SEVEN STAGES OF PREPARING AND IMPLEMENTING PFM IMPROVEMENT

This guide aims to assist practitioners in developing and implementing PFM reform initiatives following completion of a PEFA assessment. It sets out seven key stages over two phases for preparing and implementing PFM reform. These stages are based on the practical experiences of governments and advisers that have successfully implemented reform initiatives (table 2.1). While it is expected that each of the seven stages will involve extensive dialogue among various stakeholders, the guide has been developed on the premise that the government is responsible and accountable for prioritizing and implementing PFM reform.

Table 2.1 Overview of the seven stages of the PFM reform dialogue
Planning and preparation
Stage 1
Identify PFM strengths and weaknesses 
  •  Present a list of strengths and weaknesses identified in the PEFA report
Stage 2
Determine underlying causes of strengths and weaknesses 
  • Agree if analysis is to be undertaken to identify the technical and nontechnical causes of or factors contributing to the strengths and weaknesses
Stage 3
Agree on desired PFM reform outcomes
  • Agree on the desired PFM outcomes to come from addressing the problems and weaknesses
Stage 4
Develop and prioritize PFM reform options 
  • Develop a set of reform initiatives that address the weaknesses identified and support the achievement of the desired PFM outcomes
  • Agree on the order of priority of the reforms
  • Review the priorities based on constraints identified in stage 5
Stage 5
Identify potential constraints to reform 
  •  Identify constraints to implement reform successfully and possible actions to mitigate those constraints
Implementation
Stage 6
Implement reforms and reform action plans 
  • Implement specific actions and identify responsibilities, timelines, and capacity development needs
  • This stage could entail individual initiatives or form part of a reform strategy or action plan
Stage 7
Monitoring, evaluation, and adjustment
  • Monitor the implementation of reforms and individual actions
  • Review and modify reform initiatives or plans