Public Sector Governance and Accountability Series: Budgeting and ...

360 Matthew Andrews
for measurement and monitoring of PFM performance progress and a
common platform for dialogue” (PEFA 2006: 1). 1
This intention suggests that the PEFA model could provide an excellent
basis for identifying a common and standardized PFM code. This suggestion
is the starting point of this chapter. 2 The chapter does not stop at this point,
however, because complexities inherent in all PFM systems suggest limits in
using any single indicator set such as PEFA. An effort to identify a PFM code
requires thinking about exactly how to use the PEFA indicators and, indeed,
considering what is required beyond PEFA:
PFM’s systemic nature is a primary complexity. Systems derive their
strength from the quality of individual process areas and from links
between processes. PFM systems have multiple processes, which are often
developed at different levels and poorly linked. Although PEFA indicators
cover most process areas, some are not covered at all (including policy
development), some are covered in very basic ways, and there is no real
treatment of the dynamic links between processes.
PFM’s multiplicity of role players is another complexity. PFM outcomes
result from the engagement of many role players across the system—from
central ministries of finance to line ministries and agencies, procurement
departments, and even civil society entities at various levels of government
(central, regional and local). If the role-player population behaves
in a fragmented and poorly coordinated manner, the system’s results are
compromised. PEFA’s treatment of this issue is limited, 3 as indeed is the
“stove-piped” approach many governments take to PFM (which seems to
hold that individual process areas stand alone). 4
The appropriate “look” of a PFM system is contingent on the kind of goal
the system is addressing—another complication in the effort to standardize
thinking about what PFM systems should look like. There is a strong
argument that systems focused on achieving fiscal discipline require different
process elements than systems intended to foster efficient resource
allocation—with the different process elements reflecting different levels
of development and stimulating different kinds of accountability. 5 Single
indicator sets such as PEFA are arguably too static to reflect on the ideal
PFM look at different levels—PEFA’s indicators do not extend beyond
critical basics, for instance, thereby limiting the indicator set to assessments
of only the foundational levels of PFM development.
The above complexities pose a significant challenge to all who want to
develop a standardized approach to thinking about PFM—especially to