Gender Dimension in the PEFA Framework — A much desired PFM tool!
Suraj Jaiswal
Evaluating the performance of the government is not merely an academic exercise, but it has serious implications for the day-to-day lives of everyone. Such evaluations not only help citizens demand better accountability, but they can also help the government understand the deficiencies, and address them, to improve their performance.
There are various means by which the performance of the government can be examined. One method is studying the outcome of the government’s policies for which social scientists have devised a number of measures, like health indicators, education indicators, income indicators, multidimensional poverty indicators, crime indicators, and so on. Measuring these indicators, and studying them in conjunction with relevant government policies can help understand the efficacy of the policies.
Another way of evaluating the government’s performance is to examine the processes through which governments design and implement policies pertaining to public finances, a subject broadly known as ‘Public Financial Management’ (PFM). Essentially, PFM refers to the government’s management of its resources, and it involves decisions like where to raise resources from, where to spend, how to spend among others.
From late 1980s, PFM as a subject has received wide attention in the academic and policy circles. This period has also coincided with the development and refinements in the understanding of practices related to PFM. One such milestone in the development of PFM has been the creation of the Public Expenditure and Financial Accountability (PEFA) framework.
What is PEFA?
PEFA is a framework to evaluate the strengths and weaknesses of the PFM practices of a government using quantitative scores to measure the performance. In other words, under PEFA framework, different PFM related aspects of a government are evaluated and given a score. The quantitative nature of the scores also allows comparison of PFM practices across countries, as well as across different time periods.
PEFA framework was first introduced in 2001 by seven international development partners — The European Commission, the International Monetary Fund, the World Bank, and the governments of France, Norway, Switzerland, and the United Kingdom. In 2019, Slovak Republic and Luxembourg also joined as partners. Currently, PEFA secretariat is located in the World Bank’s office in Washington, DC, USA.
Since its introduction in 2001, the PEFA framework has seen improvements in methodology to evaluate PFM practices. In the methodology currently in use, the framework evaluates government’s performance on seven broad areas of activities, known as pillars. These are as follows–
1. Budget Reliability — Government budgets are prepared before the start of the financial year, and then the implementation of the budget is done through the year. Generally, the final execution turns out to be different from the projections/plans made in the budget. This measure is aimed at evaluating the degree to which execution matches the budgetary plans/projections.
2. Transparency of Public Finance — This pillar of PEFA tries to assess if the information regarding the PFM meets the criteria set out in the methodology in terms of comprehensiveness, consistency, and accessibility to the users.
3. Management of Assets and Liabilities — An important aspect of PFM is the management of government’s assets and liabilities in a way that is prudently planned, approved by appropriate authorities, and monitored effectively. This pillar tries to examine the performance of the government on these aspects.
4. Policy-Based Fiscal Strategy and Budgeting — Government’s objectives are multifold, complex, and can be spread over a long-time horizon. It is imperative that government policies are made with consideration of appropriate strategic plans, fiscal policies, and suitable projections of various macroeconomic and fiscal variables. This measure focuses if the PFM process adheres to these principles.
5. Predictability and Control in Budget Execution — Generally, the budget is approved by a centralised parliament, the responsibility of execution is shared much broadly by the bureaucratic structure of the country, and it may include other stakeholders. Large numbers of actors involved creates the risk that execution may differ across the actors, as well as from the plan on which the budget is made. There can also be the risk of misuse of public resources. These risks can be managed if there are proper standards and controls defined, and are put to use. This pillar of PEFA is aimed to assess if there are standards and controls defined to ensure that execution happens as planned in the budget, and if these standards and controls are used widely in practice.
6. Accounting and Reporting — This measure evaluates if all the relevant information is recorded, maintained, produced and disseminated at required times to all the relevant stakeholders for effective control over the purse and fulfils the purpose for which public funds have been put to use.
7. External Scrutiny and Audit — An important aspect of sound PFM practice is the review (audit) of the government’s budgetary policies and processes by an independent entity. The review is followed by a recommendation for improvement. This pillar tries to assess if the requirements regarding external review are followed.
While these seven pillars cover all aspects of PFM, the framework has a three-tier system for evaluation, which consists of pillars, indicators and dimensions. Each pillar is further divided into different components, which total number to 31 and are referred to as indicators. Each indicator is then spread across various dimensions. There are total 94 dimensions within the current framework.
The dimensions are where the quantitative scoring is done. For each government (national as well as sub-national) to be evaluated, data is collected on each of these 94 dimensions, and a score is assigned to each dimension.
The scoring is done out of a four-point scale from ‘D’ to ‘A’, where D represents the lowest score and A the highest. The score is based on following standards–
A) high level of performance that meets good international practices
B) sound performance in line with many elements of good international practices
C) basic level performance
D) less than basic level of performance. Also, if there is insufficient information
The scores are then converted to numerical scores of values 1 to 4. Taking into scores of dimensions, the final PEFA score for each pillar is calculated which indicates how the government has performed. Generally, the quantitative scores are also accompanied by explanations behind those scores.
The assessment is generally done by a country research partner organisation, which is selected by the PEFA secretariat for this specific purpose.
Gender Responsive Budgeting in PEFA Framework
Gender responsive budgeting is a framework of public policy based on the idea that there are many issues whose impact may not be the same across all genders. Hence policies need to be designed addressing the gender differential aspect.
Recognising its necessity and growing impact, in January 2020, PEFA launched Gender Responsive Public Financial Management (GRPFM) framework, which, as its name suggest, is aimed at assessing if the PFM practices of a country is adhering to the standards of gender responsive budgeting.
The framework has nine indicators, as follows-
1. Gender impact analysis of budget policy proposals
2. Gender responsive public investment management
3. Gender responsive budget circular
4. Gender responsive budget proposal documentation
5. Sex-disaggregated performance information for service delivery
6. Tracking budget expenditure for gender equality
7. Gender responsive reporting
8. Evaluation of gender impacts of service delivery
9. Legislative scrutiny of gender impacts of the budget
These indicators are further divided into 12 dimensions, and similar to PEFA, PFM framework, uses a quantitative scale.
As pilot for the framework, initially PFM practices in eight countries have been assessed on their gender responsiveness, namely — Antigua and Barbuda, Fiji, Haiti, Indonesia, St. Lucia, Ukraine, Tonga, and Norway. The average score for all nine indicators came between one and two, out of maximum 4. The low scores do point out to the unsatisfactory situation related to gender budgeting, though the small number of countries doesn’t allow global generalisation. Also, this being the first such assessment, it is difficult to make comments about historical progress. Nonetheless, development of a separate assessment for gender responsiveness of PFM practices is another important milestone in the field of public finance management.
Concluding Remarks
Given the impact of the government’s policies on our daily lives, evaluating them is crucial. The development of PEFA framework is an important development in this field. The advantage of PFM framework lies in the fact that as opposed to being unidimensional, it takes insights from multiple fields, including economics, political science, accounting, public administration, etc. These diverse insights make the PFM framework wholesome. The introduction of Gender Responsive PFM framework is another welcome development in this area.
The reports based on these frameworks provide useful insights for the policy makers to make improvements in their workings. These reports should also be used by citizens to get a better understanding of how the government is performing on its functions, and demand accountability wherever the performance is not up to the standards.
The author works with Centre for Budget and Governance Accountability (CBGA), New Delhi. The views expressed are of the author, and do not necessarily reflect the position of CBGA. You can reach Suraj Jaiswal at suraj@cbgaindia.org.
