GoSS Aid Management, Budget and Thematic Working Groups

1. GoSS Aid Management, Budget and Thematic Working Groups Arthur Akuien Chol GOSS Minister of Finance and Economic Planning Sudan Consortium Paris, March 10, 2006 Speaking notes for Slide 1; Introduction Slide: Excellencies, Ladies and Gentlemen It is my pleasure to make a brief presentation to you on the Government of Southern Sudan�s strategy for aid management, which is co-ordinated by my Ministry. As you know, the Government of Southern Sudan is in the fortunate position of being able to finance the bulk of its budget from its own resources. Our estimates for 2006 show that approximately 85% of our budget will be financed by domestic revenues, while just 15% will be financed by donor aid. Nonetheless, we believe it is important to pay attention to issues relating to aid management, so that the 15% of our budget that comes from donors is well co-ordinated, consistent with our priorities, and does not absorb a disproportionate amount of our time and attention. Speaking notes for Slide 1; Introduction Slide: Excellencies, Ladies and Gentlemen It is my pleasure to make a brief presentation to you on the Government of Southern Sudan�s strategy for aid management, which is co-ordinated by my Ministry. As you know, the Government of Southern Sudan is in the fortunate position of being able to finance the bulk of its budget from its own resources. Our estimates for 2006 show that approximately 85% of our budget will be financed by domestic revenues, while just 15% will be financed by donor aid. Nonetheless, we believe it is important to pay attention to issues relating to aid management, so that the 15% of our budget that comes from donors is well co-ordinated, consistent with our priorities, and does not absorb a disproportionate amount of our time and attention.

2. Presentation Outline Existing Aid Management Mechanisms Aid Management Challenges Strengthening Aid Management Next Steps

3. 1. Existing Aid Management Mechanisms Humanitarian sectoral coordination mechanisms (health, education, water, agriculture, donors..etc and UN Workplan). Development Planning Coordination Mechanism (MDTF (oversight committee, project appraisal committee) and Sudan Consortium). Policy Development Coordination Mechanisms (Thematic Groups based on JAM Framework) Budget Coordination Mechanism (Budget Working Groups)

4. 2. Aid Management Challenges Lack of aid strategy and overarching objective. Poor coordination of various mechanisms. Overlapping and duplication. Lack of information about volume and type of aid. Humanitarian aid still dominant. Poor tracking of flow of aid and lack of information. Limited capacity and experience in aid management

5. 3. Strengthening Aid Management Developing an Aid Strategy Linking aid to policy development and budget priorities and process Aid Tracking Speaking notes for Slide 2; Key Areas of Current Work: We are currently undertaking three key areas of work with respect to Aid Management. The first is to develop a comprehensive Aid & Debt Strategy for the Government of Southern Sudan, to guide our Aid Management policy. The second is to co-ordinate our donor aid with the GoSS budget priorities and the budget process. The third is to establish a mechanism for aid tracking. I am sure you will agree with me that all three are essential if we are to make effective and efficient use of the assistance that the donor community has so generously extended to Southern Sudan. During the rest of my presentation, I will briefly outline the objectives of our Aid & Debt Strategy, before going into greater detail on the steps we are taking to co-ordinate donor aid with the GoSS budget priorities and the budget process.Speaking notes for Slide 2; Key Areas of Current Work: We are currently undertaking three key areas of work with respect to Aid Management. The first is to develop a comprehensive Aid & Debt Strategy for the Government of Southern Sudan, to guide our Aid Management policy. The second is to co-ordinate our donor aid with the GoSS budget priorities and the budget process. The third is to establish a mechanism for aid tracking. I am sure you will agree with me that all three are essential if we are to make effective and efficient use of the assistance that the donor community has so generously extended to Southern Sudan. During the rest of my presentation, I will briefly outline the objectives of our Aid & Debt Strategy, before going into greater detail on the steps we are taking to co-ordinate donor aid with the GoSS budget priorities and the budget process.

6. (a) Developing an Aid Strategy Revive development aid flow to Southern Sudan. Use aid, as part of public resources, effectively to accelerate sustained development (poverty eradication, good governance, MDGs) and realization of peace dividends (security and basic needs). Establish effective procedures for coordination and donor engagement. Set a system for aid allocation and tracking Speaking notes for Slide 3; Developing an Aid & Debt Strategy: As I have said, we are in the process of developing an overall Aid & Debt strategy to guide our Aid Management policy. The aim of our Aid & Debt Strategy will be to use our aid as efficiently as possible, and in the best interests of Southern Sudan. It will have a number of key components. Firstly, it will set out GoSS policy on aid and debt, with reference to our preferred aid modalities, as well as the linkages between aid and fiscal policy, and aid and economic development. Secondly, it will establish formal, streamlined procedures for donor engagement and co-ordination. This is particularly important in light of the limited capacity of a number of our institutions at present. Thirdly, it will establish centralised procedures for aid approval and tracking, co-ordinated by the Ministry of Finance and Economic Planning, which we will request all donors to comply with.Speaking notes for Slide 3; Developing an Aid & Debt Strategy: As I have said, we are in the process of developing an overall Aid & Debt strategy to guide our Aid Management policy. The aim of our Aid & Debt Strategy will be to use our aid as efficiently as possible, and in the best interests of Southern Sudan. It will have a number of key components. Firstly, it will set out GoSS policy on aid and debt, with reference to our preferred aid modalities, as well as the linkages between aid and fiscal policy, and aid and economic development. Secondly, it will establish formal, streamlined procedures for donor engagement and co-ordination. This is particularly important in light of the limited capacity of a number of our institutions at present. Thirdly, it will establish centralised procedures for aid approval and tracking, co-ordinated by the Ministry of Finance and Economic Planning, which we will request all donors to comply with.

7. Aid Strategy: Making Aid Effective Make a better value of aid monies Enhance firmer commitments and more predictable financial flows Ensure government ownership and leadership Strengthen government and local institutions � link to the domestic budget as far as possible (example of MDTF) Create incentives for government to make clear policies Understand better the context Meet basic needs in a more coordinated way

8. (b) Linking Aid to Policy Development Eight Thematic Groups adopted by the Cabinet but not yet operational. Multi-Ministry, development partners and donor membership and participation in Thematic Groups Thematic Groups as mechanism for effective coordination between and among ministries and between them and their development partners (donors, UN, NGOs) Thematic Groups to provide policy direction for coordination of aid and drivers of policy discussion Thematic Groups to ensure the appropriate allocation and utilization of resources based on priority needs Speaking notes for Slide 5; Linking donors into policy development: The JAM assessment which was conducted in 2005 provided the first comprehensive analysis of the recovery and development needs of Southern Sudan. Subsequently, the GoSS has decided to continue to make use the forum provided by the eight JAM Thematic Groups to drive future policy discussion. A number of Ministries and Development Partners are participating in each Thematic Group, which are chaired at Ministerial level. It is expected that the policies formulated in the Thematic Groups will influence the expenditure priorities identified by Ministries in the budget process. Speaking notes for Slide 5; Linking donors into policy development: The JAM assessment which was conducted in 2005 provided the first comprehensive analysis of the recovery and development needs of Southern Sudan. Subsequently, the GoSS has decided to continue to make use the forum provided by the eight JAM Thematic Groups to drive future policy discussion. A number of Ministries and Development Partners are participating in each Thematic Group, which are chaired at Ministerial level. It is expected that the policies formulated in the Thematic Groups will influence the expenditure priorities identified by Ministries in the budget process.

9. Linking aid to GoSS Budget and Priorities: MDTF MDTF provides mechanism (secretariat, oversight committee and Sudan Consortium) to: link aid to GOSS budget and priorities through Project Appraisal Committee established in the MOFEP. coordinate development aid within GOSS and among and between GOSS, donors and development partners. provide forum for sharing information on aid flow not only within GOSS and among donors but also between GNU and GOSS (IOC observors) . track and monitor aid and review commitments (Sudan Consortium) for mutual partnership and accountability among all development partners, donors and civil society. link humanitarian aid with development aid and track trends Speaking notes for Slide 6; Linking aid into the GoSS Budget: The Ministry has already taken a number of steps to co-ordinate its budget process. This is important in its own right, as a weak budget process is associated with weak service delivery, but it also has the additional advantage of providing a mechanism for linking aid into the GoSS budget. First of all, the 25 or so institutions that constitute the GoSS Central Government have been grouped into ten budget sectors, according to their function. The linkages between institutions within a sector are important for integrated planning and service delivery, and will also help relatively weaker institutions to benefit from the experience of stronger ones. Each Sector is expected to set up a Budget Sector Working Group which will establish annual expenditure priorities and outcome indicators for a three year period, based on policy priorities. These plans will be known as Budget Sector Plans. Donors will be invited to participate in the Budget Sector Working Groups.Speaking notes for Slide 6; Linking aid into the GoSS Budget: The Ministry has already taken a number of steps to co-ordinate its budget process. This is important in its own right, as a weak budget process is associated with weak service delivery, but it also has the additional advantage of providing a mechanism for linking aid into the GoSS budget. First of all, the 25 or so institutions that constitute the GoSS Central Government have been grouped into ten budget sectors, according to their function. The linkages between institutions within a sector are important for integrated planning and service delivery, and will also help relatively weaker institutions to benefit from the experience of stronger ones. Each Sector is expected to set up a Budget Sector Working Group which will establish annual expenditure priorities and outcome indicators for a three year period, based on policy priorities. These plans will be known as Budget Sector Plans. Donors will be invited to participate in the Budget Sector Working Groups.

10. Linking aid to GoSS Budget: Budget Sector Working Groups Plan is underway to group all GoSS spending agencies into 10 Budget Sector Technical Working Groups to: identify sectoral priorities within the overall priorities specified by Thematic Groups. guide sector budget allocations, planning and management guide the prioritization of donor support at sector level Establish annual expenditure priorities and outcome indicators monitor sectoral performance against agreed upon outcome indicators track aid flow at sector level provide basis for sectoral public expenditure review and sectoral fiscal reporting data Donors and development partners invited to participate in the Budget Sector Working Groups

11. Linking Thematic Groups & Budget Sector Working Groups Thematic Groups will play a key role in developing GoSS development strategy � chair at Ministerial level. Budget Sector Working Group will play a key role in budget planning � priorities will be guided by Thematic Groups � chair at Under Secretary level Speaking notes for Slide 7; Link with JAM & Budget Sector Working Groups: Let me briefly explain the relationship between these Budget Sector Working Groups and the JAM Thematic Groups in a little more detail. The JAM Thematic Groups will play a central role in developing GoSS development strategy, and the Chair will be at Ministerial level. The Budget Sector Working Groups, by contrast, will play a key role in budget planning. Their budget priorities will be guided by the policies discussed and agreed by the Thematic Groups. Consistent with the technical nature of the Sector Working Groups, the chair will be at Under Secretary level. Speaking notes for Slide 7; Link with JAM & Budget Sector Working Groups: Let me briefly explain the relationship between these Budget Sector Working Groups and the JAM Thematic Groups in a little more detail. The JAM Thematic Groups will play a central role in developing GoSS development strategy, and the Chair will be at Ministerial level. The Budget Sector Working Groups, by contrast, will play a key role in budget planning. Their budget priorities will be guided by the policies discussed and agreed by the Thematic Groups. Consistent with the technical nature of the Sector Working Groups, the chair will be at Under Secretary level.

12. Budget Sector Working Groupings Accountability Economic Functions Education Health Infrastructure Justice, Law & Order Natural Resources & Rural Development Public Administration Security Social Services Speaking notes for Slide 8; Budget Sector Groupings: This slide briefly shows you the ten Sector groupings, which are broadly consistent with the international Government Financial Statistics (GFS) classifications.Speaking notes for Slide 8; Budget Sector Groupings: This slide briefly shows you the ten Sector groupings, which are broadly consistent with the international Government Financial Statistics (GFS) classifications.

13. 4. Way Forward: Next Steps Develop Aid Management Strategy for Southern Sudan and to be presented to Council of Ministers for approval. Operationalize Thematic Groups and make them operational with clear procedures and regular meetings. Present the plan for establishing Budget Sector Technical Working Groups to the Council of Ministers for approval and make them operational. Capacity building and staffing of Aid Management Unit established within the MOFEP and make it functional and operational. Identify key development partners and donors for membership in Thematic Groups and participation in Budget Sector Working Groups. Strengthening coordination between GNU and GOSS on aid management and tracking of aid flow. Speaking notes for Slide 11; Way Forward: As I conclude, I wish briefly to outline the way forward on the Sector Working Group Process. Sectors have already been requested to form their groups, and UN agencies have already made a formal commitment to participate. It is hoped that other donors will do the same. We will hold a workshop in Juba in April, to commence the Working Group process. It is our hope that, as well as acting as a key tool for budget co-ordination and development, these groups will also assist us as we try to improve our aid management. I thank you very much for listening to me.Speaking notes for Slide 11; Way Forward: As I conclude, I wish briefly to outline the way forward on the Sector Working Group Process. Sectors have already been requested to form their groups, and UN agencies have already made a formal commitment to participate. It is hoped that other donors will do the same. We will hold a workshop in Juba in April, to commence the Working Group process. It is our hope that, as well as acting as a key tool for budget co-ordination and development, these groups will also assist us as we try to improve our aid management. I thank you very much for listening to me.