PI-7. Transfers to subnational governments
Description
This indicator assesses the transparency and timeliness of transfers from central government to subnational governments with direct financial relationships to it. It considers the basis for transfers from central government and whether subnational governments receive information on their allocations in time to facilitate budget planning. It contains two dimensions and uses the M2 (AV) method for aggregating dimension scores.
Dimensions and scoring
| Score | Minimum requirements for scores |
|---|---|
7.1 System for allocating transfers |
|
| A | The horizontal allocation of all transfers to subnational governments from central government is determined by transparent, rulebased systems. |
| B | The horizontal allocation of most transfers to subnational governments from central government is determined by transparent, rulebased systems. |
| C | The horizontal allocation of some transfers to subnational governments from central government is determined by transparent, rulebased systems. |
| D | Performance is less than required for a C score. |
7.2. Timeliness of information on transfers |
|
| A | The process by which subnational governments receive information on their annual transfers is managed through the regular budget calendar, which is generally adhered to and provides clear and sufficiently detailed information for subnational governments to allow at least six weeks to complete their budget planning on time. |
| B | The process by which subnational governments receive information on their annual transfers is managed through the regular budget calendar, which provides clear and sufficiently detailed information for subnational governments to allow at least four weeks to complete their budget planning on time. |
| C | Substantial delays may be experienced in implementation of the budget procedures. Information on annual transfers to subnational governments is issued before the start of the subnational governments’ fiscal year, which could be after budget plans are decided. |
| D | Performance is less than required for a C score. |
Coverage
CG and the subnational governments which have direct financial relationships with CG.
Time period
Last completed fiscal year.
Measurement guidance
This indicator examines the arrangements for providing transfers from central government to subnational governments2 and the timeliness of information on those transfers. Financial reporting by subnational governments and fiscal risks to central government from subnational governments are addressed in PI-10.
Dimension 7.1 assesses the extent to which transparent, rule-based systems are applied to budgeting and the actual allocation of conditional and unconditional transfers. Transfers to support subnational government’s expenditure can be made in the
2 Refer to the GFS Manual, Chapter 2, for an explanation of the distinction between a subnational government from a central government unit.
