Hi to you all from Paris.

Being unable to be in person on Miami beaches, I am pleased to share a few lessons drawn from our experience in the application of the PEFA framework at the sub national level through this recorded contribution to your debates. Since 2004, France is a stakeholder of the PEFA initiative. In 2008, we became interested in the opportunity of carrying out this kind of assessment at local level, focused, in our case, on cities where we wanted to implement development projects. Our first experiences, jointly with the World Bank, have been carried out in Dakar, Senegal and Ouagadougou, Burkina Faso. Last February, we completed the assessment of Cotonou city in Benin; Nouakchott city in Mauritania will be soon undertaken. What lessons can be drawn from this experience? First of all, the PEFA framework is suited to subnational level. To date, although this has to be confirmed through a longer practice, we are fully convinced that the PEFA framework is a useful tool both for the sub national authorities and their development partners, and that the PEFA methodology is generally well designed for this kind of institutions. Therefore there is no need to alterate it. Nevertheless, according to decentralization policies implemented and the constraints that the central government may impose on local structures, some indicators can be considered, sometimes, being non applicable, as, for instance, PI-13, -14 and -15 about taxation in francophone countries. Secondly, from a donor side point of view, the use of the PEFA framework at the local level broadened the scope of analysis. If the results are focused on the local player, they also reflect the quality of the latter's financial relationship with the Central Government (transfers predictability and quality of tax collection, for example). However, in a decentralization process context, what affects this relationship is in particular the degree of autonomy granted to local entities by the central Government. The PEFA assessments, which allow, among others, to verify that the public financial management systems are efficient, can also measure to what extent these systems can be trusted. In addition, the PEFA sub national assessment could be the first step in a capacity building program definition and implementation. A shared diagnostic between the local and central

levels will help the donors to manage in a coordinated way the long-term process of improving the local public finance management. Thirdly, from the local level side, the PEFA review improves the understanding and the ownership of results in several ways: It informs local officials of the objective difficulties of local government to manage the processes and tools for budgeting and financial management,
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It opens up prospects for improvement of municipal management; It helps create a dialogue between Central Government agencies, representatives and local administration;

It improves the dialogue between the local level and its partners;

PEFA applied to sub national governments is a highly useful tool to develop a reform plan tailored to improve the financial management of a local authority or in particular to develop a national program to support the fiscal decentralization in a given country. At the end of the day, what should the PEFA framework pay attention to when dealing with sub national institutions? I see 3 caveats:
The diversity of local entities in terms of size, political and fiscal autonomy as well as

capacity implies that the final PEFA report has to describe and explain precisely the institutional, legal and regulatory environment within which the local entity is evolving. The application of the PEFA framework appears to be limited to communities with real autonomy. In practice this means that the community must have own human and technical capacity to have real power to budgetary and financial management.
The PEFA exercise should be understood by donors at local level as a preliminary

step in the development and implementation of a capacity building program for budgetary and financial management. In conclusion, I wish you successful debates and I wait impatiently for the conclusions of your work.