instruments or developing new questionnaires and toolkits containing specific information.

The Bank should streamline its internal arrangements and operational practices for planning and conducting assessments, drawing on PEFAs 2002 report on integrating PERs, CFAAs, and CPARs.

The European Commission should develop its policy and methodology for carrying out compliance tests and annual audits to facilitate the integration of such work with CFAAs, Fiscal ROSCs, HIPC AAPs, and other instruments.

Staff guidelines for assessments should be harmonized to facilitate integrated efforts and encourage collaboration.

Steps should be taken to make assessment reports more consistent and readable. For example, templates should be developed for PERs and

CFAAs.

Enhancing collaboration

To increase their collaboration with donors, governments should be given complete access to staff guidelines, assessment work plans, schedules, and reports, and other information-for example, through the Country Analytic Work Website being developed by the Bank and other development agencies. The Bank and IMF would continue to take the lead in conducting most assessments of public expenditure management and would make them available as primary sources of information. Though governments and other donors would use these assessments, they would still be fully responsible for making their own judgments of fiduciary risks and development needs.

Cooperation, coordination, and collaboration between agencies should be enhanced-especially between the Bank and IMF, drawing on their recent joint paper on strengthening collaboration on public expenditure work (World Bank and IMF 2003).

Steps should be taken to increase the participation of bilateral donor agencies in discussions with governments on public expenditure management and in follow-up efforts to implement recommendations. Coordination with regional institutions and initiatives-such as regional multilateral development banks, the Strategic Partnership with Africa, and the New Partnership for Africas Development-should also be strengthened.

All assessment reports should include standardized executive summaries, providing core information to facilitate analysis, dissemination, and sharing of information between agencies, governments, and other stakeholders.

Agencies should consider establishing quality assurance procedures for donors participating in multidonor assessments, perhaps building on the internal procedures used by the World Banks Quality Assurance Group.

Common definitions and terminology should be used in assessment work. Evaluating fiduciary risk and contributing to development goals

Governments and donors should agree on how to define fiduciary risk.

The role of assessments in evaluating fiduciary risk and contributing to long-term development goals should be clarified.

Consideration could be given to splitting the fiduciary and development aspects of assessments into separate processes and reports-and to creating a more independent process for assessing risk, with some element of joint ownership by donors and external quality control and validation. This approach would allow donors to develop stronger partnerships with countries, reduce possible conflicts of interest, and make assessments more focused on development and capacity building.

Increasing the development impact of assessments and reforms

New approaches to assessing and reforming public expenditure management should take full account of the views of governments (and other local stakeholders), because governments play the main role in designing and implementing reform strategies.

High-quality analysis and advice on public expenditure, procurement, and financial accountability requires seeing all aspects of public expenditure management as parts of an interrelated whole-not separating such efforts based on the most efficient division of labor. Thus, strengthening the substance and quality of analysis requires increasing collaboration within and between agencies.

Because governance, corruption, and cultural and institutional factors are often crucial to reforms of public expenditure management, better guidelines are needed on their definition, scope, and importance and on how to integrate them with assessments.

More attention should be paid to how recommendations and action plans are followed up and how changes in public expenditure management can be monitored and evaluated.

Priority should be given to developing a robust, internationally accepted framework for benchmarking and measuring the performance of public expenditure management, building on the HIPC AAP approach. EC compliance tests might also provide useful data. Such work should be linked to the streamlining of assessment instruments.

Developing a programmatic, modular approach

The recommendations above focus on improvements in the scope and application of current assessment instruments. Though those changes would be welcome, this studys ultimate aim is to foster more far-reaching reform of work on public expenditure management-developing an approach that is both programmatic and modular. In this context it is encouraging that a working group, led by the World Bank and IMF and supported by the PEFA program, was established in summer 2003 to examine ways of making such work more robust, relevant, and cost-effective.

The new approach to public expenditure work proposed in this study has several key features, some of which are new. First, it would emphasize the importance of recipient governments participating in-and ideally, leading- the design and implementation of public expenditure reforms. Second, it is a strategic approach, taking a medium- or long-term perspective that focuses on the steps that should be taken to move from a diagnostic assessment to the design and implementation of a sustainable program of reform and capacity building. Third, the approach would be programmatic in that it would be based not on the delivery of standardized products-such as PER, CFAA, or CPAR reports-but on a coordinated, sequenced program of diagnostic and capacity building work agreed between recipient governments and development agencies based on extensive dialogue. Such a work program would comprise a series of modules, each dealing with a different aspect of the budget process. Fourth, the work program would be designed to fit with a countrys Poverty Reduction Strategy Paper and the associated financial and technical support provided by donors. Finally, progress in improving public expenditure management would be measured by donors and recipient governments, using an agreed set of performance indicators.

An important component of the programmatic approach could be a standardized overview of information obtained through assessments,