January 17, 2011Doug Hadden
Doug Hadden, VP Products
Public Expenditure and Financial Accountability (PEFA) assessments have become a “gold standard” for analyzing Public Financial Management (PFM) progress. How well have FreeBalance customers accomplished in PEFA assessments? Quite well, using the measurements used by Paolo de Renzio in his paper published by the Oversees Development Institute, Taking Stock: What do PEFA Assessments tell us about PFM systems across countries? This study examined 2007 results.
Of course, Government Resource Planning (GRP) software cannot generate good PEFA assessments without government commitment. This is a key point. There is no magic here. Government commitment for PFM reform is required. Our software just makes it faster and easier.
Most of the FreeBalance customers who have completed implementation and were assessed are post-conflict, yet have achieved assessments slightly lower than average for all countries. However, the average has been materially exceeded in the following four categories:
- PI-5 Budgetary Classification
- PI-10 Public access to key fiscal information
- PI-20 Effectiveness of internal controls on non-salary expenditure
- PI-24 Quality and Timeliness of in-year Budget Reports
- PI-25 Quality and timeliness of annual financial statement
How can post-conflict countries achieve good results?
It is important to recognize that governments should strive for PEFA Assessments that follow country priorities. So, many countries should not be concerned with lower ratings in some indicators. We believe that government ownership and effective computerized GRP improves governance. It is very clear that leadership and ownership has successfully leveraged automated systems (the green line). The FreeBalance Accountability Suite, in my humble but subjective opinion, seems to help – as witnessed by the purple line.
Where did we get these numbers?
The PEFA site shows many assessments. We’ve used the most recent assessment, 2007 to 2010 depending on the country. This doesn’t show the current benchmark in many countries. And, we have an unfavourable recent assessment of a non post-conflict country that brings down the average. This assessment is currently not on the PEFA site. Otherwise the red and purple lines would be higher.