Opportunities and challenges to preparing national plans and budgets to achieve the Millennium Development Goals (MDGs): A perspective from UNDP Ethiopia Presented by Ms. Vinetta Robinson, Economic Advisor, UNDP Ethiopia and Eritrea, at the UNDG First Learning Event on MDGs July 19 th -21 st, 2005

1. Why MDGs-based planning in Ethiopia? The commitment of the GoE to MDGs as evidenced in the fact that Ethiopia has agreed to become a pilot country for MDGs costing\NA exercises and MDG operationalization measures. SDPRP I for Ethiopia, which was prepared in June 2002, had priorities and target areas which were not fully aligned with the MDGs. The advocacy of UN/MP/WB on the need to have MDGs-based planning, the commitment of the international community and the GOE, and the agreement with the government that the next 2 SDPRPs will be for 5 years, thus allowing for a timeframe in line with and consistent with MDGs..

2. MDGs-based planning process 2.1 Planning and Budgeting Framework: Is it sufficiently aligned with clear functional links? The Ministry of Finance and Economic Development (MoFED), is responsible for national planning and budgeting; makes efforts to build capacity for operationalizing MDGs relatively centralized and more efficient. The steps of the planning and budgeting framework are;MDGs (long term plans) SDPRP (PRSP) - MEFF (Med Term Expenditure Framework) - Annual Federal Budget -- Regional plan/budget However, as current national planning process has a short and medium term focus may fall short of the MDGs long term goals. The technical capacity of line ministries to carry out parallel processes like budgeting, action-planning, needs assessments, etc is also limited.

2. MDGs-based planning process (Contd.) 2.2 MDGs-NA and the link to SDPRP II and the sectors to make plans/strategies One of the first crucial steps in operationalizing the MGDs in Ethiopia is utilizing the MDGs-Needs Assessments (NA) and costing exercises as analytical inputs to align SDPRP with the MD/MDGs. The MDGs NA exercise commenced on August 2004 under the overall guidance of Government (MoFED) in collaboration with the UNCT, the MP and the WB and is basically an investment plan to meet the MDGs. The MDGs Task Force, chaired by the Head of the Development Planning and Research Department, MoFED served as a co-coordinating body. NA sectoral reports (the first drafts of which were completed in October 2004) on seven sectors and three thematic areas were prepared by the line ministries with the support of several consultants.

2. MDGs-based planning process (Contd.) A series of technical workshops (on methodological issues, scaling up for reaching the MDGs and review of the draft reports) have been held. The synthesis work that ties the studies together commenced in early December 2004 and is expected to be completed soon. It will: Assess the extent of inter-sectoral linkages and synergies. Establish the overall annual cost estimates of meeting the MDGs for the ten-year period (2005/ /15). Outline the financing strategy and indicate the financing gap Based on existing welfare monitoring system, outline the M&E System for MDGs implementation in Ethiopia.

3. Content of the MDG-based SDPRP II The Government is currently in the process of preparing the MDG-based SDPRP II that will run from : SDPRP II will take account of the assessment of the implementation of SDPRP I (2002/ /05) and will draw up, to a large extent, on the MDGs NA and Synthesis works. SDPRP II will deepen the fundamental work and pillars of SDPRP I, i.e., Human Resource Development, the Growth Agenda (Infrastructure Development, Rural-Urban Linkages, Private Sector Development), Tourism, NPA for Women, decentralization, Employment Generation through SME Development. It will reflect the outcomes of the 2004/05 Household Income Consumption Expenditure (HICE) survey and WM survey as well as the PPA study. Analytical works within Government, the World Bank and results of other relevant and credible studies will also contribute to the preparation and implementation of SDPRP II. It will place emphasis on assessing and developing institutional capacity and governance in tune with the requirements to achieving the MDGs.

3. Content of the MDG-based SDPRP II (Contd.) Issues and Concerns regarding content of SDPRP II How to ensure that outputs and annual budgets will fully reflect MDGs? The Millennium Project Vs. World Bank methodological approach on MDGs costing: mix of policy, institutions, interventions Size (over 100 indicators, some input and some output) and content of the SDPRP policy matrix to be refined: How to ensure that the next iterations in the policy matrix are consistent with MDG indicators? A significant increase in Direct Budget Support (DBS) in recent years is viewed as the best option for implementing MDG-based national plans and for scaling up resources to meet MDGs. Is this the case? On a positive side, despite the challenges entailed by the different aid modalities, the harmonization of donors towards the MDG-based SDPRP II and the way government delivers aid provides an opportunity.

4. Resource mobilization and utilization for scaling up The MDG-based national plan (SDPRP) is both a policy and resource mobilization instrument in Ethiopia Issues: Type and Source of financing Government Vs. donor finance instruments Financing levels: Plan A (government) Vs. Realism (WB- based on current levels of resource mobilization and aid flows and the concerns about sovereignty, capacity and Dutch disease). Capacity for increasing domestic revenue: tax administration and expansions in tax base

4. Resource mobilization and utilization for scaling up (Contd.) Domestic borrowing: plans to significantly increase but, IMF/WB and others concerned about its inflationary impact Monitoring and evaluation mechanisms to ensure resources mobilized are going into MDGs-based strategies/interventions: Oversight role of the Parliament/CSOs. Treatment of shocks : Immediate short term needs and macro- economic/social shocks induced by disasters like drought shift the budgetary focus from long-term MDG attainment to alleviation of the immediate shock impact. Institutional strength for delivery of MDGs: GoE comprehensive CSRP (Federal and Regional levels); status of public finance management and PFM committee; Joint BS missions (JBAR, FA), etc, but capacity, especially at regional and district levels, is very weak.

5. Ownership of the MDGs-based planning process MDGs-based planning and budgeting in Ethiopia are conducted primarily by MoFED and line ministries taking the leading roles with the UN, WB and MP acting as collaborators. The emerging political environment gives room for debate and changes to SDPRP II by the newly elected parliament. Issues and Concerns regarding ownership: Structure of the consultations process, finalization of pertinent back ground documents such as the Annual Progress Review (APR), Participatory Poverty Assessment (PPA), Welfare Monitoring (WM) survey and National Action Plan (NAP) on Gender and the tight schedule ahead were raised by the DAG. Regional consultation are being conducted. Yet, the issue is on whether the role of the Regions is sufficient: the Federal decentralized political system is such that, even if an MDG-based national plan is completed, there is no guarantee that focus on MDG target areas and priorities will be maintained when it is delivered to regions. Sufficient involvement of Civil Society Organizations and the private sector? The budgetary process is not as consultative as the MDG-based national plan (SDPRP); may result in a blurring of focus of MD/MDG priorities. Incompatibility in target setting and use of indicators ?

6. Partnerships Existing architecture for aid coordination and management: HLF, DAG and working groups Role of DAG: Financing and commitment to align support to SDPRP and, by extension, MDGs (mutual accountability). Concern: Will financing be sufficient and predictable ? Role of UN/MP: Advocacy, capacity building and technical advice/support Issue: The need to operate within the framework of agreed partnership agenda between DAG and GoE, i.e. the Addis Ababa Core Statement on Harmonization which addresses ownership, alignment and mutual accountability

7. Next Steps MDGs sectoral work: Endorsement of the remaining sectoral reports by the respective line ministries. MDGs synthesis work: Finalization of the report. Conducting a national workshop with the various stakeholders. The report will form the basis for the 10-year investment plan that will be prepared by the Government and will serve as an input in the formulation of the next SDPRP aimed at meeting the MDGs. Within the UN system, agreement has been reached that the preparation of the next CCA/UNDAF will also be based on the synthesis report. SDPRP II National level consultation scheduled to take place some time soon SDPRP II is expected to be finalized in September 2005 Continued GOE-DAG policy dialogue in the 6 th and 7 th HLF.