At this stage, it might useful to create a PFM reform matrix with a list of strengths and weaknesses identified by the PEFA report that provides the basis for further discussion of reform (see table 2.2). The guide expands the matrix example to reflect each of the stages, providing example data for illustrative purposes.

Table 2.2 Example of a PFM reform matrix: Strengths and weaknesses identified by PEFA assessment

As an important note of caution, it may not be realistic or desirable for all countries to aspire to an A score on all performance indicators or for a C or D score to indicate a need for a specific reform (as, for example, with Norway’s 2008 self-assessment)2. It is sometimes necessary to look beyond the low scores to see the country context and impact of the performance of specific indicators on overall PFM performance.

The weaknesses identified should be presented from the highest to the lowest priority, with key stakeholders, such as government agencies, decision makers, development partners, and civil society, participating in this initial prioritization process. Sometimes, a low score may not be a priority for reform, and sometimes an A score may hide significant problems. For example, an A in PI–1, Aggregate budget outturn, may be the result of cash rationing rather than good budget planning.

This stage reflects only an initial prioritization. Sequencing of reform initiatives will need to consider other factors, including resources, capacities, institutional constraints, political commitment, and others (discussed later). These factors will determine the feasibility of implementing a particular reform and its priority relative to other possible reforms.