Budget support and managing for results Presentation by Bodo Ellmers Action for Global Health Roundtable Madrid, 7 June 2010

More recipient country ownership Better alignment to development plans Less Transaction costs Funds recurrent costs (e.g. wages) rather than just investment (e.g. for hospital construction) Funds “systems” rather than “islands” of development Budget Support – The Advantages

Leads to more local spending (  job creation, income generation, economic development); Uses and thereby strengthens country systems More domestic accountability (to citizens in recipient countries) Avoids brain drain from public sector to donors’ projects  Sustainable and broad-based results

Focus on MDGs and poverty depends on recipient governments’ will and/or domestic power relations Problems of attribution and fungibility of money Very “central government” focused  Need to strengthen parliaments, watchdogs and citizen groups Less accountability to citizens in donor countries Can be diverted to currency reserves Budget Support – The challenges

Tax income UK Spain Health EducationDefense Administration France European Commission Budget Support: Fungibility and Attribution

Pro: Improves attribution, reduces fungibility Contra: Reduced ownership and alignment Sector Budget Support The better option?

EU Development Commissioner Piebalgs (Brussels, May 2011): Move from project-based to budget-based development policy: “Budget support is the best modality of development policy, but it is also the politically most demanding” ACP-EU Joint Parliamentary Assembly (Budapest, May 2011): Members of Parliament demand to : increase the amount of budget support as promised to 50% of the total aid set a collective EU target. ensure more parliamentary oversight. Provide their parliaments with the necessary information to hold the executive to account. EU Budget Support - Positions

Paris Declaration: „Managing for results means managing and implementing aid in a way that focuses on the desired results and uses information to improve decision-making” Partners: Strengthen the link between development plans and budget process Establish results-oriented reporting and assessment frameworks that monitor progress Donors: Link country programming and resources to results and align them with partner country performance assessment frameworks, Harmonise their monitoring and reporting requirements until they can rely more extensively on partner country systems Managing for results?

MfR can improve aid allocation, and thus aid effectiveness but... Choosing the right targets and indicators is difficult and “political” Pro-cyclical financing (results and progress depend on many factors, many of which beyond control of donors and recipients, e.g. Financial crisis) Results monitoring and measurement boosts transactions costs  use country systems Attribution of results is difficult for budget support  need to “show the development movie, not the picture” Aid works best in countries that don’t need aid  “Ensure that managing for results is linked to progress and not just results performance.” (AfGH) Managing for results – the challenges