AID EFFECTIVENESS

A GLANCE FROM GLOBAL TO COUNTRY LEVELS

Cao Manh CuongForeign Economic Relations Dept.Ministry of Planning and Investment

PAR I. AID EFFECTIVENESS GLOBAL CONTEXT

• Will donors reach their target of USD 130 billion by 2010?

• How can aid be used more effectively?• How do we help build capacity better?• Are we doing enough to accelerate pro-

poor growth?

WHY IS AID EFFECTIVENESS IN FOCUS?ODA Global Demand:

To achieve MDGs by 2015 developing countries need at least USD 150 billion annually from ODA resources.

ODA Global Supply:If the ODA amount pledged by donors at the Monterrey conference is materialized, the DAC members’ total net disbursements of ODA will rise from USD 80 billion at present to 130 billion in 2010.

Solution for matching ODA global demand and supply question

Maximizing Aid Effectiveness

DAC MEMBERS’ NET ODA IN 1990-2004 PERIOD

AND SIMULATION TO 2010

0.33

0.36

0.30

0.26

0.22

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

% o

f GN

I

0

20

40

60

80

100

120

140

OD

A (2

004

US$

bill

ion)

ODA as a % of GNI (left scale)

Total ODA(right scale)

Total ODA to Africa(right scale)

HOW CAN MAXIMIZE AID EFFECTIVENESS?

Following the Monterrey Conference, the 1st High Level Forum (HLF-1) on Harmonization was held in Rome in Feb. 2003 where the donors and the partner countries announced Rome Declaration on Harmonization.As result the HLF-1, OECD-DAC Working Group (WG) on Aid Effectiveness was established with participation of 14 partner countries (Vietnam is one member of the WG). Key outputs: Publication of Good Practice Papers – Development of contents for 2nd High Level Forum (HLF-2) on Aid Effectiveness. The HLF-2 on Aid Effectiveness was organized in Mar., 2005 where the donors and the partner countries endorsed Paris Declaration on Aid Effectiveness.

AID EFFECTIVENESS PYRAMID AS THE FINAL GOAL THAT THE PARIS

DECLARATION AIMS AT

OPPUNINITIES AND CHALLENGES OF PARIS DECLARATION ON AID

EFFECTIVENESS

At global level, the Paris Declaration provides a very strong international platform with a clear long-term vision for both donors and partner countries to bring the Harmonization, Alignment and Ownership Agenda forward.

At the country level, the Paris Declaration presents both opportunities and challenges when partner countries seek to ensure its successful implementation.

PART II. CONTEXT OF HANOI CORE STATEMENT ON AID EFFECTIVENESS

(HCS)

FREQUENTLY ASKED QUESTIONS ABOUT HCS

1. What is HCS? 2. Where did HCS come from? 3. Who developed HCS? 4. When did HCS become an official document?5. What are the contents of HCS?6. Why is HCS so essentially important?

It is a mutual commitment endorsed by the Government of Vietnam and the donor community on measures to improve AID EFFECTIVENESS in Vietnam.

WHAT IS HCS?

It is a localized statement of the Paris Declaration on Aid Effectiveness to Vietnam to ensure it is relevant to the country context.

WHERE DID HCS COME FROM?

Vietnam is the first partner country that has successfully localized PD

It was developed by the Partnership Group on Aid Effectiveness (PGAE) - A key GoV - Donor forum on Vietnam’s Aid effectiveness Agenda.

WHO DEVELOPED HCS?

It was endorsed by the donor community in Mid-term CG 2005 and approved by the Government in late September, 2005

WHEN DID HCS BECOME AN OFFICIAL DOCUMENT?

HCS contains 28 Partnership Commitments and 14 Indicators with 5 guiding principles:

WHAT ARE THE CONTENTS OF HCS?

1. Ownership 2. Alignment 3. Harmonization and Simplification4. Managing for Results 5. Mutual Accountability

HCS calls for and urges changes in behavior of both donors and Government toward aid effectiveness goals

WHY IT HCS SO ESSENTIALLY IMPORTANT?

PART III. HANOI CORE STATEMENT

ON AID EFFECTIVENESS (HCS) COMMITMENTS

OWNERSHIP (Commitments 1-2)

The Government of Vietnam takes the leadership in its 5 Year Socio Economic Development Plan (SEDP) and in integrating ODA into its planning (Commitment 1).

The Government of Vietnam further strengthens its leadership role in co-ordinating aid at all levels (Commitment 2).

ALIGNMENT (Commitments 3-17)

Donors align with Vietnam's strategies and commit to use strengthened country systems (Commitments 3-8).

Vietnam strengthens institutional capacity with support from donors; Donors increasingly use government systems. (Commitments 9-17).

HAMONIZATION AND SIMPLIFICATION (Commitments 18-24)

Donors implement common arrangements and simplify procedures (Commitments 18-21).

• Complementarity: More effective division of labour (Commitments 22-23).

• Incentives for collaborative behaviour (Commitment 24).

MANAGEMENT FOR RESULTS (Commitments 25-26)

The Government of Vietnam and donors jointly use results-oriented performance assessment frameworks to maximise aid effectiveness and manage implementation of the SEDP and related national, regional, provincial and sectoral plans (Commitment 25). Donors link country programmes and resources to achieve results that contribute to, and are assessed by, Government of Vietnam performance assessment frameworks, using agreed indicators (Commitment 26).

MUTUAL ACCOUNTABILITY (Commitments 27-28)

The Government of Vietnam and donors jointly assess, and carry out annual independent reviews, on progress in implementing agreed commitments on aid effectiveness and improved development outcomes through existing and increasingly objective country level mechanisms (Commitment 27). Donors provide timely, transparent and comprehensive information on aid flows and programme intentions to enable Government of Vietnam to present comprehensive budget reports to legislatures and citizens, and co-ordinate aid more effectively (Commitment 28).

PART IV. HANOI CORE STATEMENT

ON AID EFFECTIVENESS (HCS) INDICTORS AND TARGETS IN 2010

OWNERSHIP

1. 5 Year Socio-Economic Development Plan (SEDP) is finalised, CPRGS principles are integrated; SEDP is effectively implemented.

Indicative Targets to 2010Indicative Targets to 2010

5 Year SEDP targets are achieved

ALIGNMENT

2. Donor assistance strategies are aligned to the SEDP and related to national, regional, provincial and sector strategies

Indicative Targets to 2010Indicative Targets to 2010

All donor assistance strategies

ALIGNMENT

3. Donors strengthen government capacity by avoiding parallel implementation structures.

Indicative Targets to 2010Indicative Targets to 2010

No parallel PMUs