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

What Would an Ideal Public Finance Management System Look Like? 365
approach is meant to be evidence based (practices should be verifiable),
although in practice this approach is always difficult.
PEFA’s strengths are many—even obvious in this brief discussion:
The framework treats the PFM area appropriately—as a system in which
processes need to connect to produce outturns.
The framework adopts an increasingly respected approach to thinking
about system effectiveness—combining assessments of outturns and
processes in the context of a theoretically disciplined model (suggesting
argument as to why process 1 +process 2 can lead to outturn 3).
The framework has fairly extensive coverage (of many process areas), in
an elegant and concise set of indicators (only 28 in total).
The indicators are at a high level, allowing standardization or general
processes but also recognizing the need to accommodate variation in
the details.
The individual assessment approaches are simple, theoretically applied,
and open to evidence-based analysis.
The indicators are highly actionable—meaning that governments
scoring themselves poorly can identify exactly what they need to do
to improve.
Given those characteristics, the PEFA framework must be seen as an
appropriate and strong foundation on which to build the kind of PFM code
desired by the G8 finance ministers—outlining critical system components
with some thought on how these components interrelate and with some
detail on the ideal look in each process area. However, PEFA lacks the key
qualities necessary to deal with common complexities in PFM systems—
and because of this lack, a PFM code would need to draw from ideas
beyond PEFA.
PFM Complexity: Process Multiplicity and Interaction
Figure 11.1 shows clearly that the PEFA framework presents PFM processes
in a system. This characteristic is a strong point of the PEFA framework, but
PEFA’s treatment of the system can also be faulted for its simplicity, which—
though elegant—can mask the complexity of the PFM system. 8
In particular, PEFA does not integrate all relevant process areas into the
framework, deals with some process areas at too broad a level, and neglects the
importance of connections between process areas in complex systems. Dealing