Transcript Document 7203058

Public Expenditure &
PEFA
Financial Accountability
Procurement and the PEFA Program
“Strengthening Procurement
Capacities in Developing Countries”
OECD/DAC – World Bank Roundtable
Paris, France
Public Expenditure &
PEFA
Financial Accountability
Presented by:
Richard Allen, Head
PEFA Secretariat
January 22-23, 2003
Page 1
Introduction: PEFA in brief
What is PEFA? …
Public
Expenditure and
Financial
Accountability
 A partnership, jointly-financed by
the World Bank, European
Commission, UK (DFID), and
Switzerland (SECO).
 The Secretariat, based at the World
Bank in Washington, DC, was
established in December 2001.
 Steering Committee members
currently include: World Bank, IMF,
EC, DFID, SECO and the Strategic
Partnership with Africa (SPA).
 Current budget: $5 million over
three years.
Public Expenditure &
PEFA
Financial Accountability
Page 2
Introduction
PEFA partners …
The European
Commission
Possible Future Partners:
France
The World Bank
Norway
The International
Monetary Fund
Public Expenditure &
PEFA
Netherlands
Financial Accountability
The Department for
International
Development (DFID)
Canada
Switzerland
Public Expenditure &
PEFA
Financial Accountability
Page 3
Introduction
The scope of PEFA’s interest …
PE Process
Budget
Formulation
Budget Execution
(e.g., cash & debt
mgnt., control,
internal audit)
Expenditure
Monitoring,
Reporting &
Auditing
Public
Procurement
National &
Sub-National
Levels
PE in Public
Agencies &
Enterprises
Institutions
PE Policy/
Impact
Public Expenditure &
PEFA
Financial Accountability
Governance &
Institutional
Environment
Executive &
Legislative
Branches of
Government
Diagnostic
Analysis of
PEM Systems
Economic
Analysis of
Public Spending
Expenditure
Incidence
Poverty
Impact
Page 4
What are PEFA’s Goals and Activities?
PEFA
Goals
&
Activities
Goals
 Reduce transaction costs of
assessments for countries
 Enhance donor cooperation and
coordination
 Better meet the fiduciary and
developmental objectives of client
countries and development
agencies
 Improve impact of reforms
Activities
 Strengthen existing diagnostic instruments
and reduce duplication through a
fundamental review of their scope and
application
 Support the development of benchmarks
and performance measures
 Support activities in countries where
integrated approaches are being applied
 Disseminate information on good practice
and lessons learned
 Work with other organizations that are
developing international standards and
harmonizing approaches
Public Expenditure &
PEFA
Financial Accountability
Page 5
PEFA’s Approach
Strategic

Involves a program of
work over a medium-term
time frame (3-5 years)

Includes the whole budget
cycle

Takes into account
institutional and
governmental factors, or
is part of a wider public
sector reform strategy



Includes both diagnostic
work and the development
of reform programs
Strengthens
coordination at the
country level between
the development
organizations
Country
Focused
Integrated
Collaborative

Brings together
different instruments
and analytical tools

Is linked to the Country
Assistance Strategy
(CAS) or equivalent

Takes a wider
governance and
institutional perspective
in the analysis and
development of reforms

Leads to a Poverty
Reduction Support
Credit (PRSC) or other
budget support
operation

Seeks to fulfill the
requirements of the
individual countries as
well as those of external
stakeholders
Encourages country
ownership and
participation
Working with partners, the Program will support the delivery of this approach.
Public Expenditure &
PEFA
Financial Accountability
Page 6
3. Why is a new approach needed? Public Expenditure instruments
Examples of diagnostic tools are widespread … and overlapping
Expenditure Analysis
Budget Formulation
Budget Execution
Monitoring &
Reporting
Public Expenditure
Reviews (PER)
Country Financial
Accountability
Assessments (CFAA)
HIPC Expenditure
Tracking Assessments
Fiscal ROSC
Country Procurement
Assm’t Reviews (CPAR)
European Commission
(EC) Audits
Public Expenditure
Tracking Surveys PETS
Governance Surveys
(e.g., IGRs, AntiCorruption, Public
Officials, Household
Incidence, Poverty, etc.)
Public Expenditure &
PEFA
Financial Accountability
Page 7
Procurement Aspects of the PEFA Program
Mapping
Review
Public Expenditure &
CPAR is one of the
key instruments
under review
Benchmarking
and
Performance
Measurement
E.g., OECDDAC/WB
Roundtable,
country activities
Public Expenditure &
PEFA
Financial Accountability
PEFA
Financial Accountability
Institutional
Review
Procurement and
other public
management
reforms in
Philippines
Country
Activities
Short-term
Measures
How to build a
“platform” for PFM
and procurement
reform that
promotes longterm development
objectives
Support for
CPARs and other
procurement
activities as part
of an integrated
work program,
e.g., Kenya,
Madagascar
Page 8
Why Procurement is an Integral Part of Public Financial Management

The basic objectives are to obtain goods and services
needed to deliver government programs at the
appropriate quantity, quality and price (value for
money)

Procurement expenditures are often a significant
component of public expenditure and GDP (10-15%)

Many procurement projects involve multi-year
expenditures

Procurement is therefore a financial management issue
– not just adhering to legal requirements or obtaining
goods and services that meet technical requirements

Inappropriate procurement will reduce both strategic
resource allocation and operational efficiency, through
inappropriate goods and services and higher than
necessary costs. It may also threaten aggregate fiscal
control through cost blowouts in major projects.
Procurement
Public Expenditure &
PEFA
Financial Accountability
Page 9
How Procurement Fits with Key Themes of Budget Design & Reform
1. Greater Performance
Focus in the Budget:
• Poor procurement will
show higher unit costs
• Performance based
procurement?
4. Budget Design:
• Integrating capital and
recurrent budget
preparation and
execution involves
procurement issues
Public Expenditure &
PEFA
Financial Accountability
2. Strengthening Internal
Control & Audit:
• Procurement is a key
element of internal
control and internal
audit systems
• The procurement audit
function in Supreme
Audit Institutions (SAIs)
is important
5. Medium-Term Approach to
Budgeting:
• Does not require multi-year
appropriations, rather a
forward look to provide
indicative figures for planning
purposes
• Planning of capital investment
programs and projects an
integral part of multi-year
budgets
3. Accrual Accounting and
Budgeting:
• Focuses on accountability
of total costs, including
maintenance and
depreciation
• Part of the issue of
improving the
management of public
assets
6. Transparency:
• Fiscal transparency, as
with transparency of
procurement
transactions, may
improve overall fiscal
performance and
counter corruption
7. Other
Applications:
• eProcurement
• Public-private
partnerships (PPI)
Page 10
Mainstreaming Procurement as a Financial Management Activity – An Example
• In South Africa, procurement as a technical and peripheral
function has been put aside and is being integrated into the
overall public expenditure management process
• The term “procurement” is no longer used. Procurement officers
are called “financial management officers”
• Under the name of “Supply Chain Management” traditional
budget management in line ministries is being restructured from:
Budget
Planning
Execution
Monitoring
Reporting &
Execution
To:
Demand
Planning
Budget
planning
Acquisition
management
Logistics
Management
Disposal
Management
• Even though “Acquisitions Management” deals with most functions of traditional
procurement, each stage of the process engages financial officers, including
“procurement” experts.
• By doing so, officers in charge of demand planning are better able to prepare a more
practical and feasible plan for the logistics and procurement stages later on
(N.B. the concept of supply-chain management bas been popular in private companies since the early 1980s)
Public Expenditure &
PEFA
Financial Accountability
Page 11
Q&A
&
Discussion
Public Expenditure &
PEFA
Financial Accountability
Page 12