The Public Expenditure and Financial Accountability (PEFA) framework is a globally acknowledged instrument designed to assess the performance of public financial management (PFM) systems at specific points in time. Developed in 2001 through a collaboration of various international development organisations, including the World Bank, International Monetary Fund (IMF), and European Commission, the PEFA framework offers a systematic approach for governments to evaluate the strengths and weaknesses of their PFM institutions, policies, and practices.  The primary objective is to assist countries in enhancing fiscal discipline, optimising resource allocation, and ensuring effective service delivery.

PEFA identifies seven pillars of PFM performance that are essential to achieving these objectives as follows:

1.      Budget reliability. The government budget is feasible and executed as planned.  This is assessed by comparing actual revenues and expenditures, which are the immediate outcomes of the PFM system, with the initially approved budget.

2.      Transparency of public finances. The information on PFM is thorough, coherent, and readily available to users.  This is accomplished via detailed budget classification, transparency regarding all government revenues and expenditures, including intergovernmental transfers, publication of service delivery performance data, and accessible fiscal and budget documentation.

3.      Management of assets and liabilities. Effective management of assets and liabilities ensures that public investments provide value for money, assets are accurately recorded and managed, fiscal risks are identified, and debts and guarantees are prudently planned, approved, and monitored.

4.      Policy-based fiscal strategy and budgeting. The fiscal strategy and budget are developed in alignment with government fiscal policies, strategic plans, and comprehensive macroeconomic and fiscal projections.

5.      Predictability and control in budget execution. The budget is executed according to established standards, processes, and internal controls, guaranteeing that resources are acquired and utilized as planned.

6.      Accounting and reporting. Records are maintained with accuracy and reliability, and information is generated and distributed timely to fulfill decision-making, management, and reporting requirements.

7.      External scrutiny and audit. Public finances are independently reviewed and there is external follow-up on the implementation of recommendations for improvement by the executive.

Within these pillars, PEFA identifies 31 specific indicators that capture the PFM performance of governments as outlined below. Each indicator is scored according to specific criteria which allows for consistent comparisons across countries and over time.

Table 1: PEFA Pillars and Indicators

Source: PEFA Pillars and Indicators (PEFA Secretariat, 2019)

Aside from the standard PEFA assessment, a supplementary framework for evaluating gender-responsive public financial management (GRPFM) has also been developed—the PEFA GRPFM framework—which includes a series of supplementary indicators, as shown in Table 2, that builds on the PEFA framework to collect information on the degree to which a country’s PFM system acknowledges and promotes gender equality.

The PEFA GRPFM framework is defined by the notion that gender responsive budgeting requires PFM institutions, systems, and processes that are aware of gender-specific demands and the varying impacts of fiscal policies and practices on different genders or groups of people. Gender responsiveness is crucial throughout the budget cycle, including the planning and formulation of budgetary policies that promote gender equality, the allocation of resources for their implementation, the oversight of resource distribution to ensure sufficient allocation and adherence to policy intentions, and the assessment and evaluation of policy efficiency and effectiveness, including gender-differentiated impacts.

Table 2: PEFA GRPFM Indicators

Source: PEFA GRPFM Indicators (PEFA Secretariat, 2020)

Besides that, another supplementary framework has also been developed to address climate change —the PEFA Climate framework—which comprises supplementary indicators, as presented in Table 3, that assess the readiness of a country's PFM system to support and promote the execution of government climate change policies. The PEFA Climate framework comprises guiding questions and indicators that correspond to significant PEFA indicators across the budgetary cycle. However, the PEFA Climate framework may not encompass all aspects of the PEFA methodology as these practices are still evolving.

Table 3: PEFA Climate Indicators

Source: PEFA Climate Indicators (PEFA Secretariat, 2024)

In regard to this assessment, Indonesia has undergone several PEFA assessments, including the regular PEFA Assessment in 2017, the PEFA Assessment of Gender Responsive PFM in 2020, and the PEFA Assessment of Climate Responsive PFM in 2022. The main findings of these assessments are as follows.

Table 4: Indonesia’s PEFA Assessments Main Findings

Source: PEFA Assessments Reports

Indonesia’s PEFA assessments over the past few years show a consistent effort to align its PFM systems with international standards. It is hoped that continued reforms and capacity building will yield more robust, inclusive, and sustainable results in the next PEFA assessment.

Ditulis oleh Mia Astarina Prihyantini

Kanwil DJKN Jawa Timur

Source:

1.      Hawke, Lewis. (2017). Public Expenditure and Financial Accountability: Assessing Public Financial Management Performance and Influencing Reform Processes. The Governance Brief (31), 1-9. https://www.adb.org/publications/public-expenditure-financial-accountability

2.      PEFA Secretariat. (2017). Indonesia Public Expenditure and Financial Accountability (PEFA) Assessment Report 2017. https://www.pefa.org/

3.      Public Financial Management – Multi Donor Trust Fund, Ministry of Finance Republic of Indonesia. (2017). World Bank Lakukan Assessment Terhadap Akuntabilitas Belanja dan Keuangan Pemerintah Indonesia. https://pfm-mdtf.kemenkeu.go.id/news/Details/16  

4.      PEFA Secretariat. (2019). Framework for assessing public financial management: Improving public financial management. Supporting sustainable development. https://www.pefa.org/

5.      PEFA Secretariat. (2020). PEFA Assessment of Gender Responsive Public Financial Management: Indonesia. https://www.pefa.org/

6.      PEFA Secretariat. (2020). Supplementary Framework for Assessing Gender Responsive Public Financial Management. https://www.pefa.org/

7.      PEFA Secretariat. (2022). Indonesia PEFA Assessment of Climate Responsive Public Financial Management (PEFA Climate) 2022. https://www.pefa.org/

8.      PEFA Secretariat. (2024). Supplementary Framework for Assessing Climate-Responsive Public Financial Management. https://www.pefa.org/