An Introduction to the Multi-Donor Budget Support in Ghana

1. An Introduction to the Multi-DonorBudget Supportin Ghana Prepared by: MDBS Communication Group

2. Outline • What is budget support? • MDBS Six Pack: • Financial contribution • Alignment to government systems • Performance & conditionality • Donor harmonisation • Policy dialogue • Technical assistance & capacity support • Future of the MDBS

3. What is budget support? • Many perspectives: • The economist’s view • The systems specialist’s view • The development planner’s view • The policy maker’s view • The critic’s view

4. What is budget support: an Economist’s view • A transfer of funds from the donor to the Treasury of the recipient country, where it is mixed with the recipient country’s own resources in support of the overall budget. • Underpinning: allocative efficiency

5. What is budget support: a Development Planner’s view? • Unearmarked support to the recipient country’s own growth and poverty reduction policies • Main underpinning: without ownership no progress

6. What is budget support: a Systems Specialist’s view • Funds spent in accordance with the recipient country’s own procedures and rules. • Main underpinning: by using country systems you strengthen them, by avoiding them you weaken them

7. What is budget support: a Policy Maker’s view • Funds provided in view of an overall policy and political dialogue on inclusive development and equitable growth. • Underpinning: Development progress can only be achieved through strong political will, adherence to principles of good governance, which should be addressed at the highest level. (Chair at the table)

8. What is budget support: a Critic’s view • Budget support is a blank cheque transferring taxpayers’ money to corrupt regimes who use it for personal gain. • Underpinning: Africa’s neo-patrimonial system does not meet any standards of good governance and accountable use of public funds.

9. What is budget support: the six pack • Financial contribution • Alignment with government systems • Performance agreement & conditionality framework • Donor harmonisation • Policy dialogue • Technical assistance & capacity support

10. The MDBS Six Pack • MDBS = Multi-Donor Budget Support

11. Financial contribution (1) Source: Ministry of Finance and Economic Planning (MoFEP)

12. Financial contribution (2) Source: Ministry of Finance and Economic Planning (MoFEP)

13. Financial contribution (3) Source: Ministry of Finance and Economic Planning (MoFEP)

14. Financial contribution • Base component + Performance component = total contribution • Base component: good overall performance, including all PAF targets and triggers • Performance component: good performance in key areas (triggers), leading to additional funding (WB and AfDB use triggers as their prior actions)

15. Alignment with government systems • Development Partners rely on: • Ghana’s policy plans for priority setting • Ghana’s budget for targeting and expenditure • Ghana’s accounting and auditing for accountability • Ghana’s M&E and reporting for justification • Ghana’s Parliament for democratic supervision

16. Performance & Conditionality • Framework Memorandum (2008): • Underlying principles • Performance Assessment Framework • Holistic Assessment • National Audits (Ghana Audit Service)

17. Underlying principles • Continuing sound macro-economic policies and management • Commitment to achieving the GPRS II objectives and MDGs • Sound budgeting and PFM systems • Continuing peace and respect for human rights, the rule of law, democratic principles and the independence of the judiciary • Good governance, accountability of the citizenry, and integrity in public life, including the fight against corruption

18. Performance Assessment Framework • Agreed set of specific targets against which overall progress of the recipient government is assessed. • Taken from national policy documents (in particular the GPRS II) • A selected group of these targets determine the performance tranche. These are called triggers. • Currently: 42 targets of which 15 triggers

19. Basic PAF structure

20. Holistic Assessment • Annual Progress Review (i.c.w. NDPC) • Macroeconomic performance (i.c.w. IMF) • Sectoral progress assessments

21. National Audits • Purpose: Since national systems are used for expenditure of funds, the national audits are used to verify whether the budget has been executed in an accountable way, including public debate by Parliament. • We use in principle: • Audit of the Consolidated Fund • Additional: Audit of Selected Flows

22. Donor harmonisation (1) • MDBS Core Group: 11 development partners (African Development Bank, Canada, Denmark, European Union, France, Germany, Japan, Netherlands, Switzerland, UK, World Bank) • Three co-chairs: World Bank (permanent), Switzerland (current), Canada (incoming) • Observers: UN, IMF, Norway, US, MoFEP, NDPC

23. Donor harmonisation (2) • 14 sector working groups, including: sector ministries, MoFEP, NDPC, development partners (both MDBS and others), CSOs • Joint Heads of Cooperation • Joint Heads of Mission • MDBS Secretariat at MoFEP

24. Donor harmonisation (3) Heads of Mission Sector WG Sector Ministries CSOs Sector WG Sector Ministries CSOs Supervision + High level dialogue Sector coordination + sector policy dialogue Heads of Cooperation Sector WG Sector Ministries CSOs Coordinating structures + Broad policy dialogue MDBS Core Group MoFEP CSO Plaforms

25. Donor harmonisation (4) • New actors the MDBS is establishing relations with: • Parliament • Independent Goverment Institutions (CHRAJ, Media Board, etc.) • Traditional authorities

26. Policy Dialogue (1) • Umbrella term for all coordinated interaction within the MDBS harmonised structures between (executive) government and development partners. • Increasingly, this policy dialogue broadens to other actors, like CSO, media, Parliament, etc.

27. Policy Dialogue (2) • Coordinated interaction includes (but are not limited to): • Annual review (incl. PAF, holistic assessment) • Forward looking PAF negotiations • Budget discussion • Audit discussion • Retreats • High-level meetings • Sector working group meetings

28. Policy Dialogue (3) • Cross-Cutting Issues: cross-sectoral implications that cannot be dealt with in one sector alone and/or which require a higher-level of strategic dialogue • Underpinning: To feed into the technical discussions of the Consultative Group (CG) meetings thus receiving attention at a higher level with the hope of influencing policy decisions

29. Policy Dialogue (4) 2010 Topics • Climate Change • Implications of Decentralisation on Public Sector Reform • Ensuring a Credible National M&E Statistics System • Budget-related Issues

30. Technical assistance & capacity development • No TA fund under the MDBS, but targeted support provided • Work done through sector groups and individual DPs • TA coordination still limited, and beyond scope of MDBS

31. Future of the MDBS • Strong focus on Sector Working Groups • Inclusion of broad range of stakeholders • Aid Policy: budget support preferred modality • Issues of concern: quality of the budget, audits (and follow up), oil, MIC-status, MTDF.

32. www.mofep.gov.gh/mdbs.cfm