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SPA-CABRI Project on “Putting Aid on Budget”

Learn about the importance of putting aid on budget, recommendations from the Paris Declaration Survey, and the SPA-CABRI Project focusing on aid effectiveness in Sub-Saharan Africa. Understand the process, challenges, and benefits of capturing aid in national budgets.

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SPA-CABRI Project on “Putting Aid on Budget”

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  1. SPA-CABRI Project on “Putting Aid on Budget” Presentation to DAC Joint Venture on Public Finance Management Paris, July 2007 Peter Dearden, Strategic Partnership with Africa

  2. Presentation Outline • Why is “Putting Aid on Budget” Important • SPA-CABRI Project on “Putting Aid on Budget” • Possible Role of JV-PFM

  3. Why is Aid on Budget Important? Aid Dependency, Selected Countries (net aid/central government expenditure, 2004, %) Source : Africa Development Indicators 2006

  4. Findings of the Paris Declaration Survey • Indicator 3 : Aid flows aligned on national priorities : • Total ODA recorded in the approved budget, as % of Total ODA disbursed to government sector (as reported by donors, ex post) • 100% would be ideal • Results : average of 42% and a huge range (from 2% to 200%) • Conclusions • A large proportion of aid flows to the government are not comprehensively and accurately reflected in budget estimates • This undermines credibility of the budget for governing effective allocation of resources in line with policy priorities

  5. Recommendations of the Paris Declaration Survey • Countries need to establish a comprehensive and credible budget linked to policy priorities • Donors need to provide information on intended disbursements to the budget authorities and provide aid on budget in good time, and aligned with programme and sector priorities in the budget • Donors and partners need to work together to ensure that budget estimates are more realistic.

  6. Why Put Aid “On Budget” ? • Strengthens National Ownership of development process • Allows comprehensive resource allocation decisions (inter-sectoral, intra-sectoral) in light of overall resource flows • Builds Transparency and Accountability • Donors to government • Government to Parliament, civil society • Line Ministries to Ministry of Finance • Ministry of Finance to Line Ministries • Facilitates fiscal-monetary management

  7. Why a SPA-CABRI Project on Putting Aid on Budget? • Important issue in many countries in Sub-Saharan Africa : high aid dependency, PFM capacity constraints • SPA brings together donor HQ staff and African governments to identify and promote aid effectiveness good practice • CABRI brings together African Senior Budget Officials to promote budget management good practice

  8. Study Process 10 Country Case Studies Inception Report [June 07] Literature Review • Synthesis Report • Good Practice Note [Draft in Nov 07, final in Jan 08]

  9. Good Practice Note : Components • Why? Explain why capture aid in the budget process • How? Set out good practice • General principles • Specific examples • Who? Address both sides of the problem : • Government systems and processes • Donor behaviours • Recommend how to monitor progress in bringing aid on budget

  10. “On Budget” Study Definitions (1)

  11. “On Budget” Study Definitions (2)

  12. Key Challenges in Conducting the Study • Each country situation is different • Budget laws, procedures, systems vary • Good Practice Note needs to recognise • Government capacity to absorb and use data may be limited • Governments typically have ongoing complex PFM reforms • Donor policies (and capacity to comply with partner government requirements) also varies

  13. Case Study Country Selection • Capture different country contexts (strength of PFM systems, aid context, aid management experience) • 10 Group A countries : • Burkina Faso, Ethiopia, Ghana, Kenya, Mali, Mozambique, Rwanda, South Africa, Tanzania, Uganda • Of which, 5 possible Group B countries for deeper study : • Ghana, Mali, Mozambique, Rwanda, Uganda

  14. 10 Group A Country Reports • Country Context • PFM system, planning and budgeting structures, processes, frameworks • Aid context : importance of aid flows, different modalities etc • Aid management : structures, processes • Aid capture (7 dimensions of “on budget”): • What aid is captured, and how well? • How useful is the information? • Why, why not?

  15. Country Case Study Process Existingdocuments Country Researcher CABRISenior Budget Officer DonorRepresentative Country Report

  16. 5 Group B Country Reports • Deeper analysis of experience • More interaction with government and donors at country level • Attempt to understand interplay between formal and informal systems (also political economy) • What works, what doesn’t, and why?

  17. Role of JV-PFM Members? • Comments at this stage, to feed back to consultants as they start country work? • Pointers to existing material which the Literature Review should cover? • Facilitate input of donor views (from HQ and at country level)? • Engagement with draft Synthesis Report and Good Practice Note?

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