PUBLIC EXPENDITURE FRAMEWORK ASSESSMENT (PEFA) WORK GROUP: MEETING OVERVIEW

• Montenegro
• Kosovo
• Kyrgyzstan

Chairperson of the Work PWG is Ms. Liana Skhirtladze who is an MTEF advisor to the Georgian Ministry of Finance.  She began the meeting by reviewing the agenda. No modifications to the agenda were made.  The following is a summary of the meeting.

Work Group Goals

The following proposed objectives of the work group were presented:

• Document the experience of BCOP Countries in using PEFA
• Committee participants
• Survey information from BCOP participants
• Use information from PEFA Secretariat
• Identify formal and informal ways to use PEFA to implement and measure public finance improvements
• Report to BCOP
• Findings
• Recommendations
• Make a presentation at PEMPAL Annual Meeting
• Post a report on the PEMPAL BCOP website in April 2009

When asked, the PWG had no additions or modifications to the Goals.  By consensus participants agreed that these should be the goals.

Schedule

It was agreed that the group would try to complete its work by April of 2009 and that there should be monthly or more frequent meetings based upon need. 

Meeting Logistics

Tim Grewe, US Treasury Advisor to the Georgian Ministry of Finance explained that he and Marika Gorgadze, a US Treasury Financial Specialist in Georgia,  would provide staff support including circulating minutes for each meeting, and completing necessary work requested by the committee.  They will also coordinate with CEF and the World Bank in scheduling future Video Conferences.  They indicated that meetings would be conducted in English but that if other countries join the group requiring Russian that would be arranged. 

Meeting Participants

Chair Skhirtladze asked whether or not participation in the PWG should be expanded to other BCOP participants.  After discussion it was agreed that it would be good to have other countries participating.  An invitation letter will be drafted and sent out to other BCOP participants by the Chair.

Survey

The Chair asked participants to comment on whether a survey of all BCOP participants on their experience with PEFA might be useful in achieving the WPG goals and providing useful information to the BCOP.  After discussion the group indicated that such a survey should be done. They also indicated that the survey should be posted on the BCOP web site and also be sent out to participants by e-mail in the hopes of increasing the number of responses.   In addition, the group indicated that it would be beneficial to post PEFA reports on the BCOP web site. 

Reports from Participants

Chair Skhirtladze asked each Country to summarize their experience with PEFA.  The following is summarizes the response from each country:

• Kosovo. Completed its first PEFA Assessment in April of 2007.  The report was completed in partnership with World Bank and European Union consultants.  The report has been accepted by the government.  It is being used as a starting point in developing a Public Management Reform Plan.   While the report does identify some weaknesses, overall it came out better then expected.  They believe the report will be very useful.  Because the analysis for the report was done for year preceding 2007 progress has already been made in addressing findings.  As a result they expect to see improvements in scores in the next assessment which is scheduled for 2009.
• Montenegro.  Montenegro is in the process of completing its first assessment and the report is anticipated to be issued in late December.   They believe it has been a useful process that will be of value to the government in improving financial management systems.  In their case,  PEFA has been used in two different ways.  The first step was that the government used the tool to conduct a self-assessment.  Following that, they completed the assessment using independent consultants.  The findings of the self-assessment and the independent assessment were very similar.
• Kyrgyzstan.  The first assessment was completed in 2006 using the independent consultants using funded by the World Bank.  The Ministry of Finance used the report to develop an action plan in response to the PEFA report.  The action plan is now outdated and it is expected that the second PEFA Assessment will be conducted next year. 
• Georgia.  Georgia first used the PEFA evaluation tool to conduct self-assessments of it budget systems and format.  The initial self-assessment conducted in 2006 was used to improve the budget circular, the format, and content of the annual budget law, the budget calendar, and public access to budget information.  Following the approval of the budget a second self-assessment was conducted which showed significant improvement in the PEFA scores.  This same process was repeated for the 2007 and 2008 budget cycles.  In 2008 Georgia agreed to work with the World Bank and the European Commission to conduct an independent PEFA Assessment.  The findings from that assessment have been used to update the Public Expenditure Reform Action Plan.  Both the PEFA Report and the updated Action Plan will be presented in early January to international agencies.

Strengths and Weaknesses

Chair Skhirtladze asked for comments on the strengths and weaknesses of PEFA based upon the experiences of each country.  The following summarize the various responses:

• Overall the experience in using PEFA was favorable and all considered it to be a valuable tool particularly in preparing action plans for financial reforms. 
• Plans need to be monitored and regularly updated.  PEFA needs to be institutionalized, being conducted on a periodic basis to measure progress with financial reforms.
• In terms of the methodology used by PEFA it may be too micro in orientation.  That is, it focuses on operational issues rather then overall country performance. 

Kosovo asked if each country had a permanent work group responsible for PEFA.  Montenegro responded that they had work groups for both the self-assessment and independent assessment.  Kyrgyzstan responded that they established a work group consisting of individuals that are functionally responsible for completing the assessment.  Georgia response that they had two work groups for completing the self-assessment,  one focused on the budget process and one focused on the budget format.  Georgia also indicated that a work group consisting of all relevant agencies was formed to work with consultants on the independent assessment and to review and respond to the draft report.  The resulting Public Finance Reform Plan is monitored by the MOF department heads.  Kosovo responded indicating that while they have a work group it is not permanent.

Summary of Work Group Discussion

The following summarizes the key points of the work group discussion:

• Generally the experience with PEF has be favorable and PEFA is a valuable tool in planning pubic finance reforms.
• Typically a work group of governmental officials is used in managing the assessment whether it is a self-assessment or a independent assessment.
• PEFA needs to be institutionalized in order to effectively evaluate progress in executing reforms and in benchmarking against the practices of other countries.
• Countries participating in the work group are at various phases in their experience with PEFA. Some are just completing their first assessment. Others are preparing to conduct their second assessment.
• PEFA may be too micro in its orientation.

Next Steps

• A survey on the experience of countries in using PEFA will be prepared and reviewed by the work group prior to distribution.  The survey will be posted on the BCOP web site and sent out to BCOP members via e-mail. 
• PEFA Reports previously completed will be collected and if possible made available on the BCOP web site.
• The PEFA Secretariat will be asked to give a status report on PEFA at the next PWG meeting in January.
• Minutes of the PWG meeting will be sent to all participants in the meeting.
• The agenda for the next PWG will be sent out in advance of the next meeting.
• Research will be conducted to try to identify a “best practice” country both in completing assessment and effectively applying PEFA findings to execute financial system reforms. 
• Other BCOP countries will be invited to join the work group.