‘Should recurrent expenditurein education be supported?’Peter Colenso
Head of Profession, Education
UK Department for International Development (DFID)GRIPS, Tokyo, 18th October 2007

Structure of the presentation
1. How the UK delivers financial aid
2. Rationale for financing recurrentcosts
3. Risks
4. Evidence on peformance
5. The bigger picture on aid reform

Page 21

1. How the UK delivers financial aid• using different instruments &approaches in different country
contexts• DFID’s use of budget support

Page 3Different instruments for different contexts
Budget support if possible(plus TA and grants)

Can support
recurrent costs(e.g. ARTF),
but mostly
projects

Greater use of UN andcivil society, including
humanitarian aidIndSo ia
ut , Ch h
Af inric a,
an,
DRC,

Vi etnaman

Su
daTanzania,
Mozambique

Poverty Reduction Strategies
daUganFraag gileilesst tateat
es s

Low-income countries withplans to reducepoverty
Low-income
countries
witht
al nisep a
N fg hAFrSome budget
support andother financialaid (e.g. India)

ilazBr,MidMc dleiodu -indco nletr-i com
un ensc etri om
es eiaesondIn

Mostly influencing
domestic policies andinternational footprint

2

DFID’s use of budget support• £551m provided in budget

support to 16 countries in
2006/07• over half of our financial aid and
26% of total bilateralexpenditure• 56% GBS; 44% SBS; in somecountries both GBS & SBS (e.g.
Ghana, Vietnam)
Page 5

2. Rationale• to finance the costs that most needfinancing (e.g. teacher salaries;
supporting abolition of user fees)• support to the budget enables a dialogue
on inter- and intra-sectoral budget
allocation & execution, leading to
improved allocative and operational
efficiency• institutional strengthening• domestic accountability

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3. Risks• Partner governments• policy intrusion• absorptive capacity• aid dependency• Donor governments• leakage / corruption• demonstrating and attributing impact• parliamentary and public support

Page 7

4. Evidence on peformance• ‘Joint Evaluation of GBS’ found that GBS:
• is effective, efficient way to deliver aid & hadsignificant impact in 5 of the 7 countries• increased expenditure on the poor, including

more health & education services;• made aid more predictable & better alignedwith govt priorities & systems;• empowered public bodies to strengthen

policy development and policy coherence;• helped ensure public expenditure was more

efficiently delivered and public financial
management systems were strengthened,meaning all govt resources are bettermanaged; and positive effects on other aid• Impact (e.g. Tanzania: 25% more teachers over
5 yrs, 3m more children enrolled)
Page 84Net Enrolment Rates (GBS Evaluation countries)
100

NER %

90Mozambique

80

Rwanda70

Uganda60

Vietnam

5040
1997 1998 1999 2000 2001 2002 2003 2004

5. The bigger picture on aid reform• 4 priorities for aid reform• volume: more aid• allocation: more to low income

countries, including to fragile states• composition: more to basic education;
the right kind of support for post-basiceducation• quality: more aligned and harmonised
e.g. more budget support & recurrent
cost financing, more pooling, morePBAs; longer term; less tied aid• aid is 1 instrument in development
Page 105Proportion of Education ODA to MICs(%)

100%80%Japan

France60%

EC
Germ any

United States

40%
Canada
Italy
IDA

20%
United Kingdom

0%0%20%40%60%80%100%

Proportion of Education ODA to LICs (%)

G7 / IDA / EC aid to education by income group (2003-2005 average)(Source: DAC)

Proportion of Education ODA to Post
Secondary (%)

100%France
Germany
80%

Japan

60%

40%

EC
EC
20%

United States
UKCanada

Italy

IDA

0%0%20%40%60%80%100%

Proportion of Education ODA to Basic (% )G7 / IDA / EC aid to education by level (2003-2005 average)(Source: DAC)

6What the UK is doing• volume: 0.7% ODA/GNI trajectory;

second largest donor; US$15 billion toeducation over 10 yrs to 2015
• allocation: at least 90% total bilateral
aid to LICs
• composition: 84% of education aid tobasic education (2003-05); more
sector-wide financing• quality: 28% of total aid as budget
support in 2006/07; 52% of total aid
delivered through programme-based
approaches; aid untied since 2001
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Where good practice and goodpolitics meet• DFID believes in providing more and longer-term aid, flexibly delivered, and targeted
where it will impact the poorest• legislative base for poverty reduction• Prime Minister support• cross-party and parliamentary support(including National Audit Office)• UK public support (?)• need to deliver and communicate results, tosustain this potentially fragile consensus• need a broad and deep coalition to deliverPage 147