Donor practices > Managing budget support

Fiduciary Risk and Poverty Reduction Budget Support

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Martin Johnson:
If fiduciary risk is judged to be high and / or if the risk of corruption is judged to be high, how do we assure the international taxpayer that Poverty Reduction Budget Support (PRBS) - i.e. providing lots of money to the consolidated fund of a government partner to be budgeted, expended, accounted, reported, audited and scrutinised through government systems - is a good thing?

petagny:
We can't assure the taxpayer that it's a good thing. Or am I missing something?

Martin Johnson:
If we can't assure that it's a good thing, then why are we doing it?

atseacliff:
I'm not sure who the international taxpayer might be; however my opinionated London cabbie (we'll call him Reg) might be a useful barometer of public opinion. For him the local policeman taking a group of kids to re-build a school Rwanda is worthwhile. Gordon Brown providing (pushing) large amounts of UK taxpayers money to prop up corrupt regimes in Africa - less so (I'm being polite!)

A more nuanced view would be that we (donors and consultants alike) are committed to support some of the poorest countries in the World. Unlike the situation 10 years ago we prefer to do that with our eyes open to the realities of weak systems; and support governments who can demonstrate that they are serious about incremental improvements over the medium to long term. In the short term we insist on greater transparency and the encourage civil society and mass media to participate in the budget process. We also diversify our reputational risk through the use of a range of aid instruments - supporting for example community driven development and micro finance projects.  In this brave new world we recognize bad things happen but demand governments investigate evidence of corruption with our support. Finally where the countries political elites back-slide on their commitments, we scale back budget support operations and are more selective in our entry points.

You all know a Reg. He doesn't buy any of what I said in the last paragraph. I usually attempt to placate him further with a sentence or two about the importance of addressing aid dependency.  That issue is for another posting. 

petagny:
Martin didn't say anything about the government being 'serious about incremental improvements'. We all know cases of BS recipients where that seriousness is seriously missing.

There have to be some minimum standards. Sometimes these will be arbitrary and have some perverse incentives -  but there you go! How about having a 'budget' as a good starting point. I mean a budget in a meaningful sense, i.e., an annual expenditure plan that gets implemented more or less (wide, but declining, margin of error allowed) as the legislature intended. Once a government has shown it can do that over a 3-year period, then we can talk. Oh yes, and it would be nice if the legislature had some sort of mandate from an electorate that had had the opportunity to vote for a choice of candidates (again, recognising the inevitable imperfections).

Reg is likely to become more vocal as 'fiscal consolidation' bites and he sees more potholes being unfilled and teaching assistants being withdrawn from his kids'school. Doesn't he have as much right to be taken as seriously as civil society in the recipient country?

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