UNDP RBA MDG-Based National Development Planning Workshop

Synthesis of sector needs assessments; preparation of 10 year framework, and links with

MTEF

Chandrika BahadurUN Millennium Project

February 27-March 3, 2006

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Agenda

1. Synthesis of sector needs assessments

2. Preparation of 10-year framework

3. MDG Financing strategy

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Check MDG needs assessment results

Scope of sector assessments– Check for gaps in needs assessment– Check for double-counting of interventions

Consistency of underlying data, e.g.– population growth rates– rural and urban population ratios– gender ratios

Order of magnitude of per capita investment needs– comparison with results from other countries (e.g.

Millennium Project studies and World Bank sector assessments)

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Indicative investment needs

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Identify synergies and iteratively refine estimates

Savings, e.g.– Prevention interventions in health reduce incidence of

diseases– Improved fuels and stoves lower incidence of acute

respiratory infections

Dissavings, e.g.– Increased child survival raises number of children that will

attend school

Long-term synergies that do not affect medium-term strategies, e.g.– Maternal education lowers child mortality rates

Dynamic inter-sectoral models can help refine needs assessment results further

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Ghana 2006 2007 2008 2009 2010 2011Hunger 39,761,141 41,883,444 44,582,171 48,204,164 53,181,060 61,335,561 Primary education 282,000,055 297,512,150 313,981,019 331,410,694 349,802,436 369,297,928 Secondary education 58,269,181 57,292,912 56,644,810 56,381,396 56,465,059 56,872,941 Adult literacy programs 7,041,095 7,413,899 7,792,791 8,172,977 8,558,512 8,952,694 Gender equality 39,413,545 52,515,283 54,582,726 56,575,960 58,625,411 60,817,191 Heatlth 358,280,159 391,956,610 428,798,470 469,103,271 513,196,512 561,434,285 Water supply 73,240,352 76,673,009 80,291,148 84,093,740 88,057,807 93,022,137 Sanitation and wastewater treatment 46,310,222 49,499,031 53,019,234 56,945,780 61,390,314 66,970,501 Slum dwellers 35,548,066 37,653,625 39,996,618 42,597,645 45,479,236 48,666,031 Energy 270,054,633 282,714,813 295,897,843 309,891,624 324,771,881 340,723,942 Roads 219,535,087 221,220,489 222,936,350 224,682,670 226,459,448 228,266,686 Total 1,429,453,536 1,516,335,265 1,598,523,180 1,688,059,920 1,785,987,676 1,896,359,896

Consolidate investment needs

Aggregated needs assessments– E.g. using Millennium Project tool

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Agenda

1. Synthesis of sector needs assessments

2. Preparation of 10-year framework

3. MDG Financing strategy

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Sequence implementation of interventions

Interventions to be sequenced first:

1. Quick Wins: Investments with high short-term impact that do not require major capacity building, e.g.: Distribution of insecticide-treated anti-malarial bed nets Elimination of school and health fees Affordable replenishments of soil nutrients

2. Capacity-critical interventions: Public management (e.g. IT, financial management skills) Human resources (e.g. training, adjusting wages, hiring new staff) Infrastructure (e.g. roads, schools, health facilities)

3. Investments with long time lags, e.g.: Behavioral change through public education/HIV intervention etc

takes long time designing etc Demographic changes

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Design effective policies in support of MDG interventions

Civil service reform, e.g. recruitment and remuneration policies

Regulatory reform, e.g. tariff structures, environment standards

Legislative reform, e.g.: land tenure system, water laws

Decentralization and community involvement, e.g. local government authorities and financing norms

Fiscal reform, e.g. tax collection

Financing policies, e.g. lifeline tariffs, targeted subsidies

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Divide the work and assign responsibilities

Three key types of responsibility need to be assigned: Planning and oversight

– Assign lead responsibility for each set of interventions to line ministry or other public body

Implementation – Agree on division of responsibilities between national and

local governments– Assign responsibility for the intervention to the level at

which action is necessary– Identify role of NGOs and private sector in delivering social

services and infrastructure investments Financing

– Decide who has authority over budgets and will report to parliament and development partners/control money

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Agenda

1. Synthesis of sector needs assessments

2. Preparation of 10-year framework

3. MDG Financing strategy

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Elements of an MDG financing strategy

Household contributions

Government MDG expenditures

Debt service payments

MDG Financing Gap

(closed through ODA

including debt relief)

MDG Financing

Needs

Domestic resource

mobilization

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Sequence of preparing an MDG financing strategy

1. Estimate financing needs

2. Prepare MDG-consistent macro framework

3. Project government resource mobilization

4. Estimate household contributions

5. Identify MDG financing gap (debt relief & development assistance)

6. Identify strategy for maintaining macro stability

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Purpose of an MDG-consistent macroeconomic framework

Estimate key economic variables (GDP growth, exchange rate, national saving, private sector investment, current account balance, etc.)

Project government revenues to map out MDG financing strategy

Support policy formulation– Monetary and fiscal stabilization– Pro-poor tax systems– Promotion of private sector investment

Check MDG needs assessment (Goal 1)

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Identify Government expenditures for the MDGs

Sequence for projecting government MDG expenditures 1. Estimate current expenditures on MDG2. Project public expenditures using macroframework3. Identify non-priority expenditures that can be

reprogrammed towards MDGs4. Identify scope for increasing government revenues in

manner consistent with achieving MDGs5. Assess needed debt relief

Government MDG expenditures may rise by up to 4 percentage points of GDP through to 2015

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Identify household expenditures for the MDGs

A note on user fees– Evidence is strong that direct and indirect user fees

for primary education and essential healthcare are a barrier to access for the poor

– Ending user fees often requires increased aid to make up for the government revenue shortfall

– C.f. Education for all Initiative and Commission on Macroeconomics and Health

Household contributions for the MDGs– Policy coherence: Incentive effects of well

designed user fees must be compatible with policy objectives (i.e. no health and primary education fees)

– Affordability: Estimate household contributions on basis of ability to pay across all sectors

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Are Dutch Disease and macro-instability a barrier to scaling up aid? Increased aid will lead to a one-time real exchange rate

appreciation, but effect will be small:– Many investments focus on supply side (this is NOT a

consumption boom)– Imports and investments in tradables are neutral

Inflation can be contained by absorbing excess liquidity through increased private imports financed by foreign reserves that have been built up by aid

Consensus among economists: macroeconomic stability can be maintained through good monetary policies if aid is

1. Predictable 2. Provided as grants3. Well programmed to finance direct investments in the MDGs

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Building MDG-consistent macroeconomic frameworks: scenario based planning MDG scenario

– Investment plans and annual budgets based on country MDG needs

– National scale coverage to achieve the MDGs– Sequenced investments to build absorptive capacity

and train human resources

MDG-”minus” scenario– Investment plans and annual budgets based on

projected resources (domestic and external)– Reduced coverage assumptions that make

achievement of MDGs impossible– Prioritized investments within and across sectors