Conceptual framework of the Aid on Budget Study CABRI 6 – 8 October, 2008 Gisenyi - Rwanda

Putting Aid on Budget Study 2007 CABRI and the Strategic Partnership with Africa (SPA) Aid on Budget Study Internationally accepted standards of PFM and international aid effectiveness commitments Paris Declaration and centrality of alignment for aid effectiveness The conventional wisdom about putting aid on budget draws on public finance management, and about aid effectiveness. Consensus that sound budgeting and financial management is based on the following principles: • Budget comprehensiveness • Fiscal transparency • Transparency in order to ensure accountability

Putting Aid on Budget Study – cont. Aim - optimise country level processes for reflection and integration of aid flows at all stages of the budgeting process. Misconceptions to avoid: “Aid on Budget” not synonymous to budget support Projects are not necessarily off-budget Putting aid on budget not a mere technical exercise

Dimensions of capturing aid Contribution to the aid literature Missing element “on procurement” due to scope and complexity. However, once one considers “on treasury”, procurement becomes an important element All the dimensions are interdependent but it is possible to be on some dimensions but off others, e.g. aid not channelled via government may still be on plan and on report

International reference group Process and Outputs Group A Countries Group B countries 10 Country Case Studies Inception Report Literature Review International reference group Group A countries: Burkina Faso, Ethiopia, Kenya, South Africa and Tanzania Group B countries: Ghana, Mali, Mozambique, Rwanda and Uganda [more extensive studies] International reference group: Synthesis Report Good Practice Note

Conceptual framework Different aid disbursement channels: Channel 1: funds disbursed via Ministry of Finance Channel 2: funds disbursed to government, but via sector ministry or special project unit Channel 3: funds managed by donor, and government receives services or assets in kind Desired effects of aid on budget depend on: Quality of information Timeliness and accessibility Improved processes relating to non-aid resources Aid that is disbursed via a government body is not necessarily using the country system. Aid not channelled via government may still be on plan and on report. Quality of information: completeness, credibility (predictability), disaggregation and detail, etc. Timeliness and accessibility: who has the information, and at what stage of the relevant process. Quality of information and processes relating to non-aid resources (i.e. the quality of the underlying country system).

Key findings of the study Reporting vs. integrating aid Use of country systems relevant for all aid modalities Quantity vs. quality of aid integrated Institutional framework and incentives for use of country systems. Reporting vs. integrating aid: bringing aid on budget is not just about donors providing information to governments. Reporting aid on budget (providing information that can be included in budget documents). Integrating aid on budget (actually using government systems at the different stages of the budget cycle). Reporting and integration are not mutually exclusive activities, but reporting will not necessarily result in the same benefits as can be achieved from integration.

Key findings of the study – cont. Ensure that safeguards and compromises do not undermine benefits Strong link between partner countries' aid effectiveness strategies and strategies for strengthening PFM Importance of joint work by government and donors under government leadership.

Rwanda Working Session First CABRI working session Strong leadership from MINECOFIN in research and design Collaboration of different stakeholders Peer exchange with Mozambique, South Africa, Tanzania and Uganda.

Rwanda Working Session – cont. Research Process Phase 1 Identified gaps in reported ODA Phase 2 Quality ODA information in the budget process Phase 3 Analysis of information needs and data collection instruments Phase 1: quantified gaps between reported ODA on the consolidated account and ODA in the finance law and identified reasons for the gap. Phase 2: selected a combination of projects and programmes based on the criteria agreed upon in phase 1 to track when budget, disbursement and spending information on these projects and programmes were made available to whom and in what format by whom. Phase 3: analysed (i) the reasons for aid not being on budget or on account when it should be, (ii) the shortcomings of the procedures for information management to ensure the quality of aid integration, on both donor and government side.

Thank you!