www.pefa.org #PEFA PEFA Training Dakar, Senegal January 30-31 & February 1, 2019 PEFA Secretariat Improving public financial management. Supporting sustainable development.
INTRODUCTION Introductions Participant priorities Agenda and key training topics Intended outcomes 2
KEY TRAINING TOPICS/TAKEAWAYS PEFA 2016 FRAMEWORK PEFA ASSESSMENT PROCESS PREPARING A PEFA REPORT PEFA AND PFM REFORM 3
Intended training outcomes After the training, you will have: 1. Improved your understanding of the PEFA 2016 framework; 2. Developed capacities to engage in, and support, the PEFA assessment process; 3. Increased your skills to assess PEFA performance indicators and prepare PEFA reports; 4. Strengthened your confidence in using PEFA to discuss PFM reforms; 5. Increased your capacity to develop and monitor PFM reform action plans 6. Learned about PEFA products, and how best to use them. 4
WHAT IS 1. Set of PFM performance indicators PEFA? 2. PFM performance report 4. Tool to identify fiscal challenges 5. Means to highlight PFM trends 6. Basis for identifying PFM strengths & weaknesses 3. Database of PFM performance information 7. Support government to achieve policy goals 5
The PEFA program PEFA: Public Expenditure and Financial Accountability PEFA partnership founded in 2001 The PEFA program provides a framework for assessing PFM 6
The PEFA Framework Purpose Provide a thorough, consistent and evidence-based analysis of PFM performance at a specific point in time Assess how PFM impacts on key budget outcomes: fiscal discipline, efficient resource allocation, efficient service delivery Establish the foundation for analyzing and improving in PFM PEFA does not assess government policies 7
Measures progress over time Extensive international acceptance Benefits of PEFA Builds momentum for PFM reform Fosters stakeholder coordination 8
PEFA Secretariat Program administration & support to the PEFA Steering Committee Advice to PEFA Framework users (planning & preparation, queries) Quality Assurance Guidance material (4 volumes of the PEFA Handbook) Learning & knowledge products (Training, videos, social media) Client services (data base management, research facilitation) 9
PEFA ASSESSMENTS BY REGION - January 2019 WORLDWIDE: - USED BY 150 COUNTRIES - 577 ASSESSMENTS - 21 PLANNED ASSESSMENTS IN SUB-SAHARAN AFRICA: - USED IN 48 COUNTRIES - 277 ASSESSMENTS - 7 PLANNED ASSESSMENTS Source: https://pefa.org/countries-regions#/ 10
NUMBER OF PEFA ASSESSMENTS IN COUNTRIES BY REGION - January 2019 MIDDLE EAST AND NORTH AFRICA 13 SUB-SHARAN AFRICA 48 EUROPE AND CENTRAL ASIA 22 1 NORTH AMERICA ASIA AND PACIFIC 25 SOUTH ASIA 8 LATIN AMERICA 33 11
PEFA USED IN 243 SUBNATIONAL GOVERNMENTS in 40 COUNTRIES - January 2019
CHARACTERISTICS OF THE PEFA FRAMEWORK Basic elements of PEFA outcomes, pillars, indicators, and dimensions 13
What does the PEFA framework cover? Central government Budgetary Extrabudgetary PEFA and GFS 2014 structure of the public sector Public sector General government Public corporations State governments Local governments Social security funds Social security funds 14
What does the PEFA Framework not cover? PEFA is not used for: Assessing PFM performance of public corporations Corporate governance standards are different Part of public sector not central government sector Exception is potential fiscal risk to central government Directly assessing sector level PFM performance However, information from a government PEFA assessment can be used to inform sector analysis 15
PEFA and PFM An open and orderly PFM is one of the enabling elements to achieve the three desirable budgetary outcomes: Aggregate fiscal discipline Strategic allocation of resources Efficient service delivery 16
PEFA 2016 PFM performance assessment The PEFA framework was upgraded in 2016. It is the most comprehensive upgrade since it was first published in 2005 and slightly revised in 2011. 3 OUTCOMES 7 PILLARS 31 INDICATORS 94 DIMENSIONS 17
7 PEFA pillars of PFM performance Pillar One Budget reliability Pillar Two Transparency of public finances Pillar Three Management of assets and liabilities Pillar Four Policy-based fiscal strategy and budgeting Pillar Five Predictability and control in budget execution Pillar Six Accounting and reporting Pillar Seven External scrutiny and audit 18
PEFA and the budget cycle Policy-based fiscal strategy and budgeting Transparency of public finances External scrutiny and audit Management of assets and liabilities Predictability and control in budget execution Budget reliability Accounting and reporting 19
PEFA performance indicators BUDGET RELIABILITY PI-1. Aggregate expenditure outturn PI-2. Expenditure composition outturn PI-3. Revenue outturn TRANSPARENCY OF PUBLIC FINANCES PI-4. Budget classification PI-5. Budget documentation PI-6. Central government operations outside financial reports PI-7. Transfers to subnational governments PI-8. Performance information for service delivery PI-9. Public access to fiscal information MANAGEMENT OF ASSETS AND LIABILITIES PI-10. Fiscal risk reporting PI-11. Public investment management PI-12. Public asset management PI-13. Debt management POLICY-BASED FISCAL STRATEGY AND BUDGETING PI-14. Macroeconomic and fiscal forecasting PI-15. Fiscal strategy PI-16. Medium-term perspective in expenditure budgeting PI-17. Budget preparation process PI-18. Legislative scrutiny of budgets PREDICTABILITY AND CONTROL IN BUDGET EXECUTION PI-19. Revenue administration PI-20. Accounting for revenue PI-21. Predictability of in-year resource allocation PI-22. Expenditure arrears PI-23. Payroll controls PI-24. Procurement PI-25. Internal controls on nonsalary expenditure PI-26. Internal audit ACCOUNTING AND REPORTING PI-27. Financial data integrity PI-28. In-year budget reports PI-29. Annual financial reports EXTERNAL SCRUTINY AND AUDIT PI-30. External audit PI-31. Legislative scrutiny of audit reports 20
Time horizons As a general rule, the assessment is based on the situation at the time of data collection: At time of assessment For some indicator dimensions, the requirements for a score can be assessed on the basis of different time horizons: Last completed fiscal year Last three completed fiscal years A specific event (e.g., last budget/report submitted etc.) 21
Scoring & calibration Each dimension is scored separately. A High level of performance that meets good international practices B Sound performance above the basic level C Basic level of performance broadly consistent with good international practices D Either less than the basic level of performance or insufficient information to score 22
Scoring Each dimension is rated separately most indicators have 2, 3 or 4 dimensions Score is determined by starting from C as basic level of performance Every aspect specified in the scoring requirements must be fulfilled Materiality matters: All, most, majority, some and a few defined in the Framework and applied consistently throughout the set of indicators Sampling can be used when justified guidelines are provided under relevant indicators 23
Aggregation of dimension scores The selected method is specified for each indicator. M1 Weakest M2 Averaging Link Method Used when all elements are critical for the process/system to function; failure of one fails the process The aggregate score is the lowest score given to any of the individual dimensions of an indicator Where any of the other dimensions score higher, a + is added to the indicator score Used when elements are sufficiently independent and the process can function with one of the elements scored poorly A conversion table for combining individual scores is provided in the PEFA Framework (page 10) 24
Circumstances when there is no score Two situations may occur when no score is attributed When the elements examined are non applicable to the entity under assessment, NA replaces the score When there is a decision not to use the indicator for specific reasons that are explained, NU is used rather than a score The explanation should be included in both the CN/ToR and PEFA Report 25
Structure of an indicator Performance indicator (PI) number PI Title Short description of the PI with aggregation method Dimension to be assessed Requirements to be met for a specific score Dimension to be assessed Requirements to be met for a specific score 26
UNDERSTANDING PEFA 2016 Explaining the indicators and dimensions Exercises 27
PILLAR ONE Budget Reliability The government budget is realistic and is implemented as intended. This is measured by comparing actual revenues and expenditures (the immediate results of the PFM system) with the original approved budget. 28
PI-1 Aggregate expenditure outturn Pillar one Budget reliability PI-2 Expenditure composition outturn PI-3 Revenue outturn 29
Pillar one: Budget reliability PI-1 Aggregate expenditure outturn PI-2 Expenditure composition outturn PI-3 Revenue outturn 1.1 Aggregate expenditure outturn 2.1 Outturn by function 3.1 Aggregate revenue outturn 2.2 Outturn by economic type 3.2 Revenue composition outturn 2.3 Expenditure from contingency reserves 30
PILLAR TWO Transparency of Public Finances Information on public financial management is comprehensive, consistent, and accessible to users. This is achieved through comprehensive budget classification, transparency of all government revenue and expenditure including intergovernmental transfers, published information on service delivery performance and ready access to fiscal and budget documentation. 31
PI-4 Budget classification PI-5 Budget documentation Pillar two Transparency of public finances PI-6 Central government operations outside financial reports PI-7 Transfers to subnational governments PI-8 Performance information for service delivery PI-9 Public access to fiscal information 32
Pillar two: Transparency of public finances PI-4 Budget classification PI-5 Budget documentation PI-6 Central government operations outside financial reports 4.1 Budget classification 5.1 Budget documentation 6.1 Expenditure outside financial reports 6.2 Revenue outside financial reports 6.3 Financial reports of extrabudgetary units 33
Pillar two: Transparency of public finances PI-7 Transfers to sub-national governments PI-8 Performance information for service delivery PI-9. Public access to fiscal information 7.1 System for allocating transfers 8.1 Performance plans for service delivery 9.1 Public access to fiscal information 7.2Timeliness of information on transfers 8.2 Performance achieved for service delivery 8.3 Resources received by service delivery units 8.4 Performance evaluation for service delivery 34
PILLAR THREE Management of Assets and Liabilities Effective management of assets and liabilities ensures that public investments provide value for money, assets are recorded and managed, fiscal risks are identified, and debts and guarantees are prudently planned, approved, and monitored. 35
PI-10 Fiscal risk reporting Pillar three Management of assets and liabilities PI-11 Public investment management PI-12 Public asset management PI-13 Debt management 36
Pillar three: Management of assets and liabilities PI-10 Fiscal risk reporting PI-11 Public investment management 10.1 Monitoring of public corporations 10.2 Monitoring of subnational governments 10.3 Contingent liabilities and other fiscal risks 11.1 Economic analysis of investment proposals 11.2 Investment project selection 11.3 Investment project costing 11.4 Investment project monitoring 37
Pillar three: Management of assets and liabilities PI-12 Public asset management 12.1 Financial asset monitoring PI-13 Debt management 13.1 Recording and reporting of debt and guarantees 12.2 Nonfinancial asset monitoring 13.2 Approval of debt and guarantees 12.3 Transparency of asset disposal 13.3 Debt management strategy 38
PILLAR FOUR Policy-based Fiscal Strategy and Budgeting The fiscal strategy and the budget are prepared with due regard to government fiscal policies, strategic plans, and adequate macroeconomic and fiscal projections. 39
PI-14 Macroeconomic and fiscal forecasting Pillar four Policy-based fiscal strategy and budgeting PI-15 Fiscal strategy PI-16 Medium-term perspective in expenditure budgeting PI-17 Budget preparation process PI-18 Legislative scrutiny of budgets 40
Pillar four: Policy-based fiscal strategy and budgeting PI-14 Macroeconomic and fiscal forecasting PI-15 Fiscal strategy PI-16 Medium-term perspective in expenditure budgeting 14.1 Macroeconomic forecasts 15.1 Fiscal impact of policy proposals 16.1 Medium-term expenditure estimates 14.2 Fiscal forecasts 15.2 Fiscal strategy adoption 16.2 Medium-term expenditure ceilings 14.3 Macrofiscal sensitivity analysis 15.3 Reporting on fiscal outcomes 16.3 Alignment of strategic plans and medium-term budgets 16.4 Consistency of budgets with previous year s estimates 41
Pillar four: Policy-based fiscal strategy and budgeting PI-17 Budget preparation process PI-18 Legislative scrutiny of budgets 17.1 Budget calendar 18.1 Scope of budget scrutiny 17.2 Guidance on budget preparation 18.2 Legislative procedures for budget scrutiny 17.3 Budget submission to the legislature 18.3 Timing of budget approval 18.4 Rules for budget adjustment by executive 42
PILLAR FIVE Predictability and Control in Budget Execution The budget is implemented within a system of effective standards, processes, and internal controls, ensuring that resources are obtained and used as intended. 43
PI-19 Revenue administration PI-20 Accounting for revenue Pillar five Predictability and control in budget execution PI-21 Predictability of in-year resource allocation PI-22 Expenditure arrears PI-23 Payroll controls PI-24 Procurement PI-25 Internal controls on nonsalary expenditure PI-26 Internal audit 44 44
Pillar five: Predictability and control in budge execution PI-19 Revenue administration PI-20 Accounting for revenue PI-21 Predictability of in-year resource allocation 19.1 Rights and obligations for revenue measures 20.1 Information on revenue collections 21.1 Consolidation of cash balances 19.2 Revenue risk management 20.2 Transfer of revenue collections 21.2 Cash forecasting and monitoring 19.3 Revenue audit and investigation 20.3 Revenue accounts reconciliation 21.3 Information on commitment ceilings 19.4 Revenue arrears monitoring 21.4 Significance of in-year budget adjustments 45
Pillar five: Predictability and control in budget execution PI-22 Expenditure arrears PI-23 Payroll controls PI-24 Procurement management 22.1 Stock of expenditure arrears 23.1 Integration of payroll and personnel records 24.1 Procurement monitoring 22.2 Expenditure arrears monitoring 23.2 Management of payroll changes 24.2 Procurement methods 23.3 Internal control of payroll 24.3 Public access to procurement information 23.4 Payroll audit 24.4 Procurement complaints management 46
Pillar five: Predictability and control in budget execution PI-25. Internal controls on nonsalary expenditure PI-26. Internal audit 25.1 Segregation of duties 26.1 Coverage of internal audit 25.2 Effectiveness of expenditure commitment controls 26.2 Nature of audits and standards applied 25.3 Compliance with payment rules and procedures 26.3 Implementation of internal audits and reporting 26.4 Response to internal audits 47
PILLAR SIX Accounting and Reporting Accurate and reliable records are maintained, and information is produced and disseminated at appropriate times to meet decision-making, management, and reporting needs. 48
PI-27 Financial data integrity Pillar six Accounting and reporting PI-28 In-year budget reports PI-29 Annual financial reports 49
Pillar six: Accounting and reporting PI-27 Financial data integrity PI-28 In-year budget reports PI-29 Annual financial report 27.1 Bank account reconciliation 28.1Coverage and comparability of reports 29.1 Completeness of annual financial reports 27.2 Suspense accounts 28.2 Timing of in-year budget reports 29.2. Submission of reports for external audit 27.3 Advance accounts 28.3. Accuracy of in-year budget reports 29.3. Accounting standards 27.4 Financial data integrity processes 50
PILLAR SEVEN External Scrutiny and Audit Public finances are independently reviewed and there is external follow-up on the implementation of recommendations for improvement by the executive. 51
PI-30 External audit Pillar seven External scrutiny and audit PI-31 Legislative scrutiny of audit reports 52
Pillar seven: External scrutiny and audit PI-30 External audit PI-31 Legislative scrutiny of audit reports 30.1 Audit coverage and standards 31.1 Timing of audit reports scrutiny 30.2 Submission of the audit reports to the legislature 31.2 Hearings on audit findings 30.3 External audit follow-up 31.3 Recommendations on audit by the legislature 30.4 Supreme audit institution independence 31.4 Transparency of legislative scrutiny of audit reports 53
One additional indicator for SNGs HLG-1: Transfers from a higher level of government HLG-1.1: Outturn of transfers from higher-level government HLG-1.2: Earmarked grants outturn HLG 1.3: Timeliness of transfers from higher-level government 54
MANAGING THE PEFA ASSESSMENT PROCESS Phases, steps, and tasks in planning, managing, and undertaking a PEFA assessment Stakeholder engagement PEFA Check 55
Key steps and stakeholders involved GROUP EXERCISE Identify the key steps of an effective PEFA assessment process and the key stakeholders. Try and visualize it! 56
PEFA assessment cycle 57
PHASE 1: PLANNING 58
Key steps 1. Establish a dialogue on the need for a PEFA assessment Involves consultation with key stakeholders including development partners Agree scope, coverage, type, timing and funding sources Establish an oversight team 2. Develop the concept note or terms of reference Sets out agreed, scope, coverage, timing and resources 3. Prepare for the assessment Recruit and mobilize team Prepare meeting schedule and mission agenda Initiate data request before field work commences 59
PEFA guidance to support the start of the data collection process Volume I Annex 1.4.: Initial data request letter Data template 60 60
PHASE 2: FIELD WORK 61
Key steps 4. Launch the assessment Educate and inform oversight team, participants, and other stakeholders Introductory workshop and/or separate briefing for senior officials may be required 5. Data collection and analysis Collect data not provided as part of initial data request Corroborate data and evidence provided through multiple sources Identify and address any data gaps Commence data analysis and scoring Present and test initial findings 62
PEFA guidance to support the data analysis and scoring Volume II Key elements: About the indicator/dimension Impact on budgetary outcomes Scoring requirements Measurement guidance Timing, coverage, and data requirements 6363
PHASE 3: REPORTING 64
Key steps 6. Draft report preparation Scoring the dimensions and indicators Analysis of performance pillars and budgetary outcomes 7. Peer review and refinement Quality assurance/peer review PEFA Check 8. Final report and publication Finalized by government Publication = good practice 65
PEFA guidance on how to prepare a PEFA 2016 report Volume III Structure of the PEFA report PEFA report template How to assess performance changes between previous versions of the framework and PEFA 2016 66
PEFA CHECK Quality assurance of PEFA assessments Six criteria covering the process and the content to check the quality of the report 1. The concept note and the report follow an adequate peer review process 2. The draft concept note is submitted for peer review before the field work 3. A final version of the concept note is shared with all peer reviewers 4. The complete draft report is submitted to all peer reviewers for review 5. A revised draft PEFA report and a matrix of comments are submitted to all peer reviewers 6. The assessment management and quality assurance are described in the report 67
Role of the PEFA Secretariat as a peer reviewer Check Compliance Check Coverage Check Consistency Foster Confidence 68
PEFA Check - Quality of the content A target threshold of 85% and above Is sought for: The coverage rating of the report The compliance index at the dimension and the indicator level Is considered at the final stage of the report 69
PHASE 4: PFM REFORM ACTION 70
Key steps 9. PFM reform dialogue Discussion about PEFA assessment findings and need for reforms or reform program Develop and implement reform program Identify a reform champion and establish a team 10.Monitoring and follow-up Monitoring reforms Impact on PFM weaknesses Updating as required 71
PREPARING THE PEFA REPORT AND ANALYZING PFM PEFORMANCE Structure and content Assessment of PFM performance: scores, evidence, and justification Integrated assessment of performance indicators seven pillars of PFM performance PFM strengths and weaknesses 72
About the PEFA report PEFA reports provide a comprehensive and integrated assessment of a country s PFM based on an indicator-led analysis Provides a standalone overview of PFM performance Identifies PFM strengths and weaknesses The reports can inform governments PFM and associated reform initiatives and priorities The reports do not include recommendations for PFM reforms 73
PEFA 2016 report format Executive summary 1. Introduction 1.1 Rationale and purpose 1.2 Assessment management and quality assurance 1.3 Assessment methodology 2. Country background information 2.1 Country economic situation 2.2 Fiscal and budgetary trends 2.3 Legal and regulatory arrangements for PFM 2.4 Institutional arrangements for PFM 2.5 Other important features of PFM and its operating environment 3. Assessment of PFM performance 3.1 Budget reliability 3.2 Transparency of public finances 3.3 Management of assets and liabilities 3.4 Policy-based fiscal strategy and budgeting 3.5 Predictability and control in budget execution 3.6 Accounting and reporting 3.7 External scrutiny and audit 4. Conclusions on the analysis of PFM systems 4.1 Integrated assessment of PFM performance 4.2 Effectiveness of the internal control framework 4.3 PFM strengths and weaknesses 4.4 Performance changes since a previous assessment 5. Government PFM reform process 5.1 Approach to PFM reforms 5.2 Recent and on-going reform actions 5.3 Institutional considerations Annexes Annex 1: Performance indicator summary Annex 2: Summary of observations on the internal control framework Annex 3: Sources of information Annex 4: Supplementary annex: Tracking performance from previous PEFA using an earlier version of the framework 74
Executive Summary To go straight to the point 1. Purpose and management 2. Coverage, timing, what is being assessed, at what point of time 3. How PFM systems performance affects the three budgetary outcomes 4. Performance changes over time 5. PFM reform agenda 6. Overview of scores 75
Summary of PEFA scores as presented in the Executive summary 76
Section 1. Introduction 1.1 Rationale and purpose 1.2 Assessment management and quality assurance 1.3 Assessment methodology 77
Section 2. Country background information 2.1. Country economic situation 2. Fiscal and budgetary trends 3. Legal and regulatory arrangements for PFM 4. Institutional arrangements for PFM 5. Other important features of PFM and its operating environment 78
Section 3: Assessment of PFM performance Each indicator is reported separately and the analysis includes the following five elements GENERAL DESCRIPTION PERFORMANCE TABLE PERFORMANCE LEVEL AND EVIDENCE PERFORMANCE CHANGE REFORM ACTIVITIES 79 79
Section 4: Conclusions of the analysis of PFM performance 4 subsections 4.1 Integrated assessment of PFM performance 4.2 Effectiveness of the internal control framework NEW 4.3 PFM strengths and weaknesses 4.4 Performance changes since a previous assessment 80
4.1 Integrated assessment of PFM performance Implications for the seven pillars of PFM performance Pillar One Budget reliability Pillar Two Transparency of public finances Pillar Three Management of assets and liabilities Pillar Four Policy-based fiscal strategy and budgeting Pillar Five Predictability and control in budget execution Pillar Six Accounting and reporting Pillar Seven External scrutiny and audit 81
4.2 Effectiveness of the internal control framework Explains control-related indicator findings related to effectiveness of the internal control framework Summary of observations on internal control framework is also presented in Annex 2 Internal control components and elements 1. CONTROL ENVIRONMENT 2. RISK ASSESSMENT 3. CONTROL ACTIVITIES 4. INFORMATION AND COMMUNICATION 5. MONITORING 82
4.3 PFM strengths and weaknesses Analysis of the extent to which the PFM performance supports the achievement of the three budgetary outcomes Aggregate fiscal discipline Strategic allocation of resources Efficient service delivery 83
4.4 Performance changes since a previous assessment This subsection introduces a dynamic perspective on PFM performance and its impact on achieving the three budgetary outcomes. 84
Section 5: Government PFM reform process 5.1. Approach to PFM reforms 5.2. Recent and ongoing reform actions 5.3. Institutional considerations 85
Annexes Annex 1: Performance indicator summary Annex 2: Summary of observations on the internal control framework Annex 3: Sources of information Annex 4-Supplementary annex: Tracking performance from previous PEFA using an earlier version of the framework 86
Exercise on interpreting the PEFA indicators & writing a PEFA report Prepare an overview of Pefalia PFM performance for the relevant pillars: 1. Review the indicators and narrative of the extract of Section 3 of the Pefalia 2016 PEFA report 2. Prepare a summary of performance for the three pillars 3. Describe how PFM performance as measured by the pillars impacts on the three budgetary outcomes 4. Report back 87
Reporting back 88
TRACKING PFM PERFORMANCE CHANGES OVER TIME How to track PFM progress with previous PEFA 2011/2005 framework assessments 89
What to determine in a successive assessment? Specific changes in system performance What has changed? How much? Indicator scores will provide a crude overview of changes over time, but: Dimensions may change differently Performance may not always change enough to change the score 90
Non-performance reasons why scores may change Changes in definitions Improved availability of or access to information Different sampling Scoring methodology mistakes in previous assessment 91
Tracking performance using PEFA 2016 with previous assessment using PEFA 2011 PEFA 2016 establishes a new baseline but is not directly comparable with previous assessment that used PEFA 2011 For successive assessments apply PEFA 2011 to current data to track performance changes since previous assessment Prepare a separate annex to compare scores and provide explanation of changes Required once only for first successive assessment applying PEFA 2016 92
93
PEFA AND PFM REFORM Establishing a PFM reform dialogue within government and development partners Prioritizing PFM reform Preparing a PFM reform action plan 94
Using the PEFA report for PFM dialogue PEFA assessments alone might not provide enough detail to establish a detailed reform action plan Further studies and analysis may be needed to complement the snapshot on PFM performance from the PEFA assessment Detailed analysis of underlying causes may be needed for formulation of detailed action plan Such analysis should focus on priority areas Complementary tools available Fiscal transparency (FTE), tax administration (TADAT), debt management (DEMPA), public investment (PIMA), procurement (MAPS) 95
Budget reliability Transparency of public finances PEFA & other PFM tools Management of assets and liabilities Policy-based fiscal strategy and budgeting Predictability and control in budget execution Accounting and reporting External scrutiny and audit PER Public Expenditure Review 96
Next steps: PFM reform strategy or action plan PEFA assessment is an important input to priority setting and sequencing of PFM reform strategies or actions plans Indicator scores should not be used simplistically in reform formulation Political economy, legal, administrative, resource, and capacity factors need to be considered Reforms need to be driven by governments themselves Action plan will set out reforms, specific tasks, responsibilities, timelines, need for technical support and monitoring arrangements 97
Monitoring and follow-up of PFM reform Frequency of the assessments to be considered Application of full indicator set no more than every 3 years Between full assessments, monitoring of reform progress may include: Annual monitoring of selected indicators and/or dimensions (e.g., indicators likely to be impacted by reforms) Focus monitoring of progress on the implementation of reform measures (i.e., activity based monitoring) 98
PEFA and PFM Reform. Exercise on establishing a dialogue on PFM reform Based on the information in the PEFA report extract, identify: 1. What are the main PFM weaknesses identified in the report 2. What additional data and/or analysis do you need to better understand the reasons for weaker performance 3. What are the top three PFM reform priorities for Pefalia 99
Reporting back 100
PEFA and PFM Reform. Exercise on preparing a PFM reform action plan Based on the PEFA report and further analysis: Prepare a draft PFM reform action plan for the three priorities you identified yesterday: 1. Set out the specific tasks or actions to be undertaken to implement each of the reforms 2. Allocates responsibilities for each task 3. Provides an indicative timeline for each task 4. Identifies possible capacity development requirements for each reform and/or task 5. Sets out arrangements for monitoring implementation and progress of each reform and/or task 101
Reporting back 102
Key elements of a PFM reform action plan or strategy Stage 1: Stage 2: Stage 3: Stage 4: Stage 5: Stage 6: Stage 7 IDENTIFY PFM AGREE DESIRED PFM WEAKNESSES REFORM OUTCOMES Present a list of strengths and weaknesses identified in the PEFA report DETERMINE UNDERLYING CAUSES OF WEAKNESSES Agree analysis to be undertaken by authorities to identify the causes or contributing factors to the strengths and weaknesses identified Agree on the desired PFM outcomes from addressing the problems and weaknesses identified DEVELOP AND PRIORITZE PFM REFORM OPTIONS Develop a proposed set of reform initiatives that address the weaknesses identified and support the achievement of the desired PFM outcomes. Agree the order of priority of the reforms based on desired outcomes. Review priority based on constraints identified in stage 4. IDENTIFY POTENTIAL CONSTRAINTS TO REFORM Identify potential impediments and other constraints to successfully implementing reform and possible actions to mitigate those constraints IMPLEMENT REFORMS/ REFORM ACTION PLANS Identify specific actions, responsibilities, timelines, and capacity development needs. This could be as individual initiatives or part of a reform strategy or action plan. MONITORING AND EVALUATION Monitor the implementation of reforms and individual actions. Review and modify reform initiatives or plans. 10 3
DISCUSSION: NEXT STEPS Lessons from participants experiences with PEFA and PFM reform Discussion on planned PEFA assessments and PFM reform strategies 104
PEFA Secretariat guidance 105
Stay in touch with the PEFA Secretariat www.pefa.org PEFA Newsletter #PEFA2016 10 6
What did you think of the TRAINING? https://www.surveymonkey.com/ r/dakar2019eng 107
Quiz: Testing your knowledge Go to: https://www.surveymonkey.com/ r/pefatestdakareng and test the knowledge you acquired at this training. 108
PEFA Certificates 109