(a)
(i) With reference to the PEFA, discuss the THREE outcomes that a country derives from establishing an open and orderly public financial management system.
PEFA identifies three key outcomes of every public financial management system, and these are:

Aggregate fiscal discipline
The objective of public financial management is to ensure effective control of the total budget and management of fiscal risks. The outcome is that the government must be fiscally disciplined.

Strategic allocation of resources
The objective of a public financial management system is to ensure resources are strategically allocated to priority areas of government policy and plans. This involves planning and executing the budget in line with government priorities aimed at achieving policy objectives.

Efficient service delivery
The objective of public financial management is to collect revenues and direct these revenues to the provision of public services in an efficient and effective manner. It requires using budgeted revenues to achieve the best levels of public services within available resources.

(ii) Explain the seven pillars of an open and orderly public financial management system.
PEFA identifies seven pillars of performance in an open and orderly PFM system that are essential to achieving these objectives. The pillars are as follows:

Budget reliability
The government budget is realistic and is implemented as intended. This is measured by comparing actual revenues and expenditures (the immediate results of the PFM system) with the original approved budget.

Transparency of public finances
Information on PFM is comprehensive, consistent, and accessible to users. This is achieved through comprehensive budget classification, transparency of all government revenue and expenditure including intergovernmental transfers, published information on service delivery performance, and ready access to fiscal and budget documentation.

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

Policy-based fiscal strategy and budgeting
The fiscal strategy and the budget are prepared with due regard to government fiscal policies, strategic plans, and adequate macroeconomic and fiscal projections.

Predictability and control in budget execution
The budget is implemented within a system of effective standards, processes, and internal controls, ensuring that resources are obtained and used as intended.

Accounting and reporting
Accurate and reliable records are maintained, and information is produced and disseminated at appropriate times to meet decision-making, management, and reporting needs.

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.