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

364 Matthew Andrews
The 28 indicators used in the PEFA set are titled high-level indicators.
This terminology means that they address quality issues at a fairly broad
level, to allow for standardization at this level but country-specific variation
in the detailed practices and processes. They routinely involve a number of
dimensions. One of the two policy-based budgeting indicators, called multiyear
perspective in fiscal planning, expenditure policy, and budgeting, 7 has
four dimensions, for instance: (a) preparation of multiyear fiscal forecasts
and functional allocations, (b) scope and frequency of debt sustainability
analysis, (c) existence of sector strategies with multiyear costing or recurrent
and investment expenditure, and (d) links between investment budgets and
forward expenditure estimates.
Table 11.1 shows how the PEFA framework facilitates analysis of the
individual process areas, with reference to the subindicator known as existence
of sector strategies. Very simply, governments compare their current practices
with the descriptions in the table, identifying whether they score an A, B, C,
or D. The assessment has an obvious theoretical and comparative basis—in
this case, the argument that strategies underlying the budget are important
influences on budget quality, are better when fully costed, and are better
when covering all spending types and when consistent with fiscal forecasts
(costs are identified on the basis of such forecasts, for instance). The assessment
TABLE 11.1 Assessing Performance against the PEFA Indicator for
Existence of Sector Strategies
Score
A
B
C
D
Type of strategy
Strategies for sectors representing at least 75% of primary expenditure
exist with full costing of recurrent and investment expenditure, broadly
consistent with fiscal forecasts.
Statements of sector strategies exist and are fully costed, broadly
consistent with fiscal forecasts, for sectors representing 25% to 75% of
primary expenditure.
Statements of sector strategies exist for several major sectors but
are substantially costed only for sectors representing up to 25% of
primary expenditure or costed strategies may cover more sectors but
are inconsistent with aggregate fiscal forecasts.
Sector strategies may have been prepared for some sectors, but none
of them have substantially complete costing of investments and
recurrent expenditure.
Source: PEFA 2006: 27.