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SECTOR BUDGET SUPPORT

SECTOR BUDGET SUPPORT. Preparation and Implementation. 1. PREPARATION. Programming Budget Support Step 1. Government and NCU to discuss the possibility of engaging the EC (and possibly other donors) in developing sector approaches.

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SECTOR BUDGET SUPPORT

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  1. SECTOR BUDGET SUPPORT Preparation and Implementation

  2. 1. PREPARATION .

  3. Programming Budget SupportStep 1 • Government and NCU to discuss the possibility of engaging the EC (and possibly other donors) in developing sector approaches. • Objective – to understand the Government’s views and development priorities and ascertain whether they coincide with the EC. • If results positive, agree which sectors.

  4. Programming Budget SupportStep 2 • Discuss with EC to ensure that what was decided is/can be reflected in EC programming. • If positive, establish a sector working group to formalise the further discussions and negotiations.

  5. Designing the Budget Support Programme .

  6. Preparation • Assemble analytical documents & information (eg PEFA, IMF, World Bank reviews etc); • Carry out joint assessment of 7 KAAs; • Determine whether the country is eligible for Budget Support; • Analyse and plan the SPSP and its impact on the national budget.

  7. Drafting the Action Fiche. • Ensure participation of the Sector Working Group. • Confirm satisfactory results of the 7 KAAs; • Agree the SPSP implementation schedule (including disbursements) ; • Agree the type of tranches (fixed or variable); • Agree the form of additional TA.

  8. The Action Fiche • The SPSP’s basic planning document. Contains the following: • Rationale & country context; • Description of the SPSP (not including indicators); • Implementation arrangements. • It is the EC’s “first offer”, subject to detailed discussion with the benficiary.

  9. Disbursement Conditions and Performance Indicators 1 • General Conditions, applied to all disbursements: • Stability oriented macroeconomic policy continues; • PFM should show continued “improvement”; • Sector Working Group meets regularly. • Specific Conditions, applied to individual disbursements, usually performance related. • Disbursement conditions must always depend on Government action (not donor action).

  10. Disbursement Conditions and Performance Indicators 2 • Indicators must be clear and objectively verifiable. • They should not be subject to interpretation. • Great care must be taken with formulation. • Limit the number of conditions and indicators to manageable levels. • The EC is not concerned with detailed activities and needs to focus on policy issues.

  11. The Financing Agreement 1 • The contract between the EC and the beneficiary. • Contains all agreed conditions and indicators for disbursement and sector programme implementation; • Details responsibilities of both sides; • Sets out what is to be done, by whom and when.

  12. The Financing Agreement 2 • The FA sets out • The nature and purpose of the operation,(ie support to sector programme), • the EC’s contribution, • the beneficiary’s contribution, • period of execution, • special conditions (if any) • Annexes: • General Conditions for EC Contracts; • Technical and Administrative Provisions.

  13. Technical and Administrative Provisions • Updates the rationale set out in the Action Fiche; • Confirms that the country is eligible for budget support. • Affirm that the partner country is responsible for implementation; • States that the project will cooperate with other donors (eg World Bank etc); • Specifies direct and untargeted budgetary support; • Specifies that funds will be disbursed to the partner country’s Treasury and applied in accordance with local legislation and procedures. • Specifies when disbursements may not be made. • Contains 2 important annexes.

  14. General & Specific Conditions and Timetable for Disbursements. • Specifies • general and specific conditions for disbursements • how disbursements are made and what docs are required; • how tranches are composed (fixed and variable); • how the EC assesses satisfactory compliance with disbursement conditions

  15. Policy Reform Matrix • Contains pre-conditions, conditions and indicators for each disbursement; • Defines the expected outcomes; • Establishes responsibilities (eg, MoF, Beneficiary ministry etc).

  16. Annual Reviews • Confirms that the country remains eligible for budget support; • That the beneficiary is in compliance with disbursement conditions; • Assesses each condition for full, partial or non-compliance; • Is the basis on which the EC will disburse fixed or variable tranches; • May make recommendations for changes in future disbursement conditions.

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