Published on March 5, 2008
Africa‘s Regional Workshop on Harmonization and Alignment for Development Effectiveness and Managing for Results, 9-11 November 2004, Dar-es-Salaam : Africa‘s Regional Workshop on Harmonization and Alignment for Development Effectiveness and Managing for Results, 9-11 November 2004, Dar-es-Salaam Tanzania‘s Experience in Harmonizing and Aligning Budget Support Joint Presentation by the Government of Tanzania and her Development Partners Issues to be addressed by the presentation: Issues to be addressed by the presentation How predictable have donor budget support disbursements been? To what extent have harmonization and alignment with national processes addressed issues of predictability? Have donors aligned their calendars to the national budget calendar? Are donors using national review processes or imposing their own in addition to the national process? What needs to be done to increase short and medium term predictability? And to reduce transactions costs? Main issues agreed on by Government/ Development Partners (after the Helleiner Reoprt) : Main issues agreed on by Government/ Development Partners (after the Helleiner Reoprt) GOT ownership and leadership of the development process Strengthening GOT budgeting and financial management systems Improvements in accountability DPs fund national priorities Increasing DP transparency on planned and actual aid flows DP channel resources through the Government budget Rationalization of DP processes Long-term aid commitments Move to budget support Present Situation : Present Situation National Ownership and Leadership Enhanced Development Cooperation - openness and Improved relationship with Development Partners Broad Participatory Approach More Strategic Approach to Public Spending Focusing on Priorities – Poverty Reduction Strategy Continuous Monitoring of Progress/Impacts of Development Initiatives/Actions More Attention to Governance Issues Transparency, Accountability, etc. Improvement in harmonization/innovation – effective use of aid for Poverty Reduction Direct Budget Support - DBS: Direct Budget Support - DBS It was initiated in FY 2000/01 to support the implementation of PRS It is an integral part of the government budget process in support of PRS 14 DPs participating in this modality through PRBS, PRSC and SAL/PRSL facilities It reduces transaction costs of aid delivery It strengthens government systems for expenditure management and poverty reduction initiatives It increases the level of discretionary resources available to the Government Poverty Reduction Strategy: Poverty Reduction Strategy PRS increasingly seen as a national frame – guiding all policies/initiatives: Aimed at growth and poverty reduction Driving sector policies/strategies Linked with the budget through the PER/MTEF Setting targets with progress monitored through the Poverty Monitoring System Role of Budget Support – Instrumental to Poverty Reduction and Growth % of Budget Support to total aid flow: % of Budget Support to total aid flow Predictability of DBS: Predictability of DBS Significant progress in improving the predictability of DBS Better system of gathering commitment and projections information Greater degree of trust and cohesion in the development partnership has transformed the way that commitment and projection data is shared; now is through the PER process Aid flows database maintained by the Ministry of Finance, records and keeps track of external resources commitment and actual disbursements. This has facilitated prediction of resource flows by improving both the quality and availability of commitments and projections data. DBS commitments Vs Actual Disbursements: DBS commitments Vs Actual Disbursements DBS disbursements as compared to commitments has improved significantly Performance Assessments Framework (PAF) assessment is the basis for deciding new disbursements, prior to start of the new FY DBS disbursement since FY 2002/03 has always been 100% with more than 80% of the total amount now being disbursed during the first half of the FY DBS allows a smooth release of Government funds as the year progresses. First quarter disbursements have increased from 8 percent in FY 2002/2003 to 80% percent in 2004/2005 DBS commitments Vs Actual Disbursements: DBS commitments Vs Actual Disbursements Percentage of direct budget support front loaded FY 2002/03 to FY 2004/05 Source: Aid flows database – Ministry of Finance Alignment of Development Partners Calendars to the National Budget Calendar: Alignment of Development Partners Calendars to the National Budget Calendar Enhanced through the PER/MTEF process which links the PRS with the National Budget A calendar of a rationalized cycle of policy mechanisms and consultative processes has been drawn up and is increasingly being adopted in order to bring the timing and output of all processes more in line with the cycle of the PRS and the national budget A period of ‘quiet times’ has been identified so as to provide the Government with adequate time to concentrate on preparing the national budget and attending the Parliament budget sessions. Development Partners’ use of National Review Process: Development Partners’ use of National Review Process The annual PER process is the key process used by all stakeholders in reviewing Tanzania’s performance in budget execution and resource allocation and makes suggestions on improving budget planning and implementation in the coming fiscal year Specific to DBS is the mid and annual reviews carried out by the Government and development partners during March/April and November through the common Performance Assessment Framework (PAF). What can be done to increase short and medium term predictability and to reduce transaction costs?: What can be done to increase short and medium term predictability and to reduce transaction costs? The Government must continue to have a clear development agenda and a strategy for achieving it. The Tanzania PRS and the annual progress reports which is linked to the National Budget through the PER/MTEF process serves this purpose. Development partner transparency about aid commitments and their timely disbursement in accordance with earlier commitments, complemented by efficient Government systems for gathering, reviewing and transferring the respective data into the budget, are required to increase predictability of aid flows and hence improve budget planning and execution. The annual PER process is one of the mechanisms in which external resources information are shared. Sound public financial management is important for ensuring transparency and accountability in public resource management and for fostering development partners’ willingness and confidence in Government systems. This includes the need for transparency in budget formulation and execution What can be done? cont.: What can be done? cont. Continued use of a common assessment framework such as the PAF, which draws as much as possible on policy reforms driven by domestic stakeholders to ensure Government ownership and sustainability of reforms Common reviews of frameworks such as the PAF that are completed prior to the start of the fiscal year. This enhances the certainty with which external resources are budgeted and hence the overall resource envelope for the forthcoming annual. Adoption of the calendar of a rationalized cycle of policy mechanisms and consultative processes including identification of ‘quiet time’ helps to align all other processes within key national processes such as the PRS and the national budget thereby reducing transaction costs. Trust and continued dialogue between the Government and her development partners is very important. A comprehensive impact assessment of general budget support in Tanzania, currently undertaken by independent consultants, might facilitate further improvement in the operationalisation of the direct budget support. : A comprehensive impact assessment of general budget support in Tanzania, currently undertaken by independent consultants, might facilitate further improvement in the operationalisation of the direct budget support.