Sector policy support programmes
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SECTOR POLICY SUPPORT PROGRAMMES. A new methodology for delivery of EC development assistance. Basic Concepts and Definitions. The EC is committed to delivering "more and better aid”; It is committed to the principles of Programme Based Approaches (PBAs);

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A new methodology for delivery of EC development assistance.

Basic Concepts and Definitions

  • The EC is committed to delivering "more and better aid”;

  • It is committed to the principles of Programme Based Approaches (PBAs);

  • EC policy is to use general and sector budget support as the favoured financial vehicle for its assistance whenever conditions are favourable.

Programme-based Approaches

  • “A way of engaging in development cooperation based on the principle of coordinated support for a locally owned programme of development, such as a national poverty reduction strategy, a sector programme, a thematic programme, or a programme of a specific organisation”.

  • PBAs must reflect the particular circumstances of individual sectors and countries.

  • Also known as Sector or Sector-Wide Approaches (SWAps)

Characteristics of PBAs and SWAps

  • Leadership by the host country;

  • A single comprehensive programme and budget framework;

  • A formalised process of donor coordination;

  • Harmonisation of donor procedures for reporting, budgeting, financial management and procurement;

  • Increased use of local systems for programme design and implementation, financial management, monitoring and evaluation.

Budget Support 1

  • The transfer of financial resources from a donor to a partner country’s National Treasury, against agreed conditions.

  • Funds are part of the partner country’s global resources,

  • Are administered in accordance with the partner country’s public financial management systems.

Budget Support 2

  • General Budget Support (GBS)

    • Supports a national development policy or strategy;

    • Government decides how it will be used.

  • Sector Budget Support (SBS)

    • Supports a sector policy or strategy;

    • Government or Donors can specify use.

Sector Policy Support Programme(SPSP)

  • The EC's aid instrument for supporting a sector programme.

  • Serves as a coordinating framework for

    • government's own activities and

    • donor support.

  • The EC's favoured financing method is budget support, but sometimes the best option may be project support, or pooled funding with other donors.

Sector Approaches Purpose and Objectives

  • To promote national ownership,

    • by supporting government-owned policies and strategies,

  • To strengthen orientation towards results,

    • by promoting coherence between policy, budgeting and actual results,

  • To coordinate donor inputs with other resources

    • and reduce (eventually) the transaction costs of utilising external finance.

EC Perspective

  • By using weak government structures, incentives for improvement can be generated.

  • A clear sector policy creates greater coherence, permitting governments to assert ownership.

  • Reduced number of projects and their transaction costs

    • stops the dissipation of administrative capacity and

    • allows budgetary and planning systems to become stronger.

  • Oversight by Parliament and civil society encourages

    • improvements to efficiency and effectiveness of public services,

    • strengthening of planning, budgeting and management structures.

The 5 Main Elements of a Sector Programme

  • A sector policy and strategy;

  • The sector budget and its medium term perspective;

  • A sector coordination framework;

  • The institutional setting and existing capacities;

  • A performance monitoring system.

1. Sector Policies and Strategies


What is a Sector Policy?

  • The Sector Policy is the first building block of a sector programme.

  • Specifies what government aims to achieve in the sector, when and how;

  • Distinguishes government’s regulatory role from its service delivery role;

  • Specifies the roles of non-government agents;

  • Outlines any necessary institutional or legal reforms.

What is a Sector Strategy?

  • The SectorStrategy, is a detailed plan or document, describes how the government will implement the policy.

  • Usually plans for the medium-term (normally 3-5 years).

  • It should be directly reflected in annual sector budgets.

Good Practice

  • A coherent and consistently applied sector policy focuses government, donors and stakeholders on achieving collective results.

  • It must be consistent with the partner government’s overall strategic objectives.

  • The sector policy document will not be a rigid plan.

  • It will establish basic principles, objectives and strategies for the sector.

  • It will accept that detailed strategies and resource allocations will continue to evolve.

  • Therefore, there must be clear procedures and schedules for regularly updating the policy and strategy.

EC Perspective

  • The sector approach requires a basic agreement between the government and its partners about

    • the sector objectives,

    • how they should be achieved in broad terms.

  • Donors should not micro-manage by specifying activities in detail.

  • The EC is interested in the expected results.

2. The Sector Budget and its Medium Term Perspectives.

Basic Requirements for SPSP

  • A credible, comprehensive and transparent sector budget - essential for the proper implementation of the sector policy.

  • A clear budget classification is key to the proper elaboration of a sector budget.

  • Such a budget should

    • take into consideration all resources available to the sector (including external resources) and

    • list all expenditures (capital as well as recurrent expenditures) necessary for the achievement of the sector’s expected results.

  • The annual sector budget should increasingly reflect sector priorities and strategies.

  • Progress towards policy based budgeting, covering all resources for the sector, with realistic medium-term sector expenditure plans.

  • Eventually, sector budgets will become part of a coherent national medium-term budget and expenditure plan.

Good Practice

  • Sector policies and sector budgets are the two faces of the same coin.

  • In order to obtain the desired results, policies and budgets must be coherent.

  • Well prepared budgets supporting weak policies will not achieve better sector results.

  • Well designed policies and strategies are helpless if they are not reflected accurately and clearly in the budget.

EC Perspective

  • Within Sector approaches the EC promotes the link between policy and budget.

  • Sector budgets need to fit into government’s own disciplined overall expenditure plans,

  • Annual spending needs to be derived from medium-term projections of resource availability, priorities and recurrent and capital expenditures.

  • Eventually, this would become a Medium Term Expenditure Framework, and the central part of the government’s political and budgetary process.

3. Sector Coordination



  • Special attention must be given to sector programme management.

  • Led by the government; it should cover

    • coordination of national stakeholders, i.e. all concerned government ministries and agencies;

    • non-governmental participants;

    • coordination with and among donors.

Good Practice

  • Basic Principle:

    “Sector coordination mechanisms must not override the established structures and responsibilities of Government”.

  • Beneficiary Ministry is responsible for implementation of the sector programme;

  • MinFin must be involved and have a clear role;

  • Sector coordination mechanisms must support the wider framework of the country’s own development strategy.

EC Perspective

  • Experience shows

    • the importance of a clear government-led management and sector coordination framework.

  • Donor coordination is regarded as a means of achieving

    • improved ownership and coherence

    • reduced transaction costs .

4. Institutional Setting and Capacity Development


Basic Concept

  • Thesector approach aims to use national systems where possible and to reinforcethemby using them.

  • A clear capacitydevelopment strategy led by the government should be in place.

Paris Declaration Statement 1

  • "Capacity development is the responsibility of partner countries with donors playing a support role".

Paris Declaration Statement 2

  • "Partner countries commit to integrate specific capacity strengthening objectives in national development strategies and

  • to pursue implementation through country-led capacity development strategies ……”

Paris Declaration Statement 3

  • "Donors commit to align their analytical and financial support with partners’ capacity development objectives,

  • make effective use of existing capacities and

  • harmonize support for capacity development accordingly."

EC Perspective

  • CD must be owned and led by those wishing to develop their capacity;

  • Supply driven and fragmented support to CD is usually only marginally effective;

  • Support to CD must respond to a clear demand;

  • Be designed and implemented under partner government leadership;

  • CD must be driven by results, not by donor-funded inputs.

5. Performance Monitoring System



  • Provides key elements to steer policy dialogue and is part of the overall policy review process.

  • Focuses on results and provides feedback to management.

  • Might be a performance assessment framework (PAF) containing indicators for

    • inputs,

    • outputs,

    • outcomes,

    • impacts.

  • Clear procedures and schedules for regularly updating the policy and strategy need to be in place.

Two Additional Elements


Macroeconomic Policy

  • Essential for a stable environment for the sector;

  • Assures predictable resource levels.

Public Financial Management (PFM).

  • Ensures that policy priorities are reflected in budget allocations;

  • Promotes efficiency (“value for money”) in public spending;

  • Ensures that actual expenditure complies with the approved budget and does not exceed available resources.

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