ICGFM May 2011

1. New directions in the quality of aid debate: Implications for support to Public Financial Management Stephen GroffDeputy DirectorDevelopment Co-operation Directorate

2. Outline The Aid Quality Agenda and Commitments Assessing Progress Paris Declaration Commitments on PFM New Actors and New Themes High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda

3. Change ….? Why Change? It’s about making aid work better where it is needed 3

4. A Day in the Life of… Source; Don De Savigny & COHRED

5. Ministry of Health: Kenya Source: S. Kinzett (2004)

6. HLF-4 The Aid Quality Journey… Busan 29 Nov – 1Dec 2011 HLF-3 Istanbul principles on CSO effectiveness HLF-2 HLF-1 Dili Declaration on Fragile States Accra Action Agenda Bogota Declaration on SSC Paris Declaration on Aid Effectiveness Rome Declaration on Harmonisation 2010 2008 2011 2002 2003 2005 Monterrey Consensus

7. The Paris Declaration “pyramid”

9. 56 action-oriented commitments for both Donors and Partners countries;

10. Built-in mechanism for monitoring progress at country and global levels (12 Indicators); and

12. Progress on track 2005-2008 36% 59% 88%

13. Targets requiring efforts but within reach (2005-2008)) 36% 49% 59% 1483 45% 88%

14. Targets requiring very special efforts (2005-2008)) 22% 36% 49% 59% 43% 42% 1483 45% 88% 42% (slippage) 20% 44% 9% 22% (No progress)

15. Outline The Aid Quality Agenda and Commitments Assessing Progress Paris Declaration Commitments on PFM: Key Messages New Actors and New Themes High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda

16. Total donor PFM support, 1995-2008 Evaluation of Donor Support to PFM Reform in Developing Countries, ODI, 2010

18. Disburse aid in a timely and predictable way

19. Rely on transparent partner government budget and accounting mechanisms

21. Ensure that national systems are effective, accountable, and transparent

22. Take leadership of the public financial management reform process

23. Mobilise domestic resources, strengthen fiscal sustainability

26. Be transparent when they don’t use them.

27. Support country-led reform programmes.

28. Develop corporate plans for using country systems.

30. Strengthen their budget planning processes

31. Facilitate parliamentary oversight including through more transparency in PFMPARTNERS & DONORS will jointly assess quality of country systems.

32. What are the different components of thePFM system that aid can “use”? Source: Mokoro (2010)

33. Challenges in Implementation Many factors lead to donors bypassing country PFM systems 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 of partner country systems Shifting transaction costs from partner government to donor

34. Some common myths Using country systems means providing budget support Not necessarily: all aid modalities can make use of country systems An “all or nothing” approach? Different components of country systems can be used Pooled funds are a move towards use of national systems They might be, but this is more about harmonisation Technical co-operation cannot make use of country systems Need a flexible approach

35. Working Party on Aid Effectiveness support to 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. procurement assessment) Country Level Work Lending political support, monitoring, sharing experiences

36. Outline The Aid Quality Agenda and Commitments Assessing Progress Paris Declaration Commitments on PFM New Actors and New Themes High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda

37. 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 country systems Development actors beyond the DAC: Non-traditional providers of development assistance (i.e. Middle Income Countries, Emerging Economies, Arab donors etc) Civil society organisations For-profit private sector and foundations Bridging the divide: DAC Statement on “New Partnerships”, Bogota Statement on South South Cooperation

38. Objectives of Broadening the Partnership Finding convergence and common ground Share lessons on economic growth, poverty reduction 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 and knowledge-sharing Recall the enduring relevance of the Paris principles for developing countries (fragile states, MICs, LDCs)

39. New Themes Climate Change Financing Avoid pitfalls of complex funding channels Public Private Partnerships Strengthening regulatory and financial environments Risk Management Innovative Financing Mechanisms Additionality Predictability Aid as Catalyst towards more Effective States

40. Outline The Aid Quality Agenda and Commitments Assessing Progress Paris Declaration Commitments on PFM New Actors and New Themes High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda

41. Where are we now? Dili Declaration on fragile states (2010) Korea HLF (29 Nov. – 1 Dec. 2011) Bogota Statement on SSC (2010) Accra Agenda for Action (2008) Paris Declaration on Aid Effectiveness (2005) Rome HLF on Harmonisation (2003) Monterrey Consensus (2002) 27

42. 4th High Level Forum on Aid Effectiveness: A Unique Opportunity Forging 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 for development results and effectiveness; Improve the quality of partnerships through embracing partner country leadership, diversity and mutual respect; Seek convergence based on complementary strengths and differentiated responsibilities.

43. Who? Where? When? Apolitical eventthat attracts ministerial attendance, with decisive outcomes Busan, Korea. Host: Government of Korea 29 November to 1 December 2011.

44. HLF-4- Main Objectives Stocktaking from the Paris / Accra process Agreeing on features of high quality aid and its monitoring framework towards 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

46. Ownership and Leadership

47. Effective States and Alignment (Country Systems)

48. Diversity at country level – fragile states, middle income countries, LDCs

49. Climate Change Financing

50. Recognise all forms of partnerships (SSC, PPPs…)

52. www.oecd.org/dac/effectiveness/pfmWWW.BUSANHLF4.ORG

53. Do donors use your country systems? Yes No Sometimes

54. Does your country refuse aid because of complex donor requirements? Yes No Sometimes

55. Is aid effective in your country? Yes No Sometimes