Practical Approaches to Aid

Effectiveness:
Evidence in aligning aid Information with
recipient country budgets
Sam Moon
Overseas Development Institute
~
ICGFM Winter Conference
6 December 2010
Motivation for the study

Why did we undertake this study?

– “IATI’s role is to develop consistent and coherent international
standards for the way donors report information about aid spending”
– We felt that there was a need, and much work required, to make the
standard as valuable as possible for recipient country governments.

Premise of the research –

– “is enough common ground between government classifications to
support a recommendation for a common standard for aid flows to
reduce transaction costs for recipient countries; and do existing
international classifications adequately describe country level
standards.”
Problem Definition
• Accountability in planning, budgeting,
execution and service delivery
– The cycle is delicate in most developing countries:
• Parliaments, budgeting process, accounting procedures,
transparency of implementation can be weak.
– The domestic cycle of accountability is likely to be
undermined if it is not carefully observed and
supported with the delivery of aid:
• Common planning and execution standards, integration
of systems, etc.
Aligning aid with recipient country
systems requires funds to be:

– CABRI (2008) Aid On Budget Synthesis Report

Overcoming the problem: two levels
• Donor Headquarters/ International system:
– Publicly available information on aid in a format
that best facilitates country level demands for aid
information

• Country level:
– Tool or mechanism that can capture all aid
information and fully reclassify it to country
specific standards to improve planning and
accountability for the entire set of resources.
Methodology of the study
– Focus on the organisational and functional classification of the Chart
of Accounts.
– Choose a sample of developing countries (14) from different regions
and different colonial legacies.
– Compare the sample of government sector/organisational
classifications with the OECD/DAC CRS purpose codes (designed to
describe aid flows) and COFOG (designed to describe government
expenditure)
– Examine recipient budgets by sector using COFOG as a base.
– Use the evidence to identify similarities and differences and, if
possible, generate a classification that is able to output to CRS and to
the country classifications
– Ensure the analysis includes low level sector classification
Budget classification structure
- Why only focus on organisation and function?
- budget calendar?
- Broader chart of accounts?

- Organisation or function?
- depending on the sophistication, focus on that which is primary in
planning – is there a sector-wide approach?
Hypothesis:

– Disaggregated levels of sector/purpose

classification are more likely to be
comparable
– higher levels will be aggregated in different
ways based on different political or
ogranisational pressures.
Findings of the Study
• There are significant similarities at lower level but
the composition of these functions within ministries
and sectors varies widely.
• The international classifications both have strong and
weak points, but neither adequately describes the
country sector/organisational structures.
• The availability of national budget
classifications/CoAs was more limited than expected.
Key sector level findings
General Public Service:
Public administration,
Defence
Justice Law and Order

– These have a number of fairly discrete functions –

core PFM, internal and external security, judiciary,
policing, electionsetc.
– But are organised very differently in countries due
to legacy or political influences.
– Eg: Police
Police function
Country Organisational Location
Antigua Prime Minister’s Ministry
Ghana Ministry of the Interior
Mongolia Ministry of Justice and Home
Affairs
South Africa Department of Safety and
Security
Tanzania Defence and Security
Uganda Justice Law and Order
Economic Affairs

• Planning and administrative functions may be

centralised or disaggregated to specific
functions such as agriculture, roads, energy.
• Countries will have greater disaggregation on
the economic sectors most active in the
economy, but the broad set tends to be
common across countries.
Social Affairs

• The structure of education is fairly common

across countries and international standards
are also similar.
• The approach to health varies so widely that a
consistent set of common functions could not
be found.
• The emphasis on and organisation of social
protection and welfare can vary, but lower
level functions are fairly comparable across
countries
The ‘Spine’
• To demonstrate the findings, we constructed a best
fit low level classification from the evidence that
outputs to the country classifications as well as the
OECD DAC/CRS.
• Grouped broadly by COFOG function as a widely
recognised standard for government functions.
• Why the DAC/CRS?
– Donors generally already report to this so it is important to
ensure there is integration.
Implications and recommendations
• Interfacing information on aid with the
national planning/budgeting process MUST be
undertaken at country level – there is no
substitute.

• A common standard in describing aid, and a

clear protocol for publication of this
information is important for facilitating this
process.
• There are significant similarities in the
standards used at country level for planning
and budgeting...

• But existing international standards and

protocols are weak, creating high transaction
cost at country level.
• While a great deal of political emphasis is put on
transparency and integration of aid and budget
systems...

• The effort required to create and operationalise

mechanisms to do this appears to out-weigh political
will to drive the process at donor level.

• Furthermore, weakened accountability structures at

country level often cause perverse incentives for
actors at country level – leading to additional
pressures for maintaining status quo.
• This paper and others such as CABRIs Aid on Budget
study and studies for the IATI process begin to
outline the requirements and the constraints of a
system of standards for aligning aid to country
systems.

• But some recipient governments are implementing

their own tools to capture and align aid information.

• Malawi and Rwanda are making great steps in

building database tools and government policies for
the management of aid.