Further supplementary memorandum submitted
by the Department for International Development
DFID FOLLOW UP RESPONSE TO THE INTERNATIONAL
DEVELOPMENT COMMITTEE INQUIRY OF 18 JUNE 2002
DFID DEPARTMENTAL REPORT 2002
ISSUE 8: DIRECT
Question: (i) What evidence is there to show
that further benefits can be gained from extending budget support
from individual spending departments (for example, education in
Ghana) to simply giving the support to the Finance Ministry of
the country concerned?
1. Provision of budget support direct to
the Finance Ministry is preferable to provision directly to an
individual spending department where a government is committed
to poverty reduction, and where it allocates and spends resources
effectively in line with this commitment. This is because it:
Avoids undermining the integrity
of the budget caused by resources being provided to individual
spending departments that are not reflected in the budget.
Helps to strengthen ownership of
donor supported programmes by the government as a whole by increasing
the responsibility of the key central ministries.
Helps to increase the accountability
of spending departments to Government and Parliament.
Increases the pressure for improvements
to central government financial management and accountability
systems as greater reliance is placed on them.
And as long as resources are transferred
from the Finance Ministry to spending departments in a timely
manner the same benefits should be achieved at the sectoral level
as if the funds were provided directly.
2. DFID has been supporting improvements
in education in a number of countries by providing budget support
directly to Finance Ministries rather than to spending departments
(eg in Rwanda, Tanzania and Uganda). In Uganda, the number of
pupils in primary school tripled between 1990 and 1998and
more than doubled between 1996 and 1998leading to large
increases in the gross primary enrolment rate and the primary
completion rate. During the same period, the number of pupils
in primary school in Rwanda and Tanzania both increased by 20
per cent. This led to large increases in gross and net enrolment
rates in Rwanda. However, due to the greater growth in the school
age population, gross and net primary school enrolment (ie the
percentage of pupils going to school) in Tanzania declined over
this period, although the proportion of children completing school
3. If a donor wishes to link its budget
support to a particular sector, it should be channelled through
the Finance Ministry but notionally earmarked to that sector,
as DFID has done in the case of education in, for example, Uganda.
ISSUE 11: AID
Question: Reasons for bilateral aid to Singapore
4. The £5,000 expenditure for Brunei
noted in Table 9 of the Departmental Report represents the cost
of certain pensions and related payments where the UK has taken
over responsibilities from the government. The same also applies
to £79,000 of the £150,00 expenditure recorded for Singapore.
These pensions are declining.
5. The remaining £71,000 for Singapore
relates to scholarships financed under the Commonwealth Scholarship
and Fellowship Plan. This centrally funded DFID programme mainly
supports postgraduate students from developing Commonwealth countries
to undertake study and research in the UK. It has been agreed
that from financial year 2003-04, the Foreign and Commonwealth
Office will assume responsibility for funding all new awards for
Singapore and Brunei (which is also eligible to receive support
under the Plan). DFID will fund existing awards with expenditure
expected to finish in financial year 2004-05. DFID will not fund
new scholarships for students from high income members of the
Department for International Development
24 July 2002