The new UK results agenda - potential implications for budget support ... ?

[Martin Johnson]

The new coalition government has nailed its colours firmly to a results-based mast. The intention for this was signalled clearly in the pre-election Green Paper (One World Conservatism - A Conservative Agenda for International Development - document attached below). Whilst the Green Paper does acknowledge that some potentially important aid interventions (particularly in governance areas) do not lend themselves easily to clearly attributable and/or short term delivery of results, the starting point now appears to be that clearly attributable results are what is expected first and foremost.

What issues does this raise for DFID in terms of its strategic approach to working with partner countries? Directly attributable results cannot easily (if at all) be associated with Poverty Reduction Budget Support (PRBS) for example. Does this mean to say that PRBS is less likely to impact on poverty reduction and good governance than, say, a clearly defined results-based financing or results-based aid scheme? Or does it just mean that it is inconveniently difficult to attribute impact to PRBS? Does the inconvenience of this difficulty imply the emergence of a risk that DFID will begin to under-value some of its assets (e.g. PRBS and the package of engagement, dialogue and respect that often comes with it)?

What are the signs that Board members (government officials, practitioners and others) are beginning to see with regard to this? I sense a paradigm shift .... is it a shift in the right direction?

[Napodano]

The EC has recently published a green paper on the future of budget support.

The full document is attached. Key questions are:

Q1: Should budget support operations (especially general budget support) be designed to better reflect partner countries’ commitment to the underlying principles and if so, how? In particular, should budget support programmes make more use of political governance conditionality? Is there a case for adopting a different approach to political conditionality for general as opposed to sector budget support?

Q2: How can the budget support process be consistent with the political dialogue on underlying principles while maintaining the focus of policy dialogue on agreed development objectives? What could be the relevant fora and the appropriate level involving donors and partner country to raise and discuss concerns regarding underlying principles?

Q3: How can donors meaningfully respond to any deterioration in the underlying principles while protecting the development benefits and predictability of budget support?

Q4: How can policy dialogue with partner countries be made more effective and inclusive in contributing to achieving reforms, results and objectives?

Q5: How should donors use budget support conditionality to help improve performance, and how should they respond to failure to meet agreed conditions?

Q6: How can performance monitoring frameworks be improved and result indicators be best used in budget support operations in order to address the challenges identified above?

Q7: How can the performance of the public financial management system, including fraud prevention measures, and the value for money of budget support funds be best enhanced? Should the EU set minimum requirements for budget support?

Q8: How can budget support (including capacity building) be designed to further enhance domestic accountability and ownership in partner countries, including the participation of civil society?

Q9: How can mutual accountability better contribute to enhancing effectiveness of budget support operations in both donor and partner countries?

Q10: What kind of visibility/communication activities should be carried out both in donor and partner countries to enhance mutual accountability?

Q11: What criteria should the Commission use to inform decisions on how much if any budget support to provide to eligible countries?

Q12: What are the advantages and disadvantages of providing both general and sector budget support within the same country, or having one single budget support instrument? In which context would SBS be considered a more effective type of budget support?

Q13: What are the advantages and disadvantages, as well as the practical arrangements to ensure consistency and efficient coordination, of using a broad palette of aid instruments alongside GBS/SBS?

Q14: How can the above risks be best assessed within a comprehensive framework and managed to improve the effectiveness of budget support?

Q15: What kind of measures should the EU apply if the risk level is considered high with regard to fraud and corruption?

Q16: How can donors meaningfully respond, including with financial corrective measures, to cases of large scale corruption or fraud in the implementation of policies benefiting from budget support?

Q17: Should budget support be used to promote stability in fragile states, and if so, how?

Q18: How can budget support programmes be designed and implemented to best promote inclusive and sustained growth?

Q19: How can budget support policy dialogue and conditionality promote more domestic revenue generation and terminate dependency on aid? What form of an exit strategy should donors include in their budget support operations, and how to arrange it?

Q20: How can budget support be used to assist partner countries and regional organisations to further the process of regional integration?