Challenges for donors and partners
Geske Dijkstra
Erasmus University Rotterdam
Overview
The political context of the Partnership (GBS) Comparison results of programme aid evaluation
1999 with PGBS evaluation 2006
→ Two problematic issues: Conditionality and ownership Selectivity
→ Recommendations for donors and partner governments
Politics in donor countries
Aid must be effective, Planning for results, MDGs → poverty reduction is a technical issue
Simple eligibility criteria: IMF agreement (= technical issue), sometimes nasty political or governance situation in recipient countries, threatening to interrupt the flow of aid money
Lip service to “policy coherence”: Issues are beyond capacity of national aid agencies Subsidies to private sector in donor countries while subsidies to
private sector in recipient countries are not allowed Aid budgets must be spent, “scaling up”
Politics in recipient countries
Political patronage, clientelism → Interest in discretion, not in transparency and accountability
Poverty reduction is political issue, requires redistribution and taking political risks vis-a-vis powerful groups
(Perceived) Aid dependence→ Lip service to poverty reduction, PRSPs, MDGs, good governance→ Debate on domestic growth strategies dominated by foreign
influence (IMF & WB)→ No accountability to domestic constituencies: private sector, the
poor
Evaluation of programme aid (1999)
Funds: effective for stabilisation and growth Conditionality: not effective, but there can be donor
influence→ Selectivity→ Policy dialogue, not monologue
Policies: more reforms not always better→ Caution with policy prescriptions
Systemic effects: Modality matters for influence→ Budget support can focus attention to budget systems,
but micromanagement should be avoided
Evaluation of PGBS (2006)
Money: Stabilisation: unsolved tension with lack of predictability Growth: More allocative and operational efficiency; more money to public
services but outcomes uncertain Selectivity: political risks are underestimated, IMF judgment always
followed, no fixed eligibility criteria for fiduciary risks and governanceConditionality and ownership: “If domestic support for policies, then PGBS
can support it” → no overloading with conditions, limit disbursement conditions, agree with government and assess medium term results
Policies: PRSP central; PGBS reflects biases in PRSP → more attention for growth and income poverty needed
Institutional effects: positive effects on PFM systems → focus conditions on budget systems
Conditionality and ownership: the broader context
Lessons from programme aid evaluation: take ownership seriously, for two reasons: imposing conditions on unwilling government is not effective, and conditions may be wrong
Practice: more conditionality than before: IMF, World Bank structural adjustment plus PRSP with participation;
For example, PRSP: Willingness? “PR is higher priority for donors than for
partner governments” Is PRSP approach appropriate?
Poverty is not a technical issue; PRSP process depoliticizes debate on PR
Long-term, comprehensive, results oriented: ignores domestic political processes
Assumes automatic implementation
Selectivity
Agreement with IMF dominant precondition for debt relief and budget support
Problems: IMF has not been selective in the past: creditor role mixed up with
gatekeeper role IMF involvement limits country ownership of PRSPs: no debate on
macroecononomic framework and structural policies Research: IMF involvement leads to lower growth
Too little attention for political risks, governance, corruption
Average on six governance indicators (Kaufmann et al.) by number of IMF
agreements during ‘94-’02
-0,6
-0,5
-0,4
-0,3
-0,2
-0,1
0
1996 1998 2000 2002 2004
0 1 2 3
Recommendations for donors
Provide policy space for debate Consider limiting the role of the IMF in low-income
countries, especially with regard to defining eligibility for BS
Be more selective with respect to politics and governance criteria, and assess political willingness to combat poverty (progressive taxes?)
Take ownership and domestic political processes seriously: assess home-grown plans and use plans that may be more limited in scope and time frame, rather than comprehensive, long-term PRSPs
Recommendations for partner governments
Take policy space for debate on growth policies Design policy measures for growth in cooperation
with domestic private sector (including SMEs) … that may include financial sector policies, subsidies for exports …
Give attention to domestic revenue mobilisation including progressiveness of taxes