Putting the new aid agenda to work

1
Putting the new aid agenda to work

• Asia Programme Managers Meeting
• Delhi, May 22nd 2002

2
Quick Recap (1)

• Asia poverty reduction strategy processes are
• different
• not necessarily a PRS
• maybe state rather than federal level
• different views on role of state
• large/entrenched private sector
• welfarist vs. dev. concepts of poverty
• capacity is available
• civil society generally more organised

3
Recap (2)

• A new opportunity to influence pro-poor change?
• Not if political commitment remains weak
  process
• conditionality unlikely to be any
  different, project/sector
• support still important
• An entry point for DFID to support more
  strategic
• thinking, pro-poor dialogue changes in donor
• behaviour
• Pro-poor political change is complex does not
  come
• from outside

4
Recap (3)

• Challenges/dilemmas
• What makes for a quality prs process? Whats the
  bottom line? Is there a shared Asian perspective?
• Is a sound prs one backed by an MTEF? Should
  DFID support national/subnational govts without
  such a strategy? What about China? India? MICs?
• Need to establish some ground rules for working
  with more effectively with IFIs, RDBs ( Japan)
• Need an HQ policy that is evidenced-based, able
  to address the VFM question

5
PRSPs Aid instruments

• Support country leadership/ownership by working
  to strengthen Govt. systems and processes
• A move away from parallel/off-budget projects
• Shift towards joint funding of
• Sector programmes
• General budget
• Jointly agreed indicators, common performance
  assessment monitoring systems (building on
  national systems)
• Harmonised rules/procedures for disbursement,
  accountability risk assessment

6
Implications

• Types of project/sector support - on-budget,
  linked with
• PRS framework, performance-monitoring
• Balance between conditionality, earmarking,
  accountability
• requirements
• Capacity support/non-financial assistance
• Working with other donors and with
  non-government
• entities

7
Issues in selecting aid instruments

• Presence of a national commitment to poverty
  reduction (presence of a prs/MTEF?)
• Quality of PEM PFM, integrity of accounting
  audit arrangements, off-budget exps., quality of
  indicators for performance monitoring/
  expenditure tracking?
• Reform record on macro structural
• Risk vs. reward

8
IFI Instruments

• PRGF Key Features supporting PRS policy
  fw.
• Performance criteria/benchmarks streamlined
  linked to
• PRS policy commitments. Importance of PSIA.
• PRSC programmatic adj. credit, ex post
  performance
• assessment, annual tranches within medium term
• framework set by PRS. Due diligence tests
  CFAA, CPA,
• SSR, PSIA.
• Issues Ambitious reform agenda, need to build
  on
• sectoral processes, champions within Govt,
  annual
• tranching (reporting) vs.medium term
  perspective.
• Dangers donors ganging up, eggs in one basket

9
Budget Support Risks/Safeguards

• Risk of not achieving stated objectives because
  of
• only rhetorical commitment to poverty reduction
• other reform measures not taken or macro
  deteriorates
• corruption
• Ways of assessing/mitigating risk
• Presence of PRS backed by signs of pro-poor
  allocations/spend
• CFAA, PER, CPA other diagnostic tools
• Safeguards - capacity support to budgeting
  auditing, independent financial tracking,
  financial accountability conditions, expenditure/
  sector earmarking
• Media/NGO scrutiny

10
Case study - Tanzania

• Shift to budget support based on
• Macro stability largely achieved
• PRSP in place
• Increasing poverty focus of Govt. spending
• Commitment to improving Govt. systems
• Features of budget support
• Common mech. (9 other donors), common performance
  assessment linked to PRSP
• Safeguards CFAA complete, TA support to Govt.
  systems poverty monitoring

11
Tanzania

• Risks
• PRSP implementation off track
• PFM/PSR reforms ineffective
• Joint donor support collapses
• Complementary measures
• Strategic project support for pro-poor growth
  public accountability from below (CSOs)
• Continued SWAP engagement in PRS priority sectors
• Influencing through analytical support, aid
  coordination.