Budget support and managing for results

1. Budget support and managing for results Presentation by Bodo Ellmers Action for Global Health Roundtable Madrid, 7 June 2010

2. Budget Support – The Advantages 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

3. 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

4. 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

5. Budget Support: Fungibility and Attribution Tax income UK France Spain European Commission Administration Health Education Defense

6. Sector Budget Support The better option? Pro: Improves attribution, reduces fungibility Contra: Reduced ownership and alignment

7. 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.

8. 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

9. 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)