May 6, 2010Doug Hadden
The Government of Kosovo is committed to Public Financial Management (PFM) reform. PEFA or Public Expenditure and Financial Accountability provides a standard for assessing public financial management. The PEFA Secretariat provides assessment training and publishes completed reports. The Government of Kosovo PEFA assessments for 2007 and 2009 are available on-line.
International donors use the 28 government indicators when considering funding projects. (Donors are also assessed in PEFA). Scores range from A to D. Not all scores need to by high. The country context determines priorities. For example, Norway achieved C or D on eight indicators.
The Government of Kosovo has shown remarkable improvement in PEFA scores from 2007 to 2009. 13 scores improved while only 7 scores decreased. 7 of the 13 improved scores were significant – increasing by more than 1 letter. The indicators roll up to six major measurements:
- A. Credibility of the budget
- B. Comprehensiveness and Transparency
- C(i) Policy-Based Budgeting
- C(ii) Predictability and Control in Budget Execution
- C(iii) Accounting, Recording and Reporting
- C(iv) External Scrutiny and Audit
A recent study, Taking Stock: What do PEFA Assessments tell us about PFM systems across countries, by Paolo de Renzio for the Overseas Development Institute, compared the measurements across 57 studies. Using the same methodology, the Government of Kosovo scores higher than average on the six major measurements.
Comprehensiveness and Transparency in the budget is particularly high in Kosovo. The government is aided by the use of the FreeBalance Government Resource Planning (GRP) software. According to the 2009 PEFA report:
The strength of the existing PFM system in centred on the successful introduction and implementation of the Financial Management Information System. This has ensured that commitment control is applied in budget execution and that reporting on budget execution is timely and meets the need of management for effective decision-making.
Of course, the financial management system is a tool. Software from companies like FreeBalance need to be effectively leveraged by governments. And, PEFA assessments rate government reform, practices and legislation. GRP software does not automatically provide PFM reform. This is a government activity and requires commitment. The Government of Kosovo is committed to improving these scores through the Public Financial Management Reform Plan (PFM RAP). This is clearly a Government of Kosovo achievement.
We have had the opportunity to discuss good practices with PFM professionals the the Government of Kosovo. There are numerous lessons learned – these lessons can help other countries to improve PEFA assessments. We will be publishing a full case study in the near future.
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