Transcript Budget support and managing for results

Budget support and managing for results
Presentation by Bodo Ellmers
Action for Global Health Roundtable
Madrid, 7 June 2010
Budget Support – The Advantages
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More recipient country ownership
Better alignment to development plans
Less Transaction costs
Funds recurrent costs (e.g. wages) rather than
just investment (e.g. for hospital construction)
• Funds “systems” rather than “islands” of
development
• Leads to more local spending ( job creation,
income generation, economic development);
• Uses and thereby strengthens country systems
• More domestic accountability (to citizens in
recipient countries)
• Avoids brain drain from public sector to
donors’ projects
 Sustainable and broad-based results
Budget Support – The challenges
• Focus on MDGs and poverty depends on recipient
governments’ will and/or domestic power
relations
• Problems of attribution and fungibility of money
• Very “central government” focused
 Need to strengthen parliaments, watchdogs and
citizen groups
• Less accountability to citizens in donor countries
• Can be diverted to currency reserves
Budget Support: Fungibility and Attribution
Tax income
UK
France
Spain
European
Commission
Administration
Health
Education
Defense
Sector Budget Support
The better option?
Pro: Improves attribution, reduces fungibility
Contra: Reduced ownership and alignment
EU Budget Support - Positions
EU Development Commissioner Piebalgs (Brussels, May 2011):
Move from project-based to budget-based development policy: “Budget
support is the best modality of development policy, but it is also the
politically most demanding”
ACP-EU Joint Parliamentary Assembly (Budapest, May 2011):
Members of Parliament demand to :
• increase the amount of budget support as promised to 50% of the total
aid
• set a collective EU target.
• ensure more parliamentary oversight . Provide their parliaments with the
necessary information to hold the executive to account.
Managing for results?
• Paris Declaration: „Managing for results means managing and
implementing aid in a way that focuses on the desired results and uses
information to improve decision-making”
Partners:
• Strengthen the link between development plans and budget process
• Establish results-oriented reporting and assessment frameworks that
monitor progress
Donors:
• Link country programming and resources to results and align them with
partner country performance assessment frameworks,
• Harmonise their monitoring and reporting requirements until they can
rely more extensively on partner country systems
Managing for results – the challenges
MfR can improve aid allocation, and thus aid effectiveness but ...
• Choosing the right targets and indicators is difficult and “political”
• Pro-cyclical financing (results and progress depend on many factors,
many of which beyond control of donors and recipients, e.g.
Financial crisis)
• Results monitoring and measurement boosts transactions costs 
use country systems
• Attribution of results is difficult for budget support 
need to “show the development movie, not the picture”
• Aid works best in countries that don’t need aid  “Ensure that
managing for results is linked to progress and not just results
performance.” (AfGH)