PEFA urges stronger collaboration on budget assessment and reform

• Pages: 3222-325

Page 322

Development institutions and donor agencies require a growing number of studies and reports before they release aid money. But many reports cover the same ground. The Public Expenditure and Financial Accountability (PEFA) Program Secretariat in Washington has proposed a new approach to enable diagnostic assessments to be shared among donors. Jeremy Clift of the IMF's External Relations Department spoke to PEFA's Richard Allen about the proposal.

IMF SURVEY:What led to the creation of PEFA, and what are its aims?

ALLEN: The World Bank, the IMF, the European Commission (EC), and other donor institutions do a huge amount of work with developing countries on public expenditure-related issues-diagnostic work, assessment of institutional capabilities, and suggested reforms-but it is not very well coordinated. This has led the Executive Boards of the IMF and the Bank to stress the importance of closer collaboration. There was also a persistent problem of overlapping and duplicating diagnostic missions by the Bank, the IMF, the EC, and other agencies that created extra work and increased costs for the governments concerned. PEFA was established to create a more integrated, coordinated approach to assessing public expenditure needs and to encourage donors to work together more closely. This is part of a wider agenda of international donor harmonization that finds its voice in many forms-for example, the Rome Declaration of February 2003; the work of the multilateral development banks to harmonize procedures on financial management, procurement, and other areas; and collaboration between the World Bank and the Development Assistance Committee of major donors.

IMF SURVEY: What progress have you made?

ALLEN: We recently completed a large report that the Bank has just published on the diagnostic instruments being used by the major donor institutions.

There are a lot of them. The World Bank has its Country Financial Accountability Assessments (CFAAs), Country Procurement Assessments (CPARs), and Public Expenditure Reviews (PERs); the IMF has its fiscal Reports on the Observance of Standards and Codes (fiscal ROSCs); the Bank and the IMF are working together on the Public Expenditure Management Tracking Assessments and Action Plans for Heavily Indebted Poor Countries (HIPCs); the EC does its own assessment and audit work; and so on. The aim of PEFA was to document the coverage and scope of these instruments, identify overlaps and gaps, and assess how well these instruments are being applied in the field in operational terms.

We are also doing a lot of work on performance measurement of public expenditure management systems and developing a framework under which countries and donors can measure performance and moni-Page 323tor and track...