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What Effects has GBS Had?: 

What Effects has GBS Had? Stephen Lister 9 May 2006

Overview of Presentation: 

Overview of Presentation Aims to explain the effects the evaluators found to justify overall country assessments findings, not recommendations Sequence the evaluation subject: partnership GBS what effects did we look for? what effects did we find? overall assessment.

What did we evaluate? (concept): 

What did we evaluate? (concept) Multiple inputs of GBS (finance + +) Focus on partnership GBS unearmarked funds new style of conditionality (?) support to poverty reduction strategy Identified via country-level inventories overlap with “sector budget support”

What did we find to evaluate? : 

What did we find to evaluate? illustrative sample of countries large volume, but recent, uneven distribution of PGBS useful contrasts in “penetration” PGBS flows (Table 3.3)

What effects did we look for?: 

What effects did we look for? Expectations from GBS ultimately, poverty reduction via: more predictable funding harmonisation and alignment lower transaction costs more efficient public expenditure more effective state and public administration improved domestic accountability etc. Evaluation Instruments Enhanced Evaluation Framework flow of funds effects policy effects institutional effects Causality Map Counterfactuals

Effects on public expenditure: 

Effects on public expenditure PGBS – additional or substitute? Influence on discretionary expenditure PGBS not established in Malawi, Nicaragua Clear expansion of funds and discretion in Uganda, Rwanda More funds on budget in Mozambique, Burkina Faso, Vietnam Influence on “pro-poor” expenditures Uganda: increased level and share for Poverty Action Fund Mozambique: bringing funds on budget, rather than raising “pro-poor” share Burkina Faso: balancing (targeted) HIPC funds Rwanda: facilitating “priority” spending Vietnam: in principle, financing pro-poor policy actions Efficiency of expenditure gains in allocative and operational efficiency efficiency improvements benefit other modalities

Effects on growth and poverty: 

Effects on growth and poverty Macro-economic effects contribution to total aid flow effects, reinforces existing stability and discipline Effects on poverty reduction Caveats: problems of data, time scale, correlation vs causality (not unique to GBS) form vs. content of PGBS: support to evolving PRSs Conclusions: Weak effect on income poverty (indirect, via macro effect) Stronger effect on basic services (limited by quality and targeting issues) Weak empowerment effects (but early..)

Effects on Harmonisation & Alignment: 

Effects on Harmonisation & Alignment Positive H&A effects in all cases: policy alignment behind PRSs (but some PRSs not very operational – Uganda exceptional) by definition disbursed through government finance system short-term alignment with budget calendar improving, but weak on medium/long term commitments harmonisation effects of PGBS spread to other modalities (especially among PGBS donors) Transaction costs: clear gains for government during implementation ambiguous effects at negotiation, monitoring stages

Institutional Effects: 

Institutional Effects Public finance management Bringing discretionary funds on budget, and using government systems does have the anticipated effects on ownership and system strengthening. Capacity development TA and capacity building are the least well specified or coordinated inputs of PGBS. Nevertheless, complementary effects on system development. Policy processes A variety of positive effects on policy processes, where PGBS is established.

Unintended and adverse effects: 

Unintended and adverse effects Unpredictability? short term predictability improving destabilising effect of suspension in Malawi long term predictability? Bias against private sector / growth? public services bias reflects first-generation PRSPs no major “crowding out” effects specific to PGBS Revenue effect? no major revenue substitution effects found Fiduciary risk and corruption? PGBS increases focus on PFM strengthening no clear evidence that PGBS funds have been more vulnerable than other modalities [LATER SESSION FOR MORE ON RISK.]

Interaction with other modalities: 

Interaction with other modalities Important interactions include: Broad influence on harmonisation and alignment. Increased policy coherence across sectors. PGBS flexibility improves expenditure efficiency across all funding sources. General benefit of PFM strengthening. Complementarity between PGBS and other instruments (e.g. on cross-cutting issues, capacity building, corruption). PGBS benefits (e.g. on efficiency and t-costs) are diminished when off-budget modalities persist. Potential complementarities are not very systematically exploited.

Feedback and sustainability: 

Feedback and sustainability Evolutionary design, adaptation. Some convergence between PGBS and PRSP monitoring systems. Limited effects so far on domestic accountability (but domestic and donor accountability can reinforce each other). [LATER SESSION FOR MORE ON OWNERSHIP, ACCOUNTABILITY, INDICATORS.] PGBS needs to be durable for sustained institutional effects – main risk political? [LATER SESSION FOR MORE ON RISK.]

Overall assessment (1): 

Overall assessment (1) Confidence: Systematic and rigorous approach applied consistently across the range of study countries. Careful to provide the evidence on which judgements are based. Confident that conclusions – as far as they go – are well founded.

Overall assessment (2): 

Overall assessment (2) Distinctive features of partnership GBS: Orientation to support national poverty reduction strategies. Focus on strengthening capacity, especially in public finance management. Focus on results. Explicit attention to the quality and effectiveness of aid. Its aspiration to function as a partnership. Overall positive assessment in 5 of 7 cases.

Overall assessment (3): 

Overall assessment (3) Principal findings: Relevant response to problems in aid effectiveness. Efficient, effective and sustainable way of supporting national poverty reduction strategies. Positive systemic effects on capacity by providing discretionary funds to national budget system. Spill-over effects enhance quality of aid as a whole. Initial effects on poverty mainly through expanding public services. Ultimate effects will depend on the quality of the national poverty reduction strategy. Capacity for learning suggests instrument can become more effective over time. Did not find unintended effects or side-effects that would outweigh benefits. Sustainability requires more attention to mitigation of risks. Findings are more widely relevant to programme-based approaches which share PGBS design principles.

Thank You: 

Thank You