PRSp Alignment Finnish Aid in a PRS Context

PRSp Alignment Finnish Aid in a PRS Context Helsinki Workshop 19 -22 May 2003 1

Alignment – why worry? • PRSps have entered a new phase – from design to implementation • Implementation requires consistent & coherent external support behind PRSP priorities (targets) & country capacity to deliver • Non-aligned donor strategies risk countries devoting scarce resources to managing donors rather than meeting targets! 2

Alignment – what is it? • For external partners - the extent to which all aid instruments & modalities are congruent with the discipline & cycle of the national PRS, MTEF & budget. • For partner governments - the extent to which the MTEF & the budget are subject to the national PRS (& vice versa? ). 3

More definitions • IMF (2003) distinguishes between: A. Temporal Alignment of country’s own processes with PRS & national budget cycle or donor processes with country’s processes e. g. aligning timing & phases of donor programmes with the budget/PRS cycle. B. Policy Alignment, where policies supported by donor programmes are derived directly from PRS. 4

Harmonisation & streamlining • Related concepts • Harmonisation refers to the extent to which there is a commonality in donor policies, procedures & practices • Streamlining refers to the need to simplify, coordinate & reduce the number of procedures, indicators, missions, analytical reports etc. 5

Aligning with the PRSp (1) • Extent of alignment will vary with country contexts & ‘strength’ of the PRSp & PRS process • Alignment at the country level includes drawing on or complementing the PRSp in all stages of the PRS cycle • Optimally, the principal content of external partner strategies is derived directly from the PRSp (goals, targets, priorities etc) 6

Aligning with the PRSp (2) • Where an assistance prog. is not derived directly from the PRSp it may complement it, e. g. by addressing areas of weakness, updating analyses, feeding in lessons • Optimally, assistance programmes are implemented through existing partner Govt. institutions (disbursement, procurement, performance monitoring & review) 7

Aligning with the PRSp (3) • External partner schedules are aligned with Govt. budget, MTEF and planning cycles • Assistance programmes are coordinated & harmonised with other donors to promote selectivity, comparative advantage & reduce transactions costs. 8

Phases of PRSp Alignment Country strategies linked to PRSP goals targets & macro framework Policy formulation Shared analytical work; TA identified by Govt Financing on-budget; in line with budget/MTEF cycle; conditions & benchmarks streamlined with PRSP matrix Financing PRSP process: Results oriented, evidence based policy making? Poverty analysis M&E Monitoring, review & audit drawing on govt. systems; annual PRSP review Policy impln Communication Consultative & transparent processes Projects/programmes/ budget support complement PRSP; implementation managed by govt agencies 9

Country Experience • Ethiopia – complex environment, many external agencies • Following end of war much reengagement based on a relatively successful PRSp process – extensive participation • Pool of capable Go. E officials; Govt. leadership in preparation of PRSP (SDPRP) clear. 10

Ethiopia • SDPRP starting point for common donor action; draws on sector progs. in health, educ, water, roads. • DAG Core Group/donors agreed rules of engagement for support of SDPRP process, including a Joint Donor Fund. • Commitment of most donors to build strategies on SDPRP 11

Ethiopia • Progress on a common framework for budget support based on common matrix for performance assessment derived from SDPRP & alignment with annual PRSP review & budget cycle • Share of GBS likely to rise to 30% • SPA a key player 12

Ethiopia • Harmonisation Task Force – adopted menu approach seeking to harmonise across all 3 main aid modalities: projects, programmes & GBS • Politically sensitive • Harmonisation of project aid the hardest to achieve; much assistance to SWAPs still projectised 13

Alignment risks & challenges • All the donors ‘eggs in one basket’! What do Govts. do when things go wrong? • Macro-frameworks & MTEF ceilings – can all aid be ‘on-budget’? • Disconnects between donor HQs and country level • Lack of alignment across/within Government 14

Alignment risks & challenges • Dangers of over-centralisation? i. e. heavy focus on aligning with national institutions/processes. • What’s the ‘right’ level of participation? The need to manage expectations & support a robust political process, particularly around the budget. 15