Dimension 22.1. Scoring
| Score | Minimum requirements for scores |
|---|---|
| A |
The stock of expenditure arrears is no more than 2% of total expenditure in at least two of the last three completed fiscal years |
| B |
The stock of expenditure arrears is no more than 6% of total expenditure in at least two of the last three completed fiscal years |
| C |
The stock of expenditure arrears is no more than 10% of total expenditure in at least two of the last three completed fiscal years. |
| D | Performance is less than required for a C score |
22.1:3. The PEFA framework allows local definitions and local practices in the calculation of payment arrears. If there are no local regulations or locally widely accepted practices, the default for the assessment would be internationally accepted business practices according to which a claim will be considered in arrears, i.e., if payment has not been made within 30 days from the government’s receipt of supplier’s invoice/claim (for supplies, services or works delivered) unless the supplier has been notified within the same period that the invoice is incorrect or in other ways unacceptable. If the payment deadline used in the country exceeds 30 days, this should be noted in the PEFA report narrative along with a comment that good international practice provides for payment deadlines of 30 days or less.
22.1:4. If a payment claim is inadmissible because it does not meet the terms of the contract or law, it should be rejected and the beneficiary informed of the reason. The payment period starts when a valid payment claim is received. If the payment request is admissible but incomplete, or some corrections or clarifications are required, the payment request must be registered and the payment deadline must be suspended from the date the beneficiary is informed, and until those corrections or clarifications are received. The PEFA report narrative should highlight any systematic attempts by budgetary units to create such payment delays, where evidence suggests that this is happening. Assessors should triangulate information to ensure that no stock of arrears are held outside the system.
22.1:5. Failure to make staff payroll payments, pension, transfer or meet a deadline for payment of interest on debt immediately results in a payment being in arrears. Arrears on goods/services, salaries, pensions and debt service may be reported using various systems. The indicator is assessed on the weighted average of all such systems and should highlight if all types of expenditure are covered by systems appropriate for monitoring arrears.
22.1:6. Arrears also occur when the central bank or commercial banks hold on to checks or transfers corresponding to payment requests from budgetary central government, due to lack of cash available in bank accounts, resulting in a float of unpaid checks10.
10 https://www.imf.org/external/pubs/ft/tnm/2014/tnm1403.pdf
Pillar Five: Predictability and Control in Budget Execution
