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."
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