PFM Strengthened Approach and PFM Measurement Framework: Operational Issues

1. PFM Strengthened Approach and PFM Measurement Framework: Operational Issues Ivor Beazley, World Bank January 2007

2. Overview • Applying the Strengthened Approach and PFM Measurement Framework in country operational work 1. Why are we doing this? 2. Analytic Work Packaging 3. PFM Measurement framework application – Key issues and considerations

3. Why are we doing this?

4. Why are we doing this? • To help develop country capacity and improve PFM performance • PFM Performance Assessment and other analytic/diagnostic work continues to be important… • … but this is not the principal focus of our engagement • judge success by the extent to which we have helped the country to advance its PFM performance and reforms • requires a change in mindset • Key word: “Implementation”

5. Supporting PFM Reforms : Crucial elements • Country ownership and commitment is the most crucial element • Country-specificity : tailor the agenda to each country’s needs and circumstances at that point in time • prioritization and sequencing of reforms • multi-year perspective • in line with country’s agenda and its choices • realism – factor in country’s capacity and current performance level • political economy and institutional dimensions • Appropriate entry points • need to build awareness, foster ownership, and generate a momentum for changes. • the traditional “analytic work – strategy – action plan – actions” sequence does not always work. • Use the range of instruments • policy dialogue, analytic work, technical assistance, investment lending, IDF grants, development policy lending, training, cofinancing

6. PFM: A Strengthened Approach • A country-led and owned PFM reform agenda • A donor coordinated program of support – coordinated, coherent, multi-year program of PFM work that supports and is aligned with the government’s PFM strategy • A shared information pool – a common framework and information set for measuring and monitoring results over time www.pefa.org and www1.worldbank.org/publicsector/pe/StrengthenedApproach/

7. Operationalizing in the World Bank – Some Key Messages • Developing country capacity and improving PFM performance is the principal focus of the Bank’s PFM work. • Base PFM analytic work on country-specific circumstances and requirements • The PFM indicators and performance measurement framework are strongly encouraged. • Collaborate and coordinated closely with other donors working to support the country’s reform program • Ensure that PFM issues and work programs are well reflected in Country Assistance Strategy and Annual Country Work Programs • One “Country PFM team” within the World Bank

8. Analytic Work Packaging

9. More responsive PFM analytic work • PFM analytic work based on country-specific circumstances and requirements • In determining scope and nature of PFM analytic work, take into account: (i) needs of the country’s reform program, and our fiduciary needs; (ii) available knowledge from other donors and country, and work already done by the Bank • Mandatory requirement to prepare CFAAs, CPARs, PERs every few years removed.

10. What happens to current products (CFAAs, CPARs, PEMFAR, CIFA, etc)? • May continue as needed but not mandatory any more. • Range of possible products • e.g., (i) “PFM Performance Report”; or (ii) “just-in-time” policy notes on specific aspects of PFM system; or (iii) some of the current products (CFAA, CPAR, PER) or an integrated form of all of these • Since we have detailed fairly recent CFAAs and CPARs, the expectation is that numbers will be significantly lower than in recent years • Integrated products covering the entire PFM cycle will increasingly be the norm • The use of the PFM indicators are strongly encouraged for incorporation into PFM analytic work. • PFM Performance Report and/or indicators will help to serve as a “light update” of more detailed products. • Detailed products may be done over a longer-time time horizon.

11. Considerations in Applying the PFM Measurement Framework

12. Important Operational Considerations • Options for packaging PEFA assessments with other and sequencing issues • standalone PFM-PR • “dual products” • integration of the indicators into other products • extent of any recommendations in any component of such a package • Role of various parties in conducting the assessments • government self-assessments with external validation, • assessments done by external partners with government collaboration • Financial and personnel resources required • The time for finalization of reports (taking into account the need to ensure client understanding and ownership) • Internal QA arrangements • Report disclosure arrangements

13. Important Operational Considerations (cont’d) • No standard answers to these questions: • Needs to be decided at individual country level based on country circumstances • All stakeholders need to consider and agree on these issues, an early stage in the planning process • “Donor Reference Group” in collaboration with government

14. Collaborative process • Establish purpose and objectives of the assessment – to define stakeholders (internal and external) support the dialogue on the PFM reform process between the donors and the government and to contribute effectively to donor • Identify the expertise required and the stakeholders within the Bank. • Define the external stakeholders and consultation processes - 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. Factor in Bank requirements.

15. Updating the assessment • Frequency discussed by Franck • Interim monitoring can be built in to other processes • DPL • TA/IDF supervision • CPIA ratings • Focus monitoring of progress on the implementation of reform measures. • 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).

16. PFM Indicators – Need to Ensure Quality • Quality of indicator scoring is very important • Correct scoring of indicators in line with performance and scoring criteria • Presentation of Evidence in the report

17. Concluding thoughts … • Need for managerial attention and “push”, and leadership of senior staff • much of the Strengthened Approach is not new or novel… • … the major change required is in our own behaviors

18. Q&A and Discussion