EC Experience with Budget Support Variable Tranches and MDG-Contracts

Transcription

1 EC Experience with Budget Support Variable Tranches and MDG-Contracts Jonathan Beynon European Commission: DG Development and Cooperation - EuropeAid [A/2: Macroeconomic Analysis, Public Finance and Budget Support] Presentation at ODI seminar on Results and Innovative Approaches [Seminar #5 in Budget Support Meeting Series] 21 September 2011

2 Millions EC Budget Support Basic features Standard eligibility criteria National/Sectoral devt strategy Stability oriented macro-framework Credible and relevant programme to improve PFM Share of budget support in the overall commitments (M ) EuropeAid Fixed tranches all or nothing, subject to eligibility criteria met (and, sometimes, additional specific conditions) Variable tranches subject to eligibility linked to progress against agreed targets Others SBS GBS 11 Part of a package dialogue, capacity building, conditionality, perfomance assesment

3 Results focus Input Output ( directly controlled ) Outcome ( directly influenced ) Impact ( indirectly influenced ) Eg. amount spent on primary education, health Eg: number of schools built, or teachers / nurses trained Eg: Vaccination rates, attendance at health centres; school enrolment and completion rates, gender equality ratios. Measures result at level of beneficiary (access and use of social services). Eg, literacy rates, mortality rates

4 Why results/variable tranches? Why focus on results? Results matter Encourage evidence-based policy making Protect political space of beneficiary countries Promote domestic accountability Stimulate demand for high quality data and data that supports evidence based decision making Why variable tranches? Partial payment for partial performance Avoid damaging stop-go in aid disbursements Enhanced credibility of disbursement conditions (GBS Guidelines 2007, developed from earlier 2003 guidance note) Incentives? FT/VT share: need balance between incentives/predictability (2003)

5 Analysis of EDF 9 GBS programmes Objectives to update 2005 analysis ( Innovative Approach to Conditionality ) of VT performance to inform EC BS policy and guidelines and wider debate on RBF Scope of study GBS programmes financed out of EDF 9 (ACP countries) 37 programmes 25 countries 2bn commitments ( ) Comprehensive database of all VT indicators used Conditionality, Predictability and Performance: A Study of EDF 9 General Budget Support Programmes (discussion paper, forthcoming) NB: work in progress, results still preliminary

6 Number of Ind. Analysis of EDF 9 GBS TT 1% DT 2% 30 Average Number of VT Indicators 25 VTs 43% in programmes with FT & VT VT 41% FT 56% Mean Min Max Education 23% IMPACT 3% ACTIVITY 20% PSR/PFM 51% H&E 62% when budget Indicators included OUTCOME 38% Health 23% Infrastructure Other 2% 1% OUTPUT 6% INPUT 33%

7 Millions Overall VT disb. rate = 66% Millions FT / VT disbursement rates by country FT Disbursement Ratios w/o TBs 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% plan FT actual FT Disb. Ratio VT Disbursement Ratios w/o TBs 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% plan VT actual VT Disb. Ratio

8 VT disbursement rates by type and sector No clear evidence that result indicator performance lower than for process indicators No real difference in performance across sectors

9 Evolution of Outcome/Impact Indicators in Heath and Education Significant progress made in all key health and education outcome/impact indicators in GBS programmes (both before and after)

10 Incentive effects of VTs? No clear correlation between share of VT and disbursement performance. But, other factors at play. and some evidence that incentive effect gets stronger over time

11 GBS/VT study - summary points Results broadly similar to previous 2005 study: VT up from 35 to 43% (38% after riders ) VT indicators down (from average 15 to 12) VT indicator type and sector shares similar VT disbursements slightly down (from 71% to 66%) Mix of indicators: Commission focus on outcomes important, but not as exclusive as perceived No clear picture regarding differences in performance of different types of indicator Linkage between general conditions, policy dialogue and policy change? Annual performance fund? Incentive effects? In medium term - indicator stability is important Broader assessment of rationale for results not tested More analysis needed!

12 MDG-Contracts Key features: a longer term, more predictable form of general budget support, focused on results, targeted at strong performers Main differences / advantages Longer term commitment horizon: 6 years, not 3. Less conditional: base tranche linked only to standard eligibility criteria More predictable: Larger fixed share (70%+), plus 10-15% APT (cf average 60% fixed share for regular GBS) MDG-related tranche (15-20%): performance related financial adjustments deferred to second half, after mid-contract review implies very high degree certainty for annual disbursement NB: still an instrument of budget support: standard eligibility criteria apply Launched in 2008/09 in 8 countries, 1.8bn, 50% of GBS

13 MDG-Contracts Strong disbursement performance to date Some good results Rwanda: primary completion 52% to 76 % ( /10, cf target 56%) B.Faso: assisted deliveries 55% to 76% ( ), cf initial target 60% Comprehensive analysis to be completed Mid contract reviews + overall assessment Initial lessons...? APT: flexibility MDG-based tranche Effects on govt planning/budgeting? In-year payment delays MDG-C disbursement rates 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

14 Conclusions Effectiveness of the Instrument? Political climate: does the instrument address political challenges?