privatization, central government subsidies, transfers, and donor funds reported in the budget.
2.1:2. At the administrative level, differences should be calculated for the main budgetary heads (votes) of budgetary units that are included in the originally approved budget. If a functional classification based on GFS/COFOG is used, differences should be based on the ten main functions. Where a functional classification not based on GFS/COFOG is used, the measurement of difference should be based on the main heads approved by the legislature. If a program basis is used, the program-based categories should be rated at the same level at which they were voted by the legislature.
2.1:3. The calculations for this indicator include an adjustment to remove the effects of changes in aggregate expenditure. This is achieved by adjusting the budget outturn for each category used by the proportional difference between the total original, approved budget expenditure and the total expenditure outturn. The remaining deviation within each category is based entirely on the absolute value of changes that occurred in and between categories, net of any change assumed to have resulted from aggregate expenditure shifts.
2.1:4. While functional or program classification may provide a more useful basis for comparison of policy intent than would administrative classification, budgets are often adopted and managed on the basis of an administrative (ministry/department/agency) classification only. The same basis should be used for comparing the originally approved budget and the budget outturn.
2.1:5. The methodology for calculating this dimension is provided in a spreadsheet on the PEFA website www.pefa.org. Calculations for the indicator should be included in the assessment report as an Annex.
2.1:6. Assessors are encouraged to provide information explaining the causes of the differences between the composition of the executed budget and the composition of the approved budget. Explanations can include the accuracy of the original fiscal forecasts, external factors that may have impacted on revenues and expenditures after the budget was approved, and/or post-budget spending and revenue policy decisions, etc. Assessors are encouraged to specify whether these explanations come from the government or their own assessment.
Dimension 2.1. Scoring
|Score||Minimum requirements for scores|
|A||Variance in expenditure composition by program, administrative or functional classification was less than 5% in at least two of the last three years.|
|B||Variance in expenditure composition by program, administrative or functional classification was less than 10% in at least two of the last three years.|
|C||Variance in expenditure composition by program, administrative or functional classification was less than 15% in at least two of the last three years.|
|D||Performance is less than required for a C score.|
PEFA Handbook Volume 1: The PEFA Assessment Process – Planning, Managing and Using PEFA