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CPIA 2006
Q13: Quality of Budgetary and Financial Management
BBL
Ivor Beazley/Steve Knack, 6 December 2006
Objectives
Raise awareness of CPIA Q13 and FM’s role
Improve the quality of Q13 ratings Provide information on process and
resources Address issues and concerns
Context
Country Policy and Institutional Assessment (CPIA)
Overall CPIA scores help determine shares of IDA allocation given to each country
Annual scoring process 16 indicators, No 13 and 16 cover financial
management and accountability Disclosure for IDA countries (scores only)
How to rate Q13 - principles
Ratings are based on actual policies and performance, not on promises or intentions
Improvement is measured against benchmark criteria,
Score will not change on the basis that Government has started a reform initiative
Objective criteria have been clearly set out for assessing performance on Q13
Data Requirements
Substantial work is involved to collect data.
Q 13 assessment comprises: 3 sub-questions. Each sub-questions is
made up of a number of “dimensions” or lower level question
= total of 13 separate pieces of data 3 Sub-questions deal with at the quality
of:a) Budget processb) Control over expenditurec) Accounting, reporting and auditing
Scoring system
Countries are scored from 1- 6 on each sub-question. For Q13 there is a two stage aggregation process:
Stage 1 Rate each dimension on the 1-6 scale Work out the average of the dimensions,
rounding up or down to the nearest half point Stage 2
Simple average of the 3 sub-questions (rounded to the nearest half point) gives overall Q13 score.
Example:Sub-question a) “budget link to policy priorities”
This sub-question covers 5 issues/dimensions: (i) budget-policy link; (ii) forward look in budget; (iii) consultation with spending
ministries in budget formulation; (iv) budget classification; and (v) budget comprehensiveness
Tools
A simple worksheet is available to help score each dimension on a consistent basis
A write up template is provided to set out the write up on each sub-question
Worksheet for sub-question a) Budget links to policy priorities
Rating Budget-Policy Link
Forward Look in Budget
Consultation with Spending
Ministries
Budget Classification
Budget Comprehensiveness
1 If there is a budget, it is not a meaningful instrument, nor an indicator of policies or tool for allocation of public resources
There is no forward look in the budget
No meaningful consultation with spending ministries
No consistent budget classification system is used
More than 50 percent of public resources from all sources do not flow through the budget
2 There is no discernible link of the budget with government policies or priorities.
There is no forward look in the budget
The budget is formulated without meaningful consultation with spending ministries.
No consistent budget classification system is used
Significant fiscal operations (extra-budgetary expenditures and donor funds 25-50 % of total spending) are excluded from the budget
3 Policies or priorities are explicit, but are not linked to the budget
There is no forward look in the budget
The budget is formulated in consultation with spending ministries
The budget classification system does not provide an adequate picture of general government activities
A significant amount of funds controlled by the executive is outside the budget (e.g., 10-25%), and a number of donor activities bypass the budget.
4 Policies and priorities are broadly reflected in the budget
Some elements of forward budget planning are in place
The budget is formulated in consultation with spending ministries, from a sufficiently early stage in the budget preparation process.
The budget classification system is comprehensive, but different from international standards
Less than 10% of funds controlled by the executive are outside the budget
5 Policies and priorities are linked to the budget
Multi-year expenditure projections are integrated into the budget formulation process, and reflect explicit costing of the implications of new policy initiatives
The budget is formulated through systematic consultations with spending ministries and the legislature, adhering to a fixed budget calendar
The budget classification system is comprehensive and consistent with international standards
Off-budget expenditures are minimal, and transparent.
Timetable
Benchmarking exercise complete by end Nov Mid-Jan deadline for regional
submissions Scores finalized by OPCS end March
Issues to be aware of
“Known unknowns”, for example on, extent of operations outside the budget and arrears :
PREM or FM, or both? Upward pressure on ratings
Not a reward for good intentions Need demonstrable progress
Issues - Quality of write ups
Insufficient evidence in may write-ups Not addressing the specific dimensions
which are used to measure performance 8 out of 20 benchmark countries initially
rated “un-graded” on basis of poor write ups
Particular weakness on points b) and c)
Information sources
Not just CFAA Internal sources
CFAA, IFA etc. PE(I)R Recent DPL and PRSC documents (updates)
External sources PEFA Assessments (EC, DFID etc.) IMF Fiscal Transparency ROSC (IMF Website) IMF - PRSC Joint Staff Advisory Notes, Art IV
Direct from Government (MoF)
Trend in Q 13 Scores 2003-5
0
5
10
15
20
25
30
35
40
45
50
1 1.5 2 2.5 3 3.5 4 4.5 5 6
Rating
Nu
mb
er o
f C
ou
ntr
ies
2003
2005
Trend in ratings by sub-question 2003 to 2005
3.00
3.10
3.20
3.30
3.40
3.50
3.60
3.70
3.80
SQ(A) SQ(B) SQ(C)
Ave
rag
e R
atin
g
2005
2003
Trend in Ratings by Region - 2003-5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
MNA LAC ECA EAP SAR AFR
Region
Ave
rag
e R
atin
g
2005
2003
Issues going forward
Consistency with PEFA indicators (PEFA Secretariat will do a study)
Consistency over time – changes in basis of rating from year to year Decentralization Procurement?
Anchor Review Role
OPCFM and PRMPS review ratings for: Quality of write up, including evidential
support Cross check with other available
information Carefully scrutiny of all changes in
ratings Do a comparison across countries
Anchor is also there to provide support and advice
Good luck!