PEFA Performance Measurement

Framework A Tool For Budget Reforms

THE GEORGIA

EXPERIENCE

TOPICS OF DISCUSSION

Budget Reform Objectives

Process Description

PEFA Criteria

Findings

Recommendation

Actions

Next Step

Need for Budget Reforms

Improved Public access

Budget and Organic law changes

Improved decision-making

Simplify process

Increase linkages between documents

Main Components of Georgia Budget System

Basic Data and Directions – Macro Economic Assumptions

– Multi-year forecast

– Government priorities

– Ministry multi-year strategic plans

– Initial budget ceilings

Ministry Budget Requests

Draft Budget Law

Georgia Budget (Continued)

Parliament Review

Approved Budget Law

Budget execution

Quarterly reports

Objectives of Project

A budget circular providing clear and comprehensive guidance in developing the budget consistent with existing laws.

Enhanced content for improved decision-making

Strengthen interconnections between budget documents

Improved strategic focus within the budget.

Process

Two Work Groups Convened – Budget Circular

– Budget Format and Content

Selected PEFA Standards for Evaluation – Criteria applicable to objectives

Applied standards to current budget

Identified actions to improve compliance

Conducted interviews and surveys with: – Budget department managers and staff

– Line ministry budget staff

– Parliament staff

Presented findings and recommendation

Implemented changes

Re-evaluated Budget against PEFA Criteria

PEFA Performance Criteria

Selected PEFA Performance Indicators

Comprehensiveness and Transparency

– Comprehensiveness of information included in

budget documentation (PI-6).

Policy Based Budgeting

– Orderliness and participation in annual budget

process (PI-11).

Comprehensiveness Elements (PI-6)

Budget should include:

Macro-economic assumptions for three years

including the prior year.

Fiscal deficit

Deficit financing

Debt stock

Financial Assets

Comprehensive Elements (Continued)

Prior year’s outrun

Current year’s budget in same format as the

budget proposal

Summarized budget data for both revenue

and expenditures for main classifications

including for current and prior year.

Budget impact of new policy initiatives

Orderliness and Participation (PI-11) Elements

Budged process should exhibit:

– Existence of and adherence to a fixed budget

calendar.

– Political involvement in preparing the budget

circular

– Timely budget approval by the legislature

Initial PEFA Assessment of Format

Scored “C+” “Document fulfills 3-4 of the 9 Benchmarks.”

Identified 14 improvements:

1. Add 2007-2010 macroeconomic summary table

2. Include government priorities

3. Add summary tables by classification for

expenditures

4. Add five year fiscal impact table

Format Improvements (continued)

5. Add grant summary table by organization

6. Add information on capital revenue sources

7. Include prior year actual in all budget tables

8. More information on deficit financing

9. Use GFS 2001 to calculate data

10. Add external debt by country table.

Format improvements

11. Add state financial assets table

12. Include spending institution programs and

priorities.

13. Show capital projects for each spending

institution

14. Create Citizens Guide to the Budget.

Initial PEFA Process Assessment

Self-assessed “C”

Identified 7 areas of improvement resulting in the following actions: – Multi-year conversion of budget to GFS standards

– Additional explanatory information for: Financial condition

Government priorities

Basis of expenditure ceilings

New programs and services

Process Improvements (Continued)

Revised and improved all budget forms

Simplified economic classifications

Merged two forms.

Added form to collect information on donor and grant revenues.

Added form on program enhancements

Added form for three year budget summary

Revised capital expenditure information requirements

Budget Improvements

Added form for ministries to provide four

years of information on:

– Priorities

– Strategies

– Actions

– Programs

– Budget

Budget Improvements

Added form identifying by ministry how any

excess funds will be allocated.

Improved communications and coordination

between ministry and central budget staff.

PEFA Assessment After Improvements

Process: B

Format: B+

Summary of Improvements

Improved strategic connections between BDD, Ministry Budgets, and budget laws.

Pre-planning for revenue surpluses.

Simplified budget process

Improved content

Increased utility for decsion-maiking

Clearer budget preparation guidelines

Improved working relationships between Ministries and Central Budget Department

Observations on the Use of PEFA

Provides useful tools for assessing the

process and format of the budget.

Can result in focused and meaningful

changes.

Promotes international standards and

therefore comparability of budgets.

Improves communciations

Next Steps

Strive to reach an “A” grade for both the format and process category.

Complete conversion to GFS 2001 classifications

Institutionalize changes, e.g. annual publication of citizens guide.

Assess budget against other PEFA elements

Use elements to improve capital budget

Questions?