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New directions in the quality of aiddebate:
Implications for support toPublic Financial Management
Stephen P. Groff
Deputy DirectorDevelopment Co-operation Directorate
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Outline
I. The Aid Quality Agenda andCommitments
II. Assessing Progress
III. Paris Declaration Commitments on PFMIV. New Actors and New Themes
V. High Level Forum on Aid Effectiveness:
Implications for the future Aid QualityAgenda
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Change .? Why Change?
Its about making aid work better where it is needed
3
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A Day in the Life of
Source Don De Savi n & COHRED
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Cc e p
C o m m o d i t y
T y p e( c o l o u r c o d e d )
C o m m o d i t
Ministry of Health: Kenya
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The Aid QualityJourney
RomeDeclaration
onHarmonisat
ion
Accra ActionAgenda
Busan29 Nov
1Dec 2011
2002
Monterrey
Consensus
2003 2005 2008 2010 2011
HLF-1
HLF-2
Paris
Declarationon Aid
Effectiveness
BogotaDeclaration on
SSC
DiliDeclaration onFragile States
Istanbulprinciples on CSO
effectivenessHLF-3
HLF-4
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The Paris Declarationpyramid
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Paris Declaration: what makes itdifferent?
Unprecedented consensus;
56 action-oriented commitmentsfor both Donors and Partnerscountries;
Built-in mechanism formonitoring progress at countryand global levels (12 Indicators);
and
Targets set for 2010 monitoredin 3 separate surveys (2005-
2011).
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Outline
I. The Aid Quality Agenda andCommitments
II. Assessing Progress
III. Paris Declaration Commitments on PFMIV. New Actors and New Themes
V. High Level Forum on Aid Effectiveness:
Implications for the future Aid QualityAgenda
k
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1 Operational DStrategies
2
Reliable Public
Management
Progress on track2005-2008
36%
59%
88%
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Targets requiring effortsbut within reach (2005-2008))
1 OperationalStrategies
2
Reliable Publi
Mana ement
49%
1483
45%
36%
59%
88%
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very special efforts (2005-
2008))
1 Operational DStrategies
2
Reliable Public
Mana ement
9%
22% (No progress)
49%
1483
45%
36%
59%
88%
43%
42%
42% (slippage)
20%
44%
22%
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Outline
I. The Aid Quality Agenda andCommitments
II. Assessing Progress
III.Paris Declaration Commitments onPFM: Key Messages
IV. New Actors and New Themes
V. High Level Forum on Aid Effectiveness:Implications for the future Aid QualityAgenda
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Total donor PFM support, 1995-2008
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Paris Declaration and PFM
DONORS committed to:
Provide reliable commitments of aid over a multi-year framework
Disburse aid in a timely and predictable way
Rely on transparent partner government budget and accounting mechanisms
Adopt harmonised performance assessment frameworks
PARTNER COUNTRIES committed to:
Publish timely, transparent and reliable reporting on budget execution
Ensure that national systems are effective, accountable, and transparent
Take leadership of the public financial management reform process
Mobilise domestic resources, strengthen fiscal sustainability
Create an enabling environment for public and private investments
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Evidence on PFM: Mixed
1 Operational DStrategies
2Reliable Public
49%
1483
45%
36%
59%
88%
45%
43%
47%
21%
44%
9%
26%
24%
ACCRA AGENDA FOR ACTION
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ACCRA AGENDA FOR ACTION:Commitments on PFM (2008)
DONORS will:
Use country systems [including PFM systems] as the first option in the publicsector.
Be transparent when they dont use them.
Support country-led reform programmes.
Develop corporate plans for using country systems.
Channel 50% (or more) of government-to-government aid through countryfiduciary systems (i.e. PFM + Procurement)
PARTNERS will:
- lead in defining reform programmes.
- Strengthen their budget planning processes
- Facilitate parliamentary oversight including through more transparency in PFM
PARTNERS & DONORS willjointly assess quality of country systems.
Wh t th diff t
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What are the differentcomponents of the
PFM system that aid can use?
Source: Mokoro (2010)
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Implementation
Many factors lead to donors bypassing country PFMsystems
Varying perceptions of risk
Emphasis on fiduciary risk
Developmental risk of not using country systems
Incentives and capacities in donor organisations
Political constraints: visibility, traceability...
Quality ofpartner country systems
Shifting transaction costs from partnergovernment to donor
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Some common myths
Using country systems means providing budgetsupport
Not necessarily: all aid modalities can make use ofcountry systems
An all or nothing approach?
Different components of country systems can be used
Pooled funds are a move towards use of nationalsystems
They might be, but need to be careful about secondbest solutions
Technical co-operation cannot make use ofcountry systems
Need a flexible approach
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Working Party on Aid Effectivenesssupport on PFM
Assessing progress (Quality and Use of PFM Systems)
Global Partnership on Country Systems
Dedicated Task Forces on PFM and Procurement
Identifying and disseminating good practice
Developing and supporting common tools (e.g. procurementassessment)
Country Level Work
Lending political support, monitoring, sharing experiences
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Outline
I. The Aid Quality Agenda andCommitments
II. Assessing Progress
III. Paris Declaration Commitments on PFMIV.New Actors and New Themes
V. High Level Forum on Aid Effectiveness:
Implications for the future Aid QualityAgenda
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Broadening the Partnership Shaping the global development architecture i.e. G20
Development Consensus
G20 discourse (June 2010) on the need for greater transparency,accountability and institutional governance including use of countrysystems
Development actors beyond the DAC:
Non-traditional providers of development assistance (i.e. MiddleIncome Countries, Emerging Economies, Arab donors etc)
Civil society organisations
For-profit private sector and foundations
Bridging the divide: DAC Statement on New Partnerships, BogotaStatement on South South Cooperation
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Objectives of Broadening thePartnership
Finding convergence and common ground
Share lessons on economic growth, povertyreduction and development co-operation
Mutual interest in achieving results while
respecting diverse ways to reach them Interest in improving all forms of co-operation
through inclusive dialogue, mutual learning andknowledge-sharing
Recall the enduring relevance of the Parisprinciples for developing countries (fragile states,MICs, LDCs)
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New Themes Climate Change Financing
Cancun pledges = USD 30 billion in Fast Start Finance(FSF) over 2010-2012 with an additional long-term goalof raising USD 100 billion per year by 2020 from publicand private sources
Public Private Partnerships
Stronger regulatory environments
Innovative Financing Mechanisms
Aid as Catalyst towards more Effective States
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Outline
I. The Aid Quality Agenda andCommitments
II. Assessing Progress
III. Paris Declaration Commitments on PFMIV. New Actors and New Themes
V. High Level Forum on Aid
Effectiveness: Implications for thefuture Aid Quality Agenda
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Where are we now?
MonterreyConsensus (2002)
Rome HLFon
Harmonisation (2003)
Accra Agenda
for Action(2008)
Bogota
Statement onSSC
(2010)
ParisDeclaration on Aid
Effectiveness (2005)
DiliDeclarationon fragile
states (2010)Korea
HLF (29
Nov. 1Dec.2011)
27
g eve orum on
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g eve orum onEffectiveness: A Unique
OpportunityForging a new consensus on aid and development? Chance to reinvigorate the global commitment towards the MDGs;
Refresh and reaffirm Paris / Accra principles;
Recognise the role of aid as contributor and catalyst fordevelopment results and effectiveness;
Improve the quality of partnerships through embracing partnercountry leadership, diversity and mutual respect;
Seek convergence based on complementary strengths anddifferentiated responsibilities.
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Who? Where? When?
A political eventthat attracts ministerialattendance, with decisive outcomes
Busan, Korea. Host: Government ofKorea
29 November to 1 December 2011.
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HLF-4- Main Objectives Stocktaking from the Paris / Accra process
Agreeing on features ofhigh quality aid and itsmonitoring frameworktowards 2015
Situating aid in its broader development context:
More actors, development finance effectiveness
Diversified approach: MICs, LICs, FS, regions
Catalyst dimension: trade, security, climate
Results and right-based approaches
i f li i l
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Emerging Areas for PoliticalOutcomes
Results and transparency for better accountability
Ownership and Leadership
Effective States and Alignment (Country Systems)
Diversity at country level fragile states, middle
income countries, LDCs Climate Change Financing
Recognise all forms of partnerships (SSC, PPPs)
Role of CSOs, Parliaments and local government
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Key milestones in 2011Working Party on AidEffectiveness
Meetings and KeyEvents
HLF4 Evidence Country Systems
Q1
Q2
Q3
Q4
4th High Level Forum on Aid Effectiveness
29 November 1st December, Busan, Korea
1st draft outcomedocument
MonitoringSurvey:country leveldata collectionEvidence forProgress SinceParisDeadlines: 31
March
Evaluation:
Synthesis report(April 2011)MonitoringSurvey:preliminaryresults 1st draftProgress sinceParis (July 2011)
Reportfinalisation(September2011)
Themes forBusanDeadline: January
Preliminary Menuof Options
WP-EFF EXCOM (9-10 March)
WP-EFF + ExCOM(7-9 July)
WP-EFF + ExCOM(5-7 Oct)
2nd draft outcomedocument
DAC SLM (6-7April)
WB/IMF SpringMeeting (16-17April)
WP-EFF co-chairsFirst NarrativeOutline forOutcomeDocument(comments by 3April)
GlobalPartnershipon CountrySystems (9-10
June)
Task Force onProcurement(May)
Task Force onPFM (6-7 June)
TBC: Meetingon EffectiveStates (Paris,October)
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www.oecd.org/dac/effectivene
http://www.busanhlf4.org/http://www.busanhlf4.org/