Budget Support and Performance Assessment Frameworks

1. Budget Support and Performance Assessment Frameworks CABRI Workshop on Aid and the Budget Mauritius, 17-18 May 2007 Stephen Lister

2. Overview of Presentation • Aims • Summarise findings of Joint Evaluation of General Budget Support (especially findings as they relate to PFM) • Identify key issues in linking budgets, budget support and performance assessment frameworks (PAFs). • Sequence of session • Overview and main findings from GBS evaluation • Challenges in performance assessment and PAFs • Country experiences from Mozambique and Mauritius • General discussion – what good practices are emerging? Budget Support and Performance Assessment Frameworks

3. Part 1 Key Findings from Joint Evaluation of General Budget Support Budget Support and Performance Assessment Frameworks

4. Scope of evaluation • illustrative sample of countries • focus on partnership GBS • identified by country-level inventories • large volume, but recent, uneven distribution of PGBS • useful contrasts in “penetration” PGBS flows (Table 3.3) Budget Support and Performance Assessment Frameworks

5. Positive Features Limitations/Scope for Improvement Relevant response to problems in aid Affected by continuation of other Ø Ø effectiveness. modalities; need to consider Spill-over effects enhance quality of aid interactions (see next slide). Ø as a whole. Efficient, effective and sustainable way Not a panacea; risk of overload and/or Ø Ø of supporting national poverty unrealistic expectations. reduction strategies. Ultimate effects will depend on the Ø Initial effects on poverty mainly quality of the national poverty Ø through expanding public services. reduction strategy. Positive systemic effects on capacity by Limited links to other capacity Ø Ø providing discretionary funds to development efforts. national budget system. Did not find unintended effects or side- Sustainability requires more attention Ø Ø effects that would outweigh benefits. to mitigation of risks. Capacity for learning suggests instrument can become more effective over time. Ø Findings are more widely relevant to sector budget support and programme-based Ø approaches which sharePGBS design principles. Overall assessmentOverall positive assessment in 5 of 7 cases (exceptions, Nicaragua and Malawi). Budget Support and Performance Assessment Frameworks

6. PFM-relevant findings • Efficiency effects of bringing discretionary funds on budget • Systemic effects in strengthening PFM, including budget process • Predictability: short-term alignment with budget calendar improving, but weak on medium/long term commitments • Transaction cost gains for government at disbursement stage • PFM a natural core focus for GBS, but TA and capacity building are the least well specified or coordinated inputs of PGBS. [supports case for “strengthened approach”] • Absolute PFM benchmarks not applied, nor appropriate • Fiduciary risk and corruption? • PGBS increases focus on PFM strengthening, transparency etc • no clear evidence that PGBS funds have been more vulnerable than other modalities Budget Support and Performance Assessment Frameworks

7. Implications for Good Practice • Interaction between aid modalities • Overlap between “general” and “sector” budget support • Important interactions include: • Broad influence on harmonisation and alignment. • Increased policy coherence across sectors. • PGBS flexibility improves expenditure efficiency across all funding sources. • General benefit of PFM strengthening. • Complementarity between PGBS and other instruments (e.g. on cross-cutting issues, capacity building, corruption). • PGBS benefits (e.g. on efficiency and t-costs) are diminished when off-budget modalities persist. • Need more systematic consideration of aid portfolios at country, donor and sector levels. Budget Support and Performance Assessment Frameworks

8. Part 2 Budget Support and Performance Assessment Frameworks Budget Support and Performance Assessment Frameworks

9. PRSPs and Performance Assessment • Issues in monitoring PRSPs, including: • focus on poverty outcomes • strength/weakness of links to the budget • monitoring requirements of different stakeholders • calendar and content of Annual Progress Reports (APRs) Budget Support and Performance Assessment Frameworks

10. Performance Assessment and Budget Support • Links between PRSP approach and trends towards budget support • Implications for the information required by budget support donors • Hence the development of various performance assessment frameworks, linked to budget support disbursement conditions • Recognised problems: • diversity of donor approaches, transaction costs • potential for unpredictable finance • ownership and accountability effects Budget Support and Performance Assessment Frameworks

11. Contrasting Approaches to Performance Assessment • Different styles of performance assessment, practiced by: • IMF • World Bank • European Commission • Bilateral donors • Efforts to converge on common PAF, and increasingly to link PAF to PRSP Budget Support and Performance Assessment Frameworks

12. Issues and Implications for Budget Managers • Links between PRSP and budget • Implications for predictability of finance • Good practice in selection of indicators • Implications for accountability (to whom? and, for what?) Budget Support and Performance Assessment Frameworks