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Table 1 Inventory of Political Economy Influences on PFM Reforms:
A. Conditioning Factors: political context
Describe factor
Level of political
support for PFM reform.
Describe how the
factor impacts PFM
reform (positive or
negative)
Impacts legitimacy,
leadership,
empowerment,
engagement and
ownership of reform.
Indicator/indicators to assess
impact
How important is the
factor for
reform:(High/med/low)
How relevant for
this country?
(High/med/low)
Relevant
Sources:
Level of shared cross political party
support of the reform.
DIFD, 2001.
Pp.50ff;
Reform part of dominant political
agenda. (Plan/Budget Speech)
Bergmann, p.13
Political engagement in reform:
-Top political support
(Speeches/Participation)
-Determination of strategic vision
(Executive Decision)
-Support in public dialogue.
-Political appointee in charge
-Representation on reform steering
committee.
Stability in government
Impacts continuity of
strategic vision,
leadership and
ownership arrangements
of reform.
No. of years continuously in power;
Frequency of party and cabinet
changes (in particular Minister of
Finance).
Closeness to general elections;
Allen,2010,p.5;
Andrews 2010,
Dressel and
Brumby, 2009
Allen,2009
Prominence of the military
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Status of the political
system: a) autocratic or
democratic; b) majority
party or coalition;
c) federal or unitary
Impacts extent to which
political leadership can
exert power to
support/enforce reform;
(also impacts power of
MOF to lead reform)
Impacts on effectiveness
of accountability
arrangements
Effectiveness of legislative and
civil society oversight;
Levels of accountability;
Distribution of power between
coalition members;
Clear constitutional mandates for
federal and state authorities.
Clear rules for intergovernmental
transfers.
Degree to which these rules are
followed.
Dressel and
Brumby,2009
B. Conditioning Factors: economic context
Describe factor
Describe how the factor
impacts PFM reform
Indicator/indicators to describe
impact
Growth rate
Availability of resources
for PFM Reform;
Level of political
demand and confidence
in reform as well as
focus of PFM reform
efforts.
- Basics
- More Advanced
Average 5 year g/r of GDP;
Average g/r over world average
Level of Economic
stability (1)
Stability positively
Influences the pace of,
and nature of, efforts to
strengthen various
components of PFM :
- Revenue Mobilization
- Resource Allocation
- Expenditure and
arrears control
Av. GDP growth in recent 2 years
compared to past 10 years.
Av. Inflation rate in recent 2 years
compared to av. in past 10 years
Difference in growth rate of credit
compared with nominal GDP in 2
recent years compared to av. over
last 10 years
Real rate of interest in recent 2
How important is the
factor for this type of
reform:(High/med/low)
How relevant for
this country?
(High/med/low)
Relevant
Sources:
Andrews, 2010
Andrews,2010
iii
- Treasury ops.
years compared to its average over
last 10 years
Whether in or out of an IMF
program;
MOF resort to cash controls;
Extent of expenditure arrears.
Level of Economic
stability (2)
OR Severe instability or
disruption is a shock to
induce reform
Resource availability
(1) Positive, or
Commitment to
predictability,
sustainability and
effectiveness of
expenditure management
and control reforms.
Tax as % of GDP
Access to capital market?
Degree of donor support,
especially budget support
Tomassi,2009
Resource availability
(2) Negative
“Resource curse”
Scale of revenues from
external sources and
natural resources may
lead to weak and
fragmented PFM
governance
% of revenues derived from trade
and nat. resources as % of total
How transparent the accounting for
natural resource receipts?
How transparent/timely the flows
between managing entity and
government accounts?
Andrews, 2010,
p.34
Over reliance on high
donor disbursements
may encourage
dependency
Donor inflows as % of govt. exp.,
average over 5 year period.
Browne,2010
Allen2010,
Andrews,2010
Allen,2009
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C. Conditioning Factors: social and general governance context
Describe factor
General perception of
governance status
Social stability
Cultural stance towards
reform
Describe how the factor
impacts PFM reform
Indicator/indicators to describe
impact
Likelihood resources
will be captured; reform
progress will be slow
Ease of implementing
longer run reforms;
degree of disruption
likely
Willingness and support
for change, as indicated
by:
 Power distance/ risk
aversion.
 Trust
 Task versus Process
orientation
 Individual or Group
dynamic
 Time orientation
World Bank, Index of corruption;
Index of ease of doing business,
others?
Incidence of civil unrest; degree of
ethnic/religious homogeneity
DFID p.49
Allen, 2010,p.4
Quist,2009
Dressel and
Brumby,2009
Level and frequency of delegated
decision making. (Levels and
centralization of Procurement)
Range and importance of
procedural rule sets. (how detailed
are financial regs.?)
Tolerance of ambiguity. (level of
discretion for budget decision –
making?)
Transparency of results focus.
(interest in results-based
budgeting?)
Timeliness of decision-making
(procurement lags? budget passed
on time?).
Degree of consensus in decision
making (mechanisms to discuss
reforms used?)
PRSP process exists;
NGOs represented in reform
planning?
Senior and
Felming,2006
No. of times committees meet, no.
of cautions issued;
Andrews,2010
Dressel and
Brumby,2009
will affect the climate for
reform.
Strong external
accountability
mechanisms
Strength judged by:
Civil society groups
organized and active in
their criticism;
Legislative committees
strong and functioning,
with power to investigate
abuse;
External Audit active &
Speed of audit reports; degree of
How important is the
factor for this type of
reform:(High/med/low)
How relevant for
this country?
(High/med/low)
Source:
Helger and Aga,
2007
v
free from the executive
Power of mass media:
- freedom of press
- degree to which media
free from government
follow-up (PEFA indicators?)
Index of press freedom
No. of non-government TV
channels
Degree to which government vets
internet
Degree to which
“informal” procedures
prevail over formal
procedures
Insofar as PFM reforms
tend to address the
formal system, and
strengthen it, this will be
undermined by strong
informal systems that
will resist this change.
Tomassi,2011.
Reform record
Success breeds success:
the reforms
contemplated should be
realistic in terms of past
experience and their
relationship to other ongoing reforms.
Proportion of government
expenditure within regular budget
Extent of “quasi-fiscal operations”
Evidence of systematic variances
in expenditure during budget
execution (See new PEFA PI 2)
Evidence of special payment
procedures being used, and how
prevalent.
Degree of under-collection in
customs and excise admin.:
prevalence of under-invoicing;
smuggling; use of ASYCUDA
system
Transparency of tax expenditures
Degree of tax evasion? Evidence
this is increasing or decreasing.
How well tax evasion is prosecuted
Degree to which revealed
misconduct in PFM is prosecuted.
Record of PFM reforms:
good/bad?
No. of on-going reforms in same or
related area?
No. of which are compatible?
Length of reform commitment by
the present government?
Colonial heritage
Some systems more
centralized than others,
give MOF more power
in directing reform;
Degree of pol.
Anglophone/
francophone/
soviet/other
Andrews 2010
DFID 2001, p.42
Tomassi, 2010
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Degree of fiscal
development
engagement and
oversight has historical
roots.
The strength of the
“fiscal state”, or the
degree to which taxes are
collected from the popn.,
enhances governance
and PFM
% of taxes from non-mineral, non
external sources
Andrews,2010, p.37
D. Conditioning Factors: technological and capacity context
Describe factor
Depth of local labor
market
Describe how the factor
impacts PFM reform
Indicator/indicators to describe
impact
Reflects how severe the
supply constraint might
be for HR required for
reform
Availability of graduates as % of
workforce:
-Locally qualified
-Internationally qualified
How important is the
factor for this type of
reform:(High/med/low)
How relevant for
this country?
(High/med/low)
Source:
Allen, 2010
Bergmann, p.13
Availability of
professionals/financial expertise
-No of registered accountants
locally qualified
-No of registered accountants
internationally qualified
Degree of power of the
public sector TUs
Country’s
education/training
Reflects degree of
flexibility in
wages/hiring policies
that impact the supply of
HR required for reform
Potential for
training/retraining to
Percentage of public employees
unionized
No. of strikes in the last 5 years.
No of incidents of other industrial
action or labor disputes
No. universities offering courses in
financial skills
Tomassi, 2011
Allen,2010,p.5;
Dressel and
vii
capacity
supplement HR skills
No of colleges/training centers
offering relevant courses:
-outside government
-internal to government
Degree to which qualification is
internationally accredited:
-university degrees
-professional certification
Brumby, 2009
Public Administration
Management and
leadership capability
Even if political
leadership is strong,
there is a need for a
cadre of senior officials
willing to champion,
lead and manage reforms
No. of graduates in top civil
service grades:
-locally qualified
-internationally qualified
Degree of which bureaucrats are
depoliticized: no of political
appointees in top civil service
grades
Hedger and Aga,
2007
Browne, 2010,
p.10
DFID 2001, pp.
50ff
Allen 2010
Human Resource
Management System
Provides complementary
incentives to facilitate
reform effort
Dressel and
Brumby,2009
Stability of bureaucrats
Given time required by
reform, some stability in
the reform internal
leadership/management
is required
Size of Private/Public Sector
income gap.
Size of post holder skills gap.
Training/retraining is a part of
regular career development?
Do HR rules encourage rotation of
top staff?
Degree of turnover of top staff
(average time on post)?
Degree of concentration of reform
in a few individuals?
Degree of ICT
skills/computer literacy
Many reforms require IT
skills, but scarcity is
often a constraint on the
success of reform
No. of relevant people with
required IT skills
Bergmann &
Bietenhader,
2010.
Dressel and
Brumby,2009