Putting Aid on Budget

1. Putting Aid on Budget Synthesis Report Rwanda report "Aid on Budget" Study

2. Overview of presentation • Aid on Budget study: overview and key findings of synthesis report • Key findings of Rwanda report • Moving Forward “Aid on Budget" Study

3. « Putting Aid on Budget » Study • Study carried out in 2007 in 10 African countries for CABRI and SPA • Outputs (www.africa-sbo.org): • Synthesis report & Good Practice Note • Country reports • Feeds into Accra HLF & OECD-DAC joint venture on PFM • Follow up: Rwanda has decided to support further research and a workshop in October “Aid on Budget" Study

4. Analytical framework “Aid on Budget" Study “on budget” is about budget systems, not just budget documents. Hence: 4

5. Misconceptions to avoid “Aid on Budget" Study • “Aid on budget” is not a synonym for budget support • Budget support is on budget by definition, but other aid modalities can and should also use country budget systems. • Projects are not necessarily off-budget • Bringing aid on budget is not just about donors providing information to governments • “reflectors “ vs. “integrators” • quality of the information: completeness, credibility, disaggregation • timeliness and accessibility • quality of the underlying country system 5

6. Donor perspectives and incentives “Aid on Budget" Study • Likelihood of putting aid on budget depends on: • Form of aid (grant, loan, TA, other aid in-kind) • Modality (budget support, project aid) • Aid partner (central/local government, NGO) • But also depends on donor characteristics: • “reflectors” vs. “integrators” • Importance of “visibility” • Attitude to quality of public finance management • Flexibility • Other factors: • HQ vs. in-country perspective • Career incentives of staff 6

7. Government perspectives and incentives “Aid on Budget" Study • Often conflicting interests and incentives on the government side, e.g.: • Finance vs. sector ministries • Centre vs. local government • Vested interests of project management units • Concerns may be about: • discretion over resources • reliability of disbursement through treasury • country risk • An example: perverse incentives (for government and donors) when aid is included in sector budget ceilings Kigali, 16, 17 June 2008 Putting Aid on Budget - Overview 7

8. Recommendations for donors “Aid on Budget" Study Review agency-specific procedures and the extent to which they use regular government systems. Improve understanding of government public finance management systems and factor this into early stages of project/programme design. Support strengthened approach to public finance management Provide aid flow information linked to government FY, government planning and budget calendar, and government budget classification. Improve medium-term aid predictability Helsinki, 11-12 June 2008 "Aid on Budget" Seminar AOB Study Recommendations 8

9. Rwanda Report – key findings "Aid on Budget" Study

10. Conducive framework • Relatively few donors • Move towards Sector Budget Support • Strong coordination mechanisms, Aid Policy, EFU • Positive trend in PFM reforms, in line with best practices • New Organic Budget Law • Single Treasury Account • Production of consolidated financial statements • New Chart of accounts • New Budget Format • Development of BudgetMaster • Strengthening of MTEF process “Aid on Budget" Study

11. Aid on Budget in Rwanda • Per dimension of aid on budget: • Weakest dimension: aid on treasury – budget execution monitoring • Per type of aid: • General and sector budget support better integrated • Loans better integrated • Per donor: • Multilateral donors better integrated “Aid on Budget" Study

12. Key Challenges - Government • Need for clear definition of criteria for • What aid should be in the Finance Law • What aid can be in the budget documents but not in Finance Law • What aid should not appear in Budget documentation • Need for streamlining of aid-related data collection instruments and clarification of responsibilities between EFU, CEPEX, NBU • Need for clear definition of what information is needed, by who, when • Need for a clear framework for aid management at decentralised level • Integrating project execution monitoring in the national processes for budget execution “Aid on Budget" Study

13. Key challenges (2) • Donors: • Reflect on possibility to ensure timeliness and appropriate format of information on aid (commitments and disbursements) • Clarify criteria for moving towards sector and general budget support • Clarify criteria for projects to be «on treasury» • Clarify criteria for projects at local government level to pass through fiscal decentralisation framework • Joint Donor-government: • Improve the link between sector coordination and the budget process (timing, content) • Clear unique format for donor reporting “Aid on Budget" Study

14. Moving Forward • Additional research to be carried out in July-August-September • Workshop in early October • Agree on clear criteria for putting aid « on Parliament », « on budget », etc • Agree on improved processes for putting aid « on Parliament », « on budget », etc • Learn from experience of other countries “Aid on Budget" Study

15. Further research • Comparison of aid information per project in data provided by donors, budget, public accounts • Need data on ODA disbursements in 2007 – i.e. details of figure provided in EFU survey • In-depth analysis of data flows for 5 projects • Will need detailed data on 5 projects selected • Proposed projects: WB, GTZ, UN, USAID, ?? “Aid on Budget" Study