an Eldis Resource
Taking stock: What do PEFA assessments tell us about PFM systems across countries?
Assessing public expenditure and financial accountability
Authors:
P. de Renzio (ed)
Publisher:
Overseas Development Institute, London, 2009
This paper analyses the results of 57 Public Expenditure and Financial Accountability (PEFA) assessments. It is a comparative cross-country performance overall and across different budget dimensions. The initiative provides detailed accounts of the performance of Public Financial Management (PFM) along various dimensions.
The purpose of the analysis is to verify the usefulness of broad comparisons across countries using numerically-converted PEFA scores, in terms of overall averages and of averages for the main budget dimensions covered by the framework. The framework consists of 28 indicators which capture the capacity of country PFM systems to deliver positive outcomes along a series of dimensions: Credibility of the budget; Comprehensiveness and transparency; Policy-based budgeting; Predictability and control in budget execution; Accounting, recording and reporting; External scrutiny and audit.
The study makes two overall findings as follows:
- there is a large variation in overall average scores, ranging from Norway’s maximum score to 14 countries from different regions and levels of income, that fall below the 2.00 mark
- average scores tend to deteriorate the further one moves down the various phases of the budget cycle although overall comparisons are not very useful in terms of detecting specific issues and trends.
The study finds that taken singly, the dimensions show that countries in certain categories perform better than others although the associations are not statistically significant and could be misleading. The main factors which are correlated to variations in the overall PEFA score are the level of income, country size as measured by the log of the total population, and the degree of aid dependency. Furthermore:
- Regarding income levels, an increase in per capita income is associated with an increase in overall average PEFA scores. Income level is the most significant one
- Aid dependency level analysis shows that higher aid dependency levels are associated with marginal improvements in PEFA scores
- In relation to population size, results show that larger country size is associated with better PFM system performance.
The paper concludes that the availability of more data will allow for a more significant analysis of the determinants and consequences of improvements in PFM.
