The Public Expenditure and Financial Accountability (PEFA) program was initiated in 2001 by seven international development partners to harmonize the assessment of public financial management (PFM) systems across the partner organizations. Since 2001, the PEFA assessment framework has become the acknowledged standard for PFM assessments.
The PEFA program provides a framework for assessing and reporting on the strengths and weaknesses of public financial management (PFM) using quantitative indicators to measure performance. The PEFA methodology assesses 94 characteristics of public financial management performance across 31 key components of public financial management (indicators) in 7 broad areas of activity (pillars).
PEFA is designed to provide a snapshot of PFM performance at specific points in time using a methodology that can be replicated in successive assessments, giving a summary of changes over time. The PEFA framework can be used to assess national (central or federal) PFM systems, but can also be applied to subnational governments.
Guidance for subnational PEFA assessments. Although regional and local governments generally follow the same budget processes as central or federal governments, applying the general PEFA framework to subnational governments (SNGs) can be tricky, among others, because (i) subnational government institutions and PFM systems often operate at a much smaller scale than national governments and (ii) subnational governments have to operate within the intergovernmental fiscal framework—and often have to follow PFM processes—that have been defined by the national government.
Based on input from the community of practice, the PEFA Secretariat has prepared a new guidance document that provides PEFA users with guidance on the application of the PEFA Framework at the subnational level. This new version of the revised Guidance for Subnational Government (SNG) PEFA assessments–launched in October 2020–is available for piloting for at least one full year.
The piloting phase aims to refine the calibration of new/adjusted indicators and dimensions to reflect good practices at the SNG PFM performance; and to refine and further improve the two supplementary modules- service delivery and the full overview of the PFM performance at SNG level.
The revised guidance for applying the PEFA framework to subnational governments proposes the following:
- Revising the framework by adjusting some indicators, introducing a new pillar on intergovernmental fiscal relations and introducing two new indicators.
- 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 a supplementary module on service delivery. The service delivery module consists of 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. It is intended to be conducted on an optional basis concurrently with a PEFA assessment the analysis presented as an Annex of the PEFA assessment report.
- Introducing a supplementary module on how to get a full overview of the PFM performance at SNG level. The module 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 guidance for SNG PEFA assessments will be updated to reflect feedback from users and to incorporate findings from the pilot testing. Each revised edition will include a summary of changes from the previous versions and will be dated at the time of release.
You can access and download the revised guidance for subnational PEFA assessments from the PEFA website.