ECA PFM Strategy - Pempal · 2018. 3. 28. · PFM Performance 3 2.8 3 3.2 3.4 3.6 3.8 4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 e CPIA Q13: Quality of Budget &

ECA - PFM

PERFORMANCE AND

REFORM PRIORITIES PEMPAL BCOP Presentation

February 26, 2013

Ivor Beazley, Lead Public Sector Specialist, World Bank

1

Objectives/Scope

Present the conclusions of a World Bank review of PFM performance of ECA countries using available data:

• World Bank CPIA Index

• PEFA reports

• Open Budget

Identify regional PFM issues and challenges

Suggested PFM reform priorities

Comments and discussion

2

PFM Performance

3

2.8

3

3.2

3.4

3.6

3.8

4

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

CP

IA S

co

re

CPIA Q13: Quality of Budget & Financial Management

AFR

EAP

ECA

LAC

MENA

SAR

Global

4

CPIA 16: Transparency, Accountability, and Corruption

PFM peformance

PFM Dimensions by Income Level in ECA

5

1

2

3

4

Credibility of the budget

Comprehensiveness and Transparency

Policy-Based Budgeting

Predictability and Control in Budget

Execution

Accounting, Recording and Reporting

External Scrutiny and Audit

Low Income

Lower Middle Income

Upper Middle Income

Budget Credibility

6

1

1.5

2

2.5

3

3.5

4

PI-1 Aggregateexpenditure out-turn compared tooriginal approved

budget

PI-2 Compositionof expenditure

out-turn comparedto original

approved budget

PI-3 Aggregaterevenue out-turn

compared tooriginal approved

budget

PE

FA

Sc

ore

(A

=4,

B=

3,

C=

2, D

=1)

Budget Credibility

0

2

4

6

8

10

12

14

PI-1 PI-2 PI-3

Co

un

try S

co

res

Further analysis

A B C D

Policy-Based Budgeting

7

1

1.5

2

2.5

3

3.5

4

PI-11 Orderliness andparticipation in the

annual budget process

PI-12 Multi-yearperspective in fiscal

planning, expenditurepolicy and budgeting

PE

FA

Sc

ore

(A

=4,

B=

3,

C=

2, D

=1)

ECA Average Score

0

2

4

6

8

10

12

14

PI-12i PI-12ii PI-12iii PI-12ivC

ou

ntr

y S

co

res

Decomposing PI-12

A B C D

(i) Multi-year fiscal forecasts and functional allocations

(ii) Scope and frequency of debt sustainability analysis

(iii) Existence of sector strategies with multi-year costing of

recurrent and investment expenditure

(iv) Linkages between investment budgets and forward

expenditure estimates

Internal Controls

8

1

1.5

2

2.5

3

3.5

4

PI-4 PI-17 PI-18 PI-20

PE

FA

Sc

ore

(A

=4,

B=

3,

C=

2, D

=1)

Internal Controls

0

1

2

3

4

5

6

7

8

9

PI-20i PI-20ii PI-20iii

Co

un

try S

co

res

Further analysis

A B C D

PI-4 Stock and monitoring of expenditure payment arrears

PI-17 Recording and management of cash balances, debt and

guarantees

PI-18 Effectiveness of payroll controls

PI-20 Effectiveness of internal controls for non-salary

expenditure

(i) Effectiveness of expenditure commitment controls

(ii) Comprehensiveness, relevance and understanding of

other internal control rules/ procedures

(iii) Degree of compliance with rules for processing and

recording transactions

Procurement

9

1

1.5

2

2.5

3

3.5

4

PI-19 PI-19i PI-19ii PI-19iii

PE

FA

Sc

ore

(A

=4,

B=

3,

C=

2, D

=1)

PI-19 Procurement

(i) Evidence on the use of open competition for award of contracts that exceed the nationally established monetary threshold for small purchases

(percentage of the number of contract awards that are above the threshold)

(ii) Extent of justification for use of less competitive procurement methods

(iii) Existence and operation of a procurement complaints mechanism

0

1

2

3

4

5

6

7

8

9

10

PI-19i PI-19ii PI-19iii

Co

un

try S

co

res

Further analysis

A B C D

Internal Audit

10

1

1.5

2

2.5

3

3.5

4

PI-21 PI-21i PI-21ii PI-21iii

PE

FA

Sc

ore

(A

=4,

B=

3,

C=

2, D

=1)

PI-19 Internal Audit

0

1

2

3

4

5

6

7

8

PI-21i PI-21ii PI-21iii

Co

un

try S

co

res

Further analysis

A B C D(i) Coverage and quality of the internal audit function

(ii) Frequency and distribution of reports

(iii) Extent of management response to internal audit findings

Accounting, Recording and Reporting

11

1

1.5

2

2.5

3

3.5

4

PI-22 PI-24 PI-25

PE

FA

Sc

ore

(A

=4,

B=

3,

C=

2, D

=1)

Accounting and Financial Reporting

0

2

4

6

8

10

12

14

PI-25i PI-25ii PI-25iii

Co

un

try S

co

res

Further analysis

A B C D

PI-22 Timeliness and regularity of accounts reconciliation

PI-24 Quality and timeliness of in-year budget reports

PI-25 Quality and timeliness of annual financial statements

(i) Completeness of the financial statements

(ii) Timeliness of submission of the financial statements

(iii) Accounting standards used

External Scrutiny and Audit

12

1

1.5

2

2.5

3

3.5

4

PI-26 PI-27 PI-28

PE

FA

Sc

ore

(A

=4,

B=

3,

C=

2, D

=1)

External Audit and Scrutiny

0

1

2

3

4

5

6

7

8

9

PI-28i PI-28ii PI-28iii

Co

un

try S

co

res

Further analysis

A B C D

PI-26 Scope, nature and follow-up of external audit

PI-27 Legislative scrutiny of the annual budget law

PI-28 Legislative scrutiny of external audit reports

(i) Timeliness of examination of audit reports by the legislature (for

reports received within the last three years)

(ii) Extent of hearings on key findings undertaken by the legislature

(iii) Issuance of recommended actions by the legislature and

implementation by the executive

Fiscal Transparency

13

17

20

35

39

42

47

47

48

50

52

54

55

59

61

65

67

74

74

75

0 20 40 60 80 100

Tajikistan

Kyrgyz Republic

Macedonia

Serbia

Azerbaijan

Albania

Romania

Kazakhstan

Turkey

ECA Average

Ukraine

Georgia

Poland

Croatia

Bulgaria

Slovakia

Russia

Slovenia

Czech Republic

Open Budget Index 2012

49.4 50.4 52.3 51.7

0

10

20

30

40

50

60

70

80

90

100

2006 2008 2010 2012

ECA Average over time

Strategic challenges to ECA countries fiscal

stability and future prosperity?

• Slow projected growth

• Need to invest in

infrastructure and skills

to boost competitiveness

14

Real GDP Growth

o

-6

-4

-2

0

2

4

6

8

10

USA EU15 Europeand

CentralAsia

East Asiaand Pacific

Africa LatinAmerica

MiddleEast and

NorthAfrica

South Asia

2007 2008 2009 2010 2011

Fiscal imbalances and debt

15

External Debt (Public and Private)

Bad Demographics

8 2

2 0

0 -3

-5 -5

-6 -6

-7 -9

-9 -10 -10 -10

-10 -11

-12 -12

-12 -13 -13

-15 -10 -5 0 5 10

Tajikistan

Turkmenistan

Kyrgyz Republic

Albania

Armenia

Serbia

Moldova

Macedonia

Ukraine

Russia

Bulgaria

Poland

Share of Working Age Population

Projected Change in Share of Working Age Population,

2010-2050

• Pressure on

discretionary budget

• Reform of entitlement

programs to ensure

sustainability

• Rebalancing revenues

(declining payroll tax)

• Inter-generational

equity issues

16

Priorities for PFM Reform

•Use of medium/longer term budgeting and fiscal rules

•Management of debt and arrears (incl. municipal)

•Governance of SOEs, and associated fiscal risks

•Reform of entitlement programs to ensure sustainability

•Broadening the tax base and improving collection

Long term budget sustainability

•Results orientation in budgeting (MTEF, PBB)

• Investment in information management (IFMIS)

• Improved evaluation and management of capital projects

•Supporting new models of service delivery (incl. PPPs)

•Reducing waste and corruption in public procurement

Budget efficiency – doing more with less

•Control of debt and arrears

•Modernization of transfers and grants

•Management of EU funds (structural, cohesion, climate change etc.)

•Capacity building

Strengthening PFM at sub-national level to

support decentralization

•Modernization of internal controls

•Strengthening independent audit and oversight

• Improving the quality and availability of budget information (citizen budget, IFMIS etc.)

• Improving civic consultation and participation

Increasing fiscal transparency and

accountability

17

COMMENTS-QUESTIONS?

18