GLOSSARY

ACP : African, Caribbean and Pacific states

CPIA : Country Policy and Institutional Assessment

EDF : European Development Funds

GBS : general budget support

MDG : millennium development goals

PEFA : Public Expenditure and Financial Accountability

PFM : public finance management

SBS : sector budget support

EXECUTIVE SUMMARY

I. The European Court of Auditors has carried out a performance audit to assess whether the European Commission manages its general budget support (GBS) programmes effectively. GBS has a number of potential advantages over the traditional project approach. It can supply larger volumes of aid in a more predictable manner and since it funds the national development strategy of the partner country the latter tends to have more ownership of this aid instrument. As it is channelled through the national budget, it can encourage the improvement of public finance management (PFM) by the partner country and increase domestic accountability. It is also seen as a way of strengthening policy dialogue and improving the harmonisation and coordination of aid between donors, thereby potentially increasing the efficiency of aid delivery and reducing the costs for the partner country. GBS has been increasingly used by the Commission over the last decade in order to achieve its main development policy objective of reducing poverty.

II. GBS programmes typically consist of a support package involving the transfer of funds, capacity-building measures, dialogue with the partner country and the establishment of conditions for disbursement. A number of other donors use GBS and the Commission has to coordinate its programmes closely with theirs.

III. As with other aid modalities, the ultimate impact of GBS on poverty reduction depends on the specific circumstances in each country. It also depends on the effective Commission’s management of its GBS programmes. The Court found that, whilst the Commission has made considerable efforts over the last decade to develop its approach to providing aid through GBS, there are still weaknesses in the methodology and management of GBS programmes in ACP, Latin American and Asian countries, which are thus less likely to reach their full potential effectiveness.

IV. The Court found that, whilst a positive feature of the Commission’s approach is the systematic inclusion of macroeconomic and PFM objectives, the objectives of GBS programmes do not sufficiently take into account the specific circumstances and changing priorities of partner countries, as well as other programmes implemented by the Commission and other donors. Furthermore, although some improvement has been noted in more recent programmes, the objectives of the programmes tend to be formulated in terms which are too general and this hinders the design of the various components of the programmes and makes it more difficult to hold the Commission accountable for their effectiveness.

V. The Commission has not yet developed a sound risk management framework to properly assess and reduce the risks of its GBS programmes. This is of particular importance in view of the high levels of fiduciary risk associated with weak PFM systems and significant levels of corruption, and of the development risk arising from weaknesses in the national development strategies of many partner countries.

VI. The rationale followed by the Commission to set the amount of funds to be allocated to individual GBS programmes is not clear. It was, however, noted that the Commission has improved the predictability of its disbursements to partner countries which is important for their budgetary management.

VII. The capacity-building support provided is useful in strengthening PFM, although it was not based on an appropriate assessment of priority needs. In particular, insufficient attention has been given to the need to strengthen oversight bodies such as supreme audit institutions, parliaments and civil society organisations seeking to monitor government use of budgetary resources. It has also been little used to support other GBS objectives, notably in relation to health and education. The Commission has often not been able to fully implement the capacity-building support within the timeframe of the GBS programmes. However, in 2008 the Commission adopted a strategy that aims to improve the effectiveness of its technical cooperation.

VIII. The performance-based conditions attached by the Commission to disbursement of GBS are generally relevant but are unlikely to achieve their intended incentive effect because of the way they are designed and implemented. It is often difficult to assess whether conditions have been met or not, in particular because of a lack of clarity over what constitutes satisfactory progress, and weaknesses in the statistical systems used for assessing results.

IX. Whilst GBS programmes have had a catalytic effect in respect of strengthening dialogue on the national budget and PFM, the Commission does not make full use of the instrument’s potential because it has insufficient expertise in the priority areas related to the GBS programmes’ objectives and there are weaknesses in its management of the dialogue process.

X. The Commission’s external reporting on general budget support tends to focus on its potential benefits to improving aid delivery but there is relatively little information on its actual impact on poverty reduction. An evaluation methodology which provides evidence on whether, and in what circumstances, budget support can make an effective contribution to poverty reduction has not yet been established. However, the Commission is leading donor efforts to develop such a methodology.

XI. The Commission is aware of the need to improve its management of GBS and at the end of 2009 launched a revision of its internal guidelines to address most of the issues raised by the Court in this report which contains a series of recommendations for the Commission to consider in this context.

INTRODUCTION

1. Poverty reduction is the overarching goal of EU development cooperation and over the last decade general budget support (GBS) has been increasingly used by the European Commission, as well as by other donors, as a means to try to achieve this objective. It involves the transfer of funds by the Commission to the national treasury of a partner country in order to provide additional budgetary resources to support a national development strategy. The transfer of funds in this way is also intended to contribute to macroeconomic stability which is generally considered fundamental to development and poverty reduction. In addition, the channelling of funds through national financial systems is also intended to lead to improvements in public finance management (PFM) since effective PFM systems also play an important role in poverty reduction efforts.

2. The Commission’s GBS programmes, and those of other donors, involve not only the transfer of funds but also three other components which provide key inputs to support programme objectives:

(a) capacity development measures, mainly through technical assistance, to help countries strengthen their policy-making and management (see paragraph 49);

(b) the establishing of conditions for the release of funds which are linked to the programme objectives and agreed between the partner country and the donors. The Commission’s approach to using conditions has focused on trying to give countries greater incentives to achieve results by using a so-called "variable tranche" mechanism to reward performance (see paragraph 58);

(c) dialogue with the country on the design, implementation and results of national and sectoral policies including the budget. Increased opportunities for dialogue are often considered to be a particular benefit of budget support (see paragraph 68).

3. General budget support has many similarities with sector budget support which also involves the transfer of funds to the national treasury. However, sector budget support programmes aim to support a sector policy rather than a national strategy. Accordingly, capacity-building, conditions and dialogue all focus on supporting the selected sector.

4. An important feature of GBS is the close cooperation it entails between donors, since they are all supporting the same national strategy and using the same national systems. This means that, when setting the objectives of its GBS programmes and planning the transfer of funds, capacity-building measures, conditions and dialogue arrangements needed to achieve these objectives, the Commission also has to seek to ensure that these inputs are coordinated with the inputs of other donors.

5. Close donor coordination over GBS is also seen as best practice in order to reduce the transaction costs to partner countries of having to deal with numerous donors on a bilateral basis. Nevertheless, while following the principle of donor harmonisation, the Commission continues to have sole responsibility for taking financing decisions and is accountable to the discharge authority for the use of EU funds. Balancing the necessary donor partnership approach and the responsibility and accountability it has for its GBS programmes inevitably represents a difficult challenge for the Commission.

BUDGET SUPPORT IS THE PREFERRED AID MODALITY OF MANY DONORS

6. The Commission has given GBS to ACP countries since the seventh EDF (1990–95) and to Asian and Latin American countries since 2003. The Cotonou Agreement provides for the possibility of giving GBS to ACP countries [1] and it was also formally included in the new 2006 Development Cooperation Instrument Regulation [2] covering Asia and Latin America. For the management of GBS the Commission uses comprehensive internal guidelines [3] which it first developed in 2002, thoroughly revised in 2007 and then updated in 2009. During this audit the Commission launched another major revision that is scheduled to be completed in 2010. The Commission has also developed a series of training courses for its staff on different aspects of budget support.

7. Budget support, either GBS or sector budget support (SBS), has become the preferred aid modality of many donors, including the Commission, because they consider it the most effective way to deliver aid. In the Paris Declaration, signed in 2005, donors committed themselves to channelling increasing amounts of assistance through country systems. The EU specifically committed itself to achieving this objective by delivering 50 % of its government-to-government assistance through country systems by 2010. In 2008, the Accra Agenda for Action went further than the Paris Declaration by stating that the use of partner country systems — meaning, principally, budget support — should in future be the "first option" for delivering aid and that donors should give clear reasons if they did not use them.

8. The volume of EU budget support has increased accordingly over time. Whereas budget support represented 30 % (GBS: 21 %, SBS: 9 %) of total funding under the ninth EDF (2001–07), it is expected to reach 48 % (GBS: 31 %, SBS: 17 %) of total funding under the 10th EDF (2008–13). For the Asia and Latin America regions, the proportion delivered through budget support increased from 12 % (GBS: 3 %, SBS: 9 %) in the 2003–05 period to 25 % (GBS: 5 %, SBS: 20 %) in the 2006–09 period. GBS has been used in 35 ACP countries and has so far also been given in seven Asian and Latin American countries. Annexes I and II present the commitments per country.

GBS HAS MANY POTENTIAL BENEFITS COMPARED TO PROVIDING AID THROUGH PROJECTS

9. There are various potential benefits in providing aid through GBS rather than through funding specific projects. It can supply larger volumes of aid in a more predictable manner and since it funds the national development strategies of partner countries the latter tend to have stronger ownership of this aid instrument. As it is channelled through the national budget, it can encourage the improvement of public finance management and planning by the partner country and increase domestic accountability. Furthermore, GBS is seen as a way of strengthening policy dialogue and improving the harmonisation and coordination of aid between donors, thereby potentially increasing the efficiency of aid delivery and reducing the costs for the partner country.

10. As with other aid modalities, the ultimate effectiveness of GBS in terms of reducing poverty levels depends on the specific circumstances in each country. The legal framework [4] stipulates that GBS can only be given if there is a sound macroeconomic policy, a well-defined national development policy and sufficiently transparent, reliable and effective PFM. The Commission interprets these conditions in a dynamic manner. In its view, the weaknesses affecting PFM and the national development strategy of the partner country at the time of the financing decision do not preclude the launch of a GBS programme, provided that the will to reform exists and the reforms are relevant and credible. In this way it takes account not only of the initial situation, but also of the direction being taken by the partner country. Other budget support donors follow a similar approach.

11. As well as the specific circumstances in each country, a second major factor influencing the impact of GBS programmes is how well the Commission manages these programmes. This report addresses the question: "Does the Commission manage its GBS programmes effectively?"

AUDIT SCOPE AND APPROACH

12. To answer the question, "Does the Commission manage its GBS programmes effectively?" the audit focused on four key areas.

(a) Does the Commission appropriately select and formulate the objectives and expected results of its GBS programmes?

(b) Does the Commission appropriately manage the main risks to the effectiveness of GBS programmes?

(c) Does the Commission design and implement its GBS programmes effectively?

(d) Does the Commission report in a clear, exhaustive and accurate manner on whether GBS is meeting its objectives?

13. The audit focused on the Commission’s management of GBS programmes in ACP, Latin American and Asian countries. Given their particularities, countries in a fragile situation were excluded from the scope of this audit. The audit covered the ninth and 10th EDFs, which means commitments made from 2001 onwards, and all GBS programmes under the general budget, the first of which was committed in 2003. The Commission’s assessments of countries’ eligibility for GBS are addressed by the Court’s financial audits, the findings of which are presented in the Court’s annual reports. This report refers to these findings where relevant. The audit did not aim to make an assessment of the advantages and disadvantages of GBS compared to other aid modalities.

14. The audit involved an analytical review of all GBS programmes funded in these regions over the 2001 to 2009 period to assess the Commission’s approach to managing GBS. It included visits to four countries: Benin, Laos, Paraguay and Uganda. During those visits, the Court’s auditors interviewed Commission staff, representatives of national authorities and other donors. In addition, GBS programmes in Nicaragua and Vietnam were covered through a documentary review and questionnaires sent to the Commission Delegations in the two countries. The audit also involved meetings with the PEFA [5] secretariat, the World Bank and the International Monetary Fund and a mission to the United Kingdom to visit the Department for International Development, the National Audit Office and a consultancy company. The audit was carried out between May 2009 and May 2010.

OBSERVATIONS

THE COMMISSION INSUFFICIENTLY TAILORS THE OBJECTIVES OF ITS GBS PROGRAMMES TO THE SPECIFIC CIRCUMSTANCES OF EACH COUNTRY

15. The overall objective of GBS programmes is to support the implementation of a country’s national development strategy [6]. The Commission seeks to align the specific objectives of its programmes with these strategies.

16. This section addresses the question of whether the Commission adequately selects and formulates the objectives and expected results of its GBS programmes. The Court examined whether programme objectives are precise and tailored to country circumstances. Furthermore, the Court examined whether the objectives include strengthening PFM in partner countries and whether programmes clearly set out how budget support will contribute to achieving the expected results.

THE OBJECTIVES OF GBS PROGRAMMES TEND TO BE SIMILAR FOR ALL PARTNER COUNTRIES DESPITE THEIR DIFFERENT SITUATIONS

17. For the most part the objectives of GBS programmes are very similar across the different countries where the Commission uses this aid modality. In particular in ACP countries, in the great majority of cases over the last 10 years, each GBS programme has had objectives relating to four areas: macroeconomic stability, PFM, health and education [7]. This "one size fits all" approach does not sufficiently take into account each country’s specific and changing priorities or the other programmes funded by the Commission and other donors in the country.

18. The systematic inclusion of overall economic governance objectives relating to macroeconomic stability and PFM reform is a positive feature of the Commission’s GBS programmes. Both are essential to achieving the GBS programmes’ overarching objective of contributing to poverty reduction. However, the PFM objectives selected are often not tailored to address the PFM reform priorities of individual partner countries. Thus, for example, in Laos, PFM objectives do not address the important areas of internal control and corruption and in Vietnam PFM issues have not been prioritised. In Paraguay and Nicaragua, although PFM diagnostics identified significant weaknesses, the GBS programmes do not formulate specific programme objectives relating to PFM.

19. As regards the other objectives of GBS programmes, the Commission’s approach does not adequately reflect the fact that the national development strategies of some countries have moved in recent years to growth-targeted approaches in order to achieve the overarching objective of poverty reduction. This change is not reflected in the objectives of the new GBS programmes to support such national strategies. An example is Uganda’s new "national development plan" which was being prepared at the time of the Court’s audit. It placed much more emphasis on infrastructure and private sector development than previous national development strategies which had taken the form of "poverty eradication action plans" [8]. Although the Commission’s internal guidelines recognise that growth is a necessary condition for poverty reduction, they do not address the new importance attached to it by partner countries and how the Commission should deal with it when selecting programme objectives and related conditions.

20. The Commission’s programming procedures provide for each country’s overall aid allocation to be largely channelled into no more than two priority or "focal" sectors and, if the country is eligible for it, GBS. The Commission’s relatively standardised approach to setting GBS programme objectives does not take into account the focal sectors selected. In some countries this has also led the Commission to having both GBS programmes with health and education objectives and also health and/or education as sectors with funding channelled through SBS. In such cases the value added of the GBS programme having education and health objectives is unclear. The Court identified such cases in the current programmes of four ACP countries [9]. This was less of a problem in Asia and Latin America, mainly because GBS programmes in these countries tend to be less standardised and have more focused objectives. GBS programmes in Asian countries, for example, are structured around World Bank poverty reduction support credits, which place particular emphasis on growth as a key element in reducing poverty, rather than on social sectors.

21. The Commission’s use of standardised objectives for its GBS programmes means that it is difficult to adjust the programmes to coordinate them with other donors’ objectives for their GBS programmes. Moreover, the 2007 EU Code of Conduct on Complementarity and Division of Labour in Development Policy requires the Commission and Member States to aim at focusing their active involvement in a partner country on a maximum of three sectors [10]. This raises the question of the extent to which GBS programmes should have sectoral objectives since this requires the participation of the Commission in these sectors in addition to the two focal sectors.

THE OBJECTIVES OF GBS PROGRAMMES ARE OFTEN DEFINED IN TERMS WHICH ARE TOO GENERAL

22. The objectives of GBS programmes are formulated in most cases in rather general terms and do not set out clearly what the programmes are expected to achieve and by when (see Box 1). This is detrimental to the design of the various components of GBS programmes, namely the transfer of funds, capacity development, conditions and dialogue (see paragraphs 1 and 2). Moreover, it does not allow an objective assessment of whether objectives have been achieved, making it more difficult to hold the Commission accountable for the effectiveness of its GBS programmes.

BOX 1

SELECTING AND FORMULATING OBJECTIVES

Good Commission practice: Laos

The Commission’s GBS programmes in Laos [11] are integrated [12] in the World Bank’s budget support policy matrices which provide clear, detailed information on priority actions to be completed within the timeframe of the programme. For instance, the objective to introduce key PFM reforms is broken down into three detailed objectives relating to the budgetary process, the transparency of intergovernmental fiscal transfers and the financial audit function. For each of these detailed objectives, the policy matrices define which actions the government has to take during each year of the programmes’ implementation. The clear link with performance indicators allows objective monitoring of the achievement of the objectives of the programme.

Weak Commission practice: Nicaragua

The financing agreement for the Commission’s GBS programme in Nicaragua [13] focuses on rural areas but does not define general and specific objectives and expected results. It refers to the overall objectives of the national development plan, but does not set out what the Commission expects the GBS to achieve. Furthermore, the expected contribution to PFM is unclear. Although the financing agreement describes PFM weaknesses and the main measures taken by the government to improve the PFM system, PFM improvement is not an explicit objective of the programme.

23. Some progress was made in the financing agreements under the 10th EDF in improving the formulation of objectives by clearly distinguishing general and specific objectives in the structure of the document. By revising its internal guidance on budget support (see paragraph 6), the Commission intends to introduce further improvements by requiring its staff to:

(a) specify in the financing documents the steps needed to implement PFM reforms and national development strategies or sector policies;

(b) establish medium-term objectives for the programme.

THE COMMISSION DOES NOT APPROPRIATELY MANAGE THE MAIN RISKS TO EFFECTIVE GBS

24. All development cooperation involves taking risks which may have an impact on the effectiveness of the aid. GBS involves risks that are different from those arising from the traditional project approach to development cooperation. The main risks to the effectiveness of GBS are fiduciary risk and development risk: fiduciary risk can be defined as the risk that government funding is not used for the intended purpose of poverty reduction; development risk can be defined as the risk that the national policies and strategies supported by GBS are inadequate.

25. This section addresses the question of whether the Commission appropriately manages the main risks affecting the effectiveness of GBS. The Court examined how the Commission assessed fiduciary and development risks and what steps it took to manage those risks through relevant capacity development, conditions, dialogue and measures for monitoring and reducing risk.

THE RISK MANAGEMENT FRAMEWORK IS NOT WELL DEVELOPED

26. The eligibility conditions for budget support are designed to ensure that GBS is only provided in countries which have the necessary framework for GBS to be effective: a sound macroeconomic policy, a well-defined national development policy and a sufficiently transparent, reliable and effective PFM system (see paragraph 10). Since the Commission uses a dynamic interpretation of the eligibility conditions, the existence of significant weaknesses in PFM or development strategies at the time of the financing decision does not preclude the launch of a GBS programme, provided that the partner country is committed to reform and its progress in implementing reforms is deemed to be relevant and credible. Implementing reforms is a lengthy process. Whilst the dynamic approach means that the Commission, together with other donors, is investing in the future, it needs to assess and reduce the risks that result from systems that do not immediately provide sufficient guarantees in terms of transparency, efficiency and effectiveness [14].

27. For ACP countries [15], the Commission’s assessment of risk has focused on the risk of countries not continuing to meet eligibility conditions throughout the entire implementation period of the GBS programmes. This assessment was based on the country’s previous track record with GBS and its future prospects for meeting the eligibility criteria. The conclusions of the assessment were an important factor in deciding whether or not to provide budget support in those countries (see paragraph 45). Although this risk assessment is useful, it is not sufficient as it does not cover the potential impact of fiduciary risk and development risk on the effectiveness of GBS.

28. The Commission’s internal guidelines do not provide for the assessment of fiduciary and development risks. The main types of risks are not identified and there is no guidance on how to assess the significance, probability and potential impact of risks. Furthermore, it is not clear how risk-mitigating measures such as capacity-building support, dialogue, conditions and shorter-term measures are to be designed for the different types and levels of risk and how these measures should be coordinated with other donors.

RISKS ARE HIGH IN MOST COUNTRIES BENEFITING FROM GBS BUT ARE NOT ADEQUATELY ADDRESSED BY THE COMMISSION

FIDUCIARY RISK

29. GBS is mostly provided in countries with weak PFM systems. This is demonstrated by the annual Country Policy and Institutional Assessment (CPIA) published by the World Bank where the indicator for the quality of budgetary and financial management is relatively low for the majority of countries benefiting from GBS [16]. Weak PFM systems can lead to waste of funds and inefficiency which reduce the effectiveness of GBS programmes in achieving their poverty reduction objectives.

30. Another consequence of weak PFM systems is increased corruption. The CPIA also includes an indicator concerning transparency, accountability, and corruption in the public sector whose score is similarly low for most countries benefiting from GBS [17]. Further indications of the often high level of corruption can be derived from the Corruption Perception Index published by Transparency International. Among the 27 ACP countries that are not in a fragile situation [18] and for which GBS has been planned in the country strategy papers for the 10th EDF, 12 of them [19], on the basis of the 2009 Corruption Perception Index, are classified as having "rampant corruption" [20]. Among the six Latin American and Asian countries with GBS programmes, five of them [21] have the same classification.

31. The Court found that relevant information on PFM systems and the reform programmes to improve them is available to the Commission for its decision-making and monitoring purposes. The Public Expenditure and Financial Accountability (PEFA) are a particularly useful source of information on PFM systems. These are based on a common methodology drawn up in 2005 through joint donor efforts, including significant inputs from the Commission. The PEFA assessments have been carried out for many countries [22] and report on the state of a country’s PFM system according to 28 indicators. The assessments have in many countries stimulated PFM dialogue and the drawing up of PFM reform action plans and support programmes. The results of the assessments also provide a good basis for measuring improvement over time. They are complemented in this respect by annual PFM reports prepared by Delegations that generally provide a good overview of the PFM situation and recent developments.

32. Nevertheless, the Commission does not assess and conclude on fiduciary risk. This is partly because, unlike some Member States such as France [23] and the United Kingdom [24] and other organisations [25], it has no methodology for doing this. Furthermore it has insufficient information on how well PFM systems are actually working in practice. The PEFA assessments are not intended to be a fiduciary risk assessment tool because they do not contain a sufficiently in-depth assessment of the extent to which controls and procedures are complied with and the estimated impact of corruption. Such information should normally be found in the annual reports of the supreme audit institutions and other oversight bodies. However, in Uganda, where the supreme audit institution issues an annual audit report reasonably on time, the Commission Delegation had not made sufficient use of it for identifying fiduciary problems. In most countries supreme audit institutions issue their reports with significant delays or, in the case of Laos, they are not even made public.

33. In addition, for most countries examined, the lack of transparency in the presentation of national and subnational budgets also makes it difficult for the Commission to analyse how budgetary resources are being used. Diagnostic studies such as public expenditure tracking surveys [26] and public expenditure reviews [27] can help compensate for a lack of information by identifying major inefficiencies and leakages, so that donors and beneficiary governments can prioritise their efforts on first addressing these problems. The Commission has made relatively little use of such tools.

34. The Commission applies a number of methods in its GBS programmes to contribute to reducing fiduciary risk, in particular the PFM eligibility criterion, which requires satisfactory progress in PFM reform, and other PFM conditions attached to disbursements. Commission support for PFM reform programmes through capacity-building and dialogue is also used to reduce risk. However, the lack of a thorough and explicit fiduciary risk assessment makes it harder to draw up a risk reduction plan which clearly sets out the risks and defines what measures are needed to reduce them and over what time period. Moreover, Commission risk reduction measures mostly focus on improvements which will only have an impact over the medium to long term. Little use has been made of shorter-term measures agreed with partner governments to address high-risk areas through, for example, assisting supreme audit institutions to carry out more prompt and higher quality audits or supporting countries in the application of standard international procurement procedures (see Box 2).

35. While the Commission did include such measures for reducing risk in the design of its GBS programmes under the ninth EDF in Uganda and Benin, such as the use of private audit firms to assist supreme audit institutions in carrying out audits and the carrying out of public expenditure tracking surveys and public expenditure reviews, they were not accompanied by a clear and agreed plan of implementation that sets out how and by when these measures would address specific risks. In fact, most of the planned measures were ultimately not implemented. The GBS programmes under the 10th EDF for these countries and the GBS programmes of the Asian and Latin American countries examined do not provide for shorter-term measures.

BOX 2

REDUCING FIDUCIARY RISK

Good Commission practice: Ethiopia

The Protection of Basic Services Program II [28] was designed to support the budgets of regional level and lower tiers of government which were responsible for basic services such as education, health and water. The programme contains strengthened reporting and accountability measures to enable verification that the services were reaching the intended beneficiaries. These measures include more regular and timely reporting on regional and local spending for basic services. Furthermore, the flow of government funds was to be tracked to the final service delivery point, for instance, through public service delivery surveys. The reporting and accountability measures also included an ex-post review of procurement, measures to improve disclosure of public budget information at regional, subregional and service delivery point, and the continuous audit of local government expenditure by the Auditor General combined with the necessary capacity-building support for the Auditor General’s staff.

Weak Commission practice: Paraguay

The preparatory documents for the approval of the Commission’s GBS programme do not refer to fiduciary risk, although the overall conclusion of the Country Financial Accountability Assessment of August 2004 was that the financial management risk is high and that, to reduce risk to an acceptable level, reforms were needed in the areas of internal control, external audit and the control of decentralised entities. Furthermore, the preparatory documents do not describe the main risks relating to inefficiencies and wastage of the national budget and do not address the issue of corruption in spite of the extent of this problem [29]. Despite the high level of fiduciary risk, the preparatory documents do not demonstrate how the main weaknesses are to be tackled and no shorter-term measures were implemented.

36. The Commission has paid relatively little attention to the risk of corruption in its GBS programmes in terms of objectives, capacity-building support and monitoring and generally makes little reference to it in its programme appraisal documentation. One reason for this is that the Commission tends to treat it as a wider governance issue which has led to it not being sufficiently addressed in the context of PFM reform efforts. However, in 2008 the Commission considerably increased its efforts to tackle corruption in Uganda in conjunction with other donors and the European Anti-Fraud Office.

DEVELOPMENT RISK

37. In addition to PFM systems that work, countries also need to have well-defined national development strategies, integrated with the national budgetary framework and sectoral policies, for GBS to be effective. A structured assessment of the strategy should therefore be a significant part of the Commission’s work of drawing up GBS programmes. The Court found that national development strategies are generally described in Commission programming, identification and formulation documents but are not critically appraised and the Commission does not draw an explicit conclusion on the relevance and credibility of the strategy.

38. National development strategies are generally still weak, which is likely to mean that development risk is relatively high. Thus a 2007 World Bank review concluded that only eight of the 62 developing countries (13 %) examined had a "largely developed" strategy [30] although it considered that all countries were making progress towards this. In particular the review found that:

(a) in most countries, strategies were still only weakly linked to the budget;

(b) many of the countries were still pursuing multiple medium-term strategies, which may involve a significant duplication of effort and jeopardise progress on the other components of the development strategy;

(c) many countries have identified goals and priorities matching their specific needs but need to provide better clarification of how to achieve these goals.

39. The Commission holds considerable information on development risks. However, these are not clearly set out in the identification and formulation documents of the GBS programmes. In Paraguay for instance, risks include insufficient planning of the financial and human resources needed to implement the national development strategy, inappropriate institutional arrangements which have led to weak and inefficient policies, lack of transparency in the design and implementation of policies and programmes and inappropriate targeting of expenditure. Where the Commission did identify risks, as for instance in Uganda and Vietnam, it did not make an explicit judgement on the level of development risk and did not systematically identify measures for reducing it.

THE COMMISSION’S DESIGN AND IMPLEMENTATION OF THE DIFFERENT COMPONENTS OF ITS GBS PROGRAMMES DO NOT ENSURE THAT THEIR POTENTIAL IMPACT IS OPTIMISED

40. This section addresses the question of whether the Commission’s design and implementation of the different components of GBS were effective, i.e. transfer of funds, capacity-building support, conditions and dialogue.

THE RATIONALE FOR THE ALLOCATIONS TO INDIVIDUAL GBS PROGRAMMES IS NOT CLEAR BUT THE DISBURSEMENT OF FUNDING IS INCREASINGLY PREDICTABLE FOR THE PARTNER COUNTRIES

41. The Court examined whether the Commission appraised the amounts of individual GBS programmes according to the objectives of the programmes and the countries’ specific circumstances. Furthermore, it examined whether the Commission disburses GBS on a predictable basis and in alignment with country budgetary systems.

THERE IS NO FRAMEWORK FOR ASSESSING THE APPROPRIATE AMOUNTS FOR GBS PROGRAMMES

42. The country strategy papers and the various documents used for deciding on GBS programmes examined by the Court lack clear explanations on how the amount of GBS allocated had been decided. In most cases, a reference is only made to the overall objective of increasing the Commission’s use of budget support (see paragraph 7).

43. Imprecise objectives (see paragraph 22) are a problem for assessing the amount to be allocated to individual GBS programmes. For example, the amount required to have an impact on partner country budgetary expenditure patterns or to finance the budget deficit may be quite different from the amount required to strengthen PFM systems.

44. The Commission does not carry out a structured assessment to weigh the expected benefits and risks. Its internal guidelines stipulate that first the financial envelope for GBS must be established and then the expected benefits and risks arising from this allocation are to be assessed. A more logical approach would be to first assess the expected benefits and risks of a GBS programme and then determine the financial allocation on the basis of this assessment within the limits of the overall country allocations.

45. As regards risks, the Commission takes account of the risk of non-utilisation of GBS due to non-respect of the eligibility criteria (see paragraph 27). For the 10th EDF, generally the lower this risk was assessed to be for a given country, the more GBS it was likely to receive and the higher the percentage of its national indicative programme allocated to GBS (see the Table). However, the Commission does not consider fiduciary and development risks (see paragraphs 32 and 37) when deciding on the amount of funding.

TABLE

LINK BETWEEN GBS ALLOCATIONS AND THE COMMISSION’S ASSESSMENT OF RISK OF NON-UTILISATION OF GBS DUE TO THE NON-RESPECT OF THE ELIGIBILITY CRITERIA

| LOW RISK | MEDIUM RISK | HIGH RISK |

Number of ACP countries with budget support programmes planned in their national indicative programme for the 10th EDF | 20 | 14 | 8 |

Number of ACP countries with no budget support programmes planned in their national indicative programme for the 10th EDF [1001] | 0 | 8 | 18 |

Budget support as a percentage of the national indicative programme for the 10th EDF | Average | 73,0 % | 63,2 % | 35,0 % |

Lowest | 48,1 % | 39,6 % | 19,9 % |

Highest | 89,4 % | 95,3 % | 84,7 % |

THE COMMISSION DISBURSES GBS ON A PREDICTABLE BASIS AND IN ALIGNMENT WITH COUNTRY SYSTEMS

46. By definition, a central part of budget support is the transfer of funds by the Commission to support the national budget of the beneficiary country. In recent years, best practice in the provision of budget support has emphasised the importance to partner countries of the predictability of the flows of budget support allocated by donors. This allows partner countries to know sufficiently in advance the amount and timing of disbursements.

47. The predictability of the Commission’s disbursement of GBS is generally good. In most countries, the disbursement is scheduled to take place in the year after the performance assessment which allows the partner country to include the GBS as planned revenue in its budget. In most cases where payments have been made late, it was because of delays on the part of beneficiary countries in the submission of disbursement requests and did not result in significant negative impacts.

48. In particular, the Commission has taken significant steps to improve predictability through the introduction of the MDG contracts [32]. These programmes commit funds for a six-year period instead of the typical three years and, if eligibility conditions continue to be met, allow the disbursement of at least 70 % of the total commitment independent of performance. MDG contracts are only granted to countries that have a successful track record in implementing budget support, show a commitment to monitoring and achieving the MDGs, and have active donor coordination mechanisms to support performance review and dialogue.

CAPACITY-BUILDING SUPPORT HAS MADE USEFUL CONTRIBUTIONS BUT WAS OFTEN NOT BASED ON AN APPROPRIATE ASSESSMENT OF PRIORITY NEEDS

49. Capacity-building support is one of the key components of GBS programmes and is either included directly in the GBS programme or through an accompanying specific capacity-building support programme to contribute to GBS programme objectives. Typically about 5 % of overall GBS programme funding is set aside for capacity-building.

50. This section addresses the question of whether capacity-building support provided within the context of GBS programmes effectively contributes to meeting the programmes’ objectives. The Court examined whether capacity-building support is relevant, sufficient and clearly defined in view of the programme objectives and the interventions made by other donors. Furthermore, it examined whether capacity-building support has been implemented appropriately.

CAPACITY-BUILDING SUPPORT MAY NOT BE SUFFICIENT AND MAY NOT BE THE MOST RELEVANT

51. Despite the importance of capacity-building support, the Commission has no criteria or guidelines to assess the capacity-building support required to address the partner country’s priority needs. The assessments of capacity-building needs are not comprehensive and do not systematically take into account support provided by other donors when the Commission decides on the capacity-building allocations under GBS programmes [33].

52. Improving PFM is an important objective of all the Commission’s GBS programmes (see paragraph 18) and capacity-building can play an important role in reducing risk. The Commission’s capacity-building support therefore mainly focuses on PFM. However, there is no clear link between the needs for improving PFM in a particular country and the amounts provided for capacity-building support. It is therefore not clear that the share of GBS programme funding allocated to capacity-building, usually in the order of 5 %, is sufficient to have a significant impact.

53. Only a limited part of the capacity-building for PFM has been used for strengthening oversight bodies such as supreme audit institutions, parliaments and civil society organisations seeking to monitor government use of budgetary resources [34]. Support for capacity-building in areas other than PFM, on which GBS programme objectives are also focused, notably health and education, has been very relevant but in general marginal.

54. In some cases, capacity-building support was used to finance assistance for the management of GBS programmes. As a result, these funds did not directly contribute to the creation of sustainable capacity in the partner country. In Nicaragua, technical assistance mostly focused on the production of reports, monitoring of conditions, preparing disbursement requests and the review of the government’s plans. Similarly, in Benin, more than a third of the funds available for capacity-building support under the ninth EDF were devoted to the assessment of indicators, the preparation of joint annual reviews, the formulation of the GBS programme under the 10th EDF and the design of capacity-building support for PFM and statistics.

55. In July 2008, the Commission adopted a strategy [35] that aimed to improve the effectiveness of its assistance for capacity development by requiring it to support country-led programmes, be based on partner demand and be focused on sustainable results. Improvements were observed in the design of the capacity-building support under programmes launched after the adoption of the strategy. The capacity-building support provided under the 10th EDF in Benin and Uganda is delivered through multi-donor trust funds and is, compared to the ninth EDF, more relevant to the priority needs, better planned and better coordinated with other donors. It remains unclear, however, how the amounts for support through such mechanisms were established.

THE SUPPORT PROVIDED MADE USEFUL CONTRIBUTIONS TO CAPACITY-BUILDING BUT A SIGNIFICANT PART OF THE FUNDS AVAILABLE HAS NOT BEEN COMMITTED

56. Capacity-building support has made useful contributions, especially when support was provided in response to a clear demand from the partner country. In the area of PFM, support is mostly related to government PFM reforms in fields such as the budgetary process, internal control, procurement and the quality of statistical information. In those cases where capacity-building support focused on other sectors, it covered areas such as the formulation of national and sector strategies, the development of sector management information systems, monitoring and evaluation (see Box 3).

BOX 3

CAPACITY-BUILDING SUPPORT

Good Commission practice: Laos

The Commission has devoted a significant share (approximately 20 %) of its GBS-related funding to capacity-building which reflects the capacity constraints of the government. The programme focuses on PFM weaknesses but also seeks to build capacity in the provision of social services which is relevant to the Commission’s objective of improving performance in the health and education sectors. The technical assistance objectives include facilitating sector dialogue between ministries and development partners and helping the government to achieve the performance indicator targets linked to the variable tranches of the GBS programme. Thus synergies were created between different components of GBS, namely capacity-building support on the one hand and dialogue and conditions on the other hand.

Weak Commission practice: Benin

The capacity-building support to be provided in the framework of the ninth EDF GBS programme represents approximately 2 % of the programme financing and is not clearly defined in terms of needs, objectives, priorities and planning. There is no documented view on what improvement could and should be made within the period of the programme and how capacity-building support will contribute to this. There is no needs assessment and no justification of why certain areas have been selected to be supported and why some, such as anti-corruption measures and administrative reform, have not, even though they were identified by the poverty reduction strategy as relevant to contributing to good PFM. There is also a separate specific programme to support the reform of public management by objectives. This programme addresses relevant weaknesses but the articulation with the GBS programme is unclear. The results of the support provided have been variable, as some of the support provided did not lead to an actual improvement of systems.

57. For most GBS programmes, funds allocated to capacity-building support have in the end been only partially committed, thus reducing the effectiveness of this component of GBS programmes. In fact, on average, only approximately 60 % of capacity-building allocations are committed before the closure of the programmes. This is in part because the programme implementation period is often too short to design and fully implement their capacity-building component. This problem has been exacerbated by difficulties in first defining needs and then delays in the implementation of the capacity-building activities. Thus the Court found significant delays in the launching of the capacity-building actions in four of the six countries. However, such implementation difficulties are not specific to the capacity-building support provided by GBS programmes [36].

THE CONDITIONS ATTACHED TO DISBURSEMENT ARE PERFORMANCE ORIENTED BUT IN PRACTICE ARE NOT WORKING AS INTENDED

58. Conditions attached to the disbursement of GBS comprise general conditions relating to eligibility for budget support which have to be met before the payment of any fixed or variable tranche, and specific conditions mainly linked to the variable tranche mechanism connected to the achievement of performance indicator targets [37]. The variable tranche mechanism is a particular feature of the Commission’s budget support programmes and reflects the growing emphasis in development cooperation on managing for results. As an incentive, the amount disbursed from the variable tranches depend on the extent to which targets for selected performance indicators have been reached.

59. The Court examined whether conditions attached to the disbursement of GBS programmes are relevant in relation to their objectives, provide an incentive to the government to achieve the objectives and allow the objective assessment of progress achieved.

CONDITIONS ARE GENERALLY RELEVANT BUT ARE UNLIKELY TO ACHIEVE THEIR INCENTIVE EFFECT

60. The general conditions attached to the payment of any fixed or variable tranche are relevant since they are aligned with the country’s objectives of maintaining macroeconomic stability and making progress in relation to sound PFM and poverty reduction. In some cases there is scope for improvement in the identification of priority PFM measures to be implemented [38]. The specific conditions attached to the variable tranches of GBS programmes are also generally relevant as they are aligned with the national development priorities of the partner country (see Box 4). The Commission is increasingly taking over performance indicators from the country’s national development strategy. In some programmes, the Commission used indicators focused on poorer regions in the partner countries or which were broken down by gender in order to increase their relevance to poverty reduction priorities.

61. The Court found that the incentive effect of the variable tranche mechanism was likely to be less than intended. It was often difficult to set appropriate targets for the performance indicators. Targets that are insufficiently challenging or targets that are overly ambitious can reduce the incentive effect. Moreover, reliable statistical data to establish clear baselines and to provide information on past trends are often not available (see paragraph 67).

62. Furthermore, the Commission’s documentation did not demonstrate that there had been sufficient analysis during the target-setting process of what reforms and additional budgetary resources would be necessary and feasible in order to achieve the targets. Since proposals for targets increasingly come from the country itself, the Commission has to hold in-depth dialogue with the national authorities to ensure that targets are not set deliberately low or unrealistically high. However, there is insufficient expertise for this in many Commission Delegations (see paragraph 74). In addition, occasionally targets were not set until well into the year for which performance was being measured.

BOX 4

SELECTION OF CONDITIONS

Good Commission practice: Nicaragua

The GBS programme in Nicaragua focuses on rural areas and selected social indicators, private sector indicators and PFM indicators. The three social indicators of the programme are relevant to the objectives of the poverty reduction strategy papers since they address some of the causes of poverty identified in this national strategy. The four private sector indicators of the programme relate to the issue of land tenancy and productive capacity and this is consistent with the priority given by the poverty reduction strategy papers to investments in rural areas and the need to enhance the link between production, competitiveness and land development in order to reduce poverty. One of the two PFM indicators is relevant to the recommendations of the PFM action plan. Furthermore, the Commission’s selection of indicators has taken account of the complementarities with two SBS programmes.

Weak Commission practice: Benin

The relevance of the performance indicators is affected by a number of weaknesses.

All targets for 2005 relating to the education sector were achieved, providing the impression of a good performance by the sector but the joint annual review [39] for that year concluded that the implementation of reforms in this sector was unsatisfactory.

Two of the four indicators that relate to the health sector measure the frequency of visits to health centres. However, a government priority was preventive action against malaria, which is likely to have an adverse effect on the indicators. As a result, the Commission had to exclude these indicators from the calculation of the variable tranche amount for the year 2006.

The PFM indicators do not address the main needs of the PFM reform process. According to the conclusions of the joint annual reviews as well as of the PEFA assessment, improvements were most needed in the areas of external control, financial accountability and tax collection. This was also the view of the Commission’s internal quality review for the formulation of the GBS programme under the 10th EDF. However, this programme does not contain a condition concerning the fiscal collection rate and includes only one condition on external control for the variable tranche of 2009 which was not kept for the rest of the programme.

63. In Uganda half of the GBS targets relating to the health sector were set either below or much above the baseline without explanation. In Laos and Paraguay a number of the targets set were not very challenging, sometimes simply being set at the same level as the baseline. In Nicaragua the government acknowledged that for many targets there was no adequate accompanying budget.

64. A further factor influencing the incentive effect of the variable tranche is the proportion of the GBS programme allocated to it. The Commission has no criteria for deciding on the allocation of funds between fixed and variable tranches, which leads to significant differences between regions and countries in the proportions allocated [40]. Indeed the mix of fixed and variable tranches can also vary significantly between two consecutive programmes in the same country and without a clear explanation being given for this change. The Commission considers that the proportion of GBS allocated to the variable tranche should be higher in countries where it has more concerns about their commitment to poverty reduction and reforms. However, this approach is not referred to in the Commission’s internal guidelines or individual programme documents. Furthermore, in a significant number of the GBS programmes, particularly in Asian and Latin American countries, variable tranches are not used.

65. Some financing agreements also contain provisions to the effect that, when variable tranche performance indicators are not achieved, the Commission may pay out undisbursed funds at the end of the programme if new conditions are met. Such a possibility was provided for under GBS programmes in Benin, Nicaragua and Paraguay. In other cases undisbursed funds were reallocated to other Commission programmes or projects in the country.

IT IS OFTEN DIFFICULT TO ASSESS WHETHER CONDITIONS HAVE BEEN MET OR NOT

66. The general conditions for GBS disbursements are often vaguely defined, being based on "satisfactory" performance by partner governments in implementing national development strategies, PFM reform and macroeconomic management. No specific milestones or outputs are established to serve as criteria for what constitutes "satisfactory". As observed by the Court’s annual reports on the activities funded by the seventh, eighth, ninth and 10th EDFs [41], the Commission often concludes that progress on the reform of PFM has been "satisfactory" while having only limited evidence to support this position. This approach tends to reflect the Commission’s concern to ensure the continuity of its programmes, although it should be acknowledged that the Commission has improved its analysis in this area since the start of the 10th EDF.

67. Unreliable data can make it difficult to assess whether conditions based on performance indicator targets have been achieved or not. The World Bank’s 2007 review of "Results-based national development strategies" highlighted weak statistical systems as a major challenge faced by nearly all the 62 countries it examined. The problem is aggravated by the fact that the Commission sets its variable tranche performance indicator targets on an annual basis although year-on-year progress in some areas can only realistically be expected in terms of small percentage increases. Such small increases are difficult to measure reliably.

DIALOGUE WITH PARTNER COUNTRIES IS NOT USED TO ITS FULL POTENTIAL

68. One of the main benefits of budget support is the increased opportunities it can give donors for dialogue with governments on national policies. Dialogue can also play a very important role in helping to achieve the objectives of GBS programmes, since it allows the Commission to discuss with governments the definition and implementation of the key policy objectives supported by the programmes. Dialogue is also intended to be a key part of the Commission’s results-oriented approach to budget support since the Commission uses it in conjunction with the conditions and targets set to review the government’s performance. Dialogue typically takes place both at the policy level and at the technical level and is carried out jointly with other donors.

69. The Court examined whether the Commission manages its dialogue with the partner country in a manner that contributes to meeting the expected results of GBS programmes. For this purpose, it examined whether the objectives and modalities of dialogue were clearly defined and appropriate, whether the Commission actively participated in the dialogue at an appropriate level and in accordance with the modalities laid down and whether the Commission’s contribution to dialogue has adequately addressed key aspects of poverty reduction and PFM.

THERE IS NO APPROPRIATE FRAMEWORK TO ENSURE EFFECTIVE DIALOGUE

70. In most countries where GBS is provided, joint donor agreements have been established between donors and with partner countries to lay down common principles and procedures for conducting dialogue and the Commission actively supports and participates in such arrangements. Nevertheless the Commission has not yet developed the detailed guidance necessary to help ensure that within such frameworks its staff make full use of opportunities for dialogue.

71. The Commission’s internal guidelines provide little information on what the objectives and content of dialogue should be or on how to undertake and document dialogue at the various stages of the programme cycle. They do, however, require "an appropriate dialogue strategy" to be put in place when weaknesses affecting key aspects of the GBS programme are identified. In practice, such strategies have not been drawn up despite the useful role they could play in all GBS programmes in helping to systematically improve effective dialogue by fixing clear objectives and modalities and defining the necessary staff resources needed to conduct the dialogue.

72. The extent to which GBS programmes have established a sound basis for dialogue has varied. In Laos and Vietnam the objectives and modalities of dialogue were clearly laid out in the annual cycle of the World Bank-led poverty reduction strategy programmes to which the Commission GBS programmes contributed, with the dialogue focusing on reforms to be introduced by the national governments. In contrast there was little detailed information in Uganda and Paraguay on what the specific aims of the Commission’s dialogue would be during the course of the programme and in Paraguay the modalities to be applied to pursue them were also less clear. In Benin, significant progress was made in this respect in the 10th EDF compared to the ninth EDF.

THE COMMISSION’S INVOLVEMENT IN DIALOGUE VARIES BUT IS OFTEN LIMITED

73. GBS programmes have been particularly important in enabling the Commission to conduct a dialogue on the national budget and PFM and the Commission’s contribution to GBS dialogue is generally more developed in this area. The results of PEFA assessments (see paragraph 31) have often played a catalytic role in strengthening PFM dialogue. In the other areas on which GBS programme objectives are typically focused, the Commission’s dialogue is in many cases limited to issues relating to assessing compliance with the variable tranche and fixed tranche conditions of the programme rather than addressing overall government performance in the areas concerned. As a result, the Commission often does not play the role in dialogue that could be expected, given its significant financial contributions (see Box 5).

BOX 5

DIALOGUE

Good Commission practice: Vietnam

In Vietnam, the Commission provides GBS within the framework of the World Bank poverty reduction support credits, which is the GBS mechanism used by all donors in Vietnam. It is a clear framework for dialogue between the donor community, led by the World Bank and the government. It involves an annual cycle whereby all co-financers jointly define, monitor, and evaluate conditions with the government. For its dialogue, the Commission targets a limited number of areas which reflects its efforts to respect the EU Code of Conduct on Division of Labour in Development Policy.

Weak Commission practice: Paraguay

The objective of the GBS programme in Paraguay is to support the implementation of the Social Protection Network which is a significant element in the social protection axis of the national poverty reduction strategy. Following the major political change after the elections, dialogue took place in a particular political context. There is no structured framework in place for dialogue with donor coordination mechanisms such as working groups or joint annual reviews to discuss in detail the implementation of the national poverty reduction strategy. The Commission has concentrated its dialogue on the government’s compliance with the indicators used for the variable tranches. As a result, it paid little attention to the overall implementation of the Social Protection Network and did not seize the opportunity for a wider debate on the quality of social services. In fact, the Commission’s limited monitoring of the implementation of the Social Protection Network and the PFM action plan places limits on the possible extent of the dialogue. This means that inadequate performance is not detected early enough to allow a timely response through dialogue. When indicators were not achieved or when they were met with a much larger margin than would normally be expected, the Commission did not seek explanations from the government, nor did it question the reliability of the statistics.

74. A key factor affecting the quality of dialogue is the capacity of the Commission staff involved. An important reason for the Commission not having made full use of the opportunities for dialogue provided by GBS has been insufficient expertise in many Commission Delegations in the priority areas covered by the GBS programme objectives. In its 2007 Annual Report on the EDFs (paragraph 33), the Court indicated that "the increase of budget support … creates the need for specific skills and knowledge, and the Court notes that EuropeAid’s Internal Audit Capability (IAC) has recommended that a human resources policy is developed to incorporate objectives on numbers, skills and knowledge of budget support staff".

75. While the Commission has generally made PFM dialogue a priority, it has been difficult to recruit PFM specialists because of the relatively limited expertise available in this area. The Commission has made efforts to overcome this problem by developing several PFM-related training courses. A lower priority tended to be given to ensuring there was adequate staffing to contribute to health and education sector dialogue despite the Commission systematically including objectives for these two areas in its GBS programmes [42]. Thus the Delegation in Benin did have PFM specialists but had no staff specialised in health and education which meant it did not attend the health and education working groups [43] and can only to a limited extent participate in the joint annual reviews [44].

76. The letters sent by the Commission to governments to inform them what amount from the variable tranches is to be disbursed are used as part of the dialogue. The Commission includes in these letters relevant messages on issues of concern regarding the continued eligibility of the GBS programme, the implementation of the GBS programme and the performance of the government in the areas focused upon by the GBS programme. In some countries, however, this opportunity was not used at all (e.g. Paraguay) or only partially (e.g. Benin).

77. Despite the importance of dialogue, the Commission’s internal reporting on dialogue undertaken specifically in the context of its GBS programmes is limited [45]. The Commission’s internal management reporting from Delegations to EuropeAid’s headquarters is mainly limited to general comments on the state of political dialogue concerning the overall cooperation programme. This lack of information and the absence of clear objectives for the Commission’s dialogue on GBS (see paragraph 71), makes it difficult for the Commission to assess and demonstrate the extent to which dialogue has effectively contributed to GBS programme objectives.

THE COMMISSION’S REPORTING TO EXTERNAL STAKEHOLDERS TENDS TO FOCUS ON THE POTENTIAL BENEFITS OF GBS RATHER THAN ON RESULTS

78. The main Commission documents for reporting on its external cooperation, including GBS, are its annual reports on the "European Community’s development and external assistance policies and their implementation" [46]. In 2008, the Commission also published two documents dedicated to the subject of budget support, one entitled "Budget support — A question of mutual trust" and the second "Budget support — The effective way to finance development?". In addition, it produces information notes for the EDF and development cooperation instrument management committees composed of Member State representatives [47].

79. The Court examined the Commission’s reporting on its GBS programmes to assess whether it reported in a clear, exhaustive and accurate way on them, in particular in relation to their effectiveness, potential benefits and risks, and implementation challenges. The Court focused on the Commission’s annual reports over the period 2001–09.

EXTERNAL REPORTING FOCUSES ON THE POTENTIAL BENEFITS OF GBS

80. The annual reports regularly contain information describing the Commission’s procedures for managing budget support and new developments in the design of the instrument. They also provide details of the funding committed under budget support. In addition, they give considerable coverage to the potential benefits of budget support.

81. The Commission has regularly used the annual reports to explain the potential benefits of budget support such as alignment of assistance with national policies and systems, stronger ownership, improved opportunities for dialogue, better donor harmonisation, greater aid predictability and lower transaction costs. However, the reports tend not to emphasise the fact that the benefits described are only potential. In reality, many of them can at most be only partially realised because the necessary conditions in the beneficiary country are not yet fully in place, in particular due to continued weaknesses in national development plans and public finance management systems (see paragraphs 26, 29 and 38). Similarly the Commission itself often does not have the capacity to fully take advantage of the potential benefits, notably where its Delegations do not have sufficient expertise to make full use of the improved opportunities for dialogue which budget support offers (see paragraph 74).

82. Following the 2005 Paris Declaration on Aid Effectiveness, the Commission’s annual reports have emphasised budget support’s role in increasing "aid effectiveness" [48]. However, the reports do not make a clear distinction between the "aid effectiveness" targeted by the Paris Declaration — by which is meant improving delivery of aid by following the core principles of the Paris Declaration — and "aid effectiveness" in terms of the ultimate impact of the assistance on reducing poverty. Using budget support as a means to adhere more closely to the principles of the Paris Declaration is no guarantee that the aid has been effective in contributing to improving the lives of poor people.

83. In view of the potential role that budget support could play in delivering aid in line with the principles of the Paris Declaration, the European Union committed itself to a target of channelling 50 % of its government-to-government assistance through country systems (see paragraph 7). Moreover, the percentage of aid channelled through budget support is used as a results indicator in the EuropeAid annual work programmes. On this basis, an important feature of the annual reports’ coverage of budget support is to highlight progress towards this quantitative target, although an increase in the use of budget support does not necessarily mean an increase in its effectiveness in terms of poverty reduction.

EXTERNAL REPORTING GIVES LITTLE INFORMATION ON RISKS, IMPLEMENTATION CHALLENGES AND ACTUAL EFFECTIVENESS

84. The annual reports’ coverage of the actual results of budget support is considerably less than their commentary on its potential benefits and increased usage. The lack of information in the annual reports on the results of budget support contrasts with the information on other forms of aid which the Commission obtains from the "Results-oriented monitoring system" it has developed to carry out annual assessments of projects. The Commission has no other internal reporting procedures for systematically assessing the poverty reduction results of its GBS programmes which could then be used for external reporting purposes. There is no equivalent to the Delegation annual PFM reports (see paragraph 31) for reporting on progress in achieving objectives related to poverty reduction. The six-monthly external assistance management reports (EAMR) produced by Delegations for EuropeAid focus on implementation status rather than results.

85. The most substantial feedback related to the results of GBS was given in the 2007 annual report. This provided an overview of the findings of the 2006 joint evaluation of GBS, which was the first major evaluation of GBS carried out. However, while setting out the evaluation’s assessment that GBS had had a positive effect on policy and PFM processes, the annual report also noted that "most of the effects of GBS inputs so far have been on access to services, rather than income poverty and empowerment of the poor". In its 2009 annual report, the Commission recognised the limitations of this evaluation which "fell short of evaluating results".

86. It is of concern that there is no established evaluation methodology resulting in a body of evaluation work which provides evidence on whether, and in what circumstances, budget support can make an effective contribution to poverty reduction. The difficulties encountered by the 2006 evaluation were partly linked to the fundamental challenge in evaluating the effectiveness of budget support, which is how to attribute improvements in development outcomes specifically to budget support. This is because donor budget support is merged with national budgets, and therefore cannot be separately identified, and because improved outcomes may be due to external factors as well as the government programmes to which budget support contributes.

87. Since the 2006 joint evaluation, the Commission has been at the forefront of donor efforts within the framework of the Development Assistance Committee of the Organisation for Economic Cooperation and Development Evaluation Network to develop an improved evaluation methodology which is intended to better address the question of the impact of budget support. At the end of 2009 three pilot evaluations were launched at country level of which two were being led by the Commission.

88. An important intermediate objective of GBS, on which it would also be useful to obtain information, is to contribute to improving public finance management in partner countries. Ensuring that PFM systems effectively transfer budgetary resources for pro-poor expenditure is an essential part of achieving overall poverty reduction objectives. However, although the Commission has developed a system of annual internal reporting by Delegations on PFM issues, these reports do not assess the achievement of the PFM objectives of GBS programmes. This means that there is again little information available for external reporting on the achievement of GBS PFM objectives, which explains why there is also limited coverage of this issue in the annual reports.

89. A central risk with budget support, particularly in a context of weak public finance management and often significant levels of corruption, is that the budget of the recipient country will not be used for the intended purpose of poverty reduction. However, the annual reports tend to give little attention to this issue. Indeed the foreword to the 2009 annual report stated in reference to the largest beneficiaries of budget support that they had "demonstrated the reliability of their public finances". The annual reports again focus more on the potential benefits of budget support for developing PFM systems than on the risk that weak PFM systems will lead to budget support not achieving its poverty reduction-related objectives.

90. In addressing PFM issues in the context of budget support, the Commission’s annual report has made frequent reference to the development of the PEFA framework as a diagnostic tool for PFM. As already noted (see paragraph 31), PEFA indeed plays a useful role in highlighting areas where countries need to improve PFM, and measuring those improvements over time. However, a more balanced presentation of PEFA’s role would also recognise its limitations and that it is not in itself a risk assessment tool.

91. The Commission’s annual reports have also not addressed the key challenges it faces in its management of GBS, which are raised in this Court’s report such as the disadvantages as well as the advantages of the Commission’s results-based conditions, the capacity of its staff to make full use of the opportunities offered by GBS for dialogue, and the relevance and effectiveness of technical cooperation linked to GBS programmes.

92. The European Parliament in its discharge report on the EDF for the financial year 2007 stressed the need for Commission reporting on budget support to be based on "analytical and evaluative and not only descriptive information" [49]. More generally it called for the Commission to base its approach on "reality and conclusive evidence" rather than "rhetoric" [50]. In its follow-up report the Commission undertook to provide more in-depth coverage of budget support issues in future annual reports.

CONCLUSIONS AND RECOMMENDATIONS

OVERALL CONCLUSIONS

93. Providing aid through GBS has various potential benefits in terms of aid delivery. As with other aid modalities, the ultimate impact of GBS on poverty reduction depends, however, on the specific circumstances in each country. It also depends on effective Commission management of its GBS programmes. The Court found that, whilst the Commission has made considerable efforts over the last decade to develop its approach to providing aid through GBS, there are still weaknesses in the methodology and the management of GBS programmes in ACP, Latin American and Asian countries, which are thus less likely to reach their full potential effectiveness.

94. It must be acknowledged that the Commission’s GBS programmes are designed and implemented in coordination with other donors and that many deficiencies found by the Court are not specific to the Commission. Other supreme audit institutions, such as the UK National Audit Office [51] and the Swedish National Audit Office [52], have made similar observations concerning the management of GBS by their donor agencies. However, the Commission has sole responsibility for taking financing decisions and is accountable to the discharge authority for the management of its GBS programmes.

95. The Commission is aware of the need to improve its management of GBS and launched, at the end of 2009, a revision of its internal guidelines which aims to address most of the issues raised by the Court. A key aspect that is not currently being addressed is the need for the Commission to improve its reporting to external stakeholders. Whilst it is encouraging that the Commission has embarked on this revision process, whether it is ultimately effective will depend on results. It remains a challenge for the Commission to draw up appropriate guidelines and have them applied effectively and consistently by all Commission staff. It will require a strong commitment at all levels, a clear timetable, further efforts to train the staff concerned, strengthened support to Delegations and thorough monitoring of compliance with the revised guidelines.

SPECIFIC CONCLUSIONS AND RECOMMENDATIONS

96. Whilst a positive feature is the systematic inclusion of macroeconomic and PFM objectives and some improvement has been noted in more recent programmes concerning the definition of objectives, objectives are insufficiently tailored to the specific circumstances of the country and often not precise. In addition, the objectives do not take into account the staff resources available to Delegations.

RECOMMENDATION 1

SELECTION AND FORMULATION OF OBJECTIVES AND EXPECTED RESULTS OF GBS PROGRAMMES

The Commission should tailor the objectives of its budget support programme to the specific circumstances of the partner country. In doing so, the Commission should:

(a) ensure complementarity between GBS and other Commission support programmes in the country;

(b) more focus on specific areas within the overall national priorities where the Commission can have the most value added;

(c) set out objectives that are sufficiently precise, measurable and time-bound to allow monitoring of progress and the assessment of achievements;

(d) clearly spell out the logic of intervention by making explicit the link between the objectives and the design of the various components of the GBS programme.

97. The Commission’s dynamic interpretation of eligibility conditions involves high risks that funding is not used efficiently and effectively by the partner countries. However, the Commission’s risk management framework for its GBS programmes is not well developed and risks are not managed in an appropriate manner.

RECOMMENDATION 2

MANAGEMENT OF THE MAIN RISKS TO THE EFFECTIVENESS OF GBS PROGRAMMES

The Commission should strengthen its risk management to give EU funds better protection against leakage, waste and inefficiency. In doing so, the Commission should:

(a) perform a structured and explicit assessment of fiduciary and development risks at the outset of the GBS programmes and update it regularly during programme implementation;

(b) as a basis for fiduciary risk assessment:

make better use of information already available, notably PEFA and CPIA assessments, information on budget implementation, reports by supreme audit institutions and parliaments, and information from civil society organisations;

make greater use of other tools such as public expenditure tracking surveys, public expenditure reviews and reports on corruption;

(c) as a basis for development risk assessment, perform a thorough assessment of the relevance and credibility of the national development strategy including its credibility in respect of its links with the budget and main sector policies;

(d) build into the conditions, dialogue and capacity-building support an appropriate range of precise measures to monitor and reduce the main risks identified within a specific timeframe, including shorter-term measures where PFM systems are particularly weak.

98. The design and implementation of the four components of GBS programmes, i.e. funding, capacity-building support, conditions and dialogue, do not ensure that their potential impact is optimised.

(a) Disbursements are made in a predictable manner and in alignment with the countries’ budgetary systems, but the rationale followed to determine the amounts to be committed to individual GBS programmes is not clear.

(b) Capacity-building support is useful in strengthening PFM but is often not based on an appropriate assessment of priority needs and is only partially delivered because of delays in implementation. However, in 2008 the Commission adopted a strategy that aimed to improve the effectiveness of its capacity-building support.

(c) The Commission’s approach to performance-based conditions for disbursing GBS reflects the growing emphasis in development cooperation on managing for results. However, the incentive effect is unlikely to be achieved because of serious shortcomings in the incentive mechanisms, particularly in relation to variable tranches, and the difficulties in assessing whether conditions have been met or not.

(d) Dialogue is rightfully considered by the Commission to be a key component of its GBS programmes but is not used to its full potential. GBS programmes have had a catalytic effect with regard to strengthening dialogue on the national budget and PFM, but the absence of a dialogue strategy for each programme and insufficient expertise in Delegations are key limiting factors with regard to greater and more effective involvement in dialogue.

RECOMMENDATION 3

FINANCIAL RESOURCES

The Commission should determine the amounts to be allocated to individual GBS programmes in a better supported and more transparent manner. The Commission should:

(a) make a structured assessment weighing up risks and benefits;

(b) be able to demonstrate that the amount of funds allocated to the GBS programme is appropriate in view of the objectives and the framework for dealing with risks and benefits.

RECOMMENDATION 4

CAPACITY-BUILDING SUPPORT

In accordance with its recent new strategy for technical cooperation, the Commission should focus its capacity-building support on priority needs. In doing so, the Commission should:

(a) carry out, with the partner country and in coordination with other donors, an assessment of its priority capacity-building needs;

(b) focus on the areas where its support can provide most value added;

(c) give sufficient attention to the needs for support to accountability and anti-corruption mechanisms of the partner country, as well as to areas other than PFM.

RECOMMENDATION 5

CONDITIONS

The Commission should strengthen its management of performance-related conditions. In doing so, the Commission should:

(a) make a formalised appraisal of the appropriate proportion of fixed and variable tranches in view of the country’s specific circumstances as well as the objectives and design of the GBS programme;

(b) as regards general eligibility conditions, set out in each financing agreement a clear assessment framework that defines the conditions, timetable, source of evidence, as well as criteria against which satisfactory progress has to be assessed;

(c) as regards specific conditions for the disbursement of variable tranches:

set out clear indicators, targets, calculation methods and verification sources;

set out challenging but realistic targets using baselines, past trends and adequate assessment of the expected impacts of the actions and budgets planned to achieve these targets;

(d) support disbursement decisions with a more structured and formalised demonstration of satisfactory progress during the period concerned by clearly setting the criteria against which progress was to be assessed, the progress made and the reasons why progress may not have been according to plan.

RECOMMENDATION 6

DIALOGUE

The Commission should strengthen its approach to dialogue. In doing so, the Commission should:

(a) define for each GBS programme a dialogue strategy that sets out the objectives, content and modalities of the Commission’s involvement in dialogue;

(b) ensure that the necessary expertise is available to allow the Delegation to be effectively involved in the dialogue for the priority areas on which the GBS programme objectives focus;

(c) report to external stakeholders on the dialogue undertaken and its achievements.

99. The Commission’s reporting to external stakeholders tends to focus on the potential benefits of GBS rather than on the implementation and achievements of its programmes. One reason for this is that the Commission has not set up internal reporting procedures for systematically assessing progress against all the stated objectives of its GBS programmes which could then be used as a source of information for reporting to external stakeholders. Furthermore, in the absence of a suitable evaluation methodology, the Commission, like other donors, cannot yet demonstrate the effectiveness of GBS programmes.

RECOMMENDATION 7

REPORTING ON WHETHER GBS IS MEETING ITS OBJECTIVES

The Commission should improve its reporting on the effectiveness of its GBS programmes. In doing so, the Commission should:

(a) systematically monitor progress against all stated intermediate and ultimate objectives of the GBS programme and develop the internal reporting system accordingly;

(b) pursue its efforts, together with its partners, to develop a suitable and generally accepted evaluation methodology that allows the impact of GBS programmes to be assessed;

(c) clearly distinguish in its reporting to external stakeholders between "aid effectiveness" in terms of the delivery processes of aid and "aid effectiveness" in terms of the ultimate impact of the assistance in improving PFM systems and reducing poverty;

(d) provide to external stakeholders a complete, clear and accurate picture of its GBS programmes, notably in respect of the risks involved, including corruption, progress made in the implementation of the programmes and the achievement of objectives.

This Report was adopted by Chamber III, headed by Mr Jan KINŠT, Member of the Court of Auditors, in Luxembourg at its meeting of 16 November 2010.

For the Court of Auditors

+++++ TIFF +++++

Vítor Manuel da Silva Caldeira

President

[1] Article 61.

[2] Regulation (EC) No 1905/2006 of the European Parliament and of the Council of 18 December 2006 establishing a financing instrument for development cooperation, Article 25(1)(b) (OJ L 378, 27.12.2006, p. 41).

[3] "Guidelines on the programming, design and management of general budget support" which are available on the EuropeAid website (http://ec.europa.eu/europeaid/what/economic-support/documents/guidelines_budget_support_en.pdf).

[4] Article 61(2) of the Cotonou Agreement and Article 25(1)(b) of the Development Cooperation Instrument Regulation.

[5] Public Expenditure and Financial Accountability.

[6] Frequently such national development strategies have been presented in the form of "poverty reduction strategy papers" although in recent years this designation has been used less often.

[7] According to the Commission’s internal guidelines, "where support is being given to poverty reduction strategy papers, it is normal to focus on the social sectors of education and health as being key elements in reducing income and non-income poverty".

[8] Uganda’s first poverty eradication action plan was established in 1997. It served as a model for the subsequent "poverty reduction strategy papers" which the World Bank encouraged other developing countries to draw up.

[9] Dominican Republic, Mozambique, Tanzania and Zambia.

[10] Guiding Principle No 1 of EU Code of Conduct.

[11] A first programme with a single fixed tranche of 3,2 million euro was committed in 2007 and a second four-year programme for 13,0 million euro in 2008.

[12] On the one hand, the Commission has an input when poverty reduction support operations are set up and, on the other hand, the Commission draws from the poverty reduction support operations when setting objectives and defining conditions for its GBS programmes.

[13] The GBS programme was committed in December 2004 and provides for an amount of 68 million euro to be disbursed over the period from 2006 to 2009.

[14] The Court’s Special Report No 2/2005 concerning EDF budget aid to ACP countries: the Commission’s management of the public finance reform aspect, paragraph 13.

[15] The assessment was carried out in the context of the programming of the10th EDF. Such an assessment was not carried out for non-ACP countries.

[16] The CPIA assesses how conducive the country’s policy and institutional framework is to fostering poverty reduction, sustainable growth, and the effective use of development assistance. The World Bank uses the CPIA ratings in its aid allocation process. The CPIA consists of 16 indicators that are rated on a scale of one (low) to six (high). For the ACP, Asian and Latin American countries benefiting from GBS, the scoring in 2008 for Indicator 13, "Quality of budgetary and financial management" averages 3,4, ranging from 2,0 to 4,0.

[17] For the ACP, Asian and Latin American countries benefiting from GBS the scoring in 2008 for Indicator 16, "Transparency, accountability and corruption in the public sector" averages 3,0, ranging from 2,0 to 4,5.

[18] These countries were not included in the scope of the audit (see paragraph 13).

[19] Benin, Ethiopia, Gambia, Guyana, Kenya, Mali, Mauritania, Mozambique, Niger, Tanzania, Togo and Uganda.

[20] Corruption Perception Index of less than three. The index ranges from zero (high risk) to ten (low risk).

[21] Cambodia, Laos, Nicaragua, Paraguay and Vietnam.

[22] PEFA assessments have been carried out for all of the 28 ACP countries for which GBS commitments were made under the 10th EDF as at 31 December 2009. For nine of these countries more than one PEFA assessment had been carried out, which in principle should enable the measurement of progress over time. Some of these follow-up assessments, however, aim to create a more reliable baseline than the first assessment and thus do not enable the tracking of performance changes from the previous assessment. For Asian and Latin American countries, PEFA assessments were made in four out of the six countries in which GBS has been provided so far by the Commission.

[23] "Doctrine en matière de risque fiduciaire dans les états étrangers", France Coopération, April 2008.

[24]

[25] This lack of methodology contrasted with, for instance, the approach followed by the Asian Development Bank for its sectoral budget support interventions in Laos. The ADB had developed a matrix setting out each significant risk, how it would be addressed and over what time period.

[26] The public expenditure tracking survey is a method used to study the flow of public funds and other resources, through the various levels of government and administrative hierarchy. It is most relevant where public accounting systems function poorly or provide unreliable information.

[27] Public expenditure reviews analyse the allocation and management of public expenditure. They may cover all government expenditure or focus on a few priority sectors (e.g. health, education, agriculture, water, roads). They can be used to inform strategic planning and budget preparation and to identify ways in which to improve the efficiency and effectiveness of resource allocations. Increasingly, they also review expenditure management systems and institutions.

[28] This programme is not formally labelled a GBS programme. Nevertheless its basic objectives and purpose, the large-scale transfer of funds with the objective of poverty reduction and through national systems using a multi-sector approach, are typical of GBS programmes.

[29] Transparency International reports poor performance in terms of corruption perception and the situation is deteriorating. Its Corruption Perception Index has listed Paraguay as one of the most corrupt countries in Latin America. The relative position improved between 2004 (140th) and 2006 (111th) but later deteriorated again: 138th place in 2007 and 2008 and 154th place in 2009. This perception is confirmed by an evaluation of corruption by the United States Agency for International Development (USAID) in June 2008 as well as by various interlocutors during the Court’s audit mission to Paraguay.

[30] Results-based national development strategies: Assessment and challenges ahead, The World Bank, December 2007. The review used three criteria for its assessment: a unified strategic framework, prioritisation within that framework and a strategic link to the budget.

[1001] No risk assessment was made for nine ACP countries because they are relatively small or do not benefit from the EDFs.

[32] The name intends to highlight the contractual nature of the long-term financial commitments and its focus on MDG-related results, notably in health and education.

[33] See also paragraphs 10 and 11 of the Court’s Special Report No 6/2007 on the effectiveness of technical assistance in the context of capacity development.

[34] Special Report No 2/2005 concerning EDF budget aid to ACP countries: the Commission’s management of the public finance reform aspect (paragraphs 56 to 62). The Court recommended that relations with parliaments and supreme audit institutions should be strengthened.

[35] A backbone strategy — reforming technical cooperation and project implementation units for external aid provided by the European Commission.

[36] See the Court’s Special Report No 6/2007 on the effectiveness of technical assistance in the context of capacity development.

[37] Fixed tranches sometimes also have one or two additional conditions attached to them normally requiring the government to carry out specific actions.

[38] See paragraph 46 of the Court’s Annual Report on the activities funded by the seventh, eighth, ninth and 10th European Development Funds (EDFs) for the financial year 2008.

[39] This is a yearly review of the performance of the government by cooperation donors and the government of the partner country.

[40] Variable tranche allocations range between 10 % and 91 % of the total amounts of GBS programmes in ACP countries and between 23 % and 54 % for programmes in Asian and Latin American countries.

[41] See paragraphs 19 and 46 of the Court’s Annual Report on the activities funded by the seventh, eighth, ninth and 10th European Development Funds (EDFs) for the financial year 2008 and paragraph 34 of the Court’s Annual Report on the activities funded by the eighth, ninth and 10th European Development Funds (EDFs) for the financial year 2009.

[42] See the Court’s Special Report No 10/2008 on EC development assistance to health services in sub-Saharan Africa, paragraphs 18 and 41.

[43] Working groups monitor performance within sectors and consist of donors and representatives of the national authorities.

[44] Joint annual reviews are yearly reviews of the performance of the government by cooperation donors and the government of the partner country.

[45] Except for the requirement for payment files to report on important deteriorations in the dialogue with the national authorities, the Commission’s internal guidelines do not provide for any specific reporting on the GBS-related dialogue undertaken.

[46] Hereafter simply referred to as "annual reports".

[47] In addition, the Commission is associated with other reports, which, however, are not produced under its sole responsibility and do not necessarily reflect its views. The Court considered that it was not appropriate to include them in its examination. Examples of such reports are the joint annual reports it produces with each of the ACP partner countries as well as reports of evaluations of the European Commission’s cooperation with specific partner countries.

[48] The Paris Declaration identifies actions to reform the ways aid is delivered and managed with the ultimate objective of increasing the impact of aid. It lays down five core principles which it considers should be followed in the management of aid if its impact is to be increased: ownership, alignment, harmonisation, managing for results, and mutual accountability.

[49] European Parliament Report on discharge in respect of the implementation of the budget of the seventh, eighth and ninth European Development Funds for the financial year 2007, Committee on Budgetary Control, Rapporteur: Boguslaw Liberadzki, A6-0159/2009, paragraph 42.

[50] Ibid., paragraph 50.

[51] Department for International Development — Providing budget support to developing countries, Report by the Comptroller and Auditor General, 8 February 2008.

[52] Aid through budget support — The Government’s and Sida’s handling of a key type of development aid.

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ANNEX I

BUDGET SUPPORT COMMITMENTS AND PROGRAMMING IN ACP COUNTRIES UNTIL 31.12.2009

Code | | Country | | 9th EDF commitments | | 10th EDF programming | | 10th EDF commitments |

GBS | SBS | GBS | SBS | GBS | SBS |

| | | | | | | | | | | |

BB | | Barbados | | | 10500000 | | | 8300000 | | | |

BF | | Burkina Faso | | 197000000 | 2000000 | | 320000000 | 75000000 | | 325620000 | 50000000 |

BI | | Burundi | | 84120000 | | | 90000000 | | | 68700000 | |

BJ | | Benin | | 92580000 | 97000000 | | 100000000 | 75600000 | | 76900000 | 25000000 |

BS | | Bahamas | | | | | 4200000 |