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SPA-CABRI Project on “Putting Aid on Budget”

SPA-CABRI Project on “Putting Aid on Budget”. Presentation to DAC Joint Venture on Public Finance Management Paris, July 2007 Peter Dearden, Strategic Partnership with Africa. Presentation Outline. Why is “Putting Aid on Budget” Important SPA-CABRI Project on “Putting Aid on Budget”

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SPA-CABRI Project on “Putting Aid on Budget”

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  1. SPA-CABRI Project on “Putting Aid on Budget” Presentation to DAC Joint Venture on Public Finance Management Paris, July 2007 Peter Dearden, Strategic Partnership with Africa

  2. Presentation Outline • Why is “Putting Aid on Budget” Important • SPA-CABRI Project on “Putting Aid on Budget” • Possible Role of JV-PFM

  3. Why is Aid on Budget Important? Aid Dependency, Selected Countries (net aid/central government expenditure, 2004, %) Source : Africa Development Indicators 2006

  4. Findings of the Paris Declaration Survey • Indicator 3 : Aid flows aligned on national priorities : • Total ODA recorded in the approved budget, as % of Total ODA disbursed to government sector (as reported by donors, ex post) • 100% would be ideal • Results : average of 42% and a huge range (from 2% to 200%) • Conclusions • A large proportion of aid flows to the government are not comprehensively and accurately reflected in budget estimates • This undermines credibility of the budget for governing effective allocation of resources in line with policy priorities

  5. Recommendations of the Paris Declaration Survey • Countries need to establish a comprehensive and credible budget linked to policy priorities • Donors need to provide information on intended disbursements to the budget authorities and provide aid on budget in good time, and aligned with programme and sector priorities in the budget • Donors and partners need to work together to ensure that budget estimates are more realistic.

  6. Why Put Aid “On Budget” ? • Strengthens National Ownership of development process • Allows comprehensive resource allocation decisions (inter-sectoral, intra-sectoral) in light of overall resource flows • Builds Transparency and Accountability • Donors to government • Government to Parliament, civil society • Line Ministries to Ministry of Finance • Ministry of Finance to Line Ministries • Facilitates fiscal-monetary management

  7. Why a SPA-CABRI Project on Putting Aid on Budget? • Important issue in many countries in Sub-Saharan Africa : high aid dependency, PFM capacity constraints • SPA brings together donor HQ staff and African governments to identify and promote aid effectiveness good practice • CABRI brings together African Senior Budget Officials to promote budget management good practice

  8. Study Process 10 Country Case Studies Inception Report [June 07] Literature Review • Synthesis Report • Good Practice Note [Draft in Nov 07, final in Jan 08]

  9. Good Practice Note : Components • Why? Explain why capture aid in the budget process • How? Set out good practice • General principles • Specific examples • Who? Address both sides of the problem : • Government systems and processes • Donor behaviours • Recommend how to monitor progress in bringing aid on budget

  10. “On Budget” Study Definitions (1)

  11. “On Budget” Study Definitions (2)

  12. Key Challenges in Conducting the Study • Each country situation is different • Budget laws, procedures, systems vary • Good Practice Note needs to recognise • Government capacity to absorb and use data may be limited • Governments typically have ongoing complex PFM reforms • Donor policies (and capacity to comply with partner government requirements) also varies

  13. Case Study Country Selection • Capture different country contexts (strength of PFM systems, aid context, aid management experience) • 10 Group A countries : • Burkina Faso, Ethiopia, Ghana, Kenya, Mali, Mozambique, Rwanda, South Africa, Tanzania, Uganda • Of which, 5 possible Group B countries for deeper study : • Ghana, Mali, Mozambique, Rwanda, Uganda

  14. 10 Group A Country Reports • Country Context • PFM system, planning and budgeting structures, processes, frameworks • Aid context : importance of aid flows, different modalities etc • Aid management : structures, processes • Aid capture (7 dimensions of “on budget”): • What aid is captured, and how well? • How useful is the information? • Why, why not?

  15. Country Case Study Process Existingdocuments Country Researcher CABRISenior Budget Officer DonorRepresentative Country Report

  16. 5 Group B Country Reports • Deeper analysis of experience • More interaction with government and donors at country level • Attempt to understand interplay between formal and informal systems (also political economy) • What works, what doesn’t, and why?

  17. Role of JV-PFM Members? • Comments at this stage, to feed back to consultants as they start country work? • Pointers to existing material which the Literature Review should cover? • Facilitate input of donor views (from HQ and at country level)? • Engagement with draft Synthesis Report and Good Practice Note?

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