The CPIA measures the extent to which a country’s policy and institutional framework supports sustainable growth and poverty reduction, and consequently the effective use of development assistance. The outcome of the exercise yields both an overall score and scores for sixteen criteria that compose the CPIA. These criteria include: A. Economic Management (1. Monetary and Exchange Rate Policies; 2. Fiscal Policy; 3. Debt Policy and Management), B. Structural Policies (4. Trade; 5. Financial Sector; 6. Business Regulatory Environment), C. Policies for Social Inclusion/Equity (7. Gender equality; 8. Equity of public resource use; 9. Building human resources; 10. Social protection and labor; 11. Policies and institutions for environmental sustainability), D. Public Sector Management and Institutions (12. Property rights and rule-based governance; 13. Quality of budgetary and financial management; 14. Efficiency of revenue mobilization; 15. Quality of public administration; 16. Transparency, accountability, and corruption in the public sector).
This CPIA fiscal policy criterion assesses the quality of the fiscal policy in its stabilization and allocation functions. The stabilization function deals with achieving macroeconomic policy objectives in conjunction with coherent monetary and exchange rate policies—smoothing business cycle fluctuations, accommodating shocks. The allocation function is concerned with the appropriate provision of public goods. The criterion pays attention to public expenditure composition, including, for example, the provision of public infrastructure and agriculture related public goods and services that support medium-term growth.