What is PEFA?
The Public Expenditure and Financial Accountability (PEFA) program was initiated in 2001 by seven international development partners: The European Commission, International Monetary Fund, World Bank, and the governments of France, Norway, Switzerland, and the United Kingdom. PEFA began as a means to harmonize assessment of PFM across the partner organizations. It subsequently established a standard methodology for PFM diagnostic assessments, the PEFA framework. Since 2001 PEFA has become the acknowledged standard for PFM assessments. In 2019, the Ministries of Finance of the Slovak Republic and the Grand Duchy of Luxembourg became new partners of the program.
The PEFA program provides a framework for assessing and reporting on the strengths and weaknesses of public financial management (PFM) using quantitative indicators to measure performance. PEFA is designed to provide a snapshot of PFM performance at specific points in time using a methodology that can be replicated in successive assessments, giving a summary of changes over time.
PEFA is a methodology for assessing public financial management performance. It identifies 94 characteristics (dimensions) across 31 key components of public financial management (indicators) in 7 broad areas of activity (pillars).
The goals of the PEFA Program are to strengthen capacities to assess the status of country PFM systems and develop a practical sequence of reform and capacity development actions, in a manner that:
- Encourages country ownership;
- Reduces the transaction costs to countries;
- Enhances donor harmonization;
- Allows monitoring of progress of country PFM performance over time;
- Better addresses developmental and fiduciary concerns;
- Leads to improved impact of reform
Strengthened Approach to PFM
The PEFA Program builds on the principles of the Strengthened Approach to Supporting Public Financial Management Reform which is embodied in three components and closely aligned with the Paris Declaration on Aid Effectiveness; the Accra Agenda for Action; the Busan Partnership Agreement, and the Addis Ababa Action Agenda:
- A country-led agenda: a government-led reform program for which analytical work, reform design, implementation and monitoring reflect country priorities and are integrated into governments' institutional structures;
- A coordinated program of support from donors and international finance institutions in relation to analytical work, reform financing and technical support for implementation;
- A shared information pool on public financial management.
The PEFA Framework
The PEFA framework is a methodology for assessing and reporting on the strengths and weaknesses of public financial management (PFM) performance. It identifies 94 characteristics (dimensions) across 31 key components of PFM (indicators) in 7 broad areas of activity (pillars).
The outcome of the performance assessment, the PEFA report, provides the basis for dialogue on PFM reform strategies and priorities. The methodology can be replicated in successive assessments, giving a summary of changes over time as well as providing a pool of information that contributes more broadly to research and analysis of PFM.
How it Works
Phase one describes the key steps for planning and preparing the PEFA assessment. Phase one establishes the basis for the government's engagement in, and ownership of, the assessment process.
Dialogue on need for PEFA Assessment
Development of the concept note or terms of reference
Preparation on the assessment
Phase two involves the field work to collect evidence needed to score assessment dimensions and indicators and to obtain the information needed to write the narrative PEFA report and annexes.
Data collection and analysis
Phase three of the PEFA assessment process involves preparation of the PEFA assessment report. The primary audience for the PEFA report consists of government policy makers, officials and development partners.
Draft PEFA report
Peer review and refinement of the draft report
Final PEFA report and publication
PFM Reform Action
Phase four focuses on actions to be taken after the PEFA assessment has been completed. This phase is not strictly part of the PEFA assessment but is a necessary process to make effective use of the assessment.
Monitoring and follow-up
Goals and Impact
Who we are
The PEFA Secretariat is responsible for implementing the Steering Committee’s policies and approved work plans; delivering agreed services to the PEFA partner organizations and to other stakeholders as agreed by program policies; and reporting to the Steering Committee on progress of activities and progress against results targets.
PEFA Steering Committee
The Steering Committee comprises representatives from each of the Partners. Ordinary Steering Committee meetings take place regularly, typically twice a year. Each ordinary meeting is hosted and chaired by one of the Partners on a rotational basis. Meetings of the Steering Committee may also take place, from time-to-time, via video and audio-conference.
The PEFA Secretariat is housed in the World Bank, Washington DC, and is legally operating as a part of the Bank. It is fully funded by the resources of the PEFA Program.
Evaluation of PEFA Program
During 2016, the PEFA program went through a rigorous evaluation covering the governance of the program but also its impact and relevance.
The evaluation was conducted by a team of independent consultants and the findings and recommendations are based on document analysis and interviews with key stakeholders and country visits. The evaluation concluded that: “the performance of the PEFA program is a resoundingly positive one”. It welcomed the establishment of a credible performance measurement framework that had been applied over 220 times in more than 125 countries.
The PEFA Steering Committee prepared a management response to the final report, which provided comments on the evaluators' main findings and recommendations