Where Budgets Meet Gender Equality: Insights from PEFA Data

Gender inequality is a persistent challenge across countries, regardless of income level. Among various policy tools aimed at addressing these disparities, Gender Responsive Public Financial Management (GRPFM) has gained traction as a promising approach. GRPFM integrates gender considerations into budgetary processes, aiming to allocate public resources in ways that effectively address gender disparities. The logic of GRPFM is intuitively clear, but evidence of its impact is scarce. In this blog, we share some initial findings about correlations between GRPFM assessments and gender outcomes.

The importance of gender-specific metrics

The metrics we focus on tend to be those that show improvement. For gender outcomes, using gender-specific metrics is crucial when targeting gender gaps. This motivates gender responsive budgeting (GRB)—a core component of GRPFM—which emphasizes how public resource allocation affects genders differently. Research supports the notion that GRB can lead to positive gender outcomes. However, despite its increasing adoption, empirical evidence on GRB’s effectiveness remains limited. To our knowledge, there is no published quantitative analysis on the effectiveness of GRB.

To bridge this gap, we are exploring data from the Public Expenditure and Financial Accountability’s (PEFA) GRPFM assessments, which evaluate the extent to which public financial management systems integrate gender considerations. This analysis compares countries with GRPFM assessments to those without, examining potential correlations with gender outcomes. A detailed working paper is forthcoming.

Study methodology and key findings

Our analysis encompasses 124 countries that have undergone PEFA assessments over the past 25 years, including 19 countries across five regions with GRPFM assessments. We employ an OLS regression with fixed effects, incorporating control variables to isolate key relationships. Four significant findings emerge from our examination:

1. Countries that have completed GRPFM assessments have an 8.93 percentage points higher proportion of women in parliament compared to those without such assessments.
2. GRPFM-assessed countries report 131.4 fewer maternal deaths per 100,000 live births than their counterparts that have not undergone the assessment.
3. Interestingly, countries with GRPFM assessments exhibit a 4.91 percentage points lower share of women with at least some secondary education.
4. The gap in secondary education attainment between men and women is 4.84 percentage points wider in countries with GRPFM assessments.

Surprisingly, we found no statistically significant differences in the Gender Inequality Index, adolescent birth rate, and female labor-force participation rates between GRPFM and non-GRPFM countries.

Interpreting the correlations

While the current data cannot establish causality, the correlations provide insights into the characteristics of countries that engage in GRPFM assessments and subsequent reforms. Specifically, countries with GRPFM assessments demonstrate lower maternal mortality rates and higher female political representation compared to those without assessments. Conversely, non-GRPFM countries have a greater share of women attaining secondary education, with a smaller gender gap in educational achievement. These results offer an intriguing yet complex glimpse of the relationship between GRB and gender outcomes. They invite critical questions regarding potential selection bias and reverse causality.

Selection bias?

Could it be that countries committed to gender equality are more inclined to undergo GRPFM assessments? If true, these findings might indicate that the countries opting for assessments differ systematically concerning their gender policy commitments. Countries performing well in specific gender indicators—such as maternal health or political representation—may utilize GRPFM assessments to affirm their progress. In contrast, countries with weaker gender outcomes may postpone or avoid assessments until they can demonstrate reform actions.

Reverse causality?

Alternatively, could the intention to improve gender outcomes drive the decision to pursue a GRPFM assessment? In this case, reverse causality may be at play: a country’s desire to strengthen gender budgeting and reduce disparities could lead it to undergo the GRPFM assessment as a first step. For example, a government facing high maternal mortality may initiate a GRPFM assessment to better align its public financial management systems with health sector reforms.

A curious case in education

Interestingly, countries with GRPFM assessments tend to have larger gender gaps in education. This might challenge the hasty assumption that GRPFM-assessed countries are more gender-equal. One possible explanation is that some countries undertake GRPFM assessments precisely because they are grappling with persistent educational inequalities. In this light, the assessment becomes a signal of intent rather than a reflection of existing success.

Ultimately, the correlations presented here underscore the complexity of interpreting gender budgeting data. Rather than drawing conclusions about effectiveness, these findings prompt further inquiry: Who chooses to assess gender in their public financial management—and why? And how can the GRPFM assessment be better leveraged to support countries at different stages of their gender equality journeys?

To sum it up, GRPFM has the potential to address gender disparities. However, further empirical research is needed to establish causal relationships and gain a deeper understanding of their impact, a gap we aim to fill.