Poverty Reduction and Economic Management 34341 255 October 2005 Findings reports on ongoing operational, economic, and sector work carried out by the World Bank and its member governments in the Africa Region. It is published periodically by the Knowledge and Learning Center on behalf of the Region. The views expressed in Findings are those of the author/s and should not be attributed to the World Bank Group. Public Expenditure and Financial Accountability (PEFA) - Lessons from Uganda's Integrated Fiduciary Assessment Process Country Integrated Fiduciary Assessment (LGIFA); and the Pub- AssessmentProcess lic Expenditure Review (PER). Two additional assessments supple- The effective management of a mented the diagnostic exercises: government's financial resources the Tracking of Poverty Reducing consists of a number of separate Spending Assessment conducted but related processes, involving a by the World Bank and Interna- variety of different stakeholders tional Monetary Fund and the Fi- and levels of government. The Pub- duciary Risk Assessment con- lic Expenditure and Financial Ac- ducted by the Department for In- countability (PEFA) Program aims ternational Development (DFID) of to diagnose the country public ex- the UK. penditure, procurement and finan- The overall CIFA process in cial accounting systems and de- Uganda took place over a period of velop reforms and a capacity build- nine months, with each individual ing program to strengthen the ef- assessment being conducted over fective management and account- a period of two to three months and ability of public resources. The the PER process being carried out 2004 Country Integrated Fiduciary during the entire financial year. Assessment (CIFA) in Uganda was The CIFA task was launched in the first exercise by key develop- October 2003 with an identifica- ment partners and the government tion/preparation mission. The to adopt an integrated and holistic mission held discussions on each approach to the assessment of Pub- of the components with relevant lic Financial Management (PFM), stakeholders (budget department, along the lines of the PEFA pro- Accountant General's Office, the gram. Public Procurement and Disposal In Uganda, the CIFA has involved of Assets Authority and the Minis- the coordination and consolidation try of Local Government). A wrap- of four separate Bank diagnostic Findings up meeting was held with the Per- processes: the Country Procure- manent Secretary and the Secre- ment Assessment Report (CPAR); tary to the Treasury, during which the Country Financial Accountabil- the program for the CIFA work was ity Assessment (CFAA); the Local defined and agreed. The work on Government Integrated Fiduciary each component then proceeded in tandem. Funding for this extensive grams. The preparation of a pro- get formulation issues to the PER. analytical work was provided by the posed integrated action plan and The analysis of financial manage- World Bank and several bilateral assessment of fiduciary risk will ment in this CIFA has also tended partners.1 provide the government with a to concentrate on the Ministry of The CIFA has benefited from sound basis to address the chal- Finance and local government fi- strong coordination between the lenges of improving PFM in nance functions, and has not al- various government-donor diag- Uganda. ways addressed issues at the sec- nostic processes and the lengthy The inclusion of a specific local tor level, either in the finance or consultations with key stakehold- government component has been the service departments. Other ers throughout the process. The of considerable value, especially in concerns include the need for a good working relationship with the the decentralized service delivery more detailed assessment of PFM government and excellent coordi- environment prevailing in issues related to Uganda's wide nation between the development Uganda. The use of a quantitative variety of state-owned enterprises partners has played an important benchmarking exercise by the and other semi-autonomous orga- part in the overall success of this LGIFA allows for a comparative as- nizations and the feasibility of fo- process. This was the first ana- sessment of the performance of dif- cusing on particular areas of con- lytical study of this kind in Uganda ferent local governments. This will cern, e.g., pay and payroll manage- produced in close collaboration also allow stakeholders to track the ment. These issues will need to be with donors. comparative performance of local addressed in future exercises. governments over time. The use The CIFA exercise highlighted of "yes-no" benchmarks mitigates both the commonalities and the the subjectivity of the assessment differences between the different for many critical PFM areas. How- levels of government. In retrospect, ever, given the large number of lo- a more in-depth analysis at the lo- cal governments in Uganda, it cal government level would have would be important to design the provided a clearer understanding study to ensure that selected local of the causes of the problems governments are representative of rather than merely the symptoms. those in the country as a whole. The inclusion of a procurement specialist in the LGIFA or better coordination with the CPAR could Remaining issues also have assisted in providing an in-depth understanding of the prob- A number of concerns have been lems of local-level procurement. raised about the overlap between Benefits of the exercise the PER and the CIFA and about the 1. "The European Union's Public Expenditure and inclusion in the CIFA of normative Financial Accountability (PEFA) Trust Fund and the The integration of the various expectations regarding budget al- World Bank budgetary resources funded the LGIFA and processes has clearly highlighted locations rather than just analy- the CIFA report and action plan. The World Bank funded the links between them, and ses of static and dynamic processes helped to minimize duplication. of budget formulation and execu- the PER report, while the Royal Netherlands government The CIFA has helped to improve tion. Future exercises will need to supported the release study, which was carried out in the government and other stakehold- review this issue. In addition, the context of the PER. The CPAR was jointly funded by the ers' understanding of PFM issues, process of trying to eliminate over- World Bank, the Danish International Development as it provides a more comprehen- lap on the budget sections of the Agency, and the Royal Netherlands Government. The sive overview of the situation. It CFAA and PER created difficulties, CFAA was funded by the World Bank with additional has also highlighted the dependen- particularly in the CFAA chapter support from DFID, the African Development Bank, and cies within the PFM framework on budgeting. Future exercises the Swedish International Development Cooperation and the links to other reform pro- may wish to consider leaving bud- Agency (SIDA). The government has recom- · Extensive consultations from the sues to be agreed both internally mended that any future exercises beginning with the government and with the government and be more aligned with its budget and with development partners other stakeholders include: process - this would allow the helped to promote their owner- · Frequency and content of the CIFA's recommendations to be re- ship of the process and content exercise--should the CIFA be flected on a timely basis. Other of the CIFA report. conducted every three years commentators have suggested · Extensive planning and consul- like CFAA and CPAR or every that more time should be provided tations at the outset between the year like a PER? for the exercise. The CIFA action task team leaders of the four · Relationship between the plan enables the government to separate tasks helped to reduce CPAR, PER, CFAA, CIFA and prioritize its actions and to recog- overlap. the emerging PFM perfor- nize the interdependencies within · Time spent in setting out and mance measurement frame- the PFM framework and between agreeing on the concept paper work being developed through different reform initiatives. and report outline was worth- the PEFA. Some stakeholders have pro- while as it contributed to the · Relationship of the CIFA ac- posed that annual exercises be streamlining of the report prepa- tion plan with other reform carried out on the basis of PEFA's ration process. initiatives, in particular the PFM performance measurement · The use of an independent per- PRSC and other capacity build- framework--which uses 25 govern- son (not one of the task team ing projects. ment indicators and two develop- leaders) to consolidate the draft- · Extent to which the Public Ex- ment partner indicators to assess ing of the CIFA resulted in a well penditure Management Com- the state of PFM in the country-- balanced report. mittee (PEMCOM) can or thus monitoring the progress in · Assignment of overall manage- should take the lead in taking implementing the government's ment to one task manager and the process forward. action plan. This will form the ba- three cluster leaders in the Bank · Role of other stakeholders in- sis for future work, once the PFM helped to ensure that the process cluding line ministries, NGOs, performance measurement frame- was completed within a tight and development partners in work currently being developed timetable. future exercises. through the PEFA, is complete. · Ensuring that the action plan Over time, it is anticipated that the addresses comprehensively need for separate assessments Conclusions and Key Challenges the key issues facing the gov- such as the Tracking Poverty Re- ernment, without being self- ducing Spending Assessment and Considerable knowledge and ex- defeating by presenting an the Fiscal Transparency Report on perience has been gained in car- overwhelming set of issues. the Observancy of Standards and rying out this exercise. The CIFA Codes will be eliminated. This will advances on past reports of PFM by This article was written by reduce transaction costs by reduc- providing an integrated action plan Sudharshan Canagarajah, Task ing the number of separate action and a broad assessment of fidu- Manager for CIFA/PER/LGIFA. plans and having specific monitor- ciary risk. These can help the gov- The Task Managers for the CFAA ing arrangements. ernment to address in a clear and and the CPAR were Marius Koen focused way the challenges in and Rogati Kayani respectively. achieving sound PFM. Lessons for the future For more information, e-mail A number of issues and chal- Scanagarajah@worldbank.org lenges remain, however, regarding A number of important lessons how such exercises should be con- have been learned in relation to ducted in the future and how tra- the management of the process by ditional ways of working within the the Bank. These include the fol- Bank's technical groups can and lowing. must evolve and develop. Key is-