Response by the Department for International
Development to additional questions submitted by the International
Development Committee
RESOURCES AND
FINANCIAL TABLES
Q 1. Table 1 shows the headline resource
spending for the Department. 2002-03 £3,644 million, 2003-04
£3,689 million and in 2004-05 £3,806 million. This represents
a 1% increase for 2003-04 and a 3% increase for 2004-05. With
inflation at 3% this represents a cut in real terms, how is this
cut translated into your programme?
The 2000 Spending Review gave DFID a settlement
of £3,348 million in 2002-03 and £3,560 million in 2003-04,
an increase of 6%. The figures in the DR have been adjusted due
to the move to resource based budgeting and, in 2002-03, due to
certain in-year exceptional adjustments, such as EC rollover and
central reserve allocations, the equivalent of which are not yet
seen in 2003-04.
Although the increase in headline resource spend
between 2003-04 and 2004-05 is 3%, with respect to our programme,
the real increase is higher due to a reduction of £260 million
in spend on EC attribution as we no longer have to cover those
countries expected to accede to the EU in 2004.
Q 2. £195 million of assistance to Iraq
is planned for 2003-04 with nothing for subsequent years. How
can the Department spend so much, so quickly without waste?
£195 million was earmarked for Iraq in
2003-04 to enable DFID to respond immediately to critical needs.
Details of the £98.7 million of this sum that has already
been allocated are attached. We are working with our partner organisations
to make sure that it is not wasted. Further allocations to support
immediate, medium and longer term rehabiltation of Iraq will be
considered over the coming months in view of the developing situation
there, and the forthcoming IFI and UN needs assessment.
Q 3. In Table 2 how does reporting the outturn
and planned future expenditure on multilateral aid demonstrate
how DFID is "Improving the Effectiveness of Multilateral
Aid"?
This line shows our financial contributions
to the concessional arms of the multilateral development banks,
the European Development Fund, and the UN system.
Underpinning all our contributions is a policy
to improve the effectiveness of the multilateral agencies, in
particular to achieve alignment with Poverty Reduction Strategies.
We are increasing the scrutiny we put on the relative effectiveness
of multilateral agencies and our PSA and SDA targets linked to
this finance set specific goals for assessing improved effectiveness.
Q 4. Has any work been done to quantify how
the £865 million contribution to "EC Development Programmes"
meets DFID's objectives?
The Development Policy Statement of November
2000 put poverty reduction at the centre of EC policy, in line
with DFID's objectives, but question marks remain as to how widely
the policy has been applied.
A key objective for DFID is to increase the
poverty focus of EC expenditure. We monitor the proportion of
EC funding going to low-income countries on an annual basis. The
latest figures we have are from 2001 where the proportion rose
from 38% in 2000 to 44%.
Broader effectiveness is more difficult to quantify,
but we are working to produce a framework to measure the relative
effectiveness of multilaterals. The European Commission itself
is about to embark on a mid-term review of all of its country
programmes and DFID will participate in that exercise both in
country and through Brussels.
The Commission produces an Annual Report on
its activities and achievements in development which the UK, along
with other member states, scrutinises and debates in the General
Affairs and External Relations Council.
POVERTY REDUCTION
STRATEGIES, MEMORANDA
OF UNDERSTANDING
AND BUDGET
SUPPORT
Q 5. Can a note be provided giving further
details of how Memoranda of Understanding operate? What accountability
is built into these? How do they relate to Poverty Reduction Strategies?
DFID is developing Memoranda of Understanding
(MoUs) with—currently—a small number of developing
countries as a framework for shaping the overall medium and long
term relationship with a partner government. MoUs are based on
a set of core guiding principles which encourage the establishment
of developing partnerships based on best practices.
MoUs:
— Provide the framework for determining
the overall aid relationship with a partner-country government,
and define the basis for having substantive dialogue on key issues.
— Are open and explicit about our conditionality
and expectations. This includes explaining to our partners the
expectations placed on DFID by the UK Parliament, auditors and
public.
— Inform our partners about the predictability
of our support, particularly where where we are providing direct
budget support.
— Increase our accountability as they
clearly set out our commitments and indicate mechanisms for reviewing
progress on an annual basis.
— Provide a stimulus for greater donor
co-ordination and harmonisation, and alignment in support of national
poverty reduction strategies (PRSs).
In preparing MoUs, we endeavour explicitly to
relate these to the Poverty Reduction Strategy (PRS) process or
a similar national process. MoUs encapsulate the partner government's
own aspirations and objectives and set out how best we support
them in achieving these objectives. In so doing, they stress the
centrality of poverty reduction strategies to the development
process. MoUs draw on indicators specified in PRSs where these
are sufficiently detailed and credible for reviewing and reporting
on progress. To reduce transactions costs, we aim to develop joint
MoUs, and use PRS-outputs and outcomes as a basis for common monitoring
and review.
In return we expect our partners to honour their
commitments; in particular those specified in PRSs, greater involvement
of civil society in the policy process, transparency, and observance
of good governance codes, such as those agreed under specific
arrangements eg NEPAD.
Q 6. Can further details be provided of the
systems for assessing progress against a Poverty Reduction Strategy
and what independent review takes place?
Once countries have developed a full PRSP, they
are expected to produce annual progress reports outlining progress
in implementation. These are discussed by the Boards of the World
Bank and IMF, as the basis for continued World Bank and IMF assistance.
In addition, the Operations Evaluation Department of the World
Bank is currently preparing an independent review of overall progress
in PRS implementation.
THE NEW
PSA
Q 7. Has the new PSA resolved former difficulties
allowing the Department to map budget allocations more clearly
against them? Has this added greater transparency to the budget
allocation process? Is it possible to provide the committee with
a breakdown by function or programme (not country programme) of
where funds are spent linked to PSA objectives and targets?
The PSA has added greater transparency to the
budget allocation process. Our resource allocation process first
considers what share of resources should go to each PSA objective.
For example, our first PSA objective is to reduce poverty in Africa,
and we have set a budget for that for each year up to 2005-06.
Once such budgets are set, Directors prepare proposals for more
detailed allocations, as eventually set out in the Aid Framework
(Table 4 of the Departmental Report). We do not generally set
sectoral spending targets. Resource requirements for sectors such
as primary education or health are identified through divisional
and departmental planning processes in the light of both our overall
priorities, as expressed in the PSA, and local circumstances.
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