Putting Aid on Budget

SPA-CABRI Project on “Putting Aid on Budget” : 

SPA-CABRI Project on “Putting Aid on Budget” Presentation to DAC Joint Venture on Public Finance Management Paris, July 2007 Peter Dearden, Strategic Partnership with Africa

Presentation Outline : 

Presentation Outline Why is “Putting Aid on Budget” Important SPA-CABRI Project on “Putting Aid on Budget” Possible Role of JV-PFM

Why is Aid on Budget Important? : 

Why is Aid on Budget Important? Aid Dependency, Selected Countries (net aid/central government expenditure, 2004, %) Source : Africa Development Indicators 2006

Findings of the Paris Declaration Survey : 

Findings of the Paris Declaration Survey Indicator 3 : Aid flows aligned on national priorities : Total ODA recorded in the approved budget, as % of Total ODA disbursed to government sector (as reported by donors, ex post) 100% would be ideal Results : average of 42% and a huge range (from 2% to 200%) Conclusions A large proportion of aid flows to the government are not comprehensively and accurately reflected in budget estimates This undermines credibility of the budget for governing effective allocation of resources in line with policy priorities

Recommendations of the Paris Declaration Survey: 

Recommendations of the Paris Declaration Survey Countries need to establish a comprehensive and credible budget linked to policy priorities Donors need to provide information on intended disbursements to the budget authorities and provide aid on budget in good time, and aligned with programme and sector priorities in the budget Donors and partners need to work together to ensure that budget estimates are more realistic.

Why Put Aid “On Budget” ? : 

Why Put Aid “On Budget” ? Strengthens National Ownership of development process Allows comprehensive resource allocation decisions (inter-sectoral, intra-sectoral) in light of overall resource flows Builds Transparency and Accountability Donors to government Government to Parliament, civil society Line Ministries to Ministry of Finance Ministry of Finance to Line Ministries Facilitates fiscal-monetary management

Why a SPA-CABRI Project on Putting Aid on Budget?: 

Why a SPA-CABRI Project on Putting Aid on Budget? Important issue in many countries in Sub-Saharan Africa : high aid dependency, PFM capacity constraints SPA brings together donor HQ staff and African governments to identify and promote aid effectiveness good practice CABRI brings together African Senior Budget Officials to promote budget management good practice

Study Process: 

Study Process Synthesis Report Good Practice Note [Draft in Nov 07, final in Jan 08] Literature Review 10 Country Case Studies Inception Report [June 07]

Good Practice Note : Components: 

Good Practice Note : Components Why? Explain why capture aid in the budget process How? Set out good practice General principles Specific examples Who? Address both sides of the problem : Government systems and processes Donor behaviours Recommend how to monitor progress in bringing aid on budget

“On Budget” Study Definitions (1): 

“On Budget” Study Definitions (1)

“On Budget” Study Definitions (2): 

“On Budget” Study Definitions (2)

Key Challenges in Conducting the Study : 

Key Challenges in Conducting the Study Each country situation is different Budget laws, procedures, systems vary Good Practice Note needs to recognise Government capacity to absorb and use data may be limited Governments typically have ongoing complex PFM reforms Donor policies (and capacity to comply with partner government requirements) also varies

Case Study Country Selection: 

Case Study Country Selection Capture different country contexts (strength of PFM systems, aid context, aid management experience) 10 Group A countries : Burkina Faso, Ethiopia, Ghana, Kenya, Mali, Mozambique, Rwanda, South Africa, Tanzania, Uganda Of which, 5 possible Group B countries for deeper study : Ghana, Mali, Mozambique, Rwanda, Uganda

10 Group A Country Reports: 

10 Group A Country Reports Country Context PFM system, planning and budgeting structures, processes, frameworks Aid context : importance of aid flows, different modalities etc Aid management : structures, processes Aid capture (7 dimensions of “on budget”): What aid is captured, and how well? How useful is the information? Why, why not?

Country Case Study Process: 

Country Case Study Process Country Researcher Country Report Existing documents CABRI Senior Budget Officer Donor Representative

5 Group B Country Reports: 

5 Group B Country Reports Deeper analysis of experience More interaction with government and donors at country level Attempt to understand interplay between formal and informal systems (also political economy) What works, what doesn’t, and why?

Role of JV-PFM Members?: 

Role of JV-PFM Members? Comments at this stage, to feed back to consultants as they start country work? Pointers to existing material which the Literature Review should cover? Facilitate input of donor views (from HQ and at country level)? Engagement with draft Synthesis Report and Good Practice Note?