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Assessing Public Financial Management systems in developing countries: what works, what doesn’t and why

Guidelines to maximise the value of the Public Expenditure and Financial Accountability (PEFA) performance measurement framework

Authors: R. Wilson
Publisher: Oxford Policy Management , 2008

Full text of document

With the increasing provision of general budget support (GBS), donors are more interested in the assessment of the recipients' public financial management (PFM) systems. Against this background, this note examines the application the Public Expenditure and Financial Accountability (PEFA) performance measurement framework which has been designed as a response to:

  • high transaction costs
  • the need to standardise the assessment of PFM systems
  • the need to increase the coverage of PFM assessments
  • weak government ownership.
PEFA assesses performance against 31 indicators across four areas:
  • credibility of the budget
  • comprehensiveness and transparency
  • the budget cycle
  • donor practices.
The PEFA framework has, however, also been used to assess fiduciary risk. This has created incentives for governments to influence the scoring. Furthermore, differing implementation approaches have resulted in significant variation in the quality and nature of PEFA processes.

To maximise the value of PEFA, donors and governments should apply the framework as originally intended, i.e. as a common information pool to measure and monitor PFM performance over time. The PEFA Secretariat should be strengthened and play an obligatory role in assuring the quality of PEFA processes. It should furthermore prepare a set of implementation guidelines and principles including the following recommendations:
  • hold a workshop between donors and governments to establish independence and transparency
  • allocate sufficient time to allow for all relevant data to be collected and translated before the assessment begins
  • let the assessment be undertaken by a team of independent analysts
  • encourage governments and donors to conduct self-assessments
  • hold another workshop at the end of the process to discuss the scoring of specific indicators and reach consensus on a final report
  • do not carry out a PEFA assessment in cases where insufficient resources are provided.