Budget Support Module 6 Monitoring Monitoring a BS

Budget Support Module 6 Monitoring

Monitoring a BS programme: a continuous process Follow up and data collection § Reports from MF, Central Bank § IMF/WB / ECFIN Reports § Sector reports (implementation) § Enacted budget § Reports on budget execution § Assessments of PFM (PEFA, PEMFAR, PER, OBI) § Implementation reports of PFM Action Plan § Human rights reports § M&E indicators § Surveys, Statistics Running Head 12 -Point Plain, Title Case Analysis § Macroeconomic framework § Progress in implementing policies § Relevance/credibility of the policies § Progress of PFM reform § DRM (revenue) and Budget (expenditure) execution § Availability/accessibility of budget documents § Monitoring of performance indicators, achievement of results, specific objectives. § Evolution of risks § Monitoring of risk and mitigating measures POLICY DIALOGUE Payment file/annual report § Verify continued relevance/credibility of policies § Macroeconomic assessment § Annual report on PFM § Assessment of progress in transparency § Risk Management Framework (RMF) § M&E systems 2

Outline Module 6 1. Monitoring reforms and policy implementation 2. Monitoring the intervention strategy 3. Monitoring the eligibility conditions (FT) and the variable tranche indicators (VT) 4. Monitoring the fundamental values 5. Monitoring the policy dialogue, risk mitigation and complementary measures 3

Monitoring is a constant process Results achieved versus what was planned. Final Report incl. analysis of the reasons for possible ‘gaps’ Closure Reporting; disbursement upon proven performance and progress Programming Overall national policy Choice of overall objectives/results Harmonization and synchronization Choice of sectors Identification of “global goods” Country context analysis ü Public Policy Analysis ü Stakeholders analysis ü Political economy analysis Identification Implementation Continuous monitoring: Progress on agreed upon reforms, policy implementation, conditions, timeliness, factors affecting performance Identify need for corrective measures Proposed objectives & results Proposed scale and form Status of 4 eligibility criteria Prior actions & supporting measures Preliminary design & RMF implementation proposals Main risks & next steps Formulation Finalize intervention logic, budget & calendar, stakeholders, donor coordination, implementing modalities (disbursement criteria, CD, PD, M&E, domestic accountability, …), C&V RMF + FA Annexes

Monitoring progress Monitoring changes in Fundamental Values. RMF or any reason to inform Geographical Director – BSSC / FAST Annual Human Rights report Monitoring the progress in the Reform process or policies supported. New publications, progress reports? New policies? Keep track of IMF reports (Art. IV, PSI); Annual report Central Bank. Macro-economic policies Annual update RMF Annual Political and Policy dialogue Annual check on publication major budget information Monitoring PFM Reform Strategy and its implementation / results Monitoring results capacity building, risk mitigating measures, policy dialogue 5

Monitor the MTEF (link between Policies and Budget) valid? Policies MTEF Measurable outputs, results Strategies Programmes Annual Budget Performance Based Budgeting ? 6

Outline Module 6 1. Monitoring reforms and policy implementation 2. Monitoring the intervention strategy 3. Monitoring the eligibility conditions (FT) and the variable tranche indicators (VT) 4. Monitoring the fundamental values 5. Monitoring the policy dialogue, risk mitigation and complementary measures 7

SDG-C Intervention logic (example) Government strategy Outcomes (L 4) Impacts (L 5) Outputs (L 3) Inputs (L 1+L 2) Sustainable and inclusive growth Poverty reduction Democracy consolidated More competitive economy Better business environment Increased employability Increased use of public services Improved macro-economic management Improved public services Strengthened PFM Increased capacity to policy formulation and implementation Strengthened public sector institutions National and sector policies Budgetary resources Human resources Institutional structures Strategies and operational programmes SDG-C Induced outputs (L 3) Outputs (L 2) Contribution to: Improved macro-economic management Improved public services Strengthened PFM Improved policy form. & implem. capacity Strengthened public sector institutions Inputs Activities (L 1) More funds available for discretionary spending Increased predictability of external aid Improved harmonisation and alignment Reduced transaction costs Transfer of funds to the Treasury Policy dialogue Support to capacity development Disbursement conditions and assessment 8

Monitoring the intervention logic • Are the (implicit) assumptions still valid? • Are the institutional capacities sufficient to ‘drive’ the intervention strategy? • What are the relations between the BS induced output? (contribution to improved macroeconomic management; improved public services; strengthened PFM; strengthened public sector institutions and the policies / Reform supported) • Any slippage; any unforeseen consequences? 9

Outline Module 6 1. Monitoring reforms and policy implementation 2. Monitoring the intervention strategy 3. Monitoring the eligibility conditions (FT) and the variable tranche indicators (VT) 4. Monitoring the fundamental values 5. Monitoring the policy dialogue, risk mitigation and complementary measures 10

Monitoring of all conditions • All conditions are spelled out in the Financing Agreement • Encompasses eligibility conditions, indicators for variable tranche release and – if applicablespecific (other) conditions 11

Monitoring Eligibility conditions Public policy Assessment Requirement Satisfactory progress in implementation; credible and relevant successor strategy Aligned to PCs policy reporting cycle; country’s monitoring and evaluation arrangements; statistical quality; coordinated with DPs Macroeconomic Stability oriented policies Identify the country’s stability aimed at restoring key vulnerability to external balances shocks; Coordinate with IMF (‘on track’ or assessment letter) PFM and budget transparency Progress in PFM monitoring table. implementation reforms; Aligned to PCs budget satisfactory access to cycle; attention to DRM budget information

Frequency • Macro: If IMF programme: twice x year; if not 1 x per year (Art IV or Central Bank report); • PFM Report combines PFM with Transparency and Oversight • Update of PFM Report is determined by risk in RMF: update every year when PFM risk is substantial or high; Update every three years when PFM risks are low or moderate • Submit PFM Report (one per country) for each BS contract and disbursement request (monitoring table, Annex 3) 13

Monitoring variable tranche indicators • Guidelines: “constant monitoring of conditions and indicators”; guided by the indicator fiche. • FA contains a clause that any revision of indicators or targets can take place at the request of Government (agreement by the Commission; average 3 waivers per BS contract) • Agreed upon ex-ante; at least in the first quarter of the assessed year • Exceptional possibility to either waive or neutralise an indicator (reallocation to other indicators or to next year) 14

Outline Module 6 1. Monitoring reforms and policy implementation 2. Monitoring the intervention strategy 3. Monitoring the eligibility conditions (FT) and the variable tranche indicators (VT) 4. Monitoring the fundamental values 5. Monitoring the policy dialogue, risk mitigation and complementary measures 15

Monitoring of fundamental values • Political reporting by political section / Head of EU Delegation; • Political dialogue between EU and partner country; coordination among DPs • Political dialogue in enlargement context (Enlargement process and stabilisation and Association process): compliance to political criteria for accession, incl fundamental values • EU Human Rights and Democracy country strategy (Universal Periodic Reviews) 16

Precondition to SDG-C maintained? • Keep track of ‘Human rights country strategies’, reports of the EU electoral missions, UN sources, World Bank governance indicators, Amnesty International, Human Rights Watch etc. • Make FV subject of consultation with the Member States 17

Gradual and proportional response Change in Fundamental Values Response Stable or positively progressing situation Minor adaptations for fine-tuning if required Concerns arising Mitigation measures to be proposed; roadmap for improvement Significant deterioration Report from EU Delegation to Geographic Director (support by DEVCO/NEAR, EEAS). Next to BBSC. Suggestions for precautionary measures (complementary actions? ); delay in disbursement; reduction of BS Extreme cases Suspension; possible re-allocation of resources to non-governmental activities 18

Outline Module 6 1. Monitoring reforms and policy implementation 2. Monitoring the intervention strategy 3. Monitoring the eligibility conditions (FT) and the variable tranche indicators (VT) 4. Monitoring the fundamental values 5. Monitoring the policy dialogue, risk mitigation and complementary measures 19

Monitoring Policy Dialogue • Coherence between policy dialogue and political dialogue (i. e. Art 8 consultation, ACP countries); • Minimum record of the formal dialogue (agenda, notes, brief progress report); • Not limited to the monitoring of disbursement conditions; • Evolving stakeholder mapping and analysis. Rolling dialogue plan 20

Monitoring Risk Mitigation and Complementary measures • Efficiency and effectiveness of measures; • Coordination with other DPs and/or stakeholders; • Dialogue related to risk mitigation and complementary activities in relation to BS; • Sufficiently resourced? • Amendments required? 21

Monitoring by non public institutions Watchdog function Largely falls on the civil society organisations, the private sector and the media Predictability of budget: investment plan, cash management, Domestic Revenue Mobilisation Procurement: quality and transparency Transparency and public access to budgetary information Quality of Policy-Result chain: from policy to budget execution to results And also… informing on policy and reforms, consultations and reporting in specific forums 22

Thank you for your attention 23