Dimension 2.3. Expenditure from contingency reserves


2.3:1. This dimension measures the average amount of expenditure actually charged to a contingency vote over the last three years. This dimension recognizes that it is prudent to include an amount to allow for unforeseen events in the form of a contingency vote, although this should not be so large as to undermine the credibility of the budget. There may be more than one contingency vote. Assessors should discuss the budgeting and accounting treatment of contingency items in the report narrative. The calibration for this dimension is based on the volume of expenditure recorded against contingency votes, except for transfers to a Disaster Fund or similar reserves, as this represents a deviation from policy-based allocation.

2.3:2. Where part of the budget is protected from spending cuts for either policy reasons (for example, poverty reduction spending) or regulatory reasons (for example, compulsory welfare payments), this will show up as a composition variance. Assessors are requested to report on the purpose and extent of protected spending in the narrative.

2.3:3. A simple average across the relevant years is sufficient for calculating the average actual expenditure charged to a contingency vote, e.g., if the percentages of actual expenditure charged to a contingency vote on the original total budget were 2 percent, 4 percent, and 6 percent, the average would be 4 percent.

2.3:4. If there are no contingency funds in the budget, no accounting for or official reference to contingency expenditures this would meet the requirements for an A score as there is no expenditure charged to a contingency.

2.3:5. In some countries, contingency votes may be referred to as ‘reserves’ or ‘unallocated appropriations.’ In cases where the contingency allocation is transferred from the contingency vote to another vote, the funds should be included as actual expenditure in the destination vote, and not as expenditure on the contingency vote.

2.3:6. The spreadsheet provided on the PEFA website for dimension 2.1 can also be used to assist with calculations for this dimension

Dimension 2.3. Scoring

Score Minimum requirements for scores
A Actual expenditure charged to a contingency vote was on average less than 3% of the original budget.
B Actual expenditure charged to a contingency vote was on average more than 3% but less than 6% of the original budget.
C Actual expenditure charged to a contingency vote was on average more than 6% but less than 10% of the original budget.
D Performance is less than required for a C score.


Pillar One: Budget Reliability