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What Effects has GBS Had?

What Effects has GBS Had?. Stephen Lister 9 May 2006 . Overview of Presentation. Aims to explain the effects the evaluators found to justify overall country assessments findings, not recommendations Sequence the evaluation subject: partnership GBS what effects did we look for?

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What Effects has GBS Had?

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  1. What Effects has GBS Had? Stephen Lister 9 May 2006

  2. Overview of Presentation • Aims • to explain the effects the evaluators found • to justify overall country assessments • findings, not recommendations • Sequence • the evaluation subject: partnership GBS • what effects did we look for? • what effects did we find? • overall assessment. The Effects of GBS

  3. What did we evaluate? (concept) • Multiple inputs of GBS (finance + +) • Focus on partnership GBS • unearmarked funds • new style of conditionality (?) • support to poverty reduction strategy • Identified via country-level inventories • overlap with “sector budget support” The Effects of GBS

  4. What did we find to evaluate? • illustrative sample of countries • large volume, but recent, uneven distribution of PGBS • useful contrasts in “penetration” PGBS flows (Table 3.3) The Effects of GBS

  5. What effects did we look for? • Expectations from GBS • ultimately, poverty reduction • via: • more predictable funding • harmonisation and alignment • lower transaction costs • more efficient public expenditure • more effective state and public administration • improved domestic accountability • etc. • Evaluation Instruments • Enhanced Evaluation Framework • flow of funds effects • policy effects • institutional effects • Causality Map • Counterfactuals The Effects of GBS

  6. Effects on public expenditure • PGBS – additional or substitute? • Influence on discretionary expenditure • PGBS not established in Malawi, Nicaragua • Clear expansion of funds and discretion in Uganda, Rwanda • More funds on budget in Mozambique, Burkina Faso, Vietnam • Influence on “pro-poor” expenditures • Uganda: increased level and share for Poverty Action Fund • Mozambique: bringing funds on budget, rather than raising “pro-poor” share • Burkina Faso: balancing (targeted) HIPC funds • Rwanda: facilitating “priority” spending • Vietnam: in principle, financing pro-poor policy actions • Efficiency of expenditure • gains in allocative and operational efficiency • efficiency improvements benefit other modalities The Effects of GBS

  7. Effects on growth and poverty • Macro-economic effects • contribution to total aid flow effects, reinforces existing stability and discipline • Effects on poverty reduction Caveats: • problems of data, time scale, correlation vs causality (not unique to GBS) • form vs. content of PGBS: support to evolving PRSs Conclusions: • Weak effect on income poverty (indirect, via macro effect) • Stronger effect on basic services (limited by quality and targeting issues) • Weak empowerment effects (but early..) The Effects of GBS

  8. Effects on Harmonisation & Alignment • Positive H&A effects in all cases: • policy alignment behind PRSs (but some PRSs not very operational – Uganda exceptional) • by definition disbursed through government finance system • short-term alignment with budget calendar improving, but weak on medium/long term commitments • harmonisation effects of PGBS spread to other modalities (especially among PGBS donors) • Transaction costs: • clear gains for government during implementation • ambiguous effects at negotiation, monitoring stages The Effects of GBS

  9. Institutional Effects • Public finance management • Bringing discretionary funds on budget, and using government systems does have the anticipated effects on ownership and system strengthening. • Capacity development • TA and capacity building are the least well specified or coordinated inputs of PGBS. • Nevertheless, complementary effects on system development. • Policy processes • A variety of positive effects on policy processes, where PGBS is established. The Effects of GBS

  10. Unintended and adverse effects • Unpredictability? • short term predictability improving • destabilising effect of suspension in Malawi • long term predictability? • Bias against private sector / growth? • public services bias reflects first-generation PRSPs • no major “crowding out” effects specific to PGBS • Revenue effect? • no major revenue substitution effects found • Fiduciary risk and corruption? • PGBS increases focus on PFM strengthening • no clear evidence that PGBS funds have been more vulnerable than other modalities [LATER SESSION FOR MORE ON RISK.] The Effects of GBS

  11. Interaction with other modalities 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. Potential complementarities are not very systematically exploited. The Effects of GBS

  12. Feedback and sustainability • Evolutionary design, adaptation. • Some convergence between PGBS and PRSP monitoring systems. • Limited effects so far on domestic accountability (but domestic and donor accountability can reinforce each other). [LATER SESSION FOR MORE ON OWNERSHIP, ACCOUNTABILITY, INDICATORS.] • PGBS needs to be durable for sustained institutional effects – main risk political? [LATER SESSION FOR MORE ON RISK.] The Effects of GBS

  13. Overall assessment (1) • Confidence: • Systematic and rigorous approach applied consistently across the range of study countries. • Careful to provide the evidence on which judgements are based. • Confident that conclusions – as far as they go – are well founded. The Effects of GBS

  14. Overall assessment (2) • Distinctive features of partnership GBS: • Orientation to support national poverty reduction strategies. • Focus on strengthening capacity, especially in public finance management. • Focus on results. • Explicit attention to the quality and effectiveness of aid. • Its aspiration to function as a partnership. • Overall positive assessment in 5 of 7 cases. The Effects of GBS

  15. Overall assessment (3) • Principal findings: • Relevant response to problems in aid effectiveness. • Efficient, effective and sustainable way of supporting national poverty reduction strategies. • Positive systemic effects on capacity by providing discretionary funds to national budget system. • Spill-over effects enhance quality of aid as a whole. • Initial effects on poverty mainly through expanding public services. Ultimate effects will depend on the quality of the national poverty reduction strategy. • Capacity for learning suggests instrument can become more effective over time. • Did not find unintended effects or side-effects that would outweigh benefits. • Sustainability requires more attention to mitigation of risks. • Findings are more widely relevant to programme-based approaches which share PGBS design principles. The Effects of GBS

  16. Thank You The Effects of GBS

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