy Based

budgeting

C. Budget Cycle D. Donor Practices

Comprehensiveness and Transparency

B. Cross-cutting features

COVERAGE OF PFM INDICATORS COVERAGE OF PFM INDICATORS

Slide 7

Content of Indicator SetContent of Indicator Set

A. PFM Out-turnsCredibility of the budget Indicators 1- 4

Deviations from aggregate budgeted expenditure and revenue as well as expenditure composition. Level of expenditure arrears.

B. Key Cross-cutting issuesComprehensiveness and transparency Indicators 5-10

Coverage of budget classification, budget documentation, reporting on extra-budgetary operations, inter-governmental fiscal relations, fiscal risk oversight and public access to information.

C. Budget Cyclei. Policy-based budgeting Indicators 11-12

Annual budget preparation process, multi-year perspective in fiscal planning, expenditure policy and budgeting

Slide 8

Content of Indicator Set (cont’d)Content of Indicator Set (cont’d)

C. Budget Cycleii. Predictability & control in budget execution Indicators 13-21

Revenue administration, predictability in availability of funds, cash balances, debt & guarantee management, payroll controls, procurement, internal controls and internal audit

iii. Accounting, recording and reporting Indicators 22-25

Accounts reconciliation, reporting on resources at service outlet level, in-year budget execution reports, financial statements

iv. External scrutiny and audit Indicators 26-28

Scope, nature and follow-up on external audit; legislative scrutiny of annual budget law and external audit reports

D. Donor Practices Indicators D1- D3

Predictability of direct budget support; donor information for budgeting and reporting; use of national procedures

Slide 9

Calibration and ScoringCalibration and Scoring

• Calibrated on four point ordinal scale (A, B, C, D)– Requirements for each score explicitly specified

• Scoring based on 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

• Two scoring methodologies

Slide 10

Example Example

Slide 11

Applying the FrameworkApplying the Framework

Slide 12

Roll-out of PFM AssessmentsRoll-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

Slide 13

Geographical distribution Geographical distribution

Slide 14

Decentralized ProcessDecentralized 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.

Slide 15

Government InvolvementGovernment 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

Slide 16

Donor CollaborationDonor 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

Slide 17

Implement PFM reforms

Recommend PFM reform measures

High level performance

overview

Diagnostic Packaging – Coverage of PFM Performance Report

Investigate underlying

causes

Formulate PFM reform program

Identify main PFM

weaknesses

Recommend PFM reform measures

PFM-PR

Slide 18

Quality AssuranceQuality 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 assess whether the product respects the

Framework’s standards and methodology– Can also provide advice and guidance

Slide 19

Zambia case Zambia case