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Putting the new aid agenda to work

Putting the new aid agenda to work. Asia Programme Managers Meeting Delhi, May 22 nd 2002. Quick Recap (1). Asia poverty reduction strategy processes are different – not necessarily a PRS maybe state rather than federal level different views on role of state

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Putting the new aid agenda to work

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  1. Putting the new aid agenda to work Asia Programme Managers Meeting Delhi, May 22nd 2002

  2. Quick Recap (1) • Asia poverty reduction strategy processes are different – • not necessarily a PRS • maybe state rather than federal level • different views on role of state • large/entrenched private sector • welfarist vs. dev. concepts of poverty • capacity is available • civil society generally more organised

  3. Recap (2) • A new opportunity to influence pro-poor change? • Not if political commitment remains weak – process conditionality unlikely to be any different, project/sector support still important • An entry point for DFID to support more strategic thinking, pro-poor dialogue & changes in donor behaviour • Pro-poor political change is complex & does not come from ‘outside’

  4. Recap (3) • Challenges/dilemmas • What makes for a quality prs process? What’s the bottom line? Is there a shared Asian perspective? • Is a ‘sound’ prs one backed by an MTEF? Should DFID support national/subnational govts without such a strategy? What about China? India? MICs? • Need to establish some ground rules for working with more effectively with IFIs, RDBs (& Japan) • Need an HQ policy that is evidenced-based, able to address the VFM question

  5. PRSPs & Aid instruments • Support country leadership/ownership by working to strengthen Govt. systems and processes: • A move away from parallel/off-budget projects • Shift towards joint funding of: • Sector programmes • General budget • Jointly agreed indicators, common performance assessment & monitoring systems (building on national systems) • Harmonised rules/procedures for disbursement, accountability & risk assessment

  6. Implications • Types of project/sector support - on-budget, linked with PRS framework, performance-monitoring • Balance between conditionality, earmarking, accountability requirements • Capacity support/non-financial assistance • Working with other donors and with non-government entities

  7. Issues in selecting aid instruments • Presence of a national commitment to poverty reduction (presence of a prs/MTEF?) • Quality of PEM & PFM, integrity of accounting & audit arrangements, off-budget exps., quality of indicators for performance monitoring/ expenditure tracking? • Reform record on macro & structural • Risk vs. reward

  8. IFI Instruments • PRGF – ‘Key Features’ : supporting PRS policy fw. Performance criteria/benchmarks streamlined & linked to PRS policy commitments. Importance of PSIA. • PRSC – programmatic adj. credit, ex post performance assessment, annual tranches within medium term framework set by PRS. Due diligence tests – CFAA, CPA, SSR, PSIA. • Issues – Ambitious reform agenda, need to build on sectoral processes, ‘champions’ within Govt, annual tranching (reporting) vs.medium term perspective. • Dangers – ‘donors ganging up’, eggs in one basket

  9. Budget Support – Risks/Safeguards • Risk of not achieving stated objectives because of: • only rhetorical commitment to poverty reduction • other reform measures not taken or macro deteriorates • corruption • Ways of assessing/mitigating risk • Presence of PRS backed by signs of pro-poor allocations/spend • CFAA, PER, CPA & other diagnostic tools • Safeguards - capacity support to budgeting & auditing, independent financial tracking, financial accountability conditions, expenditure/ sector earmarking • Media/NGO scrutiny

  10. Case study - Tanzania • Shift to budget support based on: • Macro stability largely achieved • PRSP in place • Increasing poverty focus of Govt. spending • Commitment to improving Govt. systems • Features of budget support: • Common mech. (9 other donors), common performance assessment linked to PRSP • Safeguards: CFAA complete, TA support to Govt. systems & poverty monitoring

  11. Tanzania • Risks • PRSP implementation off track • PFM/PSR reforms ineffective • Joint donor support collapses • Complementary measures • ‘Strategic’ project support for pro-poor growth; public accountability from below (CSOs) • Continued SWAP engagement in PRS priority sectors • Influencing through analytical support, aid coordination.

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