PFM Reform Programmes

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)

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