The PEFA Performance Measurement Framework
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1 The PEFA Performance Measurement Framework World Bank 1
2 Content What is PEFA? Mechanics of the Framework The Assessment process Comparisons (time; countries) Use and roll-out 2
3 Content What is PEFA? Mechanics of the Framework The Assessment process Comparisons (time; countries) Use and roll-out 3
4 What is PEFA? Public Expenditure & Financial Accountability Established in 2001 by 7 agencies; now working in tandem with OECD-DAC Task Force on PFM Context: Strengthened Approach to supporting PFM Reform - Country-led PFM reform program, reflecting country priorities & implemented via government structures - Coordinated program of international support - Common information pool, for measuring performance & monitoring results over time: i.e. the PEFA PFM Performance Measurement Framework 4
5 Purpose of the PEFA Framework The Framework provides: a high level overview of all aspects of a country s PFM systems performance (including revenue, expenditure, procurement, financial assets/ liabilities): are the tools in place to help deliver the 3 main budgetary outcomes? (aggregate fiscal discipline; strategic resource allocation; efficient service delivery) It does not provide: An assessment of underlying causes for good or poor performance i.e. the capacity factors An assessment of government fiscal & financial policies 5
6 Content What is PEFA? Mechanics of the Framework The Assessment process Comparisons (time; countries) Use and roll-out 6
7 Components of the PEFA Framework Standard high-level performance indicator set - 31 indicators, cover all major aspects of PFM systems (PI 2, 3 & 19 recently revised check website) - Compromise between simplicity & comprehensiveness - Widely applicable to countries at different levels of development A standard PFM performance report (PFM-PR) - developed to provide country background - evidence on the indicators - an integrated summary assessment 7
8 Structure of the indicator set 8
9 Indicator calibration and scoring Calibrated on 4-point Cardinal Scale (A, B, C, D) Reflecting internationally accepted good practice (not best) Do not score if evidence is insufficient Most indicators have 2, 3 or 4 sub-indicators Each sub-indicator (dimension) must be rated separately In total 76 dimensions to be rated Each indicator represents a desirable result, output, function or institutional feature 9
10 PFM-PR Assessment of PFM system Indicator-led analysis Description of actual performance based on factual evidence, listing sources of information& gaps Scoring of indicator (by dimensions) with justification Reporting on progress (for each indicator) Description of recent or on-going reform measures, & indication if/when they are likely to change performance (even if not yet reflected in evidence, & hence scoring) Country specific issues Description of country characteristics relevant to understand functioning of PFM systems, e.g. public enterprises & revenue from extractive industries 10
11 PFM-PR Summary assessment The summary assessment brings together: The assessment under each of the 6 critical dimensions of PFM system performance The impact of PFM system performance on 3 budgetary outcomes The Story Line What is the story line, the number one message? - it may be all that readers remember! Likely to be starting point for discussion of reform priorities 11
12 Content What is PEFA? Mechanics of the Framework The Assessment process Comparisons (time; countries) Use and roll-out 12
13 Stages in a typical process 0. Agree the intention to undertake a PEFA based assessment 1. Agree purpose, scope and stakeholder roles 2. Prepare TOR 3. Mobilize assessment team 4. Introduction workshop for stakeholders 5. Review of existing information 6. Inception Report 7. Main field work 8. 1 st Draft Report 9. Quality Review 10. Supplementary field work 11. Draft Final Report 12. Presentation seminar 13. Final report 14. Use of the report for reform dialogue 13
14 Requirements for a quality report Adherence to PEFA methodology Data / Information must be adequate & correct Quality of Summary Assessment: strengths & weaknesses, implications for achieving budgetary outcomes Structure, logic & language of report, to convey key messages Timeliness & availability 14
15 PEFA Secretariat quality review Appraises application of PFM PIs & adequacy of background info (per chapter 1 & 2 of Framework) Considers whether summary assessment brings out clear message consistent with PI analysis Review of each PI - Correctly interpreted - Sufficient evidence - Scoring method correctly applied Responses to review comments 15
16 Content What is PEFA? Mechanics of the Framework The Assessment process Comparisons (time; countries) Use and roll-out 16
17 Over time what are we looking for? Specific changes in system performance What has changed? How much? But: changes may occur for other reasons than performance Changes in definitions Improved availability of or access to information Different sampling Different interpretation in borderline cases Methodological errors in previous assessment 17
18 Country comparisons The PEFA Framework was developed to measure progress over time in one country not for country comparisons Summary assessment provides overview of strengths & weaknesses as basis for reform prioritization No method given for arriving at single measure of overall performance no attempt to create league table Comparing scores alone can be misleading Must be approached very cautiously to ensure comparison of like with like 18
19 Content What is PEFA? Mechanics of the Framework The Assessment process Comparisons (time; countries) Use and roll-out 19
20 What can countries use the PEFA Framework for? Inform PFM reform formulation, priorities Monitor results of reform efforts Harmonize information needs for external agencies around a common assessment tool Compare to and learn from peers 20
21 PEFA contribution to results orientation Measuring changes Results from 45 repeat assessments indicate pace of progress in different areas of PFM global patterns emerging Database available to researchers almost 100 reports made public Peer learning Used as basis for discussions in regional groups of government PFM experts (e.g. Eastern Europe, West Africa, Caribbean) From PFM assessment to reform program PEFA assessment frequently used as basis for reform dialogue, but: PEFA report is one of several inputs Ownership means government decisions on priorities Complementary analysis to PEFA required to identify root causes Indicators used to set targets for reform project results 21
22 Coverage of PFM-PR in Reform Cycle Implement PFM reforms Formulate PFM reform program High level performance overview PFM-PR Recommend PFM reform measures Identify main PFM weaknesses Investigate underlying causes 22
23 Inform PFM reform formulation (1) PEFA report is one of several inputs Identification of main strengths and weaknesses and potential impact on budgetary outcomes Other factors: political economy, culture, constitution/legal, resources, capacity at entry Ownership means government decisions on priorities Government to consider all factors in deciding priorities Ample space for government s prioritization in the reform dialogue with International Agencies Do not use Indicator scores simplistically A low score is not sufficient justification for reform Other factors: relative importance of subject, complexity /timeframe for improvement, interdependence with other elements 23
24 Inform PFM reform formulation (2) Complementary analysis to PEFA may be required Detailed analysis of underlying causes needed for formulation of detailed action plan Limit such analysis to priority areas Drill-down tools some exist, others under development Guidance on using reports for reform formulation How to establish if a reform program is credible Challenge to develop general approach and toolkit to help government/donor teams identify priorities/sequencing Such an approach could strengthen country ownership of reform and coordination of donor support Work in progress 24
25 Monitor results of reform efforts Schedule full repeat assessments every 3-5 years Select a few indicators to monitor more frequently Incorporate into the M&E component of the PFM reform program (Burkina, Kenya, Zambia) Incorporate as monitoring tool in CAS (Bangladesh) PEFA indicators being used for PFM reform program evaluations (IEG, Multi-donor evaluations) 25
26 Adoption of the PEFA Framework Very good progress Over 200 assessments substantially completed, covering almost 120 countries High country coverage in many regions Africa and Caribbean 90% of countries Latin America, Eastern Europe, Asia, Pacific 45-65% Wide stakeholder involvement About 25 development banks & donor agencies involved (leading, financing, reference group) World Bank & EC taken lead in 85% of all assessments Government self-assessment increasing: not yet norm 26
27 27
28 Stay in touch with PEFA PEFA will be pleased to share its experience on development, implementation & use of the performance measurement framework Visit our website: Send us questions: Get on our news distribution list: Send us your name and address 28
29 Thank you for your attention 29
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