Budget support as more effective aid? recent experiences and emerging lessons / edited by Stefan Koeberle, Zoran Stavreski, Jan Walliser.

Format:

Book

Conference/Event

Government document

Contributor:

Koeberle, Stefan, 1965-

Stavreski, Zoran.

Walliser, Jan.

Strategic Partnership with Africa. Buget Support Working Group.

Conference Name:

Practitioners' Forum on Budget Support (2005 : Cape Town, South Africa)

Language:

English

Subjects (All):

Economic assistance--Developing countries--Congresses.

Economic assistance.

Economic development--Finance.

Budget.

Developing countries.

Budget--Developing countries--Congresses.

Economic development--Finance--Congresses.

Economic development.

Genre:

Conference papers and proceedings.

Physical Description:

xxv, 508 pages : illustrations ; 26 cm

Place of Publication:

Washington, D.C. : World Bank, [2006]

Summary:

Is Development Aid More Effective if it is Provided Directly to a Recipient country's budget? What exactly is budget support? Why has it emerged as a promising financing approach? What is the evidence that it can deliver on its potential for reducing transaction costs, ensuring predictable financing, increasing country ownership, and strengthening domestic accountability?

Budget support has been broadly embraced by the development community as a promising vehicle for delivering effective aid and overcoming some of the shortcomings of the previous project-centered development paradigm.

Compared to traditional modes of aid delivery, budget support promises greater country ownership, increased spending on services that countries prioritize in their own budgets, more predictable support to sustained policy and institutional reforms, scaling up of poverty reduction efforts, and potentially greater development effectiveness. To the extent that it reduces the typical transaction costs of project fragmentation, encourages donor harmonization, and strengthens a sensible prioritization of public expenditures, budget support can contribute to a greater development impact as well as increased accountability, aimed at improving the delivery and impact of services for the poor.

Yet there are also challenges, including the perceived fiduciary risk associated with budget support, tensions between the need for predictability and a response to uneven country performance, the difficulties of effective donor coordination, and the need for alignment with country programs.

Budget Support as More Effective Aid? Recent Experiences and Emerging Lessons provides a first comprehensive overview that takes stock of the emerging experience with budget support. It presents a variety of views and approaches by a broad range of development practitioners from recipient country governments, international financial institutions, academia, and donor agencies. Its insightful analysis draws on contemporary research and evaluation work, as well as broad practical experiences with budget support. This volume contributes to the ongoing debate about the effectiveness of development aid by clarifying key concepts, identifying implementation issues, and highlighting specific country experiences with budget support.

Contents:

1 Budget Support: Concept and Issues / Stefan Koeberle, Zoran Stavreski 3

A Context for the Emergence of Budget Support 3

B Definitions, Key Characteristics, and Rationale for Budget Support 5

C When Is Budget Support Appropriate? 10

D Key Issues in Design and Implementation 16

2 Managing Fiduciary Issues in Budget Support Operations / David Shand 27

A Fiduciary and Developmental Objectives: Two Sides of the Same Coin 28

B Issues in Fiduciary Risk 32

C Using Public Financial Management Diagnostic Information 34

D Measuring and Calibrating Fiduciary Risk 35

E Strategies to Manage and Mitigate Fiduciary Risk 37

F Is Budget Support Improving PFM? 40

Part II Recent Evaluations of Budget Support 45

3 Poverty Reduction Support Credits (PRSC): A Stocktaking / John M. Factora 47

A Operationalizing the PRSP 49

B PRSP Alignment: Content and Coverage 56

C Harmonization and Predictability 65

4 European Commission Budget Support: An Innovative Approach to Conditionality / Directorate General for Development 81

A The European Commission's Approach: How Does it Work? 81

B EC Approach: What is the Rationale? 83

C EC Approach: What Does the Review of Experience to Date Show? 85

5 A Framework for Evaluating General Budget Support / Mike A. Hammond 91

A Evolving Goals of Budget Support 91

B Purpose, Subject, and Scope of the Evaluation 93

C The Evaluation Framework 95

D Implementing the Evaluation 98

6 General Budget Support: Key Findings of Five Usaid Studies / Development Information Services 105

A Issues Analyzed 106

7 Does General Budget Support Work? Evidence from Tanzania / Andrew Lawson, David Booth, Meleki Msuya, Samuel Wangwe, Tim Williamson

A How Can We Judge Success? 121

B The Tanzanian Context 122

C Findings 122

D Overall Conclusions 135

E Learning from Tanzania 136

8 General Budget Support and Public Financial Management Reform: Emerging Lessons from Tanzania and Uganda / Tim Williamson 139

A The Hypothesis 139

B Direct Effects of General Budget Support Funding in Tanzania and Uganda on Public Financial Management Outcomes 141

C Major Factors behind Improvements in Public Financial Management Systems 146

D The Role of Nonfinancial General Budget Support Inputs in Improving Public Financial Management Systems 147

Part III Aligning Budget Support with Country Programs 153

9 PRSPS and Budgets: A Synthesis of Five Case Studies / Rosa Alonso, Lindsay Judge, Jeni Klugman 155

A Data Production, Availability, and Use 157

B Budget Formulation and the PRSP-Has the PRSP Process Increased the Openness and Transparency of the Budget Process? 163

C Accountability for Expenditures and Results 173

D Costing and Consistency with Overall Macroeconomic Framework 177

E Donor Coordination and Alignment with PRS Priorities and Predictability and Variability of External Financing 186

10 Reconciling Alignment and Performance in Budget Support Programs: What Next? / David Booth, Karin Christiansen, Paolo de Renzio 193

A The Broad Problem: PRSPs as a Two-sided Deal 194

B The Particular Problem: PRSP Annual Progress Reports and Performance Assessment Frameworks for Budget Support 196

C Why PRSP Monitoring Is Not Working 199

D Reforming Performance Assessment Frameworks: Toward Results-based Conditionality? 203

E The Alternative 205

Part IV Predictability of Budget Support 213

11 Predictability of Budget Aid: Recent Experiences / Oya Celasun, Jan Walliser 215

A Data on Budget Aid 217

B Budget Aid Flows: How Unpredictable Are They? 220

C Intrayear Predictability of Budget Aid 225

12 Improving the Dynamics of Aid: Toward More Predictable Budget Support / Benn Eifert, Alan Gelb 229

A Aid Instability: Some Stylized Facts 232

B Cushioning Expenditures through Reserve Management and Fiscal Rules 236

C How Risky Are Multiyear Aid Commitments? 241

D Calibrating Budget Support: Performance Levels versus Changes? 252

E Developing Performance-based Norms to Guide Aid Allocations 255

Part V Budget Support Coordination and Conditionality 265

13 World Bank Conditionality: Trends, Lessons, and Good Practice Principles / Stefan Koeberle, Jan Walliser 267

A Conditionality: Definitions, Modalities, and Approaches 268

B Trends in World Bank Conditionality 272

C Applying Conditionality 276

D Key Messages of the Conditionality Review 284

E Good Practice Principles 286

14 Budget Support, Conditionality, and Impact Evaluation / Jan Willem Gunning 295

A The Case for Results-based Aid 295

B Aid as a Contract 297

C Implementing Results-based Aid: Design and Experience 301

D Shocks, Results, and Predictability 303

E Impact Evaluation 306

15 Trust, Conditionality, and Aid Effectiveness / Paul Mosley, Suleiman Abrar 311

A Intuitive Foundations 312

B The Model 316

C Econometric Tests 321

D Evidence from Case Studies 324

E Policy Conclusions and Recommendations 330

16 Fungibility, Prior Actions, and Eligibility for Budget Support / Oliver Morrissey 333

A Approaches to Improving Aid Effectiveness 333

B A Model of Selectivity through Prior Actions 335

C Government Spending: Fungibility, Allocation, and Effectiveness 339

D Conclusions and Policy Implications 341

Good Practice Note on Harmonization 344

Good Practice Note on Memorandum of Understanding 347

Part VI Country Experiences 351

17 Budget Support, Aid Dependency, and Dutch Disease: The Case of Uganda / Michael Atingi-Ego 353

A Patterns and Composition of Budget Support to Uganda, 1993-2003 354

B Implications of the Increase in Budget Support 356

C Prices of Tradables versus Nontradables 365

D Exchange Rate and Export Sector Competitiveness 366

E Policy Recommendations and Conclusions 367

18 Budget Support in Mozambique / Gregor Binkert, Jose Sulemane 371

A MOU, Dialogue, Trust Building, and Harmonization 371

B Planning and Budgeting 372

C Monitoring and Evaluation of Budget Support 373

D Accountability 373

E Institutional and Human Capacity Building 374

19 Afghanistan: Budget Support in a Postconflict Environment / Wahidullah Shahrani 375

20 Budget Support and Poverty Reduction in South Asia / Shantayanan Devarajan, Shekhar Shah 377

A Addressing South Asia's Development Challenges with Budget Support 379

B Challenges Facing Budget Support in South Asia 387

Part VII Donor Perspectives on Budget Support 391

21 International Monetary Fund Perspective on Conditionality / Atish Ghosh 393

A Purposes of IMF Conditionality 393

B 2002 Conditionality Guidelines 394

C Lessons for Donors Providing Budget Support 395

22 Ending Policy Conditionality: The Recent Shift in the United Kingdom's Aid Policy / Nick Amin 397

A Rationale for a New Conditionality Framework 399

B How Will the New Policy Be Implemented? 400

C Implications for Budget Support and Cooperation with Development Partners 403

23 Germany's Perspective on Budget Support / Ingrid-Gabriela Hoven 407

24 Direct Budget Support, Disbursement Mechanisms, and Predictability / Norwegian Agency for Development Cooperation (NORAD) 411

A The Use of Direct Budget Support 412

B Causes and Consequences of Lack of Predictability 414

C Graduated Response Mechanisms 416

D The Way Forward 424

25 Budget Support and aid Effectiveness: Experience in East Asia / Hiroto Arakawa 431

B Roles of Budget Support 433

C Aid Coordination and Harmonization in Vietnam and the Philippines 436

D Conclusion and Implications for Future Assistance to Africa 440

26 The Netherlands: Country Selectivity and Aid Modality Choices / Maarten Brouwer 447

Part VIII Practioners' Forum on Budget Support: Discussion and Concluding Remarks 451

27 Summary of Discussion 453

A Budget Support: Concept, Instrument Choice, and Fiduciary Aspects 453

B Programmatic Alignment, Ownership, and Accountability 455

C Predictability and

Macroeconomic Impact of Aid 457

D Donor Coordination and Conditionality 459

28 Forum Participants' Concluding Remarks 463

Louis Kasekende 463

Tertius Zongo 465

Nick Amin 466

Alan Gelb 469

Mark Plant 470

Jerome Morris Wolgin 474

James Adams 475

1.2 Sector Budget Support 8

1.3 Recent and Ongoing Evaluations of Budget Support 10

4.1 What Does "Results" Mean? 82

4.2 Frequently Asked Questions about the Commission's Approach to Budget Support 88

7.1 Summary of Findings-General Budget Support in Tanzania 137

9.1 Fostering Intra- and Inter-ministerial Cooperation in Burkina Faso 167

9.2 Tanzania: the Participatory Public Expenditure Review and the PRSP Process 170

9.3 Bolivia: Incentivizing Pro-poor Spending at the Local Level 175

9.4 Uganda: Poverty Criteria as a Guide to Budget Allocations 184

10.1 Why the APR Is Not Adequate for Budget Support Financing Decisions: Examples from Africa 200

13.1 Good Practice in Different Country Circumstances 288

18.1 Budget Support and the Aid Relationship in Mozambique 372

22.1 Essential Elements of the UK Policy 398

25.1 Aid Enhancement Efforts in Vietnam 437

25.2 Aid Enhancement Efforts in the Philippines 438.

Notes:

Contributions discussed at the Practioners' Forum on Budget Support in May 2005 in Cape Town, South Africa, along with conclusions from a May 2005 workshop conducted by the Budget Support Working Group of the Strategic Partnership with Africa (SPA).

Includes bibliographical references (pages 479-494) and index.

ISBN:

0821364634

OCLC:

63117073

Publisher Number:

9780821364635