PFM Strengthened Approach and PFM Measurement Framework Operational

PFM Strengthened Approach and PFM Measurement Framework: Operational Issues Ivor Beazley, World Bank January 2007

Overview § Applying the Strengthened Approach and PFM Measurement Framework in country operational work 1. Why are we doing this? 2. Analytic Work Packaging 3. PFM Measurement framework application – Key issues and considerations 2

Why are we doing this?

Why are we doing this? § To help develop country capacity and improve PFM performance Ø PFM Performance Assessment and other analytic/diagnostic work continues to be important… Ø Ø … but this is not the principal focus of our engagement judge success by the extent to which we have helped the country to advance its PFM performance and reforms Ø requires a change in mindset § Key word: “Implementation” 4

Supporting PFM Reforms : Crucial elements § § Country ownership and commitment is the most crucial element Country-specificity : tailor the agenda to each country’s needs and circumstances at that point in time Ø prioritization and sequencing of reforms Ø multi-year perspective Ø in line with country’s agenda and its choices Ø realism – factor in country’s capacity and current performance level Ø political economy and institutional dimensions Appropriate entry points Ø need to build awareness, foster ownership, and generate a momentum for changes. Ø the traditional “analytic work – strategy – action plan – actions” sequence does not always work. Use the range of instruments Ø policy dialogue, analytic work, technical assistance, investment lending, IDF grants, development policy lending, training, cofinancing 5

PFM: A Strengthened Approach § A country-led and owned PFM reform agenda § A donor coordinated program of support – coordinated, coherent, multi-year program of PFM work that supports and is aligned with the government’s PFM strategy A shared information pool – a common framework and information set for measuring and monitoring results over time § www. pefa. org and www 1. worldbank. org/publicsector/pe/Strengthened. Approach / 6

Operationalizing in the World Bank – Some Key Messages 1. Developing country capacity and improving PFM performance is the principal focus of the Bank’s PFM work. 2. Base PFM analytic work on country-specific circumstances and requirements 3. The PFM indicators and performance measurement framework are strongly encouraged. Collaborate and coordinated closely with other donors working to support the country’s reform program 4. 5. Ensure that PFM issues and work programs are well reflected in Country Assistance Strategy and Annual Country Work Programs 6. One “Country PFM team” within the World Bank 7

Analytic Work Packaging

More responsive PFM analytic work § PFM analytic work based on country-specific circumstances and requirements Ø Ø In determining scope and nature of PFM analytic work, take into account: (i) needs of the country’s reform program, and our fiduciary needs; (ii) available knowledge from other donors and country, and work already done by the Bank Mandatory requirement to prepare CFAAs, CPARs, PERs every few years removed. 9

What happens to current products (CFAAs, CPARs, PEMFAR, CIFA, etc)? § May continue as needed but not mandatory any more. § Range of possible products Ø Ø e. g. , (i) “PFM Performance Report”; or (ii) “just-in-time” policy notes on specific aspects of PFM system; or (iii) some of the current products (CFAA, CPAR, PER) or an integrated form of all of these Since we have detailed fairly recent CFAAs and CPARs, the be significantly lower than in recent expectation is that numbers will years § Integrated products covering the entire PFM cycle will increasingly be the norm § The use of the PFM indicators are strongly encouraged for incorporation into PFM analytic work. § PFM Performance Report and/or indicators will help to serve as a “light update” of more detailed products. Ø Detailed products may be done over a longer-time horizon. 10

Considerations in Applying the PFM Measurement Framework

Important Operational Considerations § Options for packaging PEFA assessments with other and sequencing issues Ø Ø standalone PFM-PR “dual products” integration of the indicators into other products extent of any recommendations in any component of such a package § Role of various parties in conducting the assessments Ø Ø government self-assessments with external validation, assessments done by external partners with government collaboration § Financial and personnel resources required § The time for finalization of reports (taking into account the need to ensure client understanding and ownership) § Internal QA arrangements § Report disclosure arrangements 12

Important Operational Considerations (cont’d) § No standard answers to these questions: Ø Needs to be decided at individual country level based on country circumstances § All stakeholders need to consider and agree on these issues, an early stage in the planning process Ø “Donor Reference Group” in collaboration with government 13

Collaborative process • Establish purpose and objectives of the assessment – to define stakeholders (internal and external) support the dialogue on the PFM reform process between the donors and the government and to contribute effectively to donor • Identify the expertise required and the stakeholders within the Bank. • Define the external stakeholders and consultation processes - to allow wide recognition of the assessment while allowing a cost-effective assessment process. • Agree a common timetable for the assessment– to meet both the needs of the group as a whole and avoid operational requirements of individual donors driving the repetition of the assessment. Factor in Bank requirements. 14

Updating the assessment Frequency discussed by Franck Interim monitoring can be built in to other processes DPL TA/IDF supervision CPIA ratings Focus monitoring of progress on the implementation of reform measures. • Yearly monitoring of a selected number of indicators (e. g. focus on the indicators that are most likely to be impacted by on-going reforms). 15

PFM Indicators – Need to Ensure Quality § Quality of indicator scoring is very important Ø Ø Correct scoring of indicators in line with performance and scoring criteria Presentation of Evidence in the report 16

Concluding thoughts … § Need for managerial attention and “push”, and leadership of senior staff Ø Ø much of the Strengthened Approach is not new or novel… … the major change required is in our own behaviors 17

Q&A and Discussion 18