PI-1. AGGREGATE EXPENDITURE OUTTURN
ABOUT THE INDICATOR
This indicator measures the extent to which aggregate budget expenditure outturn reflects the amount originally approved, as defined in government budget documentation and fiscal reports. There is one dimension for this indicator – dimension 1.1. Aggregate expenditure outturn.
IMPACT ON BUDGETARY OUTCOMES
Actual aggregate expenditure that deviates significantly from the original, approved budget undermines fiscal discipline and the ability of governments to control the total budget and, subsequently, to manage risk. It also affects governments’ ability to effectively and predictably allocate resources to strategic policy priorities. Service delivery may also be affected where large deviations from planned expenditure result in the contraction of services, limitations on essential expenditures for key inputs, or the suspension of certain services. It should be noted that aggregate fiscal discipline may also be affected by extrabudgetary expenditure, ref. indicator PI-6.
Dimension 1.1. Aggregate expenditure outturn
DIMENSION MEASUREMENT GUIDANCE
1.1:1. Aggregate expenditure includes planned expenditures and those incurred as a result of
exceptional events—for example, armed conflicts or natural disasters. Expenditures on such events may be met from contingency votes. Expenditures financed by windfall revenues, including privatization, should be included and noted in the supporting fiscal tables and narrative. Expenditures financed externally by loans or grants should be included, if reported in the budget, along with contingency vote(s) and interest on debt. Expenditure assigned to suspense accounts is not included in the aggregate. However, if amounts are held in suspense accounts at the end of any year that could affect the scores if included in the calculations, they can be included. In such cases the reason(s) for inclusion must be clearly stated in the PEFA report.
1.1:2. Actual expenditure outturns can deviate from the originally approved budget for reasons unrelated to the accuracy of forecasts—for example, as a result of a major macroeconomic shock.
1.1:3. The calibration of this indicator accommodates one unusual or ‘outlier’ year and focuses on deviations from the forecast which occur in two of the three years covered by the assessment. An ‘outlier’ year is characterized by higher deviation than other years or lack of data. It is of no importance for the indicator assessment what the reason for the ‘outlier’ may be, and could include political crisis or poor budget discipline.
1.1:4. The methodology for calculating this dimension is provided in a spreadsheet on the PEFA website www.pefa.org. Calculations for the dimension should be included in the assessment report as an Annex.
1.1:5. Approved aggregate budgeted expenditure is the
Dimension 1.1. Scoring
|Score||Minimum requirements for scores|
|A||Aggregate expenditure outturn was between 95% and 105% of the approved aggregate budgeted expenditure in at least two of the last three years.|
|B||Aggregate expenditure outturn was between 90% and 110% of the approved aggregate budgeted expenditure in at least two of the last three years.|
|C||Aggregate expenditure outturn was between 85% and 115% of the approved aggregate budgeted expenditure in at least two of the last three years.|
|D||Performance is less than required for a C score.|
Pillar One: Budget Reliability