Introduction

This note presents a series of charts which provide an overview of Timor-Leste’s recent public financial management (PFM) performance based on this country’s 2014 Public Expenditure and Financial Accountability (PEFA) assessment. Comparisons are made between Timor-Leste’s performance and the performance of the other twenty-three countries that had PEFA assessments published in 2014-2015. All analyses have been prepared using results reported from using the 2011 PEFA methodology.

Overall PFM performance

Individual country PFM performance has been determined by applying the following points scale to reported individual performance indicator (PI) scores as presented in Table 1. No points were allocated to PIs that were not scored because data was unavailable, a D score was given or the PI was not applicable.

Table 1: PI scoring methodology

The graph in Figure 1 below shows Timor-Leste’s overall score was ranked fifteenth out of the twenty-four countries.

 Figure 1: Aggregate PEFA scores for 24 countries

Download a png version of Figure 1 here (Timor-Leste’s overall result) to review the overall scores of Timor-Leste and the twenty-three other countries in more detail.

Details of the distribution of overall country scores across PFM performance categories, as determined by PFMConnect, are presented in Table 2. Timor-Leste’s overall score was 36 points.

Table 2: Distribution of country PFM performance levels

Timor-Leste’s overall PFM performance is classified as “moderate”.

PI performance

The graph in Figure 2 below shows the scores for Timor-Leste’s individual PIs compared with the average score recorded for each PI across the twenty-four PEFA assessments we have studied. Please note that no scores were recorded for the top six indicators in Figure 2 as one indicator (PI-8) was not applicable, two indicators (PI-4 and PI-15) were not assessed and three other indicators (PI-1, PI-9 and PI-23) received D scores.

Figure 2: Timor-Leste PI score comparisons

Download a pdf version of Figure 2 here (Timor Leste PIs) to review individual PI scores in more detail.

Twenty-seven PIs were assessed. Fourteen PIs had scores above the country average, one PI had a score equal to the country average whilst twelve PIs had scores below the country average.

Performance across key PFM activities

The graph in Figure 3 below shows the average scores for the six key PFM activities compared with the average score recorded for these activities across the twenty-four country PEFA assessments we have studied.

 Figure 3: Timor-Leste key PFM activity comparisons

Three key PFM activities recorded scores above the country average whilst three other key PFM activities recorded scores below the country average. Download a png version of Figure 3 here (Timor-Leste’s key PFM activities) to review these scores in more detail.

PEFA ASSESSMENT

You can download the 2014 PEFA assessment for Timor-Leste here.

Download pdf

Review by David Fellows of: ‘Public Finance and Economic Growth in Developing Countries: Lessons from Ethiopia’s reforms’ by Stephen B Peterson PhD, Professor of Public Finance, Melbourne School of Government, Published by Routledge

This is a remarkable book. It has the ring of coruscating honesty which is unique in my experience of case-based literature that all too often proceeds seamlessly from challenge to solution. No battles, no reverses and a job well done, leaving the informed reader with an abiding sense of improbability.

As a stark contrast to the norm I found this book highly insightful about public financial management in general, not simply in relation to developing countries. The author tells of his attempts to develop systems that are appropriate to place and people and provide the Ethiopian state with a serious reforming experience as it recovers from a devastating civil war. We see the challenges he faces both from the state and from external agencies.

In particular, we see a huge range of requirements for financial systems, limited personnel and a low skill base supported by a development community that thinks in short timescales and finds it hard to accept the time needed to develop and embed major administrative reform.

We also see a development community presumption that favours advanced accountancy systems almost irrespective of their applicability. The potential danger being the creation of fundamentally unimproved public administrations either hooked on external consultancy or heading to chaos. We witness the tension between the author’s wish for the simpler approach that carries a greater learning potential contrasted with the leap forward desired by the World Bank but successfully resisted at least for the time being.

Devolution has a prominent position in this narrative too. Many see it as a way of resolving a whole range of problems including ethnic diversity, service priorities, performance management, corruption, public engagement, taxation and the administrative demands of a highly centralised bureaucracy. While devolution is helpful in some ways it often opens up new problems. The Ethiopian imperatives and the author’s stratagems are revealed and progress tracked.

Towards the end it appears that Ethiopia had developed a sustainable, not overly complex, accountancy solution that could be of widespread interest elsewhere only to discover that the authorities had changed their minds and opted to install a major accountancy package once the author had move on. Nevertheless, the scale of the contribution made by the author and his team in establishing the basis of financial administration in this war torn country is remarkable.

In all it is an enthralling read for those with a general interest in the challenges of international development as well as experts the field of public financial administration wherever they ply their trade.

A brief comment

The 12 May 2016 London Anti-Corruption summit communique available here sets out an extensive list of proposals and recommendations for addressing international corruption. The proposed actions for addressing corruption in the public sector include many of the recommended actions set out in our “Corruption and public financial management” presentation and our “International Development and the Challenge of Public Sector Corruption” blog.

Who attended the London Anti-Corruption summit? Check out the attendance list here.

Introduction

Corruption has a highly damaging effect on many developing countries. In this presentation, we define corruption, provide examples of public sector corruption and examine its effects (and the costs). We look at the relationship between public financial management (PFM) and corruption and present actions to combat corruption. We also discuss the role of development partners in assisting PFM reforms.