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The PEFA programme was established at the beginning of the new millennium to improve the results of development cooperation as part of the global effectiveness agenda. It provided support for the ‘Strengthened Approach to Supporting Public Financial Management Reform’ through the Paris Declaration on Aid Effectiveness of 2005, the Accra Agenda for Action of 2008, the Busan Partnership Agreement of 2011, and the Addis Ababa Action Agenda of 2015.
The programme was built on the premise that effective institutions and systems of public financial management (PFM) play a crucial role in the implementation of national policies concerning development and poverty reduction. Good PFM is the linchpin that ties together available resources, delivery of services, and achievement of government policy objectives. If it is done well, PFM ensures that revenue is collected efficiently and used appropriately and sustainably.
The strengthened approach to PFM reform therefore focused on highlighting the importance of PFM and acknowledged that reform can only be successful if we have: a government-led reform programme in which analytical work, reform design, implementation and monitoring reflect country priorities and are integrated into governments’ institutional structures; a coordinated programme of support from development partners in relation to analytical work, reform financing, and technical support for implementation; and a shared information pool on PFM systems and their performance.
The PEFA programme, established by the European Commission, International Monetary Fund, World Bank, and the governments of France, Norway, Switzerland, and the United Kingdom, was created to encompass these ideas and therefore strengthen capacities to assess the status of country PFM systems and influence PFM reform and capacity development actions.
The PEFA performance measurement framework was first launched in 2005 after four years of extensive discussion and testing. The first publicly available reports for Afghanistan and Zambia were also produced in 2005. Since then PEFA has been used more than 500 times in 150 countries. It has become the acknowledged standard for PFM assessments and has amassed a pool of data comprising over 40,000 individual performance scores.
In order for PEFA to continue providing a key basis for monitoring PFM performance and for discussing and designing reform initiatives, PEFA partners decided to upgrade the PEFA framework. This was done to reflect on the lessons learned in applying the framework and acknowledge the changing landscape of PFM reforms and the evolution of good practice over the last decade. In the beginning of 2016 the upgraded PEFA framework, known as PEFA 2016, was launched.
After the successful launch and first applications of the PEFA 2016 framework at both national and sub-national levels (as well as numerous PEFA assessments planned to be carried out), the PEFA partners are currently designing the PEFA’s strategic programme for the next five years. To date there have been four phases of the programme:
- Phase I was primarily concerned with creating a consensus on the most appropriate approach to supporting PFM strengthening, and development of the PEFA performance measurement framework
- Phase II was concerned with supporting users of PEFA during early implementation of the framework
- Phase III focused on improving quality of assessments
- Phase IV included extensive work on the development, consultation, testing and launch of the upgraded framework.
The proposal for Phase V aims to increase the PEFA programme impact by capitalizing on the wealth of data collected over the past decade for developing a better understanding of changes in public financial management. It will also seek to strengthen the important role that PEFA can play in supporting PFM reform dialogue actions through evidence-based PEFA assessment. Phase V will provide further support in utilising PEFA data for research and analysis that will identify guidance on lessons learned, impediments to reforming PFM, and pathways to successful PFM improvements. In order to do this, the PEFA programme will continue providing high-quality guidance and support to PEFA users as well as interactive and participatory learning and knowledge sharing products that facilitate peer learning among PEFA users and highlight PEFA success stories. The programme will also focus on expansion and enhancement of the PEFA database and on the analysis and visualization of PEFA data in order to monitor and evaluate the impact of PEFA on PFM performance.
Lewis Hawke is a speaker at the CIPFA International Seminar on 24-25 November at the European Court of Auditors in Luxembourg. Click here to watch the CIPFA international seminar live. A full recording of the seminar will also be available a few days after the event.
