The PEFA Steering Committee decided on June 2019 to revise the guidance for subnational government (SNG) PEFA assessments to better reflect SNG typologies and intergovernmental fiscal relations systems in each country. The revised guidance proposes the following:
• Revising the framework by adjusting some indicators, introducing a new pillar on intergovernmental fiscal relations and introducing two new indicators (i.e. HLG2: Fiscal rules and monitoring of fiscal position and public consultation);
• Adjusting the SNG PEFA assessment process by recommending preparation of an annex to the concept note to identify which PEFA indicators and dimensions are relevant for the SNG or the set of SNGs being assessed;
• Introducing an optional service delivery approach to the reports. This implies a set of diagnostic questions mapped to the relevant PEFA framework indicators to collect and analyze information, aiming to assess the extent to which the SNG’s public financial management (PFM) performance effects service delivery. The service delivery approach is intended to be conducted on an optional basis concurrently with a PEFA assessment and presented in section 2 of the PEFA assessment report, under each of the relevant indicators and dimensions.
• Introducing an optional approach of determining the influence of the central government (CG) on the SNG PFM performance. This approach is a set of diagnostic questions mapped to the relevant PEFA framework indicators to collect and analyze information aiming to assess the influence of central government on the PFM functions that are performed at the SNG level. It is intended to be conducted on an optional basis concurrently with a PEFA assessment and presented in the PEFA report. Its findings will be summarized in a consolidated report.
The PEFA Secretariat prepared a consultation package comprising of three documents for review and comment by the global community of practice on local governance and public finance.
The consultation will run from January 29 to February 21, 2020. The PEFA Secretariat is inviting for feedback on the revised guidance for SNG PEFA assessments from all interested PEFA stakeholders and in particular on the following points:
- Are the new/adjusted indicators well designed? How can they be improved? Do the requirements reflect good practices at the SNG PFM? Is the proposed calibration appropriate?
- Is the service delivery approach adequate and technically sound for SNG PEFA assessment? How could it be further improved?
- Is the approach of the influence of Central Government (CG) on performance adequate and technically sound? How can it be further improved?
Following the consultation period, the guidance for SNG PEFA assessments will be modified as necessary to reflect the feedback and to ensure that it remains applicable across a wide range of country contexts and intergovernmental fiscal relations.
Concurrently, the framework is being piloted in a number of countries and SNGs. Parties interested in piloting the current or revised drafts should contact PEFA Secretarioat for additional information. Comments and suggestions with PEFA Update in the subject line should be sent to the PEFA Secretariat.