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SECTOR POLICY SUPPORT PROGRAMMES
A new methodology for delivery of EC development assistance.
1
Basic Concepts and Definitions
• The EC is committed to delivering "more and better aid”;
• It is committed to the principles of Programme Based Approaches (PBAs);
• EC policy is to use general and sector budget support as the favoured financial vehicle for its assistance whenever conditions are favourable.
2
Programme-based Approaches
• “A way of engaging in development cooperation based on the principle of coordinated support for a locally owned programme of development, such as a national poverty reduction strategy, a sector programme, a thematic programme, or a programme of a specific organisation”.
• PBAs must reflect the particular circumstances of individual sectors and countries.
• Also known as Sector or Sector-Wide Approaches (SWAps)
3
Characteristics of PBAs and SWAps
• Leadership by the host country;• A single comprehensive programme and budget
framework;• A formalised process of donor coordination;• Harmonisation of donor procedures for
reporting, budgeting, financial management and procurement;
• Increased use of local systems for programme design and implementation, financial management, monitoring and evaluation.
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Budget Support 1
• The transfer of financial resources from a donor to a partner country’s National Treasury, against agreed conditions.
• Funds are part of the partner country’s global resources,
• Are administered in accordance with the partner country’s public financial management systems.
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Budget Support 2
• General Budget Support (GBS)– Supports a national development policy or
strategy;– Government decides how it will be used.
• Sector Budget Support (SBS)– Supports a sector policy or strategy;– Government or Donors can specify use.
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Sector Policy Support Programme(SPSP)
• The EC's aid instrument for supporting a sector programme.
• Serves as a coordinating framework for – government's own activities and – donor support.
• The EC's favoured financing method is budget support,
but sometimes the best option may be project support, or pooled funding with other donors.
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Sector Approaches Purpose and Objectives
• To promote national ownership, • by supporting government-owned policies and
strategies,
• To strengthen orientation towards results, • by promoting coherence between policy, budgeting
and actual results,
• To coordinate donor inputs with other resources • and reduce (eventually) the transaction costs of
utilising external finance.
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EC Perspective• By using weak government structures, incentives for
improvement can be generated. • A clear sector policy creates greater coherence,
permitting governments to assert ownership.• Reduced number of projects and their transaction
costs • stops the dissipation of administrative capacity and • allows budgetary and planning systems to become
stronger.• Oversight by Parliament and civil society encourages • improvements to efficiency and effectiveness of public
services, • strengthening of planning, budgeting and management
structures. 9
The 5 Main Elements of a Sector Programme
• A sector policy and strategy;
• The sector budget and its medium term perspective;
• A sector coordination framework;
• The institutional setting and existing capacities;
• A performance monitoring system.
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1. Sector Policies and Strategies
.
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What is a Sector Policy?
• The Sector Policy is the first building block of a sector programme.
• Specifies what government aims to achieve in the sector, when and how;
• Distinguishes government’s regulatory role from its service delivery role;
• Specifies the roles of non-government agents;• Outlines any necessary institutional or legal
reforms.
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What is a Sector Strategy?
• The Sector Strategy, is a detailed plan or document, describes how the government will implement the policy.
• Usually plans for the medium-term (normally 3-5 years).
• It should be directly reflected in annual sector budgets.
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Good Practice• A coherent and consistently applied sector policy focuses
government, donors and stakeholders on achieving collective results.
• It must be consistent with the partner government’s overall strategic objectives.
• The sector policy document will not be a rigid plan. • It will establish basic principles, objectives and strategies
for the sector. • It will accept that detailed strategies and resource
allocations will continue to evolve. • Therefore, there must be clear procedures and schedules
for regularly updating the policy and strategy. 14
EC Perspective• The sector approach requires a basic
agreement between the government and its partners about – the sector objectives, – how they should be achieved in broad terms.
• Donors should not micro-manage by specifying activities in detail.
• The EC is interested in the expected results. 15
2. The Sector Budget and its Medium Term
Perspectives.
Basic Requirements for SPSP
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• A credible, comprehensive and transparent sector budget - essential for the proper implementation of the sector policy.
• A clear budget classification is key to the proper elaboration of a sector budget.
• Such a budget should – take into consideration all resources available to the
sector (including external resources) and – list all expenditures (capital as well as recurrent
expenditures) necessary for the achievement of the sector’s expected results.
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• The annual sector budget should increasingly reflect sector priorities and strategies.
• Progress towards policy based budgeting, covering all resources for the sector, with realistic medium-term sector expenditure plans.
• Eventually, sector budgets will become part of a coherent national medium-term budget and expenditure plan.
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Good Practice
• Sector policies and sector budgets are the two faces of the same coin.
• In order to obtain the desired results, policies and budgets must be coherent.
• Well prepared budgets supporting weak policies will not achieve better sector results.
• Well designed policies and strategies are helpless if they are not reflected accurately and clearly in the budget.
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EC Perspective
• Within Sector approaches the EC promotes the link between policy and budget.
• Sector budgets need to fit into government’s own
disciplined overall expenditure plans, • Annual spending needs to be derived from medium-term
projections of resource availability, priorities and recurrent and capital expenditures.
• Eventually, this would become a Medium Term Expenditure Framework, and the central part of the government’s political and budgetary process.
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3. Sector Coordination
.
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Framework
• Special attention must be given to sector programme management.
• Led by the government; it should cover– coordination of national stakeholders, i.e. all
concerned government ministries and agencies; – non-governmental participants; – coordination with and among donors.
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Good Practice• Basic Principle:
“Sector coordination mechanisms must not override the established structures and responsibilities of Government”.
• Beneficiary Ministry is responsible for implementation of the sector programme;
• MinFin must be involved and have a clear role;
• Sector coordination mechanisms must support the wider framework of the country’s own development strategy.
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EC Perspective
• Experience shows – the importance of a clear government-led
management and sector coordination framework.
• Donor coordination is regarded as a means of achieving – improved ownership and coherence – reduced transaction costs .
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4. Institutional Setting and Capacity Development
.
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Basic Concept
• The sector approach aims to use national systems where possible and to reinforce them by using them.
• A clear capacity development strategy led by the government should be in place.
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Paris Declaration Statement 1
• "Capacity development is the responsibility of partner countries with donors playing a support role".
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Paris Declaration Statement 2
• "Partner countries commit to integrate specific capacity strengthening objectives in national development strategies and
• to pursue implementation through country-led capacity development strategies ……”
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Paris Declaration Statement 3
• "Donors commit to align their analytical and financial support with partners’ capacity development objectives,
• make effective use of existing capacities and
• harmonize support for capacity development accordingly."
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EC Perspective• CD must be owned and led by those wishing
to develop their capacity; • Supply driven and fragmented support to CD
is usually only marginally effective; • Support to CD must respond to a clear
demand;• Be designed and implemented under partner
government leadership; • CD must be driven by results, not by donor-
funded inputs. 30
5. Performance Monitoring System
.
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Characteristics• Provides key elements to steer policy dialogue and is part of the
overall policy review process.
• Focuses on results and provides feedback to management.
• Might be a performance assessment framework (PAF) containing indicators for– inputs, – outputs, – outcomes,– impacts.
• Clear procedures and schedules for regularly updating the policy and strategy need to be in place.
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Two Additional Elements
.
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Macroeconomic Policy
• Essential for a stable environment for the sector; • Assures predictable resource levels.
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Public Financial Management (PFM).
• Ensures that policy priorities are reflected in budget allocations;
• Promotes efficiency (“value for money”) in public spending;
• Ensures that actual expenditure complies with the approved budget and does not exceed available resources.
35