Transcript PFM Global Landscape

PFM
Global Landscape
What can we cay about PFM
systems and trends around the
world?
Sanjay Vani, World Bank
March 21, 2008
Bill Dorotinsky, IMF
Sequencing Seminar
Outline
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Overview of Significant Developments in PFM area in the
last few years
Trends and Status of PFM systems – HIPC data
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Cross-country status
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2000-2004
2005-6 update
Developments in ECA region
PEFA Stock Take results
PEFA Impact Study
PFM Reform
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What Triggers PFM Reforms
Initiatives and trends
Significant Developments in PFM in
the last few years
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Articulation of the Strengthened Approach
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Tool for PFM performance measurement – PEFA
Paris Declaration (March 2005) – commitment by
countries to strengthen country systems
(indicator 2a) and commitment by donors to use
country systems (indicator 5b)
GAC Strategy – importance of country systems
and emphasis on use of country systems
Comparison of Outcomes of Assessment in 2001 & 2004
Budget execution and reporting relatively weaker than formulation in 2001, and showed
most progress to 2004.
Comprehensiveness, medium-term perspective, internal audit, timely in-year reporting,
and ex poste audit, remain weakest areas.
Percentage of Countries Not meeting Benchmarks
(24 Countries)
2001
2004
100
90
80
Percentage
70
60
50
40
30
20
10
0
Indicator
Number
1
2
3
4
5
Formulation
6
7
8
9
10
Execution
11
12
13
14
Reporting
15
16
New
2004 Update: Findings
Performance across the major PEM categories was uneven.
Countries improved in some categories, only to fall back in others.
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In terms of benchmarks met,
 Largest improvements were seen in budget
reporting
 Budget formulation improved in nine countries
and deteriorated in eight
 Budget execution improved in six countries and
deteriorated in eight
 Overall, five countries (Cameroon, Ghana, Mali,
Tanzania, Senegal) showed improvements in the
PFM systems by meeting an additional three or
more benchmarks than in 2001
HIPC-PEFA Update
% of Benchmarks met by indicator (2001-2006)
100
90
80
70
60
2001
50
2004
40
2006
30
20
10
Budget
Coverage
Off-budget
Spending
Budget outturns
Donor funds
Classification
Med Term
Projections
Arrears
Internal
Controls
Tracking
Surveys
Bank
Reconciliations
Reports and
Audit
0
1
2
3
4
5
7
8
9
10
11
15
Budget comprehensiveness, donor funds on-budget, medium-term perspective,
internal audit, relatively weaker areas.
Other Trends
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Significant PFM reforms in the recent past
in countries joining the European Union to
meet the requirements of EU acquis
communautaire
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Regional initiatives in
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WAEMU
Central America tax and customs
ECA PEM-PAL
Cross-country Look
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Recent draft stock-take, examining PEFA
scores across all countries in sample (57
countries)
Broad results
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Better PFM systems (as measured by PEFA)
correlate with
Higher income
 Higher population size
 Higher aid dependency
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Regional Comparison
Average PEFA scores, by region and dimension
4.00
3.50
3.00
Budget Cred
Compr and Transp
2.50
Policy-Based Budget
Predic and Control
Acc and Report
2.00
Ext Scrutiny
Average
1.50
1.00
EAP
ECA
LAC
MENA
Region
OECD
SAS
SSA
Recent PEFA Impact Study
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Alignment of PFM programme – 6
countries out of 12
Govt/Donor understanding of PFM
strengths/ weaknesses – 9/12
Reduced transaction costs – 7/12
Donor coordination – 8/12
Govt – Donor coordination – 8/12
What triggers major PFM Reforms?
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Internal crisis – e.g. the 1998 financial crisis
Outside pulls – the EU accession requirements
for the Central and Eastern European countries
Donor Driven - the HIPC initiative or donor
requirements
Forward looking new government, country
demands for improvement
Reform Trends
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Donors
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Accrual accounting, MTEF, performance and program
budgeting, PRSP and budgeting, gender budgeting,
fiscal rules, decentralization, IFMIS
Sectoral reforms. Earmarked revenues, separate
funds, parallel systems (Chad oil revenue).
OECD
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Long-term forecasts/planning
Fewer big-bang, more refinements (accounting,
performance information)
Conclusions
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Scope for improvement in all regions across all
areas of PFM
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Challenge is to support countries in better managing
all resources
Challenge of sequencing, goals
From HIPC, we see there is some improvement,
though slow
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Expectations need to be realistic
Reform efforts and instruments need to be geared
towards longer term, on-going engagement
Issues to Ponder
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Have certain donor-led PFM initiatives
complicated the PFM reform landscape in
countries? (e.g. MTEF or Accrual
Accounting or Performance Budgeting)
How do you explain better PFM scores in
countries with high aid dependency?