Documents considered by the Committee on 16 March 2011 - European Scrutiny Committee Contents

Annex: UK inputs into the Green Paper: the Future of EU Budget support to third countries

1.  "Specific comments on the key issues of budget support identified by the Green Paper:

2.  "Political governance and the role of political dialogue:

  • "The UK feels that the commitment to good governance (political and economic) by the partner country is an important pre-condition for receiving aid regardless of the aid instrument. This is more so for general budget support, as the latter de facto funds the whole national budget and programme of expenditure. Therefore good governance should feature as a key underlying principle for budget support in any Budget Support Memorandum of Understanding.
  • "The dialogue related to general budget support programmes provides an important opportunity to raise possible political governance issues and concerns that development partners may have. The political nature of the dialogue should not overshadow other elements of the budget support dialogue such as reforms, service delivery issues and results.
  • "Any political dialogue within budget support programmes should be consistent with other dialogues that take place in a partner country under different agreements and for a (e.g. Cotonou Agreement art 8).
  • "Development partners should be realistic about the leverage that they can have on political issues through the provision of budget support.

3.  "Role of policy dialogue and conditionality:

  • "The UK feels that conditions should only be used to achieve a balance between accountability (ensuring aid is spent on the purpose intended), ownership (enabling partner countries to determine their own policies and strategies to reduce poverty) and predictability.
  • "Conditionality has very limited ability to lever changes and to impose policies. It should be used to support the achievement of results: we want to move away from process conditionality towards outcome conditionality.
  • "The Green Paper rightly mentions that attribution of results is very difficult. We would welcome, and we would be happy to support, more efforts towards a more robust methodology to attribute results of budget support. This would improve our ability to communicate to the wider public the benefits of budget support.

4.  "Accountability:

  • "The UK would like more efforts in supporting domestic accountability when the European Commission provides budget support. This is equally important when assessing the partner country's political culture of domestic accountability, as a key determining factor when deciding to provide budget support. The assessment should be part of the specific eligibility criteria for providing budget support.

5.  "Programming of budget support:

  • "There is a need for greater transparency in how the European Commission makes the decision to provide budget support.
  • "The UK will continue its support to the European Commission's dynamic approach/trajectory of change in Public Financial Management (PFM) systems. We strongly believe that shifting to the use of minimum standards for PFM systems would be wrong. The dynamic approach is more appropriate for three fundamental reasons:
    • "countries most in need of budget support are those with the weakest PFM systems, and budget support helps strengthen PFM systems. So applying minimum standards leaves those with weak PFM systems initially trapped below the minimum standards;
    • "the application of a dynamic approach allows a proper cost-benefit approach: it entails testing whether the benefits from providing budget support (the expected results) outweighs the costs and risks; and
    • "the dynamic approach allows future reform objectives to be tailored to country circumstances; Setting minimum standards at a global level would not.

6.  "Strengthening risk assessment and dealing with fraud and corruption:

  • "The UK welcomes the drive to strengthen the assessment and management of risks.

7.  "Budget support in situation[s] of fragility:

  • "Budget support has been a critical aid instrument in situations of fragility (e.g. Rwanda and Sierra Leone). We would suggest the European Commission base its decision to provide budget support in fragile situations on an assessment of the risks and benefits of such support.
  • "We would welcome clear guidance on the additional safeguards we would expect the European Commission to have in place in fragile states when providing budget support.

8.  "Growth, fiscal policy and mobilisation of domestic resources:

  • "The UK believes it is important that budget support programmes do not undermine the efforts by the partner countries to mobilise domestic revenue through taxation. Indeed we need to clearly see a commitment by partner countries receiving budget support to boost their tax base."

previous page contents next page

© Parliamentary copyright 2011
Prepared 24 March 2011