1 PRSp Alignment Finnish Aid in a PRS Context Helsinki Workshop May 2003

2 Alignment – why worry? PRSps have entered a new phase – from design to implementation Implementation requires consistent & coherent external support behind PRSP priorities (targets) & country capacity to deliver Non-aligned donor strategies risk countries devoting scarce resources to managing donors rather than meeting targets!

3 Alignment – what is it? For external partners - the extent to which all aid instruments & modalities are congruent with the discipline & cycle of the national PRS, MTEF & budget. For partner governments - the extent to which the MTEF & the budget are subject to the national PRS (& vice versa?).

4 More definitions IMF (2003) distinguishes between: A.Temporal Alignment of countrys own processes with PRS & national budget cycle or donor processes with countrys processes e.g. aligning timing & phases of donor programmes with the budget/PRS cycle. B.Policy Alignment, where policies supported by donor programmes are derived directly from PRS.

5 Harmonisation & streamlining Related concepts Harmonisation refers to the extent to which there is a commonality in donor policies, procedures & practices Streamlining refers to the need to simplify, coordinate & reduce the number of procedures, indicators, missions, analytical reports etc.

6 Aligning with the PRSp (1) Extent of alignment will vary with country contexts & strength of the PRSp & PRS process Alignment at the country level includes drawing on or complementing the PRSp in all stages of the PRS cycle Optimally, the principal content of external partner strategies is derived directly from the PRSp (goals, targets, priorities etc)

7 Aligning with the PRSp (2) Where an assistance prog. is not derived directly from the PRSp it may complement it, e.g. by addressing areas of weakness, updating analyses, feeding in lessons Optimally, assistance programmes are implemented through existing partner Govt. institutions (disbursement, procurement, performance monitoring & review)

8 Aligning with the PRSp (3) External partner schedules are aligned with Govt. budget, MTEF and planning cycles Assistance programmes are coordinated & harmonised with other donors to promote selectivity, comparative advantage & reduce transactions costs.

9 Phases of PRSp Alignment Policy formulation Commun- ication Policy impln M&E Poverty analysis PRSP process: Results oriented, evidence based policy making? Financing Country strategies linked to PRSP goals targets & macro framework Projects/programmes/ budget support complement PRSP; implementation managed by govt agencies Financing on-budget; in line with budget/MTEF cycle; conditions & benchmarks streamlined with PRSP matrix Monitoring, review & audit drawing on govt. systems; annual PRSP review Shared analytical work; TA identified by Govt Consultative & transparent processes

10 Country Experience Ethiopia – complex environment, many external agencies Following end of war much re- engagement based on a relatively successful PRSp process – extensive participation Pool of capable GoE officials; Govt. leadership in preparation of PRSP (SDPRP) clear.

11 SDPRP starting point for common donor action; draws on sector progs. in health, educ, water, roads. DAG Core Group/donors agreed rules of engagement for support of SDPRP process, including a Joint Donor Fund. Commitment of most donors to build strategies on SDPRP Ethiopia

12 Ethiopia Progress on a common framework for budget support based on common matrix for performance assessment derived from SDPRP & alignment with annual PRSP review & budget cycle Share of GBS likely to rise to 30% SPA a key player

13 Ethiopia Harmonisation Task Force – adopted menu approach seeking to harmonise across all 3 main aid modalities: projects, programmes & GBS Politically sensitive Harmonisation of project aid the hardest to achieve; much assistance to SWAPs still projectised

14 Alignment risks & challenges All the donors eggs in one basket! What do Govts. do when things go wrong? Macro-frameworks & MTEF ceilings – can all aid be on-budget? Disconnects between donor HQs and country level Lack of alignment across/within Government

15 Alignment risks & challenges Dangers of over-centralisation? i.e. heavy focus on aligning with national institutions/processes. Whats the right level of participation? The need to manage expectations & support a robust political process, particularly around the budget.