The PEFA Framework – rationale, adoption and use

1. The PEFA Framework – rationale, adoption and use PEMPAL Plenary Plus Istanbul, February 27, 2008 Jim Brumby, World Bank

2. Content • Rationale for the PEFA Framework • Status on rolling-out • Challenges & Opportunities • Services provided by the PEFA program

3. Rationalefor the PFM Performance Measurement Framework

4. PEFA Objectives To improve: • government ownership • harmonization • donor alignment • results orientation in the area of public financial management

5. The Strengthened Approach • A country-led reform program– including a PFM reform strategy and action plan • A donor-coordinated program of analytical, technical and financial support • A common information pool– based on a framework for measuring and monitoring results over time

6. Creating a Common Information Pool • Creation of the Common Information Pool is facilitated by adopting the PEFA PFM Performance Measurement Framework • Application of the PEFA Framework is entirely decentralized to the country level (if, when, how to use Framework)

7. The PFM Performance Measurement Framework • 28 + 3 PFM performance indicators • Supported by an explanatory and analytical PFM performance report • Indicator scoring based on: • Transparency • Evidence • Objective criteria • Internationally recognized good PFM practice

8. What can countries use PEFA assessments for ? • Inform PFM reform formulation, priorities • Monitor results of reform efforts • Harmonize information needs by external agencies around a common assessment tool • Compare to and learn from peers

9. Status on rolling-out

10. PEFA Assessments : roll-out trend

11. Roll-out status and outlook • Assessment Status as at August 2007 • About 3 assessments completed every month • 67 substantially completed reports, covering 60 countries • 15 on-going but report not yet issued • 30 agreed with government but not started • Outlook for end of 2008 • 90 countries covered • 10 repeat assessments

12. Geographical distribution

13. Geographical coverage • Large regional variations • High : (>80% of countries covered by completed or ongoing work) • Sub-Sahara Africa and Caribbean • Medium : (40-60% of countries covered) • Eastern Europe, Asia, Pacific, Latin America • Low : (<25% of countries covered) • Other (Middle East / North Africa & high income)

14. Eastern Europe / Central Asia • 12 countries / territories implementing PEFA assessments (as of Feb. 2008): • Kyrgyz Republic 2005 completed, published • Albania 2006 (part of PEIR and CFA) completed • Armenia 2006, update 2008 draft, update starting • Moldova 2006 completed, published • Serbia 2006 completed, published • Ukraine 2006 completed, published • Kosovo 2007 completed, published • Tajikistan 2007 completed, published • Azerbaijan 2007 draft final • Macedonia 2007 (as part of CFA) completed • Georgia 2007 draft report • Belarus 2008 starting

15. Challenges& Opportunities

16. Global Issues • Tracking progress over time • when will repeat assessments be implemented in ECA? • Sharing of assessment results • dissemination of reports in ECA not a big issue. 6 out of 8 completed reports are publicly available • Quality of assessments and reports • improving • Country comparison • not the primary objective. May be done with caution. • How to move from assessment to reform action

17. Quality is key to credibility and use • Ex-ante and ex-post factors affecting quality • Government engagement in planning and implementing the assessment • Full donor collaboration • A well planned and managed process • Adequate resources, quantitative & qualitative • Comprehensive review arrangements for TOR and reports

18. Country Comparison • Global trends and regional differences may be identified • Comparison of two countries must be done very cautiously. • Comparing the scores alone is dangerous: • Technical definitions may be different • Carefully read each report to understand performance differences behind the scores

19. Relative Performance in PFM • Country characteristics affecting overall level of ratings: • Main factor: Economic development • Minor factors: Population size, aid dependency, degree of democracy • No significant link to: regional affiliation or administrative heritage • Comparing ECA countries to global average of 60 countries: • Overall level of ratings - close to global average • Higher than average - budget credibility • Lower than average - external oversight

20. From assessment to reform action • Analyze results and identify priorities • what weaknesses are important, which ones less so? • technical links – platform approach? • what is the government politically motivated to address • The identify underlying causes for weak performance in selected areas and prepare capacity building plan • Peer discussion can be useful for identifying reform priorities • Country case – Norway • one of the richest countries in the world

21. Norway’s self-assessment • Most indicators scored ‘A’ or ‘B’ but … • Several indicators rated ‘C’ or ‘D’ • Weaknesses identified: • No central collection of ex-ante budget information from municipalities (PI-8iii) • No central overview of risks from AGAs and SOEs (PI-9i) • No multi-year program budgeting (PI-12) • No data on use of open competition in procurement (PI-19i) • SAI criticism of procurement routines in agencies (PI-19ii) • No comprehensive system of internal audit (PI-21) • No central collection of info on funding of primary services (23) • Little follow up by agencies on external audit findings (PI-26 iii) • Little parliamentary scrutiny of external audit reports (PI-28)

22. Reform priorities for Norway ! • Government reaction to low ratings: • Need for improvements confirmed • procurement routines and system monitoring (PI-19) • scrutiny / follow up on external audit reports (PI-26 & 28) • Need for improvements questioned • Not the responsibility of central government • because primary service delivery is decentralized to municipalities • PI-8 and PI-23 • because public administration is decentralized • PI-9 and PI-21 • Not a priority for central government • multi-year program budgeting (PI-12) • Will a domestic or international debate about the latter be initiated when the report is published

23. Services provided by the PEFA program

24. Support to assessment managers Support tools on the website (www.pefa.org): • List of completed, ongoing and planned assessments – updated periodically • Links to completed reports, when public Support on request: • Advice / Video-conference briefings to country teams on assessment planning • List of consultants with PEFA experience • Review of terms of reference • Quality reviews of draft assessment reports

25. Support to Assessors Support tools on the website: • The Framework (English, French, Spanish, Portuguese, Russian, Arabic) • Calculation spreadsheets for some indicators • Guidance on information / evidence for assessment • Clarifications and additional guidance on indicators • Training materials Support on request: • Indicator interpretation and other advice to assessors during implementation

26. Stay in touch with PEFA • Visit our website :www.pefa.org • Send us questions :pefa@worldbank.org • Get on our news distribution list : Send us your name, organization and email address

27. Thank You for Your Attention