1. Workshop on Territorial Approaches to Local Development
Session 3.2. Budget Support in decentralised context. How can we promote Local/territorial policies?
Methodological Note Providing EU Budget Support in Decentralised Countries
Jorge Rodriguez Bilbao “Civil Society & Local Authorities" European Commission-DG DEVCO B2
Workshop on Territorial Approaches to Local Development
What does it entail and how can it be fostered in Eastern and Southern African countries? Dar Es Salaam, 04 to 6 April 2016

2. The Concept of Budget Support: looking at the whole package
From the outset, budget support is conceived as an instrument to support national policies owned by partner countries.
The delivery of budget support comes with a package of four interlinked inputs:
Financial transfers to the national treasury of the partner country;
Policy dialogue;
Performance assessment framework;
A set of accompanying capacity development measures.
Conditionality and Indicators can only be focused on the responsibility of CG

3. The Concept of Budget Support: looking at the whole package
All of these budget support inputs also have a clear national focus.
Funds are channelled through national systems.
The central government is the main dialogue partner.
The assessment of performance indicators is done with national agencies.
The latter also tend to be the main beneficiaries of capacity development support provided around budget support. operations.

4. …. And two “Existential” questions of Budget Support
Are EU funds disappearing in a black whole or utilised within a ‘sound’ PFM system?

5. Some limits to the BS modality
Development outcomes (foreseen as objectives of EU support) occur at local level!!!)
BS concentrates staff in capital; little scope for getting out of the office and going to the "field";
Policy Dialogue: A “virtual” dialogue? Disconnected from the field?
The « missing middle » of Service delivery: How can we capture the most problematic downstream questions relating to service delivery? (e.g.; Front-line human resource issues)

6. Why this methodological note?
Three “push” factors
A large number of EU partner countries who have chosen to undertake a decentralisation reform process of variable scope and depth, find themselves at different stages of such processes and experience a greater or lesser momentum in the reform process.
Growing demands coming from EUD around the world – from regional seminars on Budget Support organised by EU in the last years (Hanoi 2007, Bangkok 2008, Jakarta 2010 and Bangkok 2012) - have progressively built a consensus among participants for EU to provide guidance on this topic.
There is a growing recognition of LAs as developmental actors in the international development context.

8. Policies Institutions
Why is it important to integrate Local Authorities in budget support operations?
1 - Giving equal attention to policies and institutions
BS operations are meant to help partner countries design and implement their own effective development policies.
Policies
Institutions
Their actual development impact critically depends also on delivery systems 8

9. Big ambitious strategy
What do we often have?
Mimicking of policies developed elsewhere
With no prior adaptation to local conditions
In settings of inadequate institutions
Big ambitious strategy
Inadequate
local institutions

10. 2 - Assessing the difference made by decentralisation
Why is it important to integrate Local Authorities in budget support operations?
2 - Assessing the difference made by decentralisation
Decentralisation reforms change a country’s governance and public administration and turn it into a multi‐level system in which responsibilities for development planning, financing and implementation are meant to be shared between national and local authorities 10

11. Why is it important to integrate Local Authorities in budget support operations?
3 - Coherence with new EU (and international community) vision regarding LAs as developmental actors…..
Recognise that LAs are political actors (i.e. self-government mechanisms of a local political constituency) and not just managerial entities for delivery of a specific set of services;
Improve the allocative and productive efficiency of public sector resources in a locality.
Mobilize and bring to bear on the national development effort, additional resources from localities (including those of local communities and private sector) 11

12. Why is it important to integrate Local Authorities in budget support operations?
4 - Re-thinking decentralisation and the developmental role of local authorities
A political process of empowerment of people over the public sector through the empowerment of their local governments
(stressing the political/social dimensions of the reforms) TO
FROM
A public sector reform process intended to transfer responsibilities, resources and authority from higher to lower levels of government
(stressing the administrative/ fiscal dimensions of the reforms)

13. BS in decentralised countries: options
BS to national and sector policies
attention to the role that local authorities might be able to play, as key components of the local public sector, in delivering such policies
BS to decentralisation reforms
to help national authorities articulate and operationalize national decentralisation policies and strategies, develop the legal framework of the sub-national system of governance and public administration, build the institutions and capacities for effective local governance and promote local development
BS to local/territorial policies
where there is a clear national policy commitment to promote local development to support the above policy and facilitate the establishment of central-local “development contracts” in support of territorial development strategies formulated and implemented by local authorities.
The purpose of all three types of operations, is not to induce the adoption of any particular policy, but to help partner countries operationalize and implement the basic policy choices they have already made. 13

14. Institutional outcomes BUDGET SUPPORT + COMPLEMENTARY MEASURES
New generation of BS programs
sector development outcomes,
Support better resourced and more capable local authorities,
including empowering Local Authorities to both (i) “localize” and implement national sector programs and (ii) deliver their own local development policies.
Institutional outcomes
Improve the institutions of sub-national governance and public administration, to fulfil the potential development role of Local Authorities, under agreed constitutional and legal frameworks.
Policy outcomes
Improve the policy, constitutional, legal and regulatory framework within which autonomous and accountable local authorities may be able to operate.
FINANCIAL AND NON FINANCIAL (TECHNICAL ASISTANCE, POLICY DIALOGUE, CAPACITY BUILDING)
BUDGET SUPPORT + COMPLEMENTARY MEASURES