Special Report No 11/2010 ‘The Commission’s management of General Budget Support in ACP, Latin American and Asian Countries’
Date: 2011-02-17
Institutions: European Court of Auditors
Subjects: ACP countries, Asia, European Commission, Latin America, budget

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The Commission’s managemenT of

general budgeT supporT in aCp, 

laTin ameriCan and asian CounTries

en

 
 
 
 
special r eport no  11 

 2010

The Commission’s 
managemenT  of 
general budgeT 
supporT in aCp,  
laTin  ameriC an and 
asian CounTries

(pursuant to article 287(4), second subparagraph, Tfeu)

european CourT of audiT ors

european CourT of audiT ors 
12, rue alcide d e g asperi
1615 luxembourg
luXembourg

Tel. +352 4398-1
fax +352 4398-46410
e-mail: euraud@eca.europa.eu
internet: http://www.eca.europa.eu

special r eport no 11 

 2010

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luxembourg: publications office of the european union, 2011

isbn 978-92-9237-028-2

doi:10.2865/90830

© european union, 2011

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Printed in Luxembourg

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

ConTenT s

3

Paragraph

Glossary

I–XI 

EXEcutIvE  summary

1–11 

6–8 

IntroductIo n

BudGEt suPPort Is thE PrEfErrEd aId modalIty of many donor s

9–11 

GBs has many PotEntIal BEnEfIts comParEd to ProvIdInG aId throuGh ProjEct

s

12–14 

audIt scoPE  and aPProac h

15–92 

oBsErvatIon s

15–23 

17–21 

 thE commIssIon InsuffIcIEntly taIlors thE oBjEctIvEs of Its GBs ProGrammEs to thE
sPEcIfIc cIrcumstancEs of Each countr y

 The objeCTives of  gbs programmes Tend To be similar for all parTner  CounTries despiTe  Their 
differenT  siTua Tion s

22–23 

 The objeCTives of  gbs programmes are ofTen defined in  Terms whiCh are  Too general

24–39 

 thE commIssIon doEs not aPProPrIatEly manaGE thE maIn rIsks to EffEctIvE GB

s

26–28 

The risk managemenT  framework is noT well developed

29–39 

40–77 

41–48 

49–57 

58–67 

 risks are high in mosT  CounTries benefiTing from  gbs buT  are noT adeQua TelY addressed bY The 
Commission

 thE commIssIon’s dEsIGn and ImPlEmEntatIon of thE dIffErEnt comPonEnts of Its GBs
ProGrammEs do not EnsurE that thEIr PotEntIal ImPact Is oPtImIsE

d

 The raTionale for The alloC aTions To individual gbs programmes is noT Clear buT  The 
disbursemenT  of funding is inCreasingl Y prediCTable for The par Tner  CounTrie s

 CapaCiT Y-building suppor T has made useful ConTribuTions buT  was ofTen no T based on an 
appropriaTe assessmenT  of prioriTY  needs

 The CondiTions a T TaChed To disbursemenT  are performanCe orienTed buT  in praCTiCe are no T 
working as inTende d

68–77 

 dialogue wiTh par Tner  CounTries is no T used To iT s full poTenTia l

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

 
 
 
4

78–92 

 thE commIssIon’s rEPortInG to EXtErnal stakEholdErs tEnds to focus on thE
PotEntIal BEnEfIts of GBs rathEr than on rEsult s

80–83 

 eXTernal repor Ting foCuses on  The po TenTial benefiT s of gbs

84–92 

 eXTernal repor Ting gives liT Tle informa Tion on risks, implemenT aTion  Challenges and 
aCTual effeCTivenes s

93–99 

conclusIons and rEcommEndatIon s

93–95 

 ovErall conclusIon s

96–99 

 sPEcIfIc conclusIons and rEcommEndatIon s

annEX I 

annEX II 

– 

– 

 BudGEt suPPort commItmEnts and ProGrammInG In acP countrIEs 
untIl 31.12.200 9
 BudGEt suPPort commItmEnts In asIan and latIn amErIcan countrIEs 
untIl 31.12.200 9

rEPly  of thE  commIssIo n

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

 
 
 
glossarY

5

acP: african, Caribbean and pacific states

cPIa : Country policy and i nstitutional assessment

Edf: european d evelopment funds

GBs: general budget support

mdG: millennium development goals

PEfa: public expenditure and f inancial accountability

Pfm: public finance management

sBs : sector budget support

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

6

eXeCuTive   
summarY

I.
T h e   e u r o p e a n   C o u r t   o f   a u d i t o r s   h a s   c a r -
r i e d   o u t   a   p e r f o r m a n c e   a u d i t   t o   a s s e s s 
w h e t h e r   t h e   e u r o p e a n   C o m m i s s i o n   m a n -
ages its general budget suppor t (gbs) pro -
gra m m e s   e f fe c t i ve l y.   g b s  h a s   a   n u m b e r   o f 
p o t e n t i a l   a d v a n t a g e s   o v e r   t h e   t r a d i t i o n a l 
p ro j e c t   a p p ro a c h .   i t   c a n   s u p p l y   l a rg e r   vo l -
u m e s   o f   a i d   i n   a   m o re   p re d i c t a b l e   m a n n e r 
a n d   s i n c e   i t   f u n d s   t h e   n a t i o n a l   d e v e l o p -
m e n t   s t r a t e g y   o f   t h e   p a r t n e r   c o u n t r y   t h e 
latter tends to have more ownership of this 
aid instrument. as it is channelled through 
t h e   n a t i o n a l   b u d g e t ,   i t   c a n   e n co u ra g e   t h e 
i m p r o v e m e n t   o f   p u b l i c   f i n a n c e   m a n a g e -
m e n t   (p f m)   b y   t h e   p a r t n e r   c o u n t r y   a n d 
i n c re a s e   d o m e s t i c   a cco u nt a b i l i t y.   i t   i s   a l s o 
s e e n   a s   a   way   o f   s t re n g t h e n i n g   p o l i c y   d i a -
l o g u e   a n d   i m p r o v i n g   t h e   h a r m o n i s a t i o n 
a n d   c o o r d i n a t i o n   o f   a i d   b e t w e e n   d o n o r s , 
t h e r e b y   p o t e n t i a l l y   i n c r e a s i n g   t h e   e f f i -
c i e n c y   o f   a i d   d e l i v e r y   a n d   r e d u c i n g   t h e 
costs for the par tner countr y.  gbs has been 
i n c re a s i n g l y   u s e d   by   t h e   Co m m i s s i o n   ove r 
the last decade in order to achieve its main 
d e ve l o p m e nt   p o l i c y   o b j e c t i ve   o f   re d u c i n g 
pover t y.

II.
g b s  p r o g r a m m e s   t y p i c a l l y   c o n s i s t   o f   a 
s u p p o r t   p a c k a g e   i nvo l v i n g   t h e   t r a n s fe r   o f 
f u n d s ,   c a p a c i t y - b u i l d i n g   m e a s u r e s ,   d i a -
l o g u e   w i t h   t h e   p a r t n e r   c o u n t r y   a n d   t h e 
e s t a b l i s h m e n t   o f   c o n d i t i o n s   fo r   d i s b u r s e -
m e n t .   a  n u m b e r   o f   o t h e r   d o n o r s   u s e   g b s 
a n d   t h e   Co m m i s s i o n   h a s   t o   c o o rd i n a t e   i t s 
program me s closely  with th eir s.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

III.
a s   w i t h   o t h e r   a i d   m o d a l i t i e s ,   t h e   u l t i -
m a t e   i m p a c t   o f   g b s  o n   p o ve r t y   re d u c t i o n 
d e p e n d s   o n   t h e   s p e c i f i c   c i r c u m s t a n c e s   i n 
each countr y. i t also depends on the effec -
t i ve   Co m m i s s i o n’s   m a n a g e m e n t   o f   i t s   g b s 
p ro gra m m e s.  Th e   Co u r t   fo u n d   t h at ,   w h i l s t 
t h e   C o m m i s s i o n   h a s   m a d e   c o n s i d e r a b l e 
e f fo r t s   ove r   t h e   l a s t   d e c a d e   to   d e ve l o p   i t s 
a p p r o a c h   t o   p r o v i d i n g   a i d   t h r o u g h   g b s, 
there are still weak nesses in the methodol-
o g y   a n d   m a n a g e m e n t   o f   g b s  p ro gra m m e s 
in aCp, latin  american and asian countries, 
which are thus less likely to reach their full 
potential  effec t iven ess.

Iv.
The Cour t found that, whilst a positive fea -
t u r e   o f   t h e   C o m m i s s i o n’s   a p p r o a c h   i s   t h e 
s y s t e m a t i c   i n c l u s i o n   o f   m a c r o e c o n o m i c 
a n d   p fm  o b j e c t i ve s,   t h e   o b j e c t i ve s   o f   g b s 
p r o g r a m m e s   d o   n o t   s u f f i c i e n t l y   t a k e   i n t o 
a c c o u n t   t h e   s p e c i f i c   c i r c u m s t a n c e s   a n d 
c h a n g i n g   p r i o r i t i e s   o f   p a r t n e r   c o u n t r i e s , 
a s   we l l   a s   o t h e r   p ro gra m m e s   i m p l e m e nte d 
by   t h e   Co m m i s s i o n   a n d   o t h e r   d o n o r s.  fu r-
thermore, although some improvement has 
b e e n   n o t e d   i n   m o r e   r e c e n t   p r o g r a m m e s , 
t h e   o b j e c t i ve s   o f   t h e   p ro gra m m e s   te n d   to 
b e   fo r m u l ate d   i n   te r m s   w h i c h   a re   to o   g e n -
eral and this hinders the design of the var-
i o u s   c o m p o n e n t s   o f   t h e   p r o g r a m m e s   a n d 
m a k e s   i t   m o r e   d i f f i c u l t   t o   h o l d   t h e   C o m -
m i s s i o n   a c c o u n t a b l e   f o r   t h e i r   e f f e c t i v e -
ness.

77

eXeCuTive  
summarY

v.
T h e   C o m m i s s i o n   h a s   n o t   y e t   d e v e l o p e d 
a   s o u n d   r i s k   m a n a g e m e n t   f r a m e w o r k   t o 
p r o p e r l y   a s s e s s   a n d   r e d u c e   t h e   r i s k s   o f 
i t s   g b s  p r o g r a m m e s .   T h i s   i s   o f   p a r t i c u l a r 
i m p o r t a n c e   i n   v i e w   o f   t h e   h i g h   l e v e l s   o f 
f i d u c i a r y   r i s k   a s s o c i a t e d   w i t h   w e a k   p f m 
s y s t e m s   a n d   s i g n i f i c a n t   l e v e l s   o f   c o r r u p -
t i o n ,   a n d   o f   t h e   d e v e l o p m e n t   r i s k   a r i s i n g 
f r o m   w e a k n e s s e s   i n   t h e   n a t i o n a l   d e v e l -
o p m e n t   s t r a t e g i e s   o f   m a ny   p a r t n e r   c o u n -
tr ies.

vI.
T h e   r a t i o n a l e   fo l l o w e d   b y   t h e   C o m m i s s i o n 
t o   s e t   t h e   a m o u n t   o f   f u n d s   t o   b e   a l l o c a t e d 
to   i n d i v i d u a l   g b s   p ro gr a m m e s   i s   n o t   c l e a r. 
i t   w a s ,   h o w e v e r,   n o t e d   t h a t   t h e   C o m m i s -
s i o n   h a s   i m p r o ve d   t h e   p r e d i c t a b i l i t y   o f   i t s 
d i s b u r s e m e n t s   t o   p a r t n e r   c o u n t r i e s   w h i c h 
i s   i m p o r t a n t   f o r   t h e i r   b u d g e t a r y   m a n a g e -
ment.

vII.
Th e   c a p a c i t y- b u i l d i n g   s u p p o r t   p rov i d e d   i s 
u s e f u l   i n   s t r e n g t h e n i n g   p fm,   a l t h o u g h   i t 
w a s   n o t   b a s e d   o n   a n   a p p r o p r i a t e   a s s e s s -
ment of pr ior it y needs. i n par ticular, insuf-
f i c i e n t   a t t e n t i o n   h a s   b e e n   g i v e n   t o   t h e 
n e e d   to   s t re n g t h e n   ove r s i g h t   b o d i e s   s u c h 
a s   s u p re m e   a u d i t   i n s t i t u t i o n s,   p a r l i a m e nt s 
a n d   c i v i l   s o c i e t y   o r g a n i s a t i o n s   s e e k i n g 
t o   m o n i t o r   g o v e r n m e n t   u s e   o f   b u d g e t -
a r y   r e s o u r c e s.   i t   h a s   a l s o   b e e n   l i t t l e   u s e d 
t o   s u p p o r t   o t h e r   g b s  o b j e c t i v e s ,   n o t a -
b l y   i n   r e l a t i o n   t o   h e a l t h   a n d   e d u c a t i o n . 
T h e   C o m m i s s i o n   h a s   o f t e n   n o t   b e e n   a b l e 
t o   f u l l y   i m p l e m e n t   t h e   c a p a c i t y - b u i l d i n g 
s u p p o r t   w i t h i n   t h e   t i m e f r a m e   o f   t h e   g b s 
p r o g r a m m e s .   ho w e v e r,   i n   2 0 0 8   t h e   C o m -
m i s s i o n   a d o p t e d   a   s t r a t e g y   t h a t   a i m s   t o 
i m p ro ve   t h e   e f fe c t i ve n e s s   o f   i t s   t e c h n i c a l 
cooperation.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

8

eXeCuTive   
summarY

XI.
T h e   C o m m i s s i o n   i s   a w a r e   o f   t h e   n e e d   t o 
i m p r o v e   i t s   m a n a g e m e n t   o f   g b s  a n d   a t 
t h e   e n d   o f   2 0 0 9   l a u n c h e d   a   re v i s i o n   o f   i t s 
i nte r n a l   g u i d e l i n e s   to   a d d re s s   m o s t   o f   t h e 
i s s u e s   r a i s e d   b y   t h e   C o u r t   i n   t h i s   r e p o r t 
w h i c h   c o n t a i n s   a   s e r i e s   o f   r e c o m m e n d a -
t i o n s   f o r   t h e   C o m m i s s i o n   t o   c o n s i d e r   i n 
th is contex t.

vII I.
T h e   p e r f o r m a n c e - b a s e d   c o n d i t i o n s 
a t t a c h e d   b y   t h e   C o m m i s s i o n   t o   d i s b u r s e -
ment  of gbs are gen eral l y rel eva nt  but  a re 
u n l i k e l y   t o   a c h i e v e   t h e i r   i n t e n d e d   i n c e n -
t i v e   e f f e c t   b e c a u s e   o f   t h e   w a y   t h e y   a r e 
d e s i gn e d   a n d   i m p l e m e nte d.   i t   i s   o f te n   d i f -
f i c u l t   t o   a s s e s s   w h e t h e r   c o n d i t i o n s   h a v e 
b e e n   m e t   o r   n o t ,   i n   p a r t i c u l a r   b e c a u s e 
o f   a   l a c k   o f   c l a r i t y   o v e r   w h a t   c o n s t i t u t e s 
s a t i s f a c t o r y   p r o g r e s s ,   a n d   w e a k n e s s e s   i n 
t h e   s t a t i s t i c a l   s y s t e m s   u s e d   fo r   a s s e s s i n g 
res ult s.

IX .
w h i l s t   g b s  p r o g r a m m e s   h a v e   h a d   a   c a t a -
l y t i c   e f f e c t   i n   r e s p e c t   o f   s t r e n g t h e n i n g 
d i a l o g u e   o n   t h e   n at i o n a l   b u d g e t   a n d   p fm, 
t h e   Co m m i s s i o n   d o e s   n o t   m a k e   f u l l   u s e   o f 
t h e   i n s t r u m e n t ’s   p o t e n t i a l   b e c a u s e   i t   h a s 
i n s u f f i c i e nt   e x p e r t i s e   i n   t h e   p r i o r i t y   a re a s 
related to  th e gb s p ro gramme s’ o b j ec tives 
a n d   t h e r e   a r e   w e a k n e s s e s   i n   i t s   m a n a g e -
ment  of t he  d ial o gu e proces s. 

X .
T h e   C o m m i s s i o n’s   e x t e r n a l   r e p o r t i n g   o n 
g e n e r a l   b u d g e t   s u p p o r t   t e n d s   t o   f o c u s 
o n   i t s   p o t e n t i a l   b e n e f i t s   t o   i m p rov i n g   a i d 
d e l i ve r y   b u t   t h e re   i s   re l at i ve l y   l i t t l e   i n fo r -
m a t i o n   o n   i t s   a c t u a l   i m p a c t   o n   p o v e r t y 
r e d u c t i o n .   a n   e v a l u a t i o n   m e t h o d o l o g y 
w h i c h   p rov i d e s   e v i d e n c e   o n   w h e t h e r,   a n d 
in what circumstances, budget suppor t can 
m a k e   a n   e f fe c t i ve   co nt r i b u t i o n   to   p ove r t y 
r e d u c t i o n   h a s   n o t   y e t   b e e n   e s t a b l i s h e d . 
however, the Commission is leading donor 
effor ts to  d evel o p  su ch a met ho d o l ogy.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

inTroduCTion

9

1. 

 pover t y  re duc t io n is the overarc hi n g g oal of  e u d evelopment 
cooperation and over the last decade general budget suppor t 
(gbs) has been increasingly used by the  european Commission, 
a s   we l l   a s   by   o t h e r   d o n o r s,   a s   a   m e a n s   t o   t r y   to   a c h i e ve   t h i s 
o b j e c t i v e .   i t   i n v o l v e s   t h e   t r a n s f e r   o f   f u n d s   b y   t h e   C o m m i s -
sio n  to  the   natio nal   treasu r y   of  a   par tn e r   countr y  in   orde r   to 
provide additional budgetar y resources to suppor t a national 
development strategy. The transfer of funds in this way is also 
i n t e n d e d   t o   c o n t r i b u t e   t o   m a c r o e c o n o m i c   s t a b i l i t y   w h i c h   i s 
g e n e ra l l y   co n s i d e re d   f u n d a m e n t a l   to   d e ve l o p m e n t   a n d   p ov -
er t y re duc t io n. i n addit ion , th e c han nelling of  f un d s th rough 
national financial systems is also intended to lead to improve -
m e n t s   i n   p u b l i c   f i n a n c e   m a n a g e m e n t   ( p fm )   s i n c e   e f f e c t i v e 
pfm systems also play an impor tant role in pover t y reduc tion 
effo r t s.

2. 

The Commission’s gbs programmes, and those of other donors, 
i n v o l v e   n o t   o n l y   t h e   t r a n s f e r   o f   f u n d s   b u t   a l s o   t h r e e   o t h e r 
components which provide key inputs to suppor t programme 
ob jec tive s: 

(a ) 

c a p a c i t y   d e ve l o p m e n t   m e a s u re s,   m a i n l y   t h ro u g h   t e c h n i -
c a l   a s s i s t a n c e,   t o   h e l p   c o u n t r i e s   s t re n g t h e n   t h e i r   p o l i c y -
mak in g an d managem ent ( see paragra ph  49 ); 

(b) 

t h e   e s t a b l i s h i n g   o f   c o n d i t i o n s   f o r   t h e   r e l e a s e   o f   f u n d s 
which are linked to the programme objec tives and agreed 
between the par tner countr y and the donors. The Commis-
sio n’s ap p ro ach to  u sing  con dition s  ha s  foc u se d on  t r y i ng 
to   gi ve   co u nt r i e s   gre ate r   i n ce nt i ve s   to   a c h i e ve   re s u l t s   by 
u s i n g   a   s o - c a l l e d  ‘ va r i a b l e   t ra n c h e’  m e c h a n i s m   to   re wa rd 
p er fo r man ce (se e p aragraph  58 ) ;

(c) 

dial o g ue w it h t he cou ntr y  on th e  d es i gn , i mple m entat ion 
and results of national and sec toral policies including the 
b u d g e t .   i n c r e a s e d   o p p o r t u n i t i e s   f o r   d i a l o g u e   a r e   o f t e n 
c o n s i d e r e d   t o   b e   a   p a r t i c u l a r   b e n e f i t   o f   b u d g e t   s u p p o r t 
(s ee p aragra ph 68).

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3. 

4. 

5. 

g e n e r a l   b u d g e t   s u p p o r t   h a s   m a n y   s i m i l a r i t i e s   w i t h   s e c t o r 
b u d g e t   s u p p o r t   w h i c h   a l s o   i nvo l ve s   t h e   t r a n s fe r   o f   f u n d s   t o 
t h e   n a t i o n a l   t r e a s u r y.   h o w e v e r,   s e c t o r   b u d g e t   s u p p o r t   p r o -
grammes aim to suppor t a sec tor polic y rather than a national 
s t rate g y.   acco rd i n g l y,   c a p a c i t y- b u i l d i n g,   co n d i t i o n s   a n d   d i a-
log ue  all  focu s o n su p p o r ting  t he  s el ec ted  se c tor.

a n   i m p o r t a n t   f e a t u r e   o f   g b s  i s   t h e   c l o s e   c o o p e r a t i o n   i t   e n -
tail s  be t ween   d ono rs,  s ince  the y   are   al l  s uppor t in g   th e  s ame 
n a t i o n a l   s t r a t e g y   a n d   u s i n g   t h e   s a m e   n a t i o n a l   s y s t e m s.  T h i s 
means that, when setting the objectives of its gbs programmes 
a n d   p l a n n i n g   t h e   t r a n s fe r   o f   f u n d s,   c a p a c i t y - b u i l d i n g   m e a s -
ures, conditions and dialogue arrangements needed to achieve 
t h e s e   o b j e c t i ve s,   t h e   Co m m i s s i o n   a l s o   h a s   t o   s e e k   to   e n s u re 
t h a t   t h e s e   i n p u t s   a r e   c o o r d i n a t e d   w i t h   t h e   i n p u t s   o f   o t h e r 
don ors.

 Close donor coordination over gbs is also seen as best practice 
i n   o rd e r   to   re d u ce   t h e   t ra n s a c t i o n   co s t s   to   p a r t n e r   co u nt r i e s 
o f   h av i n g   to   d e a l   w i t h   n u m e ro u s   d o n o r s   o n   a   b i l ate ra l   b a s i s. 
ne ve r t h e l e s s,   w h i l e   fo l l ow i n g   t h e   p r i n c i p l e   o f   d o n o r   h a r m o -
ni sat io n,  the  Co mmis s ion   co ntin ue s  to  h ave   s ole  res pon s ibi l-
i t y   fo r   t a k i n g   f i n a n c i n g   d e c i s i o n s   a n d   i s   a c c o u n t a b l e   t o   t h e 
d i s c h a r g e   a u t h o r i t y   f o r   t h e   u s e   o f   e u  f u n d s .   ba l a n c i n g   t h e 
ne ces sar y don or p ar tnersh ip approach a nd  th e  res pons ibi li t y 
a n d   a c c o u n t a b i l i t y   i t   h a s   fo r   i t s   g b s   p ro g r a m m e s   i n e v i t a b l y 
rep rese nt s a diffic ul t  chall en ge for   th e  Commi ss i on.

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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).

6. 

7. 

8. 

Bu dG E t   s uP Po r t   Is  t hE   PrEfEr rEd   aId  
m o d a lIt y   o f   m a n y   d o n o r s

 T h e   C o m m i s s i o n   h a s   g i v e n   g b s   t o   a C p   c o u n t r i e s   s i n c e   t h e 
seventh edf (1990–95) and to  asian and latin  american coun-
t r i e s   s i n c e   2 0 0 3 .   T h e   C o t o n o u   a g r e e m e n t   p r o v i d e s   f o r   t h e 
p o s s i b i l i t y   o f   g i v i n g   g b s  t o   a Cp  c o u n t r i e s 1  a n d   i t   w a s   a l s o 
for m al ly  incl u ded in the new 2 0 0 6  d evelopment  Coope ration 
i n s t r u m e nt   r e g u l at i o n 2  cove r i n g   as i a   a n d   lat i n   am e r i c a .   fo r 
the management of gbs the Commission uses comprehensive 
i n t e r n a l   g u i d e l i n e s 3  w h i c h   i t   f i r s t   d e v e l o p e d   i n   2 0 0 2 ,   t h o r -
oughly revised in 2007 and then updated in 2009. d ur ing this 
audit the Commission launched another major revision that is 
sch edu l ed to  be co mp l eted in  2 0 1 0 . Th e Com mis s ion  ha s a lso 
developed a series of training courses for its staff on different 
as p ec t s o f b udg et su p p or t.

bu d g e t   s u p p o r t ,   e i t h e r   g b s  o r   s e c t o r   b u d g e t   s u p p o r t   (s b s) , 
h a s   b e c o m e   t h e   p r e f e r r e d   a i d   m o d a l i t y   o f   m a n y   d o n o r s ,   i n -
c l u d i n g   t h e   C o m m i s s i o n ,   b e c a u s e   t h e y   c o n s i d e r   i t   t h e   m o s t 
e f fe c t i ve   w ay   t o   d e l i ve r   a i d.   i n   t h e   pa r i s   d e c l a r a t i o n ,   s i g n e d 
in 2005, donors committed themselves to channelling increas-
i n g   a m o u n t s   o f   a s s i s t a n c e   t h r o u g h   c o u n t r y   s y s t e m s.  T h e   e u 
s p e c i f i c a l l y   c o m m i t t e d   i t s e l f   t o   a c h i e v i n g   t h i s   o b j e c t i v e   b y 
d e l i ve r i n g   5 0   %   o f   i t s   g ove r n m e nt- to - g ove r n m e nt   a s s i s t a n ce 
thro u gh  cou ntr y  s ys tems  by  2 01 0 .   i n   20 08 ,  t he   acc ra   age nda 
fo r   ac t i o n   we nt   f u r t h e r   t h a n   t h e   pa r i s   d e c l a rat i o n   by   s t at i n g 
t h a t   t h e   u s e   o f   p a r t n e r   c o u n t r y   s y s t e m s   —   m e a n i n g,   p r i n c i -
pal l y,  b udg et   sup p or t   —  sh ould  in   f ut ure  be  th e ‘ f ir s t  opt ion’ 
fo r   d e l i ve r i n g   a i d   a n d   t h a t   d o n o r s   s h o u l d   g i ve   c l e a r   re a s o n s 
if t hey did no t  us e t hem.

 Th e   vo l u m e   o f   e u  b u d g e t   s u p p o r t   h a s   i n c re a s e d   a cco rd i n g l y 
o v e r   t i m e .   w h e r e a s   b u d g e t   s u p p o r t   r e p r e s e n t e d   3 0   %   ( g b s: 
21 %, sbs: 9 %) of total funding under the ninth edf (2001–07), 
i t   i s   e x p e c t e d   t o   r e a c h   4 8   %   ( g b s:   3 1   % ,   s b s:   1 7   % )   o f   t o t a l 
fun ding  under  the 10t h ed f (2 00 8– 13 ). for t he asia an d l at in 
america regions, the propor tion delivered through budget sup -
por t  inc reased   f rom  12  %  (gbs:  3   %,  s bs:  9   %)   in   the   20 03 –05    
p e r i o d   t o   2 5   %   (g b s:   5   % ,   s b s :   2 0   % )   i n   t h e   2 0 0 6 – 0 9   p e r i o d. 
gbs has been used in 35 aCp countries and has so far also been 
given in seven asian a nd latin amer ican countr ies. A nn exes I 
an d II p rese nt  t he co mmitments  pe r  cou nt r y.

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4  article 61(2) of the Cotonou 
agreement and article 25(1)(b) 

of the development Cooperation 

instrument regulation.

12

9. 

10.  

G Bs   h a s   m a n y   PotEn tIa l   B EnEfIt s  
co mP a rEd  to   Pr o vIdInG   aId  t h r o uGh  
Pr o jEc t s  

 There  a re var io u s p o tential  bene f it s in  provi di ng  aid  th roug h 
gbs rather than through funding specific projec ts.  i t can sup -
p l y   l a r g e r   v o l u m e s   o f   a i d   i n   a   m o re   p re d i c t a b l e   m a n n e r   a n d 
since it fu nd s t he nation al  developme nt  s trategi es  of  par tn e r 
countries the latter tend to have stronger ownership of this aid 
i n s t r u m e nt.   as   i t   i s   c h a n n e l l e d   t h ro u g h   t h e   n at i o n a l    b u d g e t, 
it can encourage the improvement of public finance manage -
m e n t   a n d   p l a n n i n g   b y   t h e   p a r t n e r   c o u n t r y   a n d   i n c re a s e   d o -
m e s t i c   a c c o u n t a b i l i t y.   fu r t h e r m o r e,   g b s   i s   s e e n   a s   a   w a y   o f 
streng th enin g p ol ic y  dial ogue an d improvi n g t h e h ar m on i sa-
tio n and  coo rdinatio n o f aid bet wee n  d on or s, t he re by  pote n -
t i a l l y   i n c r e a s i n g   t h e   e f f i c i e n c y   o f   a i d   d e l i v e r y   a n d   r e d u c i n g 
the  cos t s fo r the  p ar t ner  countr y.

 as with other aid modalities, the ultimate effec tiveness of gbs 
i n   t e r m s   o f   re d u c i n g   p o ve r t y   l e ve l s   d e p e n d s   o n   t h e   s p e c i f i c 
circumstances in each countr y. The legal framework 4 stipulates 
that gbs can only be given if there is a sound macroeconomic 
p o l i c y,   a   we l l - d e f i n e d   n a t i o n a l   d e ve l o p m e n t   p o l i c y   a n d   s u f -
ficiently transparent, reliable and effec tive pfm. The Commis -
s i o n   i n t e r p re t s   t h e s e   c o n d i t i o n s   i n   a   d y n a m i c   m a n n e r.   i n   i t s 
view, the weak nesses affec ting pfm and the national develop -
ment strategy of the par tner countr y at the time of the financ -
ing decision do not preclude the launch of a gbs programme, 
p r o v i d e d   t h a t   t h e   w i l l   t o   r e f o r m   e x i s t s   a n d   t h e   r e f o r m s   a r e 
rel evant  and credib l e.  i n t his way it t ake s account n ot  on ly o f 
t h e   i n i t i a l   s i t u at i o n ,   b u t   a l s o   o f   t h e   d i re c t i o n   b e i n g   t a k e n   by 
t h e   p a r t n e r   c o u n t r y.   o t h e r   b u d g e t   s u p p o r t   d o n o r s   f o l l o w   a 
simil ar ap p ro ach .

11.  

 as well as the specific circumstances in each countr y, a second 
major fac tor influencing the impac t of gbs programmes is how 
well the Commission manages these programmes. This repor t 
addresses the question: ‘d oes the Commission manage its gbs 
pro gram mes effec tivel y? ’

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

audiT sC ope and approa Ch

13

12.  

To answer the question, ‘d oes the Commission manage its gbs 
programmes effec tively?’ the audit focused on four key areas.

5  public expenditure and 
financial accountability.

(a ) 

d o e s   t h e   C o m m i s s i o n   a p p r o p r i a t e l y   s e l e c t   a n d   f o r m u -
l a t e   t h e   o b j e c t i v e s   a n d   e x p e c t e d   r e s u l t s   o f   i t s   g b s   p r o -
gramm es?

(b) 

does the Commission appropriately manage the main risks 
to  t he e ffe c tive nes s  of g bs program me s ?

(c) 

d o e s   t h e   Co m m i s s i o n   d e s i gn   a n d   i m p l e m e nt   i t s   g b s   p ro -
gramm es effec t ivel y?

(d ) 

d oes the Commission repor t in a clear, exhaustive and ac -
cu rate  manne r o n w het her  gbs is  m e eti n g  it s  obj e c ti ve s?

13.  

14.  

 T h e   a u d i t   fo c u s e d   o n   t h e   Co m m i s s i o n’s   m a n a g e m e n t   o f   g b s 
programmes in aCp, latin  american and asian countries. given 
t h e i r   p a r t i c u l a r i t i e s,   co u nt r i e s   i n   a   f ra gi l e   s i t u at i o n   we re   e x -
c l u d e d   f r o m   t h e   s c o p e   o f   t h i s   a u d i t .   T h e   a u d i t   c o v e r e d   t h e 
n i n t h   a n d   1 0 t h   e d fs,   w h i c h   m e a n s   c o m m i t m e n t s   m a d e   f ro m 
2 0 0 1   o n w a r d s ,   a n d   a l l   g b s  p r o g r a m m e s   u n d e r   t h e   g e n e r a l 
b u d g e t ,   t h e   f i r s t   o f   w h i c h   w a s   co m m i t te d   i n   2 0 0 3 .  Th e   Co m -
miss ion’s  asses s ment s  o f  countr ie s’  e ligibil it y   for   gbs  are  ad -
dres sed  by   t he  Cour t ’s   financial  audit s,   th e  f in d in g s  of  wh i ch 
are presented in the Cour t ’s annual repor ts. This repor t refers 
t o   t h e s e   f i n d i n g s   w h e r e   r e l e v a n t .   T h e   a u d i t   d i d   n o t   a i m   t o 
make   a n  as sessment  of  the  advanta ge s   an d  di sad va nt ag es   of 
gbs co mp ared to  o th er aid modali ti es.

 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.  i t included visits 
to   fo u r   co u nt r i e s :   b e n i n ,   la o s,   pa ra g u ay   a n d   ug a n d a .   d u r i n g 
those visits, the Cour t ’s auditors inter viewed Commission staff, 
re p re s e n t a t i ve s   o f   n a t i o n a l   a u t h o r i t i e s   a n d   o t h e r   d o n o r s.   i n 
addition, gbs programmes in  nicaragua and vietnam were cov-
e re d   t h ro u g h   a   d o c u m e nt a r y   re v i e w   a n d   q u e s t i o n n a i re s   s e nt 
to the Commission delegations in the two countries. The audit 
a l s o   i nvo l ve d   m e e t i n g s   w i t h   t h e   p e fa 5  s e c re t a r i at,   t h e  wo r l d 
ba n k   a n d   t h e   i n t e r n a t i o n a l   m o n e t a r y   fu n d   a n d   a   m i s s i o n   t o 
the united  k ingdom to visit the d epar tment for i nter national 
d e v e l o p m e n t ,   t h e   na t i o n a l   a u d i t   o f f i c e   a n d   a   c o n s u l t a n c y 
c o m p a n y.  T h e   a u d i t   w a s   c a r r i e d   o u t   b e t w e e n   m a y   2 0 0 9   a n d 
m ay 20 10.

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observaTions

14

15.  

16.  

17.  

t hE   co m mIs sIo n   In s u f fIcI En t ly  taIlo r s  
t hE   oBjEc tIvEs   o f   It s   G Bs   Pr oGr a m mEs  
to  t hE   sP EcIfIc   cIr c u m s ta n cEs   o f   Eac h  
co u n t r y

 T h e   o v e r a l l   o b j e c t i v e   o f   g b s  p r o g r a m m e s   i s   t o   s u p p o r t   t h e 
implementation of a countr y ’s national development strategy 6. 
T h e   Co m m i s s i o n   s e e k s   t o   a l i g n   t h e   s p e c i f i c   o b j e c t i ve s   o f   i t s 
pro gram mes w it h t hese st rategie s.

 This section addresses the question of whether the Commission 
adequately selects and formulates the objectives and expected 
re s u l t s   o f   i t s   g b s  p ro gra m m e s.  Th e   Co u r t   e x a m i n e d   w h e t h e r 
programme objec tives are precise and tailored to countr y cir -
c u m s t a n c e s .   fu r t h e r m o r e ,   t h e   C o u r t   e x a m i n e d   w h e t h e r   t h e 
objec tives include strengthening pfm in par tner countries and 
whether programmes clear ly set out how budget suppor t will 
contr ib ute to ac hieving  t he expe c te d res ults.

t hE   oBjEc tIvEs   o f   G Bs   Pr oGr a m mEs  tEn d  to 
B E   sImIl a r   f o r   a l l   Pa r t nEr   co u n t rI Es   dEsP ItE 
t hE Ir   dIf fErEn t   sIt uatIo n s

 fo r the  m ost  p ar t t he ob j ec tive s of  gbs programme s are ver y 
s i m i l a r   a c ro s s   t h e   d i f fe re n t   co u n t r i e s   w h e re   t h e   Co m m i s s i o n 
u s e s   t h i s   a i d   m o d a l i t y.   i n   p a r t i c u l a r   i n   aCp  c o u n t r i e s,   i n   t h e 
gre at   m a j o r i t y   o f   c a s e s   ove r   t h e   l a s t   1 0   ye a r s,   e a c h   g b s  p ro -
gram me  has  had  ob j ec tives   relat in g   to  four   are as:   macroe co -
n o m i c   s t a b i l i t y,   p f m,   h e a l t h   a n d   e d u c a t i o n 7.   T h i s  ‘o n e   s i z e 
fits  a ll ’ ap pro ac h do es no t suffici ent ly  t ake  i nto account e ach 
c o u n t r y ’s   s p e c i f i c   a n d   c h a n g i n g   p r i o r i t i e s   o r   t h e   o t h e r   p r o -
gram mes   f unded  by  the  Co mmiss ion   a nd   ot he r   d on ors   i n   th e 
cou nt r y.

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’.

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18.  

Th e s ys tematic  in clu sio n of ove rall e co nomi c g over n ance  o b -
jec tives relating to macroeconomic stability and pfm reform is 
a positive feature of the Commission’s gbs programmes.  b oth 
a re   e s s e n t i a l   to   a c h i e v i n g   t h e   g b s  p ro gr a m m e s’  ove r a rc h i n g 
ob jec tive   o f  cont r ib ut in g  to   pover t y   re duc ti on.   howe ver,  th e 
pfm o bj ec t ives s elec ted are of ten  not  t ai lore d to add res s  t he 
pfm reform priorities of individual par tner countries. Thus, for 
example, in laos,  pfm objec tives do not address the impor tant 
a re a s   o f   i nte r n a l   co nt ro l   a n d   co r r u p t i o n   a n d   i n   vi e t n a m   p fm 
i s s u e s   h ave   n o t   b e e n   p r i o r i t i s e d.   i n   pa ra g u ay   a n d   n i c a ra g u a , 
a l t h o u g h   p fm  d i a gn o s t i c s   i d e nt i f i e d   s i gn i f i c a nt   we a k n e s s e s, 
t h e   g b s   p r o g r a m m e s   d o   n o t   f o r m u l a t e   s p e c i f i c   p r o g r a m m e 
ob jec tive s rel atin g to  pfm. 

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. 

19.   as regards the other objec tives of gbs programmes, the Com -
m i s s i o n’s   a p p ro a c h   d o e s   n o t   a d e q u ate l y   re f l e c t   t h e   f a c t   t h at 
t h e   n at i o n a l   d e ve l o p m e nt   s t rate gi e s   o f   s o m e   co u nt r i e s   h ave 
moved in recent years to growth-targeted approaches in order 
t o   a c h i e v e   t h e   o v e r a r c h i n g   o b j e c t i v e   o f   p o v e r t y   r e d u c t i o n . 
This  c hang e  is   no t  refl ec ted  in  t he   obj ec ti ves   of   th e   ne w gbs 
pro gram mes to  su p p o r t s uc h nati ona l s trate gi es.  an  example 
i s   ug a n d a’s   n e w  ‘n a t i o n a l   d e v e l o p m e n t   p l a n’  w h i c h   w a s   b e -
in g  p repa re d  at   t he  t ime  of  the  Cour t ’s  aud it.  i t  pla ce d  much 
mo re   e mpha sis  on   infras truc ture   a nd   pr ivate  s ec tor   de vel op -
m e n t   t h a n   p r e v i o u s   n a t i o n a l   d e v e l o p m e n t   s t r a t e g i e s   w h i c h 
ha d  t ake n  the   for m   of ‘p over t y  e rad icat ion   ac tion   plan s’ 8.  al -
t h o u g h   t h e   Co m m i s s i o n’s   i n t e r n a l   g u i d e l i n e s   re c o g n i s e   t h a t 
g ro w t h   i s   a   n e c e s s a r y   c o n d i t i o n   fo r   p o ve r t y   re d u c t i o n ,   t h e y 
do  no t   address  th e  n ew   imp or ta n ce  att ach ed   to  it   by   par t ne r 
co u nt r i e s   a n d   h ow   t h e   Co m m i s s i o n   s h o u l d   d e a l   w i t h   i t   w h e n 
sel ec ting  p ro gramme ob jec tives an d  re lated  con di ti on s.

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9  dominican republic, 
mozambique, Tanzania and 

Zambia.

10  guiding principle no 1 of eu 
Code of Conduct.

20.  

 Th e   Co m m i s s i o n’s   p ro gra m m i n g   p ro ce d u re s   p rov i d e   fo r   e a c h 
co u nt r y ’s   ove ra l l   a i d   a l l o c at i o n   to   b e   l a rg e l y   c h a n n e l l e d   i nto 
no more than t wo priorit y or ‘focal ’ sec tors and, if the countr y 
is eligible for it, gbs. The Commission’s relatively standardised 
approach to setting gbs programme objec tives does not take 
into account the focal sec tors selec ted. i n some countries this 
ha s al s o l ed t he Co mmissio n to h avi n g both  gbs programmes 
w i t h   h e a l t h   a n d   e d u c at i o n   o b j e c t i ve s   a n d   a l s o   h e a l t h   a n d / o r 
e d u c a t i o n   a s   s e c t o r s   w i t h   f u n d i n g   c h a n n e l l e d   t h r o u g h   s b s. 
i n   s u c h   c a s e s   t h e   va l u e   a d d e d   o f   t h e   g b s   p ro gra m m e   h av i n g 
edu catio n  and  heal th  ob j ec tive s  is   un cle ar.  Th e  Cour t   i de nt i -
fied  s uc h  cas es  in  the  cur rent  programm es   of   four   aCp  coun -
t r i e s 9.  T h i s   w a s   l e s s   o f   a   p r o b l e m   i n   a s i a   a n d   la t i n   a m e r i c a , 
m a i n l y   b e c a u s e   g b s  p r o g r a m m e s   i n   t h e s e   c o u n t r i e s   t e n d   t o 
b e   l e s s   s t a n d a rd i s e d   a n d   h ave   m o re   fo c u s e d   o b j e c t i ve s.   g b s 
p r o g r a m m e s   i n   a s i a n   c o u n t r i e s,   fo r   e x a m p l e,   a r e   s t r u c t u r e d 
a ro u n d  wo r l d   ba n k   p ove r t y   re d u c t i o n   s u p p o r t   c re d i t s,   w h i c h 
p l a c e   p a r t i c u l a r   e m p h a s i s   o n   grow t h   a s   a   k e y   e l e m e n t   i n   re -
duc ing  p ove r t y,  rat her t han on  soc i al s ec tor s.

21.  

 T h e   Co m m i s s i o n’s   u s e   o f   s t a n d a rd i s e d   o b j e c t i ve s   fo r   i t s   g b s 
programmes means that it is difficult to adjust the programmes 
to coordinate them with other donors’ objec tives for their gbs 
programmes. moreover, the 2007 eu Code of Conduc t on Com -
p l e m e n t a r i t y   a n d   di v i s i o n   o f   la b o u r   i n   d e v e l o p m e n t   po l i c y 
requires the Commission and member states to aim at focusing 
their active involvement in a par tner countr y on a maximum of 
three sec tors 10. This raises the question of the ex tent to which 
g b s   p r o g r a m m e s   s h o u l d   h a v e   s e c t o r a l   o b j e c t i v e s   s i n c e   t h i s 
requires the par ticipation of the Commission in these sec tors 
in  addit ion  to  th e t wo  fo c al  s ec tor s.

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t hE   oBjEc tIvEs   o f   G Bs   Pr oGr a m mEs   a rE   o f tEn  
dEfInEd   In  tEr m s  WhIc h   a rE   to o   G EnEr a l

22.  

 T h e   o b j e c t i v e s   o f   g b s  p r o g r a m m e s   a r e   f o r m u l a t e d   i n   m o s t 
case s  in  rat her  g eneral   ter ms   an d   do  n ot  s et   out   clear ly   wh at 
t h e   p r o g r a m m e s   a r e   e x p e c t e d   t o   a c h i e v e   a n d   b y   w h e n   ( s e e 
Box 1). This is detrimental to the design of the various compo-
nents of gbs programmes, namely the transfer of funds, capac -
i t y   d e ve l o p m e n t ,   co n d i t i o n s   a n d   d i a l o g u e   ( s e e   p a ra gra p h s   1 
and 2). moreover, it does not allow an objec tive assessment of 
whether objec tives have been achieved, mak ing it more diffi-
cult to hold the Commission accountable for the effec tiveness 
of  its  g bs pro grammes.

B oX   1

s ElEc tInG   a n d   f o r m u l atInG   oBjEc tIvEs

Good commission practice: l aos

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 intergov-
ernmental 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 achieve-
ment of the objectives of the programme.

Weak commission practice: n icaragua

The financing agreement for the Commission’s gbs programme in  nicaragua13 focuses on rural areas 
but does not define general and specific objectives and expected results. it refers to the overall objec-
tives 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.

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.

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23.  

s o m e   p ro gre s s   wa s   m a d e   i n   t h e   f i n a n c i n g   a gre e m e nt s   u n d e r 
t h e   1 0 t h   e d f  i n   i m p r o v i n g   t h e   fo r m u l a t i o n   o f   o b j e c t i v e s   b y 
c l e a r l y   d i s t i n g u i s h i n g   g e n e r a l   a n d   s p e c i f i c   o b j e c t i ve s   i n   t h e 
s t r u c t u re   o f   t h e   d o c u m e n t .   b y   re v i s i n g   i t s   i n t e r n a l   g u i d a n c e 
on budget suppor t (see paragraph 6), the Commission intends 
to  int ro duce fur t her  imp rovement s by  req ui r in g  i ts  st aff  to:

(a ) 

s p e c i f y   i n   t h e   f i n a n c i n g   d o c u m e n t s   t h e   s t e p s   n e e d e d   t o 
implement pfm refor ms and national development strate -
gie s o r se c tor  p ol ic ies;

(b) 

es tab l is h mediu m-ter m obje c t ive s  for  t he  program me.

t hE   co m mIs sIo n   d oEs   n ot   aP Pr oPrIatEly  
m a n aG E  t hE   m aIn   rIs k s  to   Ef fEc tIvE   G Bs

24.   all development cooperation involves tak ing r isks which may 
h ave   a n   i m p a c t   o n   t h e   e f fe c t i ve n e s s   o f   t h e   a i d.   g b s   i nvo l ve s 
r isks that are different from those ar ising from the traditional 
projec t approach to development cooperation. The main r isks 
to the effec tiveness of gbs are fiduciar y risk and development 
r isk : fiduciar y r isk can be defined as the r isk that gover nment 
f u n d i n g   i s   n o t   u s e d   fo r   t h e   i n t e n d e d   p u r p o s e   o f   p o ve r t y   re -
duc t io n; deve lo pment r isk c an  b e de f in ed  a s th e  r is k t hat th e 
n a t i o n a l   p o l i c i e s   a n d   s t r a t e g i e s   s u p p o r t e d   b y   g b s   a r e   i n a d -
equ ate.

25.  

Th i s   s e c t i o n   a d d re s s e s   t h e   q u e s t i o n   o f   w h e t h e r   t h e   Co m m i s -
s i o n   a p p r o p r i a t e l y   m a n a g e s   t h e   m a i n   r i s k s   a f fe c t i n g   t h e   e f-
fec tive ness  o f  gb s. The   Co ur t  examined  h ow  th e  Comm is s ion 
a s s e s s e d   f i d u c i a r y   a n d   d e v e l o p m e n t   r i s k s   a n d   w h a t   s t e p s   i t 
took to manage those risks through relevant capacity develop-
ment,  co nditio ns,   dial o gu e  and  m eas ures   for   mon itor in g   a nd 
redu cing  r isk .

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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.

t hE   rIs k   m a n aG EmEn t   f r a mE W o r k   Is    
n ot  W El l   dE vEloP Ed

26.  

 Th e el igib ilit y co nditio ns  fo r bud g e t s uppor t are de signe d to 
ensu re  t hat   gb s  is   on ly  p rovided  in  countr ies   w h ic h   h ave   th e 
ne ces sar y  fram ewo r k  for   gb s  to  be  e ffec tive:   a  sound  m ac ro -
econ o mic p o l ic y, a wel l - d efined n ati on al d eve lopme nt  poli c y 
an d a su ffic ie nt ly transp arent, re li able a nd  ef fe c t ive  p fm sys -
tem (see paragraph 10). since the Commission uses a  dynamic 
i n t e r p r e t a t i o n   o f   t h e   e l i g i b i l i t y   c o n d i t i o n s ,   t h e   e x i s t e n c e   o f 
significant weaknesses in pfm or development strategies at the 
time of the financing decision does not preclude the launch of 
a  gbs  p rogramme,  provid ed  that   t he   par t n er   count r y  is   com -
mitted  to   refor m  and  its  p ro gres s  i n   im plem enti n g  refor ms   is 
deemed to be relevant and credible. implementing reforms is a 
lengthy process. whilst the dynamic approach means that the 
Co m m i s s i o n ,   t o g e t h e r   w i t h   o t h e r   d o n o r s,   i s   i nve s t i n g   i n   t h e 
future, it needs to assess and reduce the risks that result from 
systems that do not immediately provide sufficient guarantees 
in  ter ms  o f t ran sp arenc y,  effic ien c y  an d  ef fe c t ive ne s s 14.

27.  

fo r   aCp  co u nt r i e s 1 5,   t h e   Co m m i s s i o n’s   a s s e s s m e nt   o f   r i s k   h a s 
focu se d o n t he r is k of co u nt r ies n ot conti nui ng  to me et  e li gi-
bility conditions throughout the entire implementation period 
o f   t h e   g b s  p r o g r a m m e s .   T h i s   a s s e s s m e n t   w a s   b a s e d   o n   t h e 
cou nt r y ’s  p revio u s  track   record  wi th   gbs  and  it s  future  pros -
p e c t s   fo r   m e e t i n g   t h e   e l i g i b i l i t y   c r i t e r i a .  T h e   c o n c l u s i o n s   o f 
the assessment were an impor tant fac tor in deciding whether 
or not to provide budget suppor t in those countries (see para-
g r a p h   4 5 ) .   a l t h o u g h   t h i s   r i s k   a s s e s s m e n t   i s   u s e f u l ,   i t   i s   n o t 
sufficient as it does not cover the potential impac t of fiduciar y 
r is k and  d evel o p ment  r isk o n  th e  ef fec t ive ne ss  of  gb s.

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28.  

Th e   Co m m i s s i o n’s   i n te r n a l   g u i d e l i n e s   d o   n o t   p rov i d e   fo r   t h e 
assessment of fiduciar y and development risks. The main types 
of  r is ks  are not  ident ified an d t h ere i s n o g uid an ce on  h ow to 
a s s e s s   t h e   s i g n i f i c a n c e,   p r o b a b i l i t y   a n d   p o t e n t i a l   i m p a c t   o f 
risks. fur thermore, it is not clear how risk-mitigating measures 
s u c h   a s   c a p a c i t y - b u i l d i n g   s u p p o r t ,   d i a l o g u e,   c o n d i t i o n s   a n d 
s h o r t e r - t e r m   m e a s u r e s   a r e   t o   b e   d e s i g n e d   f o r   t h e   d i f f e r e n t 
t y p e s   a n d   l e v e l s   o f   r i s k   a n d   h o w   t h e s e   m e a s u r e s   s h o u l d   b e 
coo rdin ate d wit h o ther donors.

rIs k s   a rE   hI Gh   In   m o s t   co u n t rI Es   B EnEfItInG 
f r o m   G Bs   Bu t   a rE   n ot   a dE QuatEly   a d d rEs sEd  
By  t hE   co m mIs sIo n

F i d u c i a r y  r i s k

29.   g b s   i s   m o s t l y   p rov i d e d   i n   co u n t r i e s   w i t h   we a k   p fm   s ys te m s. 
T h i s   i s   d e m o n s t r a t e d   b y   t h e   a n n u a l   C o u n t r y   po l i c y   a n d   i n -
s t i t u t i o n a l   a s s e s s m e n t   ( C p i a )   p u b l i s h e d   b y   t h e   wo r l d   b a n k 
where the indicator for the qualit y of budgetar y and financial 
m a n a g e m e n t   i s   r e l a t i v e l y   l o w   f o r   t h e   m a j o r i t y   o f   c o u n t r i e s 
benefiting from gbs 16. weak pfm systems can lead to waste of 
fun ds and in effic ienc y w hic h reduce  th e e ffe c ti ve n es s of gbs 
pro gram mes in ac hieving  their  pover t y   red uc t ion  obje c ti ve s.

30.   a n o t h e r   co n s e q u e n ce   o f   we a k   p fm   s ys te m s   i s   i n c re a s e d   co r-
ruption. The Cpia also includes an indicator concerning trans -
p a re n c y,   a c c o u n t a b i l i t y,   a n d   c o r r u p t i o n   i n   t h e   p u b l i c   s e c t o r 
w h o s e   s c o r e   i s   s i m i l a r l y   l o w   f o r   m o s t   c o u n t r i e s   b e n e f i t i n g 
fro m gb s 17.  fu r t her in dications  of t he of ten h i gh  le vel of  co r-
rupt ion can b e der ived from  th e Cor r upt ion  perception  i n dex 
p u b l i s h e d   by  Tr a n s p a re n c y   i n te r n a t i o n a l.   a m o n g   t h e   2 7   aCp  
c o u n t r i e s   t h a t   a r e   n o t   i n   a   f r a g i l e   s i t u a t i o n 1 8  a n d   f o r   w h i c h 
gbs  ha s  be en  p l anned  in  the  countr y   s trate g y   pape r s  for   th e 
1 0 t h  e d f ,   1 2   o f   t h e m 1 9,   o n   t h e   b a s i s   o f   t h e   2 0 0 9   C o r r u p t i o n 
pe r c e p t i o n   i n d e x ,   a r e   c l a s s i f i e d   a s   h a v i n g  ‘r a m p a n t   c o r r u p -
tion’ 20. among the six latin american and asian countries with 
gbs p ro gramme s,  f ive o f them 21 h ave th e same class ific ation. 

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.

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31.  

The Cour t found that relevant information on pfm systems and 
t h e   r e fo r m   p r o g r a m m e s   t o   i m p r o v e   t h e m   i s   a v a i l a b l e   t o   t h e 
Commission for its decision-mak ing and monitoring purposes. 
The public expenditure and  financial accountability (pefa ) are 
a   p a r t i c u l a r l y   u s e f u l   s o u r c e   o f   i n fo r m a t i o n   o n   p fm  s y s t e m s . 
These are based on a common methodology drawn up in 2005 
through joint donor effor ts, including significant inputs from 
the Commission. The pefa assessments have been car r ied out 
f o r   m a n y   c o u n t r i e s 2 2  a n d   r e p o r t   o n   t h e   s t a t e   o f   a   c o u n t r y ’s 
pfm system according to 28 indicators. The assessments have 
i n   m a ny   co u nt r i e s   s t i m u l ate d   p fm  d i a l o g u e   a n d   t h e   d raw i n g 
up   of   pfm  re fo r m   ac t io n  p l ans  and  su ppor t  program m es.  The 
results of the assessments also provide a good basis for meas-
ur ing improvement over time. They are complemented in this 
re s p e c t   by   a n n u a l   p fm   re p o r t s   p re p a re d   by   d e l e g at i o n s   t h at 
g e n e r a l l y   p rov i d e   a   g o o d   ove r v i e w   o f   t h e   p fm  s i t u a t i o n   a n d 
recent  devel op ments.

32.   ne ve r t h e l e s s,   t h e   Co m m i s s i o n   d o e s   n o t   a s s e s s   a n d   co n c l u d e 
on  f iduciar y  r isk . This  is  p ar tly   be c ause,   un like   s ome   m ember 
s t a t e s   s u c h   a s   fr a n c e 2 3  a n d   t h e   un i t e d   k i n g d o m 2 4  a n d   o t h e r 
organisations 25, it has no methodology for doing this. fur ther-
more it has insufficient infor mation on how well pfm systems 
are ac tually work ing in prac tice. The pefa assessments are not 
inte nded   to   b e  a  fidu ciar y  r isk   a ss es sm ent   tool  be c aus e   th e y 
d o   n o t   c o n t a i n   a   s u f f i c i e n t l y   i n - d e p t h   a s s e s s m e n t   o f   t h e   e x -
tent to  which  co ntro l s and p roced ures  are  com plie d wit h a nd 
the  e stim ate d im p ac t o f co r rupt ion .  suc h infor mat io n s hould 
nor mally be found in the annual repor ts of the supreme audit 
in st itu t io ns  and   ot her  oversight   bodi es.  howe ver,  in   ugan da, 
w h e r e   t h e   s u p r e m e   a u d i t   i n s t i t u t i o n   i s s u e s   a n   a n n u a l   a u d i t 
repor t reasonably on time, the Commission delegation had not 
made sufficient use of it for identifying fiduciar y problems. i n 
mo st  co unt r ies su p reme au dit in s ti tuti on s i ss ue  th e ir  re por t s 
w i t h   s i g n i f i c a n t   d e l a y s   o r,   i n   t h e   c a s e   o f   l a o s ,   t h e y   a r e   n o t 
even  made p u blic. 

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  ‘managing fiduciary risk in 
dfid bilateral aid programmes’, 

dfid, january 2008.

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.

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33.  

34.  

35.  

i n addition, for most countries examined, the lack of transpar-
e n c y   i n   t h e   p r e s e n t a t i o n   o f   n a t i o n a l   a n d   s u b n a t i o n a l   b u d g -
ets   al s o  mak es  it  d if ficu l t  fo r  the   Commi ss i on  to  a na lyse   h ow 
budg et ar y   reso u rces  are  b eing   use d.   diagnost ic  s tudies  such 
as   p u bl ic   exp en ditu re  trac k ing  s ur veys 26  an d  public   expe ndi-
ture reviews 27 can help compensate for a lack of information by 
identif ying  maj or  ineffic ienc ies  a nd   le ak ag es,  so  t h at  d onor s 
a n d   b e n e f i c i a r y   g o v e r n m e n t s   c a n   p r i o r i t i s e   t h e i r   e f f o r t s   o n 
f i r s t   a d d r e s s i n g   t h e s e   p r o b l e m s .   T h e   C o m m i s s i o n   h a s   m a d e 
rel at ivel y lit tl e u se of s uch  tools.

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.

Th e Co mmissio n ap pl ies  a numbe r  of m eth ods  i n it s gbs pro -
gra m m e s   to   co nt r i b u te   to   re d u c i n g   f i d u c i a r y   r i s k ,   i n   p a r t i c u-
l a r   t h e   p fm  e l i g i b i l i t y   c r i t e r i o n ,   w h i c h   r e q u i r e s   s a t i s f a c t o r y 
p ro g r e s s   i n   p fm  re fo r m ,   a n d   o t h e r   p fm  c o n d i t i o n s   a t t a c h e d 
t o   d i s b u r s e m e n t s .   C o m m i s s i o n   s u p p o r t   fo r   p fm  r e fo r m   p r o -
grammes through capacit y-building and dialogue is also used 
t o   re d u c e   r i s k .   ho w e ve r,   t h e   l a c k   o f   a   t h o ro u g h   a n d   e x p l i c i t 
f i d u c i a r y   r i s k   a s s e s s m e n t   m a k e s   i t   h a r d e r   t o   d r a w   u p   a   r i s k 
r e d u c t i o n   p l a n   w h i c h   c l e a r l y   s e t s   o u t   t h e   r i s k s   a n d   d e f i n e s 
what measures are needed to reduce them and over what time 
period. moreover, Commission risk reduc tion measures mostly 
fo c u s   o n   i m p rove m e n t s   w h i c h   w i l l   o n l y   h ave   a n   i m p a c t   ove r 
the medium to long term. little use has been made of shor ter-
t e r m   m e a s u re s   a g re e d   w i t h   p a r t n e r   g ove r n m e n t s   t o   a d d re s s 
high-r isk areas through, for example, assisting supreme   audit 
i n s t i t u t i o n s   t o   c a r r y   o u t   m o r e   p r o m p t   a n d   h i g h e r   q u a l i t y 
 audit s  o r su pp o r tin g countr ies in  t h e appli cati on  of  s tan d ard 
inte r natio nal p ro curement proce dures  ( se e  B ox  2) .

 while the Commission did include such measures for reducing 
r is k in th e design o f it s gb s programm es under th e n inth  e df 
in uganda and  b enin, such as the use of pr ivate audit fir ms to 
a s s i s t   s u p r e m e   a u d i t   i n s t i t u t i o n s   i n   c a r r y i n g   o u t   a u d i t s   a n d 
t h e   c a r r y i n g   o u t   o f   p u b l i c   e x p e n d i t u re   t r a c k i n g   s u r ve y s   a n d 
pub l ic  exp end it u re  reviews,  the y   we re   not   accompan ie d  by   a 
c l e a r   a n d   a g r e e d   p l a n   o f   i m p l e m e n t a t i o n   t h a t   s e t s   o u t   h o w 
a n d   by   w h e n   t h e s e   m e a s u re s   wo u l d   a d d re s s   s p e c i f i c   r i s k s.   i n 
f a c t ,   m o s t   o f   t h e   p l a n n e d   m e a s u r e s   w e r e   u l t i m a t e l y   n o t   i m -
plemented. The gbs programmes under the 10th  edf for these 
c o u n t r i e s   a n d   t h e   g b s  p r o g r a m m e s   o f   t h e   a s i a n   a n d   la t i n 
american countries examined do not provide for shor ter-term 
meas ures.

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B oX   2

r Ed u cInG   fId u cIa r y   rIs k

Good commission practice: Ethiopia

The protection of basic  services program ii28 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 g eneral’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 decen-
tralised 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.

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.

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36.  

37.  

 The Commission has paid relatively little attention to the r isk 
o f   c o r r u p t i o n   i n   i t s   g b s  p ro g r a m m e s   i n   t e r m s   o f   o b j e c t i ve s, 
 capacity-building suppor t and monitoring and generally makes 
l i t t l e   re fe re n c e   t o   i t   i n   i t s   p ro g r a m m e   a p p r a i s a l   d o c u m e n t a -
tion. one reason for this is that the Commission tends to treat 
i t   a s   a   w i d e r   g o ve r n a n c e   i s s u e   w h i c h   h a s   l e d   t o   i t   n o t   b e i n g 
s u f f i c i e n t l y   a d d r e s s e d   i n   t h e   c o n t e x t   o f   p fm  r e fo r m   e f fo r t s . 
h owe ve r,   i n   2 0 0 8   t h e   Co m m i s s i o n   co n s i d e ra b l y   i n c re a s e d   i t s 
e f f o r t s   t o   t a c k l e   c o r r u p t i o n   i n   ug a n d a   i n   c o n j u n c t i o n   w i t h 
ot her  do no rs and th e e uro p ean  a nti-f raud o ffice. 

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.

d e v e l o p m e n t   r i s k

i n  addit ion   to  pfm  sys te ms  that  wor k ,   countr ies   als o  n ee d  to 
have well- defined national development strategies, integrated 
wit h t he natio nal  b u dgetar y  fram ewor k an d se c toral poli c ie s, 
for  gb s  to  b e  e ffec t ive.  a  st ruc tured  asse ssment  of  t he  st rat -
egy should therefore be a significant par t of the Commission’s 
w o r k   o f   d r a w i n g   u p   g b s  p r o g r a m m e s .  T h e   C o u r t   f o u n d   t h a t 
n a t i o n a l   d e v e l o p m e n t   s t r a t e g i e s   a r e   g e n e r a l l y   d e s c r i b e d   i n 
C o m m i s s i o n   p r o g r a m m i n g ,   i d e n t i f i c a t i o n   a n d   f o r m u l a t i o n 
d o c u m e n t s   b u t   a re   n o t   c r i t i c a l l y   a p p r a i s e d   a n d   t h e   Co m m i s-
s i o n   d o e s   n o t   d r a w   a n   e x p l i c i t   c o n c l u s i o n   o n   t h e   r e l e v a n c e 
an d c redib ilit y  of t he st rategy.

38.   national development strategies are generally still weak, which 
is likely to mean that development risk is relatively high. Thus 
a   2 0 0 7   wo r l d   ba n k   r e v i e w   c o n c l u d e d   t h a t   o n l y   e i g h t   o f   t h e 
62 developing countries (13 %) examined had a ‘largely devel -
oped’ strategy 30 although it considered that all countries were 
mak ing   p rogress  towards  t his.  i n   par ticular  th e  review  found 
that :

(a ) 

in mo st cou nt r ies,  s trategies we re  s ti ll on ly  we ak ly  li n ked 
to  t he b udg e t;

(b) 

m a n y   o f   t h e   c o u n t r i e s   w e r e   s t i l l   p u r s u i n g   m u l t i p l e 
 m e d i u m - te r m   s t ra te gi e s,   w h i c h   m ay   i nvo l ve   a   s i gn i f i c a n t 
duplication of effor t and jeopardise progress on the other 
co mp o nent s  o f t he develop me nt  s trateg y ;

(c) 

many countries have identified goals and priorities match -
ing their specific needs but need to provide better clar ifi-
cat io n  of  how to  ac hieve th ese  g oal s.

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39.  

Th e  Com mis sion   hol ds   con siderable   i n for mat io n  on  d e ve lop -
ment r isks. however, these are not clear ly set out in the iden -
tification and formulation documents of the gbs programmes. 
i n   pa r a g u a y   fo r   i n s t a n c e,   r i s k s   i n c l u d e   i n s u f f i c i e n t   p l a n n i n g 
o f   t h e   f i n a n c i a l   a n d   h u m a n   r e s o u r c e s   n e e d e d   t o   i m p l e m e n t 
the national development strategy, inappropriate institutional 
a r r a n g e m e n t s   w h i c h   h a v e   l e d   t o   w e a k   a n d   i n e f f i c i e n t   p o l i-
c i e s,   l a c k   o f   t r a n s p a re n c y   i n   t h e   d e s i g n   a n d   i m p l e m e n t a t i o n 
o f   p o l i c i e s   a n d   p r o g r a m m e s   a n d   i n a p p r o p r i a t e   t a r g e t i n g   o f 
ex p e n d i t u re.  wh e re   t h e   Co m m i s s i o n   d i d   i d e nt i f y   r i s k s,   a s   fo r 
i n s t a n ce   i n   u g a n d a   a n d  vi e t n a m ,   i t   d i d   n o t   m a k e   a n   e x p l i c i t 
judg em ent   o n  the  l evel   of   deve lopme nt   r i sk  a nd   di d  n ot  sys-
temat icall y ident if y measu res for  red uci n g  it.

t hE   co m mIs sIo n ’s   dEsI Gn   a n d 
ImPlEmEn tatIo n   o f  t hE   dIf fErEn t  
co mPo nEn t s   o f   It s   G Bs   Pr oGr a m mEs    
d o   n ot   En s u rE   t h at  t hE Ir   PotEn tIa l  
ImP ac t   Is   oPtImIsEd

40.  

Th i s   s e c t i o n   a d d re s s e s   t h e   q u e s t i o n   o f   w h e t h e r   t h e   Co m m i s -
sion’s design and implementation of the different components 
of gbs were effec tive, i.e. transfer of funds, capacit y-building 
sup p o r t,  co nditio ns  and dial ogue.

t hE   r atIo n a lE   f o r  t hE   a l lo c atIo n s  to 
In dIvId ua l   G Bs   Pr oGr a m mEs   Is   n ot   c lEa r   Bu t  
t hE   dIsBu r sEmEn t   o f   f u n dInG   Is   In c rEa sInGly  
PrEdIc taBlE  

f o r  t hE   P a r t nEr   co u n t rI Es

41.  

 T h e   Co u r t   e x a m i n e d   w h e t h e r   t h e   Co m m i s s i o n   a p p r a i s e d   t h e 
am o unts   o f  indiv idual   gb s  program me s  accordin g  to   th e   ob -
jec tives of the programmes and the countries’ specific circum-
s t a n c e s.   fu r t h e r m o r e,   i t   e x a m i n e d   w h e t h e r   t h e   Co m m i s s i o n 
d i s b u r s e s   g b s   o n   a   p r e d i c t a b l e   b a s i s   a n d   i n   a l i g n m e n t   w i t h 
cou nt r y b udg etar y systems.

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42.  

43.  

44.  

t h e r e   i s  n o  F r a m e w o r k  F o r  a s s e s s i n g  t h e  a p p r o p r i a t e 
a m o u n t s  F o r gBs  p r o g r a m m e s

Th e cou nt r y st rategy p ap ers  and th e var ious doc ume nt s u se d 
for  deciding   o n  gb s  p ro grammes  examined   by   t he   Cour t  lac k 
c l e a r   e x p l a n a t i o n s   o n   h o w   t h e   a m o u n t   o f   g b s  a l l o c a t e d   h a d 
b e e n   d e c i d e d.   i n   m o s t   c a s e s,   a   re fe re n ce   i s   o n l y   m a d e   to   t h e 
overall objec tive of increasing the Commission’s use of budget 
sup p o r t  (see p aragraph  7) .

i mp rec ise o b je c t ives  ( see p aragraph  2 2 )  are  a pro ble m for  as-
s e s s i n g   t h e   a m o u n t   t o   b e   a l l o c a t e d   t o   i n d i v i d u a l   g b s  p r o -
g r a m m e s .   fo r   e x a m p l e,   t h e   a m o u n t   r e q u i r e d   t o   h a v e   a n   i m -
p a c t   o n   p a r t n e r   c o u n t r y   b u d g e t a r y   e x p e n d i t u r e   p a t t e r n s   o r 
to fin ance t he b udg et defic it may  be  qui te  d if fe rent  f rom th e 
am o unt req uired to st rength en p fm sys tem s.

Th e   Co m m i s s i o n   d o e s   n o t   c a r r y   o u t   a   s t r u c t u re d   a s s e s s m e n t 
to   we i g h   t h e   e x p e c te d   b e n e f i t s   a n d   r i s k s.   i t s   i nte r n a l   g u i d e -
l i n e s   s t i p u l a te   t h a t   f i r s t   t h e   f i n a n c i a l   e nve l o p e   fo r   g b s  m u s t 
be  est ab lishe d an d th en the expe c te d ben e fi ts  a nd  r i sk s  ar is -
i n g   f r o m   t h i s   a l l o c a t i o n   a r e   t o   b e   a s s e s s e d .   a  m o r e   l o g i c a l 
a p p ro a c h   wo u l d   b e   to   f i r s t   a s s e s s   t h e   ex p e c te d   b e n e f i t s   a n d 
r i s k s   o f   a   g b s  p r o g r a m m e   a n d   t h e n   d e t e r m i n e   t h e   f i n a n c i a l 
allo catio n on  th e b as is  of t his as se ss me nt wi th in  t he  lim it s of 
the  ove ral l cou ntr y al loc atio ns.

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45.   as   reg a rds  r isk s,  the  Commiss ion   t ak e s  a ccount  of   th e   r i sk  of 
n o n - u t i l i s a t i o n   o f   g b s  d u e   t o   n o n - r e s p e c t   o f   t h e   e l i g i b i l i t y 
c r i t e r i a   ( s e e   p a r a g r a p h   2 7 ) .   fo r   t h e   1 0 t h   e d f,   g e n e r a l l y   t h e 
lower this risk was assessed to be for a given countr y, the more 
gbs  it  was  l ik el y  to  receive  an d  th e   h i gh e r   t he   pe rce nt ag e   of 
i t s   n a t i o n a l   i n d i c a t i ve   p ro g r a m m e   a l l o c a t e d   t o   g b s  ( s e e   t h e 
Tab le).  however,  t he Commis sion doe s no t con s ide r  f iduci ar y 
and development risks (see paragraphs 32 and 37) when decid -
in g o n  the amo unt o f funding.

taBlE

l In k   B E t W E En   G Bs   a l lo c atIo n s   a n d  t hE   co m mIs sIo n ’s 
a s sEs s mEn t   o f   rIs k   o f   n o n - u tIlIs atIo n   o f   G Bs
t hE   n o n - rEsP Ec t   o f  t hE   ElI G I B IlIt y   c rItErIa

  d uE  to   

LOW RISK

MEDIUM RISK

HIGH RISK

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

Number of ACP countries with no budget support programmes 
planned in their national indicative programme for the 10th EDF1

Budget support as a 
percentage of the national 
indicative programme for  
the 10th EDF

Average

Lowest

Highest

20

0

73,0 %

48,1 %

89,4 %

14

8

63,2 %

39,6 %

95,3 %

8

18

35,0 %

19,9 %

84,7 %

1 

 no risk assessment was made for nine aCp countries because they are relatively small or do not benefit from the edfs.

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t h e c o m m i s s i o n  d i s B u r s e s gBs  o n  a  p r e d i c t a B l e  B a s i s  a n d 
i n  a l i g n m e n t  w i t h  c o u n t r y   s y s t e m s

46.   b y de finit ion, a cent ral  p ar t  of bud g et s uppor t i s th e  transfe r 
o f   f u n d s   b y   t h e   Co m m i s s i o n   t o   s u p p o r t   t h e   n a t i o n a l   b u d g e t 
o f   t h e   b e n e f i c i a r y   c o u n t r y.   i n   r e c e n t   y e a r s ,   b e s t   p r a c t i c e   i n 
t h e   p ro v i s i o n   o f   b u d g e t   s u p p o r t   h a s   e m p h a s i s e d   t h e   i m p o r -
t a n c e   t o   p a r t n e r   c o u n t r i e s   o f   t h e   p re d i c t a b i l i t y   o f   t h e   f l o w s 
o f   b u d g e t   s u p p o r t   a l l o c a t e d   b y   d o n o r s .   T h i s   a l l o w s   p a r t n e r 
countries to k now sufficiently in advance the amount and tim -
in g o f  disb urs ements.

31  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.

47.  

48.  

The predic tabilit y of the Commission’s disbursement of gbs is 
generally good. i n most countries, the disbursement is sched-
u l e d   t o   t a k e   p l a c e   i n   t h e   ye a r   a f t e r   t h e   p e r fo r m a n c e   a s s e s s-
ment  wh ich   al l ows   th e  p ar tner   countr y  to  in c lude   th e  gbs   as 
planned revenue in its budget. i n most cases where payments 
have  be en  m ad e  l ate,  it  was  beca us e   of  d elays  on   th e   par t   of 
b e n e f i c i a r y   c o u n t r i e s   i n   t h e   s u b m i s s i o n   o f   d i s b u r s e m e n t   re -
que st s and did  no t resu l t in sign if i c ant  n eg at ive  i mpac t s.

i n   p a r t i c u l a r,   t h e   Co m m i s s i o n   h a s   t a k e n   s i g n i f i c a n t   s t e p s   t o 
i m p rove   p re d i c t a b i l i t y   t h ro u g h   t h e   i n t ro d u c t i o n   o f   t h e   m d g 
c o n t r a c t s 3 1.   T h e s e   p r o g r a m m e s   c o m m i t   f u n d s   f o r   a   s i x - y e a r 
period instead of the typical three years and, if eligibilit y con-
ditions continue to be met, allow the disbursement of at least 
7 0   %   o f   t h e   t o t a l   c o m m i t m e n t   i n d e p e n d e n t   o f   p e r fo r m a n c e. 
mdg contrac ts  are onl y granted to count r ie s  t hat h ave a s uc -
ce ss fu l  t rac k record in im pl ement in g  budg et  s uppor t, sh ow a 
commitment to monitoring and achieving the mdgs, and have 
a c t i v e   d o n o r   c o o r d i n a t i o n   m e c h a n i s m s   t o   s u p p o r t   p e r fo r m -
an ce review and dial o gu e.

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c aP acIt y- BuIl dInG  
co n t rI Bu tIo n s   Bu t  Wa s   o f tEn   n ot   B a sEd   o n 
a n   aP Pr oPrIatE   a s sEs s mEn t   o f   PrIo rIt y   nE Ed s

s uP Po r t   h a s   m a dE   u sEf u l  

49.   C a p a c i t y - b u i l d i n g   s u p p o r t   i s   o n e   o f   t h e   k e y   c o m p o n e n t s   o f 
g b s  p r o g r a m m e s   a n d   i s   e i t h e r   i n c l u d e d   d i r e c t l y   i n   t h e   g b s 
p r o g r a m m e   o r   t h r o u g h   a n   a c c o m p a n y i n g   s p e c i f i c   c a p a c i t y -
building suppor t programme to contribute to gbs programme 
o b j e c t i v e s .   Ty p i c a l l y   a b o u t   5   %   o f   o v e r a l l   g b s  p r o g r a m m e 
fun ding  is set as ide fo r c ap acit y-bui ldi ng.

32  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.

50.  

This section addresses the question of whether capacity-build -
i n g   s u p p o r t   p rov i d e d   w i t h i n   t h e   co ntex t   o f   g b s   p ro gra m m e s 
effectively contributes to meeting the programmes’ objectives. 
The Cour t examined whether capacit y-building suppor t is rel -
evant, sufficient and clearly defined in view of the programme 
o b j e c t i ve s   a n d   t h e   i nte r ve nt i o n s   m a d e   by   o t h e r   d o n o r s.   fu r-
thermore, it examined whether capacit y-building suppor t has 
be en imp l emented ap p ro p r iately.

c a p a c i t y- B u i l d i n g  s u p p o r t  m a y  n o t  B e   s u F F i c i e n t  a n d  m a y 
n o t  B e   t h e  m o s t  r e l e v a n t

51.   despite the impor tance of capacity-building suppor t, the Com-
m i s s i o n   h a s   n o   c r i t e r i a   o r   g u i d e l i n e s   t o   a s s e s s   t h e   c a p a c i t y -
b u i l d i n g   s u p p o r t   r e q u i r e d   t o   a d d r e s s   t h e   p a r t n e r   c o u n t r y ’s 
p r i o r i t y   n e e d s .   T h e   a s s e s s m e n t s   o f   c a p a c i t y - b u i l d i n g   n e e d s 
a r e   n o t   c o m p r e h e n s i v e   a n d   d o   n o t   s y s t e m a t i c a l l y   t a k e   i n t o 
account suppor t provided by other donors when the Commis-
s i o n   d e c i d e s   o n   t h e   c a p a c i t y - b u i l d i n g   a l l o c at i o n s   u n d e r   g b s 
pro gram mes 32.

52.  

i m p ro v i n g   p fm   i s   a n   i m p o r t a n t   o b j e c t i ve   o f   a l l   t h e   Co m m i s -
sion’s gbs programmes (see paragraph 18) and capacity-build -
in g  can   p lay  an  imp or t ant  role  in   reduci ng   r i s k . Th e  Comm is-
sio n’s   cap acit y- buil ding   su p por t  t he re fore   m ain ly   foc us e s  on 
p fm.   ho w e v e r,   t h e r e   i s   n o   c l e a r   l i n k   b e t w e e n   t h e   n e e d s   f o r 
i m p rov i n g   p fm  i n   a   p a r t i c u l a r   co u nt r y   a n d   t h e   a m o u nt s   p ro -
v i d e d   fo r   c a p a c i t y - b u i l d i n g   s u p p o r t .   i t   i s   t h e re fo re   n o t   c l e a r 
that the share of gbs programme funding allocated to capac -
i t y- b u i l d i n g,   u s u a l l y   i n   t h e   o rd e r   o f   5   % ,   i s   s u f f i c i e nt   to   h ave 
a s ign ificant  imp ac t.

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33  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.

34  a backbone strategy — 
reforming technical cooperation 

and project implementation 

units for external aid provided by 

the european Commission.

53.   onl y a limited p ar t o f t he c apac it y- bui ldi n g for   p fm ha s been 
use d for st reng then ing oversight  bodi es  suc h  as  suprem e a u -
d i t   i n s t i t u t i o n s ,   p a r l i a m e n t s   a n d   c i v i l   s o c i e t y   o r g a n i s a t i o n s 
seek ing to monitor gover nment use of budgetar y resources 33. 
s u p p o r t   f o r   c a p a c i t y - b u i l d i n g   i n   a r e a s   o t h e r   t h a n   p f m ,   o n 
w h i c h   g b s  p r o g r a m m e   o b j e c t i v e s   a r e   a l s o   f o c u s e d ,   n o t a b l y 
h e a l t h   a n d   e d u c a t i o n ,   h a s   b e e n   ve r y   re l e v a n t   b u t   i n   g e n e r a l 
margin al.

54.  

55.  

i n some cases, capacit y-building suppor t was used to finance 
a s s i s t a n ce   fo r   t h e   m a n a g e m e nt   o f   g b s  p ro gra m m e s.   as   a   re -
sult, these funds did not direc tly contribute to the creation of 
sustainable capacity in the par tner countr y. in nicaragua, tech-
ni cal  as sista nce mo stl y  fo c us ed on  t h e produc t ion  of  re por ts, 
m o n i t o r i n g   o f   c o n d i t i o n s ,   p r e p a r i n g   d i s b u r s e m e n t   r e q u e s t s 
and the review of the gover nment ’s plans. similar ly, in  b enin, 
more than a third of the funds available for capacit y-building 
sup p o r t  unde r t he ninth ed f were devoted to the as ses sme nt 
of indicators, the preparation of joint annual reviews, the for -
m u l at i o n   o f   t h e   g b s   p ro gra m m e   u n d e r   t h e   1 0 t h   e d f   a n d   t h e 
des ign o f cap acit y-b u il ding s uppor t  for  p fm  an d s tat is ti c s.

i n july 2008, the Commission adopted a strategy 34 that aimed 
to improve the effec tiveness of its assistance for capacit y de -
velopment by requiring it to suppor t countr y-led programmes, 
b e   b a s e d   o n   p a r t n e r   d e m a n d   a n d   b e   fo c u s e d   o n   s u s t a i n a b l e 
r e s u l t s .   i m p r o v e m e n t s   w e r e   o b s e r v e d   i n   t h e   d e s i g n   o f   t h e 
cap ac it y-bu il din g  su p p o r t  u nde r   programm es   l aun c h ed   af te r 
t h e   a d o p t i o n   o f   t h e   s t r a t e g y.  T h e   c a p a c i t y - b u i l d i n g   s u p p o r t 
provided under the 10th edf in  benin and uganda is delivered 
through multi- donor trust funds and is, compared to the ninth 
edf,   m ore   re l evant   to   t he   p r i or i t y   n eeds,   better  plan ned   and 
better coordinated with other donors. i t remains unclear, how-
ever, how the amounts for suppor t through such mechanisms 
we re es tab lish ed.

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t h e  s u p p o r t  p r o v i d e d  m a d e  u s e F u l  c o n t r i B u t i o n s  t o 
c a p a c i t y- B u i l d i n g  B u t  a  s i g n i F i c a n t   p a r t  o F  t h e  F u n d s 
a v a i l a B l e  h a s  n o t  B e e n  c o m m i t t e d

56.   Capacit y-building suppor t has made useful contr ibutions, es -
p e c i a l l y   w h e n   s u p p o r t   w a s   p r o v i d e d   i n   r e s p o n s e   t o   a   c l e a r 
demand from the par tner countr y. i n the area of pfm, suppor t 
i s   m o s t l y   r e l a t e d   t o   g o v e r n m e n t   p fm   r e f o r m s   i n   f i e l d s   s u c h 
a s   t h e   b u d g e t a r y   p ro ce s s,   i nte r n a l   co nt ro l,   p ro c u re m e nt   a n d 
t h e   q u a l i t y   o f   s t a t i s t i c a l   i n f o r m a t i o n .   i n   t h o s e   c a s e s   w h e r e 
capacity-building suppor t focused on other sec tors, it covered 
areas such as the formulation of national and sector strategies, 
the development of sec tor management infor mation systems, 
mo nito r ing  a nd eval u atio n ( see B ox  3) .

B oX   3

c aP acIt y -BuIl dInG   s uP Po r t

Good commission practice: l aos

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 part-
ners 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 rep -
resents 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 objec-
tives. 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.

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32

57.  

for most gbs programmes, funds allocated to capacit y-build -
i n g   s u p p o r t   h a v e   i n   t h e   e n d   b e e n   o n l y   p a r t i a l l y   c o m m i t t e d , 
t h u s   r e d u c i n g   t h e   e f f e c t i v e n e s s   o f   t h i s   c o m p o n e n t   o f   g b s 
p r o g r a m m e s .   i n   f a c t ,   o n   a v e r a g e ,   o n l y   a p p r o x i m a t e l y   6 0   % 
o f   c a p a c i t y - b u i l d i n g   a l l o c a t i o n s   a r e   c o m m i t t e d   b e f o r e   t h e 
c l o s u r e   o f   t h e   p r o g r a m m e s .  T h i s   i s   i n   p a r t   b e c a u s e   t h e   p r o -
g r a m m e   i m p l e m e n t a t i o n   p e r i o d   i s   o f t e n   t o o   s h o r t   t o   d e s i g n 
an d  fu ll y  imple m ent  t heir  c apac i t y- build in g   compon ent. Th is 
problem has been exacer bated by difficulties in first defining 
needs and then delays in the implementation of the capacit y-
buil ding  ac tiviti es.  Th us  t he Cour t  found  si gn if ica nt  de lays i n 
t h e   l a u n c h i n g   o f   t h e   c a p a c i t y- b u i l d i n g   a c t i o n s   i n   fo u r   o f   t h e 
s i x   c o u n t r i e s.   h owe ve r,   s u c h   i m p l e m e n t a t i o n   d i f f i c u l t i e s   a re 
not specific to the capacit y-building suppor t provided by gbs 
pro gram mes 35.

35  see the Court’s special report 
no 6/2007 on the effectiveness 

of technical assistance in 

the context of capacity 

development.

36  fixed tranches sometimes 
also have one or two additional 

conditions attached to 

them normally requiring the 

government to carry out specific 

actions.

t hE   co n dItIo n s   at tac hEd  to   dIsBu r sEmEn t  
a rE   P Er f o r m a n cE   o rI En tEd   Bu t   In   Pr ac tIcE 
a rE   n ot  W o r kInG   a s   In tEn dEd

58.   Conditions attached to the disbursement of gbs comprise gen -
eral conditions relating to eligibility for budget suppor t which 
h a v e   t o   b e   m e t   b e fo r e   t h e   p a y m e n t   o f   a ny   f i xe d   o r   v a r i a b l e 
tranche, and specific conditions mainly linked to the var iable 
tranche mechanism connec ted to the achievement of per form-
an ce  indicato r  target s 36.  The  var iable  tran ch e  mech an is m  is  a 
p a r t i c u l a r   fe a t u r e   o f   t h e   C o m m i s s i o n’s   b u d g e t   s u p p o r t   p r o -
gra m m e s   a n d   re f l e c t s   t h e   grow i n g   e m p h a s i s   i n   d e ve l o p m e nt 
c o o p e r a t i o n   o n   m a n a g i n g   f o r   r e s u l t s .   a s   a n   i n c e n t i v e ,   t h e 
a m o u nt   d i s b u r s e d   f ro m   t h e   va r i a b l e   t ra n c h e s   d e p e n d   o n   t h e 
e x t e n t   t o   w h i c h   t a r g e t s   fo r   s e l e c t e d   p e r fo r m a n c e   i n d i c a t o r s 
have b een  re ached.

59.  

Th e   Co u r t   ex a m i n e d   w h e t h e r   co n d i t i o n s   at t a c h e d   to   t h e   d i s -
bursement of gbs programmes are relevant in relation to their 
objec tives, provide an incentive to the government to achieve 
the objec tives and allow the objec tive assessment of progress 
achie ved.

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37  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.

33

60.  

61.  

62.  

c o n d i t i o n s  a r e   g e n e r a l l y  r e l e v a n t   B u t  a r e   u n l i k e l y  t o 
a c h i e v e   t h e i r  i n c e n t i v e   e F F e c t

 Th e  g e ne ral   co ndit ion s  att ache d  to   th e   pay me nt  o f   any   f ixe d 
or variable tranche are relevant since they are aligned with the 
co u nt r y ’s   o b j e c t i ve s   o f   m a i nt a i n i n g   m a c ro e co n o m i c   s t a b i l i t y 
a n d   m a k i n g   p r o g r e s s   i n   r e l a t i o n   t o   s o u n d   p fm  a n d   p o v e r t y 
r e d u c t i o n .   i n   s o m e   c a s e s   t h e r e   i s   s c o p e   fo r   i m p r o v e m e n t   i n 
the  ide nt ificatio n o f p r io r it y p fm measures to be imple me nt -
ed 37. The specific conditions attached to the variable tranches 
o f   g b s  p r o g r a m m e s   a r e   a l s o   g e n e r a l l y   r e l e v a n t   a s   t h e y   a r e 
aligned wit h t he natio nal  developme nt pr i or i tie s  of  th e pa r t-
ner countr y (see Box 4). The Commission is increasingly tak ing 
over per formance indicators from the countr y ’s national devel -
op me nt  st rate gy.  i n s o me p rogrammes, the Commis sio n use d 
indicators focused on poorer regions in the par tner countr ies 
o r   w h i c h   w e r e   b r o k e n   d o w n   b y   g e n d e r   i n   o r d e r   t o   i n c r e a s e 
the ir rel evance to p over t y reduc t ion  pr i or it ie s.

T h e   C o u r t   f o u n d   t h a t   t h e   i n c e n t i v e   e f f e c t   o f   t h e   v a r i a b l e 
tranche mechanism was likely to be less than intended. i t was 
of ten d ifficul t to  s et ap p ro p r iate ta rg et s for  t he  per for man ce 
i n d i c a t o r s.  Ta rg e t s   t h a t   a re   i n s u f f i c i e n t l y   c h a l l e n g i n g   o r   t a r-
gets that are overly ambitious can reduce the incentive effec t. 
m oreover, reliable statistical data to establish clear baselines 
and to provide information on past trends are of ten not avail-
abl e  (see  paragrap h 67 ). 

fu r t h e r m o re,   t h e   Co m m i s s i o n’s   d o c u m e nt at i o n   d i d   n o t   d e m-
o n s t r a t e   t h a t   t h e r e   h a d   b e e n   s u f f i c i e n t   a n a l y s i s   d u r i n g   t h e 
t a rg e t- s e t t i n g   p ro ce s s   o f   w h at   re fo r m s   a n d   a d d i t i o n a l   b u d g-
e t a r y   re s o u rc e s   wo u l d   b e   n e c e s s a r y   a n d   fe a s i b l e   i n   o rd e r   t o 
a c h i e ve   t h e   t a rg e t s.   si n ce   p ro p o s a l s   fo r   t a rg e t s   i n c re a s i n g l y 
com e  from  th e  co u nt r y  it s el f,   t h e  Comm is si on   h as   to  h old  i n-
d e p t h   d i a l o g u e   w i t h   t h e   n a t i o n a l   a u t h o r i t i e s   t o   e n s u r e   t h a t 
t a r g e t s   a r e   n o t   s e t   d e l i b e r a t e l y   l o w   o r   u n r e a l i s t i c a l l y   h i g h . 
howe ver, t here  i s insu ffic ient  exper tis e  for  th i s i n  many  Com -
mission delegations (see paragraph 74). in addition, occasion-
a l l y   t a r g e t s   w e r e   n o t   s e t   u n t i l   w e l l   i n t o   t h e   y e a r   f o r   w h i c h 
pe r fo r mance was b eing  m easure d.

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B oX   4

s ElEc tIo n   o f   co n dItIo n s

Good commission practice: n icaragua

The gbs programme in nicaragua focuses on rural areas and selected social indicators, private sector in-
dicators 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.

 ο

 ο

 ο

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 38 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 indica-
tors 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.

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

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63.  

i n   u g a n d a   h a l f   o f   t h e   g b s   t a rg e t s   re l a t i n g   t o   t h e   h e a l t h   s e c -
tor were set either below or much above the baseline without 
e x p l a n a t i o n .   i n   la o s   a n d   pa r a g u a y   a   n u m b e r   o f   t h e   t a r g e t s 
set  were  not  ver y  challenging,  sometimes  simply  being  set  at 
t h e   s a m e   l e ve l   a s   t h e   b a s e l i n e.   i n   n i c a ra g u a   t h e   g ove r n m e n t 
a c k n o w l e d g e d   t h a t   fo r   m a ny   t a r g e t s   t h e r e   w a s   n o   a d e q u a t e 
accompanying budget.

39  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.

64.   a fur ther factor influencing the incentive effec t of the variable 
tra nch e is t he p rop o r tio n o f th e  gbs programme allocated to 
it. The  Co mmissio n has no  c r iter ia for  de cid in g  on th e  a lloc a-
tion of funds between fixed and variable tranches, which leads 
to significant differences between regions and countries in the 
pro p o r t ions   a llo c ated 39.   i ndee d  the   mix   of  fixed  and   var i abl e 
tranches can also  var y  significant ly bet ween t wo consecutive 
programmes in the same countr y and without a clear explana -
t i o n   b e i n g   g i ve n   fo r   t h i s   c h a n g e.  T h e   Co m m i s s i o n   c o n s i d e r s 
t h at   t h e   p ro p o r t i o n   o f   g b s   a l l o c a te d   to   t h e   v a r i a b l e   t ra n c h e 
s h o u l d   b e   h i g h e r   i n   c o u n t r i e s   w h e r e   i t   h a s   m o r e   c o n c e r n s 
a b o u t   t h e i r   c o m m i t m e n t   t o   p o v e r t y   r e d u c t i o n   a n d   r e f o r m s . 
however, this approach is not refer red to in the Commission’s 
inte r na l g uide lin es o r individual program me  doc um ents.  fur-
t h e r m o r e ,   i n   a   s i g n i f i c a n t   n u m b e r   o f   t h e   g b s  p r o g r a m m e s , 
p a r t i c u l a r l y   i n   a s i a n   a n d   la t i n   a m e r i c a n   c o u n t r i e s,   v a r i a b l e 
tra nch es are  no t u sed.

65.  

s ome financing agreements also contain provisions to the ef -
fe c t   t h a t ,   w h e n   v a r i a b l e   t r a n c h e   p e r fo r m a n c e   i n d i c a t o r s   a re 
not achieved, the Commission may pay out undisbursed funds 
at  t he end of t he p ro gramme if n e w con dit ion s  are  me t.  such 
a   p o s s i b i l i t y   w a s   p rov i d e d   fo r   u n d e r   g b s  p ro gra m m e s   i n   b e -
nin, nicaragua and paraguay. in other cases undisbursed funds 
were reallocated to other Commission programmes or projec ts 
in  th e co unt r y.

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i t  i s  o F t e n  d i F F i c u l t  t o  a s s e s s  w h e t h e r  c o n d i t i o n s   
h a v e  B e e n  m e t  o r  n o t

66.  

T h e   g e n e r a l   c o n d i t i o n s   f o r   g b s  d i s b u r s e m e n t s   a r e   o f t e n 
v a g u e l y   d e f i n e d ,   b e i n g   b a s e d   o n  ‘s a t i s f a c t o r y ’  p e r f o r m a n c e 
b y   p a r t n e r   g o v e r n m e n t s   i n   i m p l e m e n t i n g   n a t i o n a l   d e ve l o p -
ment strategies, pfm reform and macroeconomic management. 
no  s pe cific   mil es to nes   or  ou tputs   a re  e st abli sh e d  to  se r ve   as 
cr iter ia fo r wh at co ns titu tes ‘sati sf ac tor y ’.  as obser ved by th e 
Cour t ’s annual repor ts on the ac tivities funded by the seventh, 
eighth, ninth and 10th edfs 40, the Commission often concludes 
t h a t   p r o g r e s s   o n   t h e   r e f o r m   o f   p f m   h a s   b e e n  ‘s a t i s f a c t o r y ’ 
w h i l e   h av i n g   o n l y   l i m i te d   e v i d e n ce   to   s u p p o r t   t h i s   p o s i t i o n . 
T h i s   a p p r o a c h   t e n d s   t o   r e f l e c t   t h e   C o m m i s s i o n’s   c o n c e r n   t o 
ensure the continuity of its programmes, although it should be 
ack nowledged that the Commission has improved its analysis 
in  th is area since t he s tar t  of t he  1 0 t h  e d f .

40  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.

67.   un re l i a b l e   d a t a   c a n   m a k e   i t   d i f f i c u l t   t o   a s s e s s   w h e t h e r   c o n -
d i t i o n s   b a s e d   o n   p e r f o r m a n c e   i n d i c a t o r   t a r g e t s   h a v e   b e e n 
a c h i e v e d   o r   n o t .   T h e   wo r l d   b a n k ’s   2 0 0 7   r e v i e w   o f  ‘r e s u l t s -
based national development strategies’ highlighted weak sta-
t i s t i c a l   s y s t e m s   a s   a   m a j o r   c h a l l e n g e   f a c e d   b y   n e a r l y   a l l   t h e 
6 2  c o u n t r i e s   i t   e x a m i n e d.  T h e   p r o b l e m   i s   a g g r a v a t e d   b y   t h e 
fact that the Commission sets its variable tranche per formance 
i n d i c a t o r   t a r g e t s   o n   a n   a n n u a l   b a s i s   a l t h o u g h   y e a r - o n - y e a r 
p ro g re s s   i n   s o m e   a re a s   c a n   o n l y   re a l i s t i c a l l y   b e   e x p e c t e d   i n 
ter ms of small percentage increases. such small increases are 
diff icul t  to  measu re rel iab ly.

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dIa loGuE  W It h   Pa r t nEr   co u n t rI Es   Is   n ot   u sEd  
to   It s   f u l l   PotEn tIa l

68.   one of the main benefits of budget suppor t is the increased op -
por tu nit ie s it  ca n give do no rs  for  dia log ue  wi th  g over nm ents 
on  nat io nal  p o l icies.   dial o gue  can  also  play  a  ver y   imp or tant 
rol e in he lp ing  to  ac hieve t he obje c ti ve s  of gbs programmes, 
s i n c e   i t   a l l ows   t h e   Co m m i s s i o n   t o   d i s c u s s   w i t h   g ove r n m e n t s 
the definition and implementation of the key polic y objec tives 
suppor ted by the programmes. dialogue is also intended to be 
a   k e y   p a r t   o f   t h e   Co m m i s s i o n’s   re s u l t s - o r i e n te d   a p p ro a c h   to 
b u d g e t   s u p p o r t   s i n ce   t h e   Co m m i s s i o n   u s e s   i t   i n   co n j u n c t i o n 
with the conditions and targets set to review the government ’s 
per formance. dialogue typically takes place both at the polic y 
level  and at t he  tec hn ical  level an d i s c ar r ie d out joi nt ly  w it h 
ot her  do no rs. 

69.  

The Cour t examined whether the Commission manages its dia-
l o g u e   w i t h   t h e   p a r t n e r   co u nt r y   i n   a   m a n n e r   t h at   co nt r i b u te s 
to  m eet ing  t he  exp ec ted  res ults   of  gbs   programme s.   for  t his 
p u r p o s e,   i t   e x a m i n e d   w h e t h e r   t h e   o b j e c t i ve s   a n d   m o d a l i t i e s 
o f   d i a l o g u e   w e r e   c l e a r l y   d e f i n e d   a n d   a p p r o p r i a t e ,   w h e t h e r 
t h e   C o m m i s s i o n   a c t i v e l y   p a r t i c i p a t e d   i n   t h e   d i a l o g u e   a t   a n 
a p p ro p r i ate   l e ve l   a n d   i n   a cco rd a n ce   w i t h   t h e   m o d a l i t i e s   l a i d 
down and whether the Commission’s contribution to dialogue 
h a s   a d e q u a t e l y   a d d r e s s e d   k e y   a s p e c t s   o f   p o v e r t y   r e d u c t i o n 
an d pfm.

t h e r e   i s  n o  a p p r o p r i a t e  F r a m e w o r k  t o  e n s u r e   
e F F e c t i v e  d i a l o g u e 

70.  

i n   m o s t   co u n t r i e s   w h e re   g b s  i s   p rov i d e d,   j o i n t   d o n o r   a gre e -
ments have been established between donors and with par tner 
cou nt r ies to  l ay dow n co mmon  pr i nc i ple s a nd  proce dure s  for 
c o n d u c t i n g   d i a l o g u e   a n d   t h e   C o m m i s s i o n   a c t i v e l y   s u p p o r t s 
and par ticipates in such arrangements. never theless the Com -
m i s s i o n   h a s   n o t   ye t   d e ve l o p e d   t h e   d e t a i l e d   g u i d a n ce   n e ce s-
sar y to help ensure that within such frameworks its staff make 
ful l  u se o f o p po r t unities for  dial ogue.

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71.  

72.  

Th e   Co m m i s s i o n’s   i n te r n a l   g u i d e l i n e s   p rov i d e   l i t t l e   i n fo r m a-
t i o n   o n   w h a t   t h e   o b j e c t i ve s   a n d   c o n t e n t   o f   d i a l o g u e   s h o u l d 
be or on how to under take and document dialogue at the vari-
ous stages of the programme c ycle. They do, however, require 
‘a n   a p p r o p r i a t e   d i a l o g u e   s t r a t e g y ’  t o   b e   p u t   i n   p l a c e   w h e n 
we a k n e s s e s   a f fe c t i n g   k e y   a s p e c t s   o f   t h e   g b s  p ro gra m m e   a re 
identified. in prac tice, such strategies have not been drawn up 
despite the useful role they could play in all gbs programmes 
in helping to systematically improve effec tive dialogue by fix-
ing clear objec tives and modalities and defining the necessar y 
sta ff reso urces  n eeded to  co nduc t t h e d ia log ue.

The extent to which gbs programmes have established a sound 
bas is  for  dialo g ue  has   var ied.  i n   laos   an d  vietn am  th e  objec -
t i ve s   a n d   m o d a l i t i e s   o f   d i a l o g u e   we re   c l e a r l y   l a i d   o u t   i n   t h e 
annual c ycle of the world bank-led pover t y reduc tion strategy 
pro gram mes  to   w hich  t he  Comm i ss ion   gbs  programm es  con -
t r i b u t e d,   w i t h   t h e   d i a l o g u e   fo c u s i n g   o n   re fo r m s   to   b e   i n t ro -
duced by the national governments. in contrast there was  little 
d e t a i l e d   i n f o r m a t i o n   i n   ug a n d a   a n d   pa r a g u a y   o n   w h a t   t h e 
s p e c i f i c   a i m s   o f   t h e   Co m m i s s i o n’s   d i a l o g u e   wo u l d   b e   d u r i n g 
the   cou rse  o f  th e  p ro gramme  an d  in   paraguay  t he  modalitie s 
t o   b e   a p p l i e d   t o   p u r s u e   t h e m   w e r e   a l s o   l e s s   c l e a r.   i n   b e n i n , 
signif icant  p ro gress  was made in  t h is  re spe c t in  t he  10 t h  e df 
com pa red to  th e ninth e df .

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t h e c o m m i s s i o n’s  i n v o l v e m e n t  i n  d i a l o g u e  v a r i e s   
B u t  i s  o F t e n  l i m i t e d

73.   g b s  p ro g r a m m e s   h a ve   b e e n   p a r t i c u l a r l y   i m p o r t a n t   i n   e n a b -
l i n g   t h e   C o m m i s s i o n   t o   c o n d u c t   a   d i a l o g u e   o n   t h e   n a t i o n a l 
b u d g e t   a n d   p fm  a n d   t h e   C o m m i s s i o n’s   c o n t r i b u t i o n   t o   g b s 
dialogue is generally more developed in this area. The results 
o f   p e fa   a s s e s s m e n t s   ( s e e   p a r a gr a p h   3 1 )   h ave   o f te n   p l aye d   a 
cat al yt ic ro l e in s t rengt henin g p fm dialogue.  i n  th e othe r ar-
eas on which gbs programme objec tives are typically focused, 
t h e   Co m m i s s i o n’s   d i a l o g u e   i s   i n   m a ny   c a s e s   l i m i te d   to   i s s u e s 
r e l a t i n g   t o   a s s e s s i n g   c o m p l i a n c e   w i t h   t h e   v a r i a b l e   t r a n c h e 
a n d   f i xe d   t r a n c h e   c o n d i t i o n s   o f   t h e   p r o g r a m m e   r a t h e r   t h a n 
addressing overall gover nment per for mance in the areas con-
c e r n e d.   a s   a   re s u l t ,   t h e   Co m m i s s i o n   o f t e n   d o e s   n o t   p l ay   t h e 
rol e  in   dialo g ue   that   coul d  be  ex pec ted,   give n   it s   si gni f icant 
financ ial  co nt r ib ut ion s ( see B ox  5) .

B oX   5

d Ia loGuE

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 govern-
ment. 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 d evelopment policy.

Weak commission practice: Paraguay 

The objective of the gbs programme in  paraguay is to support the implementation of the social pro-
tection 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 coor-
dination mechanisms such as working groups or joint annual reviews to discuss in detail the imple-
mentation 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 moni-
toring 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.

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41  see the Court’s special report 
no 10/2008 on eC development 

assistance to health services in 

sub-saharan africa, paragraphs 

18 and 41.

42  working groups monitor 
performance within sectors 

and consist of donors and 

representatives of the national 

authorities.

43  joint annual reviews 
are yearly reviews of the 

performance of the government 

by cooperation donors and 

the government of the partner 

country.

74.   a  k e y   f a c to r   a f fe c t i n g   t h e   q u a l i t y   o f   d i a l o g u e   i s   t h e   c a p a c i t y 
of the Commission staff involved. an impor tant reason for the 
Commission not having made full use of the oppor tunities for 
d i a l o g u e   p rov i d e d   b y   g b s   h a s   b e e n   i n s u f f i c i e n t   e x p e r t i s e   i n 
m a ny   Co m m i s s i o n   d e l e g a t i o n s   i n   t h e   p r i o r i t y   a re a s   c o ve re d 
by   t h e   g b s  p ro gra m m e   o b j e c t i ve s.   i n   i t s   2 0 0 7   an n u a l   r e p o r t 
o n   t h e   e d fs   ( p a ra gra p h   3 3 ) ,   t h e   Co u r t   i n d i c ate d   t h at  ‘ t h e   i n -
crease of budget suppor t … creates the need for specific sk ills 
a n d   k n o w l e d g e,   a n d   t h e   Co u r t   n o t e s   t h a t   e u ro p ea i d ’s   i n t e r -
n a l   a u d i t   C a p a b i l i t y   (i a C )   h a s   r e c o m m e n d e d   t h a t   a   h u m a n 
r e s o u r c e s   p o l i c y   i s   d e v e l o p e d   t o   i n c o r p o r a t e   o b j e c t i v e s   o n 
num be rs, sk il ls  and k now l edge of  budg et  s uppor t  s taf f ’.

75.   while the Commission has generally made pfm dialogue a pri -
o r i t y,   i t   h a s   b e e n   d i f f i c u l t   to   re c r u i t   p fm   s p e c i a l i s t s   b e c a u s e 
o f   t h e   re l a t i ve l y   l i m i t e d   e x p e r t i s e   av a i l a b l e   i n   t h i s   a re a .  T h e 
Commission has made effor ts to overcome this problem by de -
veloping 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 objec tives for these t wo 
a re a s   i n   i t s   g b s   p ro gra m m e s 4 1.  Th u s   t h e   d e l e g a t i o n   i n   b e n i n 
did have pfm specialists but had no staff specialised in health 
a n d   e d u c at i o n   w h i c h   m e a nt   i t   d i d   n o t   at te n d   t h e   h e a l t h   a n d 
e d u c at i o n   wo r k i n g   gro u p s 4 2  a n d   c a n   o n l y   to   a   l i m i te d   e x te nt 
par t icip ate in the jo int  an nu al rev i ews 43.

76.  

 The letters sent by the Commission to gover nments to infor m 
t h e m   w h a t   a m o u n t   f r o m   t h e   v a r i a b l e   t r a n c h e s   i s   t o   b e   d i s-
b u r s e d   a re   u s e d   a s   p a r t   o f   t h e   d i a l o g u e.  Th e   Co m m i s s i o n   i n-
cludes in these letters relevant messages on issues of concern 
regarding the continued eligibility of the gbs programme, the 
impleme nt atio n  of  t he  gbs  programme  an d  the   per for m ance 
of  th e g over nment  in the areas foc use d upon  by  th e  gbs pro -
gramme. in some countries, however, this oppor tunity was not 
use d at al l  (e.g.  p aragu ay) o r only par tially  (e. g. b en in) .

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44  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.

45  hereafter simply referred to as 
‘annual reports’.

46  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.

77.   despite the impor tance of dialogue, the Commission’s internal 
rep or t ing   o n  dial og ue  u nd er tak en   s pec i fi cally   i n  th e   contex t 
o f   i t s   g b s  p r o g r a m m e s   i s   l i m i t e d 4 4.   T h e   C o m m i s s i o n’s   i n t e r -
n a l   m a n a g e m e n t   re p o r t i n g   f ro m   d e l e g a t i o n s   t o   e u ro p e a i d ’s 
h e a d q u a r t e r s   i s   m a i n l y   l i m i t e d   t o   g e n e r a l   c o m m e n t s   o n   t h e 
s t a t e   o f   p o l i t i c a l   d i a l o g u e   c o n c e r n i n g   t h e   o v e r a l l   c o o p e r a -
tio n  p ro gramme. This   lac k  o f  in for mat ion   an d  t h e  abse n ce   of 
c l e a r   o b j e c t i v e s   f o r   t h e   C o m m i s s i o n’s   d i a l o g u e   o n   g b s   ( s e e 
paragraph 71), makes it difficult for the Commission to assess 
and demonstrate the ex tent to which dialogue has effec tively 
contr ib uted to gb s p rogramme  obje c t ive s.

t hE   co m mIs sIo n ’s   rE Po r tInG   to   E X tEr n a l  
s ta kEh o l dEr s  tEn d s  to   f o c u s   o n  t hE 
PotEn tIa l   B EnEfIt s   o f   G Bs   r at hEr  t h a n   
o n   rEs u lt s

78.  

T h e   m a i n   Co m m i s s i o n   d o c u m e n t s   fo r   re p o r t i n g   o n   i t s   e x t e r-
na l   co o p eratio n,   incl u ding  gbs,  are   its  annual  repor ts  on  t he 
‘e uropean Communit y ’s development and ex ter nal assistance 
policies and their implementation’ 45. i n 2008, the Commission 
a l s o   p u b l i s h e d   t w o   d o c u m e n t s   d e d i c a t e d   t o   t h e   s u b j e c t   o f 
b u d g e t   s u p p o r t ,   o n e   e n t i t l e d  ‘bu d g e t   s u p p o r t   —   a  q u e s t i o n 
of  mu tu al t rus t ’ and t he second ‘budg et  s uppor t  — The  e ffe c -
t i v e   w a y   t o   f i n a n c e   d e v e l o p m e n t ? ’.   i n   a d d i t i o n ,   i t   p r o d u c e s 
i n fo r m at i o n   n o te s   fo r   t h e   e d f   a n d   d e ve l o p m e nt   co o p e rat i o n 
i n s t r u m e n t   m a n a g e m e n t   c o m m i t t e e s   c o m p o s e d   o f   m e m b e r 
st ate  rep res ent at ives 46.

79.  

T h e   C o u r t   e x a m i n e d   t h e   C o m m i s s i o n’s   r e p o r t i n g   o n   i t s   g b s 
pro gram mes  to  as s ess  w het her  it  re por te d  in   a   c le ar,   exh aus-
tive and accurate way on them, in par ticular in relation to their 
e f fe c t i ve n e s s,   p o te n t i a l   b e n e f i t s   a n d   r i s k s,   a n d   i m p l e m e n t a -
tion challenges. The Cour t focused on the Commission’s annual 
rep or t s over t he p er io d 20 01 –09 .

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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47  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.

42

80.  

81. 

82.  

E X tEr n a l   rE Po r tInG   f o c u sEs   o n  t hE 
PotEn tIa l   B EnEfIt s   o f   G Bs

Th e   a n n u a l   re p o r t s   re g u l a r l y   co n t a i n   i n fo r m a t i o n   d e s c r i b i n g 
t h e   C o m m i s s i o n’s   p r o c e d u r e s   fo r   m a n a g i n g   b u d g e t   s u p p o r t 
an d  ne w  devel o p ments  in  th e  de si gn  of  t h e  i ns tr um ent.  The y 
a l s o   p rov i d e   d e t a i l s   o f   t h e   f u n d i n g   co m m i t te d   u n d e r   b u d g e t 
s u p p o r t .   i n   a d d i t i o n ,   t h e y   gi ve   co n s i d e ra b l e   cove ra g e   to   t h e 
pote nt ial  b enefits  of b u dget s up por t.

 The  Co mmissio n  has  reg ul ar ly   us ed   t h e  an nual  re por ts   to  ex-
plain  the  po tential   b enefits  of  budg e t  s uppor t   suc h   as   ali gn-
ment of assistance with national policies and systems, stronger 
ownership, improved oppor tunities for dialogue, better donor 
h a r m o n i s a t i o n ,   gre a t e r   a i d   p re d i c t a b i l i t y   a n d   l owe r   t r a n s a c -
t i o n   c o s t s .   ho w e v e r,   t h e   r e p o r t s   t e n d   n o t   t o   e m p h a s i s e   t h e 
fac t   t hat  the   ben efits   des cr ibed  are  on ly   potenti al.  i n   realit y, 
m a ny   o f   t h e m   c a n   at   m o s t   b e   o n l y   p a r t i a l l y   re a l i s e d   b e c a u s e 
t h e   n e c e s s a r y   c o n d i t i o n s   i n   t h e   b e n e f i c i a r y   c o u n t r y   a r e   n o t 
ye t   f u l l y   i n   p l a ce,   i n   p a r t i c u l a r   d u e   to   co nt i n u e d   we a k n e s s e s 
i n   n a t i o n a l   d e v e l o p m e n t   p l a n s   a n d   p u b l i c   f i n a n c e   m a n a g e -
m e n t   s y s t e m s   ( s e e   p a r a g r a p h s   2 6 ,   2 9   a n d   3 8 ) .   s i m i l a r l y   t h e 
C o m m i s s i o n   i t s e l f   o f t e n   d o e s   n o t   h a v e   t h e   c a p a c i t y   t o   f u l l y 
t a k e   a d v a n t a g e   o f   t h e   p o t e n t i a l   b e n e f i t s ,   n o t a b l y   w h e r e   i t s 
d e le g at ions  do  not  have s ufficient expe r ti se  to ma ke full us e 
of the improved oppor tunities for dialogue which budget sup -
por t  of fe rs (s ee p aragrap h  74 ).

 following the 2005 paris declaration on aid effec tiveness, the 
C o m m i s s i o n’s   a n n u a l   r e p o r t s   h a v e   e m p h a s i s e d   b u d g e t   s u p -
p o r t ’s   r o l e   i n   i n c r e a s i n g  ‘a i d   e f f e c t i v e n e s s ’ 4 7.   ho w e v e r,   t h e 
re p o r t s   d o   n o t   m a k e   a   c l e a r   d i s t i n c t i o n   b e t we e n   t h e  ‘a i d   e f -
fe c t i ve n e s s’  t a rg e te d   by   t h e   pa r i s   d e c l a r a t i o n   —   by   w h i c h   i s 
meant  imp roving  del iver y  of aid by followi n g th e  core  pr in c i-
ples of the paris declaration — and ‘aid effec tiveness’ in terms 
of  th e u lt imate  i mp ac t  o f th e ass i st an ce on  red uc i ng  pove r t y. 
u s i n g   b u d g e t   s u p p o r t   a s   a   m e a n s   t o   a d h e re   m o re   c l o s e l y   t o 
the principles of the paris declaration is no guarantee that the 
a i d   h a s   b e e n   e f fe c t i ve   i n   co nt r i b u t i n g   to   i m p rov i n g   t h e   l i ve s 
of  po o r pe op l e.

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43

83.  

84.  

i n   v i e w   o f   t h e   p o te nt i a l   ro l e   t h at   b u d g e t   s u p p o r t   co u l d   p l ay 
i n   d e l i ve r i n g   a i d   i n   l i n e   w i t h   t h e   p r i n c i p l e s   o f   t h e   pa r i s   d e c -
l a r a t i o n ,   t h e   eu ro p e a n   u n i o n   co m m i t te d   i t s e l f   t o   a   t a rg e t   o f 
channelling 50 % of its government-to - government assistance 
through countr y systems (see paragraph 7). moreover, the per-
ce nt ag e o f aid c han nel l ed through  bud ge t  s uppor t i s us e d a s 
a results indicator in the europea id annual work programmes. 
on this basis, an impor tant feature of the annual repor ts’ cov -
erage of budget suppor t is to highlight progress towards this 
quantitative target, although an increase in the use of budget 
suppor t does not necessarily mean an increase in its effec tive -
ne ss  in te r ms o f p over t y reduc tion .

E X tEr n a l   rE Po r tInG   G IvEs   lIt t lE   In f o r m atIo n  
o n   rIs k s ,  ImPlEmEn tatIo n   c h a l lEnG Es   a n d 
ac t ua l   Ef fEc tIvEnEs s

 Th e   a n n u a l   re p o r t s’  cove r a g e   o f   t h e   a c t u a l   re s u l t s   o f   b u d g e t 
s u p p o r t   i s   c o n s i d e r a b l y   l e s s   t h a n   t h e i r   c o m m e n t a r y   o n   i t s 
p o te n t i a l   b e n e f i t s   a n d   i n c re a s e d   u s a g e.  Th e   l a c k   o f   i n fo r m a-
t i o n   i n   t h e   a n n u a l   r e p o r t s   o n   t h e   r e s u l t s   o f   b u d g e t   s u p p o r t 
c o n t r a s t s   w i t h   t h e   i n f o r m a t i o n   o n   o t h e r   f o r m s   o f   a i d   w h i c h 
t h e   Co m m i s s i o n   o b t a i n s   f ro m   t h e  ‘r e s u l t s - o r i e n te d   m o n i to r-
in g s ystem’ it  has  devel o p ed to car r y  out  an nual a ss es sm ents 
o f   p ro j e c t s.  Th e   Co m m i s s i o n   h a s   n o   o t h e r   i n te r n a l   re p o r t i n g 
p r o c e d u r e s   f o r   s y s t e m a t i c a l l y   a s s e s s i n g   t h e   p o v e r t y   r e d u c -
tio n re sul ts  of  its  gb s p ro grammes  whic h could th e n  be us ed 
for ex ter nal repor ting pur poses. There is no equivalent to the 
d elegation annual pfm repor ts (see paragraph 31) for repor t -
i n g   o n   p r o g r e s s   i n   a c h i e v i n g   o b j e c t i v e s   r e l a t e d   t o   p o v e r t y 
re d u c t i o n .  Th e   s i x- m o n t h l y   e x te r n a l   a s s i s t a n ce   m a n a g e m e n t 
rep or t s (eamr ) pro du ced  by d eleg ations for  europe aid foc us 
on  im p l ement at ion  s tatu s rath er  t ha n  res ults. 

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44

85.  

86.  

87.  

The most substantial feedback related to the results of gbs was 
given in the 2007 annual repor t. This provided an over view of 
t h e   f i n d i n g s   o f   t h e   2 0 0 6   j o i n t   e v a l u a t i o n   o f   g b s ,   w h i c h   w a s 
the   f irs t  major   eval u atio n  of  gbs  c ar r ie d  out.  howe ver,  wh ile 
s e t t i n g   o u t   t h e   e v a l u a t i o n’s   a s s e s s m e n t   t h a t   g b s   h a d   h a d   a 
positive effec t on polic y and pfm processes, the annual repor t 
als o  noted  t hat  ‘mo s t  o f  t he  e ffe c t s  of  gbs  in puts  s o  far  have 
b e e n   o n   a c c e s s   t o   s e r v i c e s,   r a t h e r   t h a n   i n c o m e   p o ve r t y   a n d 
empowerment of the poor ’. in its 2009 annual repor t, the Com-
m i s s i o n   r e c o g n i s e d   t h e   l i m i t a t i o n s   o f   t h i s   e v a l u a t i o n   w h i c h 
‘fel l  sh o r t  o f eva l uat ing resu lts’.

i t  is   o f  co ncer n  t hat  there  is   no  e st ablis h ed   e va luat ion   m e t h-
o d o l o g y   r e s u l t i n g   i n   a   b o d y   o f   e v a l u a t i o n   w o r k   w h i c h   p r o -
vides evidence on whether, and in what circumstances, budget 
suppor t can make an effec tive contr ibution to pover t y reduc-
tion. The difficulties encountered by the 2006 evaluation were 
par t l y  l inke d  to  t he  fun dament al  cha lle ng e   i n   e val uat in g   t he 
effec tiveness of budget suppor t, which is how to attribute im -
provem ent s  in  develop ment  outcome s   s peci fi c ally   to  bud g et 
suppor t. This is because donor budget suppor t is merged with 
nat ion al   b udg ets,   and  therefore  can not   be   s eparately   i de nti-
f i e d ,   a n d   b e c a u s e   i m p r o v e d   o u t c o m e s   m a y   b e   d u e   t o   e x t e r -
n a l   f a c t o r s   a s   we l l   a s   t h e   g o ve r n m e n t   p ro g r a m m e s   t o   w h i c h 
budg et  su p por t co ntr ib utes. 

si n ce   t h e   2 0 0 6   j o i nt   e va l u at i o n ,   t h e   Co m m i s s i o n   h a s   b e e n   at 
t h e   f o r e f r o n t   o f   d o n o r   e f f o r t s   w i t h i n   t h e   f r a m e w o r k   o f   t h e 
d e v e l o p m e n t   a s s i s t a n c e   C o m m i t t e e   o f   t h e   o r g a n i s a t i o n   fo r 
eco no mic Co o pe ratio n and  d evelopment  evaluat ion  n et wor k 
to de vel o p a n imp roved evaluat ion  me th odolog y  w hi ch is  i n -
tended to better address the question of the impac t of budg -
e t   s u p p o r t .   a t   t h e   e n d   o f   2 0 0 9   t h r e e   p i l o t   e v a l u a t i o n s   w e r e 
launched at countr y level of which t wo were being led by th e 
Co mm issio n.

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88.   an impor tant intermediate objective of gbs, on which it would 
also be useful to obtain information, is to contribute to improv-
ing public finance management in par tner countries. ensuring 
that pfm systems effec tively transfer budgetar y resources for 
pro -poor expenditure is an essential par t of achieving overall 
pover t y reduc tion objec tives. however, although the Commis -
s i o n   h a s   d e ve l o p e d   a   s ys te m   o f   a n n u a l   i nte r n a l   re p o r t i n g   by 
d e l e g a t i o n s   o n   p fm  i s s u e s ,   t h e s e   r e p o r t s   d o   n o t   a s s e s s   t h e 
a c h i e ve m e nt   o f   t h e   p fm  o b j e c t i ve s   o f   g b s  p ro gra m m e s.  Th i s 
m e a n s   t h a t   t h e re   i s   a g a i n   l i t t l e   i n fo r m a t i o n   av a i l a b l e   fo r   e x -
t e r n a l   re p o r t i n g   o n   t h e   a c h i e ve m e n t   o f   g b s  p fm  o b j e c t i ve s, 
which explains why there is also limited coverage of this issue 
in  th e annu al re p or t s.

89.   a  c e n t r a l   r i s k   w i t h   b u d g e t   s u p p o r t ,   p a r t i c u l a r l y   i n   a   c o n t e x t 
of weak public finance management and of ten significant lev-
el s   of   co r r up t io n,   is   t h at   t h e  bu dg et  of   th e  re cip ie nt  co untr y 
w i l l   n o t   b e   u s e d   fo r   t h e   i n te n d e d   p u r p o s e   o f   p ove r t y   re d u c -
tion. however, the annual repor ts tend to give little attention 
to   t h i s   i s s u e.   i n d e e d   t h e   fo re wo rd   to   t h e   2 0 0 9   a n n u a l   re p o r t 
stated in reference to the largest beneficiaries of budget sup -
por t that they had ‘demonstrated the reliability of their public 
finances’. The annual repor ts again focus more on the potential 
be nefit s   o f  bu dget   su p p or t   for   de vel opin g   p fm  s ys tems  th an 
on the risk that weak pfm systems will lead to budget suppor t 
not  ac hieving it s  p over t y  reduc tion - re lated  obje c ti ve s. 

90.  

i n   a d d r e s s i n g   p fm  i s s u e s   i n   t h e   c o n t e x t   o f   b u d g e t   s u p p o r t , 
the  Co mmissio n’s  an nu al  repor t  h as  ma de  f req ue nt refe ren ce 
t o   t h e   d e v e l o p m e n t   o f   t h e   p e fa   f r a m e w o r k   a s   a   d i a g n o s t i c 
t o o l   f o r   p fm.   a s   a l r e a d y   n o t e d   ( s e e   p a r a g r a p h   3 1 ) ,   p e fa  i n -
deed plays a useful role in highlighting areas where countries 
need to improve pfm, and measuring those improvements over 
t i m e.   ho w e v e r,   a   m o r e   b a l a n c e d   p r e s e n t a t i o n   o f   p e fa’s   r o l e 
wo ul d  als o reco gnise it s limitat ion s a nd  t hat i t is  n ot in  i ts elf 
a r is k a ssess ment  to ol.

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91.  

92.  

T h e   C o m m i s s i o n’s   a n n u a l   r e p o r t s   h a v e   a l s o   n o t   a d d r e s s e d 
t h e   k e y   c h a l l e n g e s   i t   f a ce s   i n   i t s   m a n a g e m e n t   o f   g b s,   w h i c h 
a r e   r a i s e d   i n   t h i s   C o u r t ’s   r e p o r t   s u c h   a s   t h e   d i s a d v a n t a g e s 
a s   we l l   a s   t h e   a d v a n t a g e s   o f   t h e   Co m m i s s i o n’s   re s u l t s - b a s e d 
c o n d i t i o n s ,   t h e   c a p a c i t y   o f   i t s   s t a f f   t o   m a k e   f u l l   u s e   o f   t h e 
op p o r t unit ie s o ffered by  gb s for dialogue,  and t he relevan ce 
and effec tiveness of technical cooperation linked to gbs pro -
gram mes.

T h e   e u r o p e a n   pa r l i a m e n t   i n   i t s   d i s c h a r g e   r e p o r t   o n   t h e   e d f 
for  the   fina nc ial   year  2007  s tress ed   t he   n e ed   for   Commi ss i on 
re p o r t i n g   o n   b u d g e t   s u p p o r t   t o   b e   b a s e d   o n  ‘a n a l y t i c a l   a n d 
eva lu at ive and no t onl y d es cr ipt ive  i n for mat ion’ 48. m ore gen-
e r a l l y   i t   c a l l e d   f o r   t h e   C o m m i s s i o n   t o   b a s e   i t s   a p p r o a c h   o n 
‘realit y and conclusive evidence’ rather than ‘r hetor ic ’ 49. i n its 
fol low-up   re po r t   the  Com mis sion   un de r took   to  prov i de  more 
in - dep t h  coverage  o f  b u dget  suppor t   i ss ues   i n  fut ure  an n ual 
rep or t s.

48  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.

49  ibid., paragraph 50.

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ConClusions and 
reCommendaTions

47

o vEr a l l   co n c lu sIo n s

93.   pro v i d i n g   a i d   t h ro u g h   g b s  h a s   v a r i o u s   p o t e n t i a l   b e n e f i t s   i n 
t e r m s   o f   a i d   d e l i ve r y.   a s   w i t h   o t h e r   a i d   m o d a l i t i e s,   t h e   u l t i-
mate  imp ac t  o f  gb s  o n  p over t y   reduc tion   depen ds,   howe ve r, 
on the specific circumstances in each countr y. i t also depends 
on effec tive Commission management of its gbs programmes. 
The Cour t found that, whilst the Commission has made consid-
erable effor ts over the last decade to develop its approach to 
p rov i d i n g   a i d   t h ro u g h   g b s,   t h e re   a re   s t i l l   we a k n e s s e s   i n   t h e 
methodology and the management of gbs programmes in  aCp, 
latin  amer ican and asian countr ies, which are thus less likely 
to  reach t heir f ul l  p otential  ef fe c t ive ne s s.

50  department for international 
development — providing 

budget support to developing 

countries, report by the 

Comptroller and auditor 

general, 8 february 2008.

51  aid through budget 
support — The government’s 

and sida’s handling of a key type 

of development aid.

94.  

95.  

i t   m u s t   b e   a c k n o w l e d g e d   t h a t   t h e   C o m m i s s i o n’s   g b s  p r o -
grammes are designed and implemented in coordination with 
o t h e r   d o n o r s   a n d   t h at   m a ny   d e f i c i e n c i e s   fo u n d   by   t h e   Co u r t 
are not specific to the Commission. o ther supreme audit insti-
tu tio ns,  su ch  as  the  uk  nat iona l  audit  o ffice 50  an d  th e  swed -
i s h   na t i o n a l   a u d i t   o f f i c e 5 1,   h a v e   m a d e   s i m i l a r   o b s e r v a t i o n s 
con cer n ing   th e  man agement  of  gbs  by   their   don or   agen c ies. 
ho w e v e r,   t h e   C o m m i s s i o n   h a s   s o l e   r e s p o n s i b i l i t y   f o r   t a k i n g 
f i n a n c i n g   d e c i s i o n s   a n d   i s   a c c o u n t a b l e   t o   t h e   d i s c h a r g e   a u -
tho r it y  for the  management of its  gb s program me s.

Th e Co mmissio n is  aware of th e ne e d to im prove  i ts  man age -
m e n t   o f   g b s  a n d   l a u n c h e d,   a t   t h e   e n d   o f   2 0 0 9 ,   a   re v i s i o n   o f 
i t s   i n te r n a l   g u i d e l i n e s   w h i c h   a i m s   to   a d d re s s   m o s t   o f   t h e   i s-
s u e s   r a i s e d   b y   t h e   C o u r t .   a  k e y   a s p e c t   t h a t   i s   n o t   c u r r e n t l y 
b e i n g   a d d re s s e d   i s   t h e   n e e d   fo r   t h e   Co m m i s s i o n   t o   i m p ro ve 
its repor ting to ex ternal stakeholders. whilst it is encouraging 
t h a t   t h e   Co m m i s s i o n   h a s   e m b a r k e d   o n   t h i s   re v i s i o n   p ro ce s s, 
whether it is ultimately effec tive will depend on results. i t re -
mains a challenge for the Commission to draw up appropr iate 
guidelines and have them applied effec tively and consistently 
by   a l l   Co m m i s s i o n   s t a f f.   i t   w i l l   re q u i re   a   s t ro n g   co m m i t m e n t 
at all levels, a clear timetable, fur ther effor ts to train the staff 
concerned, strengthened suppor t to delegations and thorough 
mo nito r ing  o f co mp l iance w ith  th e  re vi se d g uid el in es.

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sP EcIfIc   co n c lu sIo n s   a n d 
rEco m mEn d atIo n s

96.   whilst a positive feature is the systematic inclusion of macro -
economic and pfm objectives and some improvement has been 
n o te d   i n   m o re   re ce nt   p ro gra m m e s   co n ce r n i n g   t h e   d e f i n i t i o n 
of objec tives, objec tives are insufficiently tailored to the spe -
c i f i c   c i r c u m s t a n c e s   o f   t h e   c o u n t r y   a n d   o f t e n   n o t   p r e c i s e.   i n 
a d d i t i o n ,   t h e   o b j e c t i v e s   d o   n o t   t a k e   i n t o   a c c o u n t   t h e   s t a f f 
reso urces avail ab l e to  d el eg ations.

r Ec o m mEn d atIo n   1

s ElEc tIo n   a n d   f o r m u l atIo n   o f   oBjEc tIvEs   a n d 

E X P Ec tEd   rEs u lt s   o f   G Bs

  Pr oGr a m mEs

T h e  Co mm issi o n  sh o u l d  t ail o r   th e   o bj e c ti ve s  o f  i t s  b u d g e t 
s u p p o r t   p r o g r a m m e   t o   t h e   s p e c i f i c   c i r c u m s t a n c e s   o f   t h e 
p ar t n e r co untr y.  i n d o in g  s o, th e  Co mm issi o n  sh o ul d:

(a) 

e nsu r e   co m p l e m e nt a r i t y   b e t we e n   g bs  a n d   o th e r   Co m -
m issi o n  su p p o r t  p ro g r amm e s in   th e co untr y ;

(b)  

m o re   f o cus  o n  sp e ci f i c   are as  w i thin  th e   ove r all  n ati o n -
a l   p r i o r i t i e s   w h e r e   t h e   Co m m i s s i o n   c a n   h ave   t h e   m o s t 
v alu e a d d e d;

(c) 

s e t o ut o bj e c ti ves that are su f f icie ntl y p re cis e, m easur-
a b l e   a n d   t i m e - b o u n d   t o   a l l o w   m o n i t o r i n g   o f   p r o g r e s s 
an d th e ass e ssm e nt  o f a chi eve m e nt s;

(d) 

c l e a r l y   s p e l l   o u t   t h e   l o g i c   o f   i n t e r v e n t i o n   b y   m a k i n g 
e x p licit th e link b e t we e n th e o bj e c ti ves an d th e d esign 
o f th e  v ar i o us co mp o n e nt s o f  th e g bs p ro g r amm e.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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97.  

The Commission’s dynamic inter pretation of eligibilit y condi -
t i o n s   i nvo l ve s   h i g h   r i s k s   t h a t   f u n d i n g   i s   n o t   u s e d   e f f i c i e n t l y 
a n d   e f fe c t i ve l y   by   t h e   p a r t n e r   co u n t r i e s.   howe ve r,   t h e   Co m -
mission’s risk management framework for its gbs programmes 
is no t wel l devel op ed and  r is ks a re n ot  man ag ed  in  an  appro -
pr iate manne r.

r Ec o m mEn d atIo n   2

m a n a G EmEn t   o f   t hE   m aIn   rIs k s   t o   t hE  

Ef fEc tIvEnEs s   o f   G Bs

  Pr oGr a m mEs

T h e Co mmissio n sh o ul d s tre n g th e n it s r isk mana g e m e nt to 
give eu f unds b et ter prote c tion agains t leak age, was te and 
in e f f i ci e n c y. i n d o in g s o, th e Co m m issi o n sh o u l d:

(a) 

p e r f o r m   a   s t r u c t u r e d   a n d   e x p l i c i t   a s s e s s m e n t   o f   f i d u -
c i a r y   a n d   d e v e l o p m e n t   r i s k s   a t   t h e   o u t s e t   o f   t h e   g b s 
pro gramm es and up date it re gularly during pro gr amm e 
imp l e m e nt ati o n;

(b)  

as  a b asis f o r f i du ciar y  r isk ass e ssm e nt :

 ο

m a k e   b e t te r   u s e   o f   i n fo r m at i o n   a l re a d y   ava i l a b l e, 
n o t a b l y   p e fa   a n d   C p i a   a s s e s s m e n t s,   i n fo r m a t i o n 
on budget implementation, repor ts by supreme au-
d i t   i n s t i t u t i o n s   a n d   p a r l i a m e nt s,   a n d   i n fo r m at i o n 
fro m  civil  soc ie t y organisat ions ;

 ο

m a k e   g r e a t e r   u s e   o f   o t h e r   t o o l s   s u c h   a s   p u b l i c 
ex p e n d i t u re   t ra c k i n g   s u r ve ys,   p u b l i c   ex p e n d i t u re 
rev ie ws  and re p or ts  on  cor rupti on ;

(c) 

a s   a   b a s is   f o r   d e ve l o p m e nt   r is k   a s s e s s m e n t ,   p e r f o r m   a 
thorough assessment of the relevance and cre dibilit y of 
t h e   n a t i o n a l   d e ve l o p m e n t   s t r a t e g y   i n c l u d i n g   i t s   c r e d -
i b ili t y   i n   re sp e c t   o f   i t s   li n k s   w i th   t h e   b u d g e t   a n d   m ai n 
s e c to r p o li ci e s;

(d) 

b uil d into th e co n di ti o ns , dial o gu e an d c ap a ci t y - b uil d -
i n g   s u p p o r t   a n   a p p r o p r i a te   r a n g e   o f   p r e c is e   m e a s u r e s 
to   m o ni to r  an d  re du ce  th e   m ain   r isk s   i d e nti f i e d  w i thin 
a   sp e ci f i c   t i m e f r a m e,   i n clu d i n g   sh o r te r- te r m   m e asu r e s 
w h e re pfm s y s te ms  are p ar ti cular l y  we ak .

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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98.  

The design and implementation of the four components of gbs 
p ro g r a m m e s,   i . e.   f u n d i n g,   c a p a c i t y - b u i l d i n g   s u p p o r t ,   c o n d i -
tio ns and dial o gu e,  do  no t ensure  th at t he ir  potenti al im pa c t 
is o pt imise d.

(a ) 

di s b u r s e m e n t s   a r e   m a d e   i n   a   p r e d i c t a b l e   m a n n e r   a n d   i n 
al ignm ent   w ith   t he  countr ies’  bu dge t ar y   s yste ms,   but  t h e 
r a t i o n a l e   fo l l o we d   t o   d e t e r m i n e   t h e   a m o u n t s   t o   b e   c o m -
mit te d to  individu al  g bs programme s  is  no t c le ar.

(b) 

Ca pac it y-bu il ding  su pp or t   is  u se ful  in   s tren gt he ni n g  p fm 
b u t   i s   o f t e n   n o t   b a s e d   o n   a n   a p p r o p r i a t e   a s s e s s m e n t   o f 
p r i o r i t y   n e e d s   a n d   i s   o n l y   p a r t i a l l y   d e l i v e r e d   b e c a u s e   o f 
d e l ays   i n   i m p l e m e nt at i o n .   howe ve r,   i n   2 0 0 8   t h e   Co m m i s -
s i o n   a d o p te d   a   s t rate g y   t h at   a i m e d   to   i m p rove   t h e   e f fe c -
t ivene ss o f its c ap acit y-buildin g  suppo r t.

(c) 

(d ) 

T h e   C o m m i s s i o n’s   a p p r o a c h   t o   p e r f o r m a n c e - b a s e d   c o n -
d i t i o n s   f o r   d i s b u r s i n g   g b s  r e f l e c t s   t h e   g r o w i n g   e m p h a -
s i s   i n   d e ve l o p m e n t   co o p e ra t i o n   o n   m a n a gi n g   fo r   re s u l t s. 
ho w e v e r,   t h e   i n c e n t i v e   e f f e c t   i s   u n l i k e l y   t o   b e   a c h i e v e d 
b e c a u s e   o f   s e r i o u s   s h o r tco m i n g s   i n   t h e   i n ce nt i ve   m e c h a-
n i s m s ,   p a r t i c u l a r l y   i n   r e l a t i o n   t o   v a r i a b l e   t r a n c h e s ,   a n d 
the difficulties in assessing whether conditions have been 
me t  or n ot.

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 ef -
fec t with regard to strengthening dialogue on the national 
budget and pfm, but the absence of a dialogue strategy for 
each programme and insufficient exper tise in delegations 
a r e   k e y   l i m i t i n g   f a c t o r s   w i t h   r e g a r d   t o   g r e a t e r   a n d   m o r e 
ef fe c t ive invo lvement in dialog ue.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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r Ec o m mEn d atIo n   3
f In a n cIa l   rEs o u r cEs

T h e Co m missi o n sh o ul d d e te r min e th e am o unt s to b e all o -
c ate d to  in di v i du al  g bs p ro gr amm e s in  a b e t te r  sup p o r te d 
an d  m o re tr ansp are nt m ann e r.  T h e  Co mm issi o n  sh o ul d:

(a) 

m a k e   a   s t r u c t u r e d   a s s e s s m e n t   w e i g h i n g   u p   r i s k s   a n d 
b e n e f i t s;

(b)  

b e   a b l e   to   d e m o ns t r ate   th at   th e   am o u nt   o f   f u n ds   a ll o -
c a te d   to   t h e   g bs  p r o g r a m m e   is   a p p r o p r i a te   i n   v i e w   o f 
th e obje c tives and th e f r am ewor k for d ealing w ith r isk s 
an d  b e n e f i t s .

r Ec o m mEn d atIo n   4

c aP a cIt y -BuIl dInG

  s uP Po r t

i n   a c c o r d a n c e   w i t h   i t s   r e c e n t   n e w   s t r a t e g y   f o r   t e c h n i c a l 
c o o p e r a t i o n ,   t h e   C o m m i s s i o n   s h o u l d   f o c u s   i t s   c a p a c i t y -
b u i l d i n g   su p p o r t   o n   p r i o r i t y   n e e ds .   in   d o i n g   s o,   t h e   Co m -
m issi o n  sh o ul d:

(a) 

c a r r y   o u t ,   w i t h   t h e   p a r t n e r   c o u n t r y   a n d   i n   c o o r d i n a -
t i o n   w i t h   o t h e r   d o n o r s ,   a n   a s s e s s m e n t   o f   i t s   p r i o r i t y 
ca pa cit y-b uil ding needs;

(b) 

fo c u s   o n   t h e   a re a s   w h e re   i t s   s u p p o r t   c a n   p rov i d e   m o s t 
valu e add ed;

(c ) 

g i v e   s u f f i c i e n t   a t t e n t i o n   t o   t h e   n e e d s   f o r   s u p p o r t   t o 
a c c o u n t a b i l i t y   a n d   a n t i - c o r r u p t i o n   m e c h a n i s m s   o f   t h e 
p ar tn er cou nt r y,  as  wel l as to are as  ot h er   th an  p fm.

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r Ec o m mEn d atIo n   5
c o n dItIo n s

T he Commission should s trengthen it s management of p er-
f o r m an ce - re l ate d   co n di ti o ns .  i n   d o in g  s o,   th e  Co mm issi o n 
sh o ul d:

(a) 

mak e a fo r m alised ap p raisal of  th e a ppropr i ate propor-
t ion  of  fixe d an d var iab le tranc he s in  v ie w of  th e coun-
tr y ’s specific circumstances as well as the objectives and 
de sign  of  t he gb s p ro gram me ;

(b) 

as regards general eligibilit y conditions, set out in each 
financing agreement a clear assessment framework that 
d e f i n e s   t h e   c o n d i t i o n s,   t i m e t a b l e,   s o u rc e   o f   e v i d e n c e, 
a s   w e l l   a s   c r i t e r i a   a g a i n s t   w h i c h   s a t i s f a c t o r y   p r o g r e s s 
has  to  be  asse ssed;

(c ) 

a s   re g a rd s   s p e c i f i c   c o n d i t i o n s   fo r   t h e   d i s b u r s e m e n t   o f 
var ia bl e t ranc he s :

 ο

 ο

set out clear indicators, targets, calculation meth -
o ds a nd ve r ification source s;

s e t   o u t   c h a l l e n g i n g   b u t   r e a l i s t i c   t a r g e t s   u s i n g 
baselines, past trends and adequate assessment of 
t h e   ex p e c te d   i m p a c t s   o f   t h e   a c t i o n s   a n d   b u d g e t s 
p l anned  to  ach ieve  t hese targe ts ;

(d) 

suppor t disbursement decisions with a more struc tured 
a n d   fo r m a l i s e d   d e m o n s t rat i o n   o f   s at i s f a c to r y   p ro gre s s 
du r in g  t he   pe r io d  con cer n ed  by   c le ar ly   s e tti n g  t he   c r i-
t e r i a   a g a i n s t   w h i c h   p r o g r e s s   w a s   t o   b e   a s s e s s e d ,   t h e 
p ro g re s s   m a d e   a n d   t h e   re a s o n s   w hy   p ro g re s s   m a y   n o t 
have  b een accord in g to  plan .

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r Ec o m mEn d atIo n   6
d Ia l oGuE

T h e   C o m m i s s i o n   s h o u l d   s t r e n g t h e n   i t s   a p p r o a c h   t o   d i a -
l o gu e. i n d o in g  s o, th e  Co mm issi o n  sh o ul d:

(a) 

define for each gbs programme a dialogue strategy that 
s e t s   o u t   t h e   o b j e c t i ve s,   c o n t e n t   a n d   m o d a l i t i e s   o f   t h e 
Co mmiss io n’s invo l veme nt  in  dialog ue ;

(b) 

ensure that the necessar y exper tise is available to allow 
the delegation to be effectively involved in the dialogue 
for t he p r ior it y areas  on  whic h t h e  gbs programme  ob -
jec tive s focu s;

(c ) 

rep o r t to ex te r nal  st ak eholder s on  th e di al og ue  und er-
t aken  and it s ac hieveme nt s.

99.  

T h e   C o m m i s s i o n’s   r e p o r t i n g   t o   e x t e r n a l   s t a k e h o l d e r s   t e n d s 
to   fo c u s   o n   t h e   p o te n t i a l   b e n e f i t s   o f   g b s  r a t h e r   t h a n   o n   t h e 
i m p l e m e n t a t i o n   a n d   a c h i e v e m e n t s   o f   i t s   p r o g r a m m e s .   on e 
reaso n for t his  is that  t he Co mmi s si on h as  not  se t up i nte r n al 
r e p o r t i n g   p r o c e d u r e s   f o r   s y s t e m a t i c a l l y   a s s e s s i n g   p r o g r e s s 
against all the stated objec tives of its gbs programmes which 
c o u l d   t h e n   b e   u s e d   a s   a   s o u rc e   o f   i n fo r m a t i o n   fo r   re p o r t i n g 
t o   e x t e r n a l   s t a k e h o l d e r s .   fu r t h e r m o r e ,   i n   t h e   a b s e n c e   o f   a 
suit ab l e eva lu atio n methodology, t he  Commi ss i on,  lik e  oth er 
donors, cannot yet demonstrate the effec tiveness of gbs pro -
gram mes.

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r Ec o m mEn d atIo n   7

r E Po r tInG   o n   WhE t hEr   G Bs   Is   mE E tInG    

It s   oBjEc tIvEs

T h e   C o m m i s s i o n   s h o u l d   i m p r o v e   i t s   r e p o r t i n g   o n   t h e   e f -
f e c t i ve n e s s   o f   i t s   g bs  p r o g r a m m e s .   i n   d o i n g   s o,   t h e   Co m -
m issi o n  sh o ul d:

(a) 

systematically monitor progress against all stated inter-
mediate and ultimate objec tives of the gbs programme 
a n d   d e v e l o p   t h e   i n t e r n a l   r e p o r t i n g   s y s t e m   a c c o rd i n g -
l y ;

(b) 

pursue its effor ts, together with its par tners, to develop 
a   s u i t a b l e   a n d   g e n e r a l l y   a c c e p t e d   e v a l u a t i o n   m e t h o d-
o lo g y  th at   all ows   th e  impac t  of  gbs  programmes   to  be 
as ses sed ;

(c ) 

clearly distinguish in its repor ting to external stakehold-
e r s   b e t we e n  ‘a i d   e f fe c t i ve n e s s’  i n   te r m s   o f   t h e   d e l i ve r y 
p ro ce s s e s   o f   a i d   a n d  ‘a i d   e f fe c t i ve n e s s’  i n   te r m s   o f   t h e 
ultimate impac t of the assistance in improving pfm sys -
te ms an d redu cin g p over t y ;

(d) 

p r o v i d e   t o   e x t e r n a l   s t a k e h o l d e r s   a   c o m p l e t e ,   c l e a r 
a n d   a c c u r a t e   p i c t u r e   o f   i t s   g b s   p r o g r a m m e s ,   n o t a b l y 
i n   r e s p e c t   o f   t h e   r i s k s   i nv o l v e d ,   i n c l u d i n g   c o r r u p t i o n , 
progress made in the implementation of the programmes 
and  th e achievement of  obje c t ive s.

This r eport was adopted by Chamber iii , headed by m r j an kin ŠT, 
member of the Court of auditors, in luxembourg at its meeting of 
16 n ovember 2010.

For the Court of Auditors

vítor m anuel da silva C aldeira
President

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a n nE X   I

Bu dG E t   s uP Po r t   co m mIt mEn t s   a n d   Pr oGr a m mInG   In   acP 
co u n t rI Es   u n tIl  31.12 .2 00 9

Code

Country

BB

BF

BI

BJ

BS

Barbados

Burkina Faso

Burundi

Benin

Bahamas

9th EDF commitments 

10th EDF programming 

10th EDF commitments 

GBS

SBS

GBS

SBS

GBS

SBS

10 500 000

8 300 000

197 000 000

2 000 000

320 000 000

75 000 000

325 620 000

50 000 000

84 120 000

90 000 000

68 700 000

92 580 000

97 000 000

100 000 000

75 600 000

76 900 000

25 000 000

BW

Botswana

51 416 000

4 200 000

34 000 000

62 000 000

10 000 000

60 000 000

22 620 000

29 210 000

Belize

Congo (RDC)

Central African 
Republic

Congo (Brazzaville)

Cape Verde

Dominica

106 000 000

18 530 000

30 450 000

21 225 000

33 000 000

16 300 000

11 500 000

10 780 000

4 600 000

Dominican Republic

38 000 000

48 200 000

91 300 000

53 700 000

Ethiopia

Falkland Islands

Gabon

Grenada

Ghana

Gambia

Guinea-Bissau

Guyana

Haiti

Jamaica

Kenya

Comoros

Saint Lucia

Liberia

Lesotho

58 273 703

162 464 024

195 000 000

200 000 000

200 000 000

4 547 116

10 000 000

5 000 000

5 290 000

10 000 000

111 000 000

5 000 000

175 000 000

83 000 000

216 020 000

8 000 000

18 100 000

41 196 379

36 200 000

22 000 000

32 000 000

32 950 000

30 200 000

14 800 000

48 000 000

10 000 000

64 580 000

32 550 000

12 250 000

60 500 000

33 000 000

41 900 000

33 000 000

125 000 000

126 800 000

66 400 000

16 465 000

3 500 000

20 200 000

53 800 000

6 900 000

7 270 000

27 000 000

26 000 000

BZ

CD

CF

CG

CV

DM

DO

ET

FK

GA

GD

GH

GM

GW

GY

HT

JM

KE

KM

LC

LR

LS

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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a n nEX   I

Code

Country

9th EDF commitments 

10th EDF programming 

10th EDF commitments 

GBS

SBS

GBS

SBS

GBS

SBS

MG

ML

MR

MS

MU

Madagascar

129 500 000

170 000 000

160 000 000

90 000 000

Mali

Mauritania

Montserrat

Mauritius

156 530 000

87 000 000

150 000 000

106 500 000

155 700 000

38 000 000

29 000 000

17 200 000

28 552 531

44 357 000

43 500 000

44 990 000

16 600 000

MW

Malawi

85 500 000

175 000 000

60 000 000

123 890 000

MZ

NA

NC

NE

PM

RW

SC

SH

SL

SN

ST

TC

TD

TG

TT

TZ

UG

VC

VU

WS

ZM

Mozambique

149 922 000

92 700 000

311 000 000

181 200 000

315 110 000

30 000 000

Namibia

New Caledonia

Niger

Saint Pierre and 
Miquelon

Rwanda

Seychelles

Saint Helena

Sierra Leone

Senegal

São Tomé and 
Príncipe

Turks and Caicos 
Islands

Chad

Togo

85 000 000

21 500 000

60 200 000

181 000 000

150 000 000

135 000 000

93 000 000

15 000 000

12 810 000

101 764 000

175 000 000

35 000 000

184 440 000

78 800 000

7 500 000

15 500 000

15 590 000

90 000 000

10 000 000

64 820 000

133 000 000

25 000 000

75 000 000

13 300 000

32 000 000

32 500 000

62 000 000

53 000 000

14 635 000

23 800 000

5 000 000

Trinidad and Tobago

27 300 000

24 300 000

Tanzania

Uganda

Saint Vincent and  
the Grenadines

Vanuatu

Samoa

Zambia

201 000 000

43 500 000

305 000 000

139 000 000

314 840 000

70 000 000

92 000 000

17 500 000

175 000 000

55 000 000

175 000 000

6 200 000

4 750 000

8 600 000

179 000 000

93 000 000

232 000 000

136 000 000

255 000 000

35 000 000

25 500 000

15 300 000

TOTAL

2 481 678 612

988 079 139

3 636 200 000

1 914 900 000

2 900 150 000

648 200 000

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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57

a n nE X   I I

Bu dG E t   s uP Po r t   co m mIt mEn t s   In   a sIa n   a n d   l atIn   a mErIc a n  
co u n t r I E s   u n t I l  31.1 2.2 00 9 

Code

Country

GBS

SBS

TOTAL

BD

BO

EC

GT

HN

ID

IN

KG

KH

LA

NI

NP

PE

PH

PK

PY

SV

TJ

UY

VN

Bangladesh

Bolivia

Ecuador

Guatemala

Honduras

Indonesia

India

Kyrgyzstan

Cambodia

Laos

Nicaragua

Nepal

Peru

Philippines

Pakistan

Paraguay

El Salvador

Tajikistan

Uruguay

Vietnam

TOTAL

0

0

0

0

60 500 000

0

0

0

23 100 000

16 200 000

75 500 000

0

0

0

0

24 000 000

37 000 000

0

0

102 000 000

338 300 000

105 000 000

96 500 000

54 600 000

33 800 000

34 000 000

145 000 000

340 000 000

65 000 000

30 000 000

0

92 900 000

38 000 000

60 800 000

59 000 000

109 000 000

54 000 000

37 100 000

43 000 000

8 000 000

16 000 000

1 421 700 000

105 000 000

96 500 000

54 600 000

33 800 000

94 500 000

145 000 000

340 000 000

65 000 000

53 100 000

16 200 000

168 400 000

38 000 000

60 800 000

59 000 000

109 000 000

78 000 000

74 100 000

43 000 000

8 000 000

118 000 000

1 760 000 000

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

58

replY of The 
Commission 

I II .
Th e   Co m m i s s i o n   t a k e s   c a re   t o   e n s u re   t h a t 
it follows oeCd  g ood prac tice guidance on 
bu d g e t   su p p o r t   i n   o r d e r   t o   m a x i m i s e   t h e 
p o te nt i a l   b e n e f i t s   o f   b u d g e t   s u p p o r t.  Th i s 
entails joint monitoring arrangements, har-
monised repor ting, the streamlining of dis-
b u r s e m e n t   c o n d i t i o n s   a n d   t h e   a l i g n m e n t 
of disbursements and reviews to fit in with 
n a t i o n a l   b u d g e t a r y   t i m e t a b l e s .   T h e   p r i n -
c i p l e s   u n d e r l y i n g   t h i s   a p p ro a c h   a re   f i r m l y 
e n s h r i n e d   i n   t h e   pa r i s   a n d   ac c r a   d e c l a r a -
t i o n s   o n   a i d   ef f e c t i v e n e s s   t o   w h i c h   t h e 
Commission fully subscr ibes. a key issue in 
this respec t is the impor tance of delivering 
budget suppor t in a timely and predic table 
m a n n e r   s o   t h a t   c o u n t r i e s   c a n   re a d i l y   p l a n 
t h e   s c a l i n g - u p   o f   p o v e r t y - f o c u s e d   p u b l i c 
expen diture programm es. 

T h e   Co m m i s s i o n   i s   c o n t i n u a l l y   s t r i v i n g   t o 
i m p r o v e   t h e   e f f e c t i v e n e s s   o f   d e s i g n   a n d 
m a n a g e m e n t   o f   i t s   g e n e r a l   b u d g e t   s u p -
p o r t   p ro gra m m e s.   pa r t i c u l a r   e m p h a s i s   h a s 
b e e n   p l a c e d   o n   t h e   n e e d   t o   d e m o n s t r a t e 
a n d   m o n i to r   e l i gi b i l i t y   fo r   b u d g e t   s u p p o r t 
t h r o u g h   a   f o c u s   o n   m a c r o e c o n o m i c   p o l i -
c i e s ,   i m p r o v i n g   p u b l i c   f i n a n c i a l   m a n a g e -
ment and credible pover t y reduc tion strat -
e g i e s.   fo l l o w i n g   t h e   Co u r t ’s   o b s e r v a t i o n s 
i n   i t s   a n n u a l   re p o r t s,   t h e   Co m m i s s i o n   h a s 
r e c e n t l y   d e e p e n e d   i t s   a s s e s s m e n t s   o f   e l i -
gibilit y through a more struc tured and for -
malise d process.

EXEcutIvE  summary

I.
The Commission welcomes the Cour t ’s per-
f o r m a n c e   a u d i t   o n   b u d g e t   s u p p o r t   a s   a 
useful input  into  the fur t her ref i n e me nt  of 
i t s   a p p ro a c h   to   p rov i d i n g   a i d   t h ro u g h   t h i s 
i n s t r u m e n t .   T h e   e u r o p e a n   C o n s e n s u s   o n 
d evelopme nt   po lic y  (a dop ted  by   the  euro -
p e a n   pa r l i a m e nt,   t h e   Co u n c i l,   t h e   m e m b e r 
states and t he  Commis s ion  in 20 0 5 ) es tab -
l i s h e d   b u d g e t   s u p p o r t   a s   t h e   e u r o p e a n 
un i o n’s   p re fe r re d   a i d   m o d a l i t y.  Th i s   p o l i c y 
wa s   a d o p te d   fo l l ow i n g   s u b s t a nt i a l   ex p e r i -
ence in implementing budget suppor t pro -
g r a m m e s   h i g h l i g h t i n g   t h e   p o t e n t i a l   b e n -
e f i t s   o f   b u d g e t   s u p p o r t   i n   co nt r i b u t i n g   to 
national policies for pover t y reduc tion and 
e co n o m i c   re fo r m .  Th e   p ro s p e c t   o f   i n c re a s -
i n g   t h e   r e l a t i v e   s h a r e   o f   a i d   p r o v i d e d 
t h r o u g h   b u d g e t   s u p p o r t   i s   a n   a n s w e r   t o 
t h e   l i m i t a t i o n s   m e t   by   t h e   p ro j e c t   m o d a l -
i t y   i n   s u p p o r t i n g   t h e   s t r u c t u r a l   r e f o r m s . 
a s   t h e   C o u r t   r i g h t l y   n o t e s ,   b y   w o r k i n g 
t h ro u g h   n at i o n a l   s ys te m s,   b u d g e t   s u p p o r t 
t e n d s   t o   s t r e n g t h e n   o w n e r s h i p ,   s u p p o r t 
t h e   r o l e   o f   n a t i o n a l   i n s t i t u t i o n s ,   f o s t e r 
d o m e s t i c   a cco u nt a b i l i t y   a n d   f a c i l i t ate   t h e 
ach ieveme nt  of devel op ment  ob je c ti ve s.

T h e   C o m m i s s i o n ’ s   g b s  p r o g r a m m e s 
e x i s t   i n   t h e i r   c u r r e n t   f o r m   s i n c e   t h e 
2 0 0 0   c o m m u n i c a t i o n  
‘ C o m m u n i t y 
s u p p o r t   f o r   e c o n o m i c   r e f o r m   p r o -
g r a m m e s   a n d   s t r u c t u r a l   a d j u s t m e n t : 
r e v i e w   a n d   p r o s p e c t s ’  ( C o m( 2 0 0 0 )   5 8 ) .  
T h e   C o m m i s s i o n   i n t e n d s   t o   u p d a t e   i t s 
b u d g e t   s u p p o r t   p o l i c y   i n   2 0 1 1   f o l l o w i n g 
a   p u b l i c   c o n s u l t a t i o n   b a s e d   o n   a   gr e e n 
pa p e r   t h a t   a i m s   t o   c o l l e c t   v i e w s   a n d   e v i -
d e n c e   t h a t   c o u l d   c o n t r i b u t e   t o   i m p rov i n g 
i t s   a p p r o a c h   i n   t h e   f u t u r e   a n d   i t s   c u r r e n t 
wo r k   w i t h   m e m b e r   s t a t e s   t o w a rd s   a   m o re 
c o o r d i n a t e d   a p p r o a c h   t o   e u  b u d g e t   s u p -
por t.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

5959

replY of The 
Commission 

vI I .
Th e   Co m m i s s i o n   a i m s   to   p rov i d e   c a p a c i t y-
b u i l d i n g   s u p p o r t   t o   a c c o m p a n y   b u d g e t 
suppor t programmes  wit h a view to e nsu r-
i n g   re l e va n ce   a n d   e f fe c t i ve n e s s.   a  n u m b e r 
o f   i m p o r t a n t   s u c c e s s e s   h a v e   b e e n   n o t e d 
i n   k e y   p o l i c y   a r e a s   r e l a t e d   t o   s u p p o r t i n g 
d o m e s t i c   a cco u nt a b i l i t y,   p ove r t y   m o n i to r-
i n g   s y s t e m s   a n d   p u b l i c   f i n a n c i a l   m a n a g e -
m e n t .   C l o s e r   a t t e n t i o n   t o   d e s i g n   a n d   a n 
u n d e r s t a n d i n g   o f   t h e   i n s t i t u t i o n a l   s e t t i n g 
i s   e s s e n t i a l   t o   a c h i e v i n g   s u s t a i n a b l e   a n d 
c o n s i s t e n t   r e s u l t s   i n   d e l i v e r i n g   t e c h n i c a l 
co o p e rat i o n .   fo r   t h i s   re a s o n ,   t h e   Co m m i s -
s i o n   h a s   re ce nt l y   e s t a b l i s h e d   i t s   b a c k b o n e 
strategy on Technical Cooperation which is 
i n c re a s i n g l y   a p p l i e d   a n d   s e t s   o u t   a   f ra m e -
wo r k   fo r   a s s e s s m e n t   a n d   i d e n t i f i c a t i o n   o f 
t h e   n e e d s .   i n   a d d i t i o n ,   c a p a c i t y - b u i l d i n g 
s u p p o r t   i n c l u d i n g   t o   s u p re m e   a u d i t   i n s t i -
t u t i o n s   a n d   p a r l i a m e n t s   o r   i n   p o v e r t y 
monitor ing is frequently provided through 
separate but complement ar y  programme s.

vI I I.
T h e   C o m m i s s i o n   h a s   i n t r o d u c e d   r e s u l t -
b a s e d   c o n d i t i o n s   i n   b u d g e t   s u p p o r t   a n d 
h a s   i n t e g r a t e d   i m p o r t a n t   l e s s o n s   l e a r n e d 
o v e r   t h e   y e a r s .   T h i s   a p p r o a c h   h a s   b e e n 
c r u c i a l   i n   e n s u r i n g   a   s t r o n g e r   f o c u s   o n 
o u tco m e s   i n   g b s  p e r fo r m a n ce   m o n i to r i n g 
i n   co u nt r i e s   a n d   h a s   o f te n   b e e n   a cco m p a-
n i e d   by   s u p p o r t   to   s t re n g t h e n   we a k n e s s e s 
in statistical systems. i t is currently review-
i n g   i t s   ex p e r i e n ce,   i n c l u d i n g   t h e   ex te nt   to 
w h i c h   c o u n t r i e s   f i n d   r e s u l t - b a s e d   c o n d i -
tions an effec tive incentive to per form bet-
te r,   t h ro u g h   t h e   co n s u l t at i o n   gre e n   pa p e r 
on the future of eu budget suppor t.  i n this 
c o n t e x t   t h e   gr e e n   p a p e r   a i m s   t o   e s t a b -
l i s h   h ow   co n d i t i o n s   c a n   b e s t   co nt r i b u te   to 
p o l i c y   d i a l o g u e   a n d   p ro m o t e   a n d   c a p t u re 
progress in par tner countries’ development 
results.

Iv.
T h e   g e n e r a l   a n d   s p e c i f i c   o b j e c t i v e s   o f 
t h e   Co m m i s s i o n’s   g b s  p ro gra m m e s   d e r i ve 
direc tly from the objec tives of the national 
development and pover t y reduc tion strate -
gies which they are designed to suppor t. i n 
co u n t r i e s   w h e re   s o c i a l   s e c to r s   we re   a   s i g -
n i f i c a n t   c o m p o n e n t   o f   t h e   p ove r t y   re d u c -
t i o n   s t r a t e g i e s,   t h i s   h a s   b e e n   re f l e c t e d   i n 
g b s  p ro gra m m e s.  Th e   Co m m i s s i o n’s   i nte n -
t i o n   i s   to   s e t   o u t   a   m o re   p re c i s e   i n te r ve n -
t i o n   l o g i c   fo r   g b s  p ro g r a m m e s   w h i c h   w i l l 
p r o v i d e   a   c l e a r e r   a r t i c u l a t i o n   b e t w e e n 
g e n e r a l   a n d   s p e c i f i c   o b j e c t i v e s   a n d   w i l l 
ensure a more precise definition of specific 
objec tives.

v.
T h e   C o m m i s s i o n   i s   s t r e n g t h e n i n g   i t s   r i s k 
m a n a g e m e n t   f r a m e w o r k   i n   p a r t i c u l a r   i n 
t h e   c o n t e x t   o f   i t s   r e v i s i o n   o f   t h e   b u d g e t 
s u p p o r t   g u i d e l i n e s .   T h e   C o m m i s s i o n 
a l r e a d y   e m p l o y s   a   n u m b e r   o f   i m p o r t a n t 
r isk mitigation measures in the design and 
implementation of its budget suppor t pro -
g r a m m e s .   w h e r e   t h e   C o m m i s s i o n   n o t e s 
that progress is insufficient, disbursements 
are withheld until credible reassurances or 
mea su res  have b een es t ab lished.

vI.
Th e   g b s  e nve l o p e   i s   e s t a b l i s h e d   p r i m a r i l y 
by the assessment of the expec ted benefits 
and adapted in the light of the assessment 
o f   r i s k .   T h e   C o m m i s s i o n   i s   r e v i e w i n g   t h e 
c r i t e r i a   t h a t   i n fo r m   d e c i s i o n s   o n   a m o u n t s 
p r o g r a m m e d   fo r   b u d g e t   s u p p o r t   t h r o u g h 
the consultation based on the green paper 
w i t h   a   v i e w   t o   i n t r o d u c i n g   a   m o r e   s t r u c -
tured appro ac h.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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60

replY of The 
Commission 

i t   i s   ex p e c te d   t h at   a s   e va l u at i o n s   p ro gre s s 
t h e y   w i l l   i n c r e a s i n g l y   f e e d   i n t o   t h e   C o m -
m i s s i o n’s   a n n u a l   r e p o r t s   o n   t h e   m a n a g e -
m e n t   o f   e x t e r n a l   a s s i s t a n c e.   i n   t h e   m e a n -
t i m e ,   t h e   C o m m i s s i o n   h a s   a l r e a d y   t a k e n 
s t e p s   t o   b o l s t e r   t h e   c o v e r a g e   o f   b u d g e t 
s u p p o r t   i n   i t s   2 0 1 0   a n n u a l   r e p o r t   a n d 
through additional countr y infor mation on 
budget suppor t provided to m ember states 
and the european par liament. The Commis-
s i o n   i s   re a d y   to   f u r t h e r   d e ve l o p   i t s   re p o r t-
ing on budget suppor t in the light of feed -
back f rom  s takeholder s.

XI.
T h e   C o m m i s s i o n   a p p r e c i a t e s   t h e   C o u r t ’s 
r e c o m m e n d a t i o n s   i n   t h e   c o n t e x t   o f   g b s 
p r o g r a m m e s ,   b o t h   f r o m   r e c e n t   a n n u a l 
r e p o r t s   a n d   t h i s   s p e c i a l   r e p o r t ,   a n d   w i l l 
u s e   t h e m   a s   a n   i n p u t   to   re f i n e   a n d   d e e p e n 
the scope of its methodological guidelines 
for g ene ral budg et suppor t. 

IX.
po l i c y   d i a l o g u e   i s   c e n t r a l   t o   a n y   g e n e r a l 
b u d g e t   s u p p o r t   p r o g r a m m e .   T h i s   i s   t y p i -
c a l l y   b a s e d   o n   a   m u l t i - d o n o r   f ra m e wo r k   i n 
which the Commission is ac tively engaged. 
a  m o re   s t rate gi c   a p p ro a c h   to   t h e   m a n a g e -
m e n t   a n d   d o c u m e n t a t i o n   o f   p o l i c y   d i a -
l o g u e ,   a l o n g   w i t h   c o n t i n u e d   a t t e n t i o n   t o 
t r a i n i n g ,   w i l l   f u r t h e r   e n h a n c e   t h e   e f f e c -
tiveness of dialogue. i n the contex t of both 
t h e   gr e e n   p a p e r   a n d   i n   o n g o i n g   d i s c u s -
sions with eu  m ember states, the Commis-
s i o n   i s   i n   t h e   p ro ce s s   o f   re f l e c t i n g   o n   h ow 
to   o p t i m i s e   t h e   p o te nt i a l   i m p a c t   o f   p o l i c y 
d i a l o g u e   i n   t h e   co ntex t   o f   g e n e ra l   b u d g e t 
suppor t p rogram mes.

X.
The Commissio n p ub l ish es a w ide  ran ge  of 
re p o r t i n g   cove r i n g   b u d g e t   s u p p o r t   i s s u e s 
s u c h   a s   t h e   a n n u a l   r e p o r t   o n   e x t e r n a l 
a s s i s t a n ce,   co u n t r y   f i c h e s   o n   b u d g e t   s u p -
p o r t   s e n t   t o   m e m b e r   s t a t e s   a n d   t h e   eu ro -
p e a n   pa r l i a m e nt,   co u nt r y   e va l u at i o n s   a n d, 
i n   aCp  c o u n t r i e s,   t h e   j o i n t   a n n u a l   re p o r t s 
on  th e imp l ementat io n of t he Csp. 

Th e   Co m m i s s i o n   i s   n o t   a l o n e   i n   f a c i n g   t h e 
i m p o r t a nt   c h a l l e n g e   o f   re p o r t i n g   co m p re -
hensively on the impac t of general budget 
s u p p o r t .   ne ve r t h e l e s s   t h e   s t ro n g   d e m a n d 
from ex ternal stakeholders for such repor t -
i n g   i s   r e c o g n i s e d .   T h e   C o m m i s s i o n   t a k e s 
t h e s e   c h a l l e n g e s   s e r i o u s l y   a n d   i s   wo r k i n g 
to   d e ve l o p   m o re   i n fo r m at i ve   re p o r t i n g   o n 
th e result s o f its gbs p rogramm e s.

T h e   Co m m i s s i o n   h a s   t a k e n   t h e   l e a d e r s h i p 
i n   d e ve l o p i n g   a n   e va l u at i o n   m e t h o d o l o g y 
w i t h   t h e   o eCd/da C   w h i c h   c l e a r l y   s e t s   o u t 
t h e   m a i n   c h a n n e l s   t h ro u g h   w h i c h   b u d g e t 
suppor t co nt r ib utes to  p over t y  re du c ti on .

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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6161

replY of The 
Commission 

IntroductIon

oBsErvatIons

6.
s t r u c t u r a l   a d j u s t m e n t   s u p p o r t   w a s   p r o -
v i d e d   i n   d i f f e r e n t   w a y s   u n d e r   p r e v i o u s 
edfs. The current Commission  gbs is based 
o n   t h e   c o m m u n i c a t i o n  ‘ C o m m u n i t y   s u p -
por t for economic refor m programmes and 
s t r u c t u r a l   a d j u s t m e n t :   r e v i e w   a n d   p r o s -
pec ts’ (Com(2000) 58 of 4.2.2000) and sub -
sequ ent gu idel ines.

1 7.
Th e   g e n e ra l   a n d   s p e c i f i c   o b j e c t i ve s   o f   t h e 
Commission’s gbs programmes are der ived 
direc tly from the objec tives of the national 
d e v e l o p m e n t   s t r a t e g i e s   w h i c h   t h e y   a r e 
designed to suppor t. where these are pov-
e r t y   re d u c t i o n   s t r a te gi e s   t h a t   gi ve   p ro m i -
n e n c e   t o   t h e   s o c i a l   s e c t o r s ,   t h e s e   h a v e 
been  reflec ted in g bs program me s. 

8.
T h e   e u r o p e a n   c o n s e n s u s   e n s h r i n e d   t h e 
o b j e c t i v e   t o   i n c r e a s e   t h e   u s e   o f   b u d g e t 
s u p p o r t,   w h e re   c i rc u m s t a n ce s   p e r m i t,   a s   a 
means to strengthen ownership, to suppor t 
p a r t n e r s’  n at i o n a l   a cco u nt a b i l i t y   a n d   p ro -
cedures, to finance national pover t y reduc-
t i o n   s t r a t e g i e s   ( i n c l u d i n g   o p e r a t i n g   c o s t s 
o f   h e a l t h   a n d   e d u c a t i o n   b u d g e t s )   a n d   t o 
p r o m o t e   s o u n d   a n d   t r a n s p a r e n t   m a n a g e -
ment  of p ub lic  finances.

9.
g e n e r a l   b u d g e t   s u p p o r t   e n c o u r a g e s   t h e 
i d e n t i f i c a t i o n   o f   t h e   p o l i c y   a n d   i n s t i t u -
t i o n a l   co n s t ra i nt s   to   t h e   e f fe c t i ve   d e l i ve r y 
o f   t h e   p a r t n e r   g o v e r n m e n t s’  f u n c t i o n s .   i t 
also aims at contributing to the progressive 
r e m o v a l   o f   t h e s e   c o n s t r a i n t s   a n d   f o c u s e s 
o n   o v e r a l l   c o u n t r y   o u t c o m e s ,   r a t h e r   t h a n 
on  specific and l imited o ut pu ts.

T h e   C o m m i s s i o n’s   i n t e n t i o n   i s   t o   b e t t e r 
t a i l o r   o b j e c t i ve s   t o   t h e   p a r t i c u l a r   c i rc u m -
sta nces  of  t he count r y.

1 8.
T h e   C o m m i s s i o n   i s   e n c o u r a g e d   b y   t h e 
C o u r t ’s   r e c o g n i t i o n   t h a t   t h e   s y s t e m a t i c 
i n c l u s i o n   o f   m a c r o e c o n o m i c   a n d   p f m 
o b j e c t i v e s   i s   a   p o s i t i v e   f e a t u r e .   g b s  p r o -
gramme objec tives should be der ived from 
n at i o n a l   p r i o r i t i e s.  Th i s   i s   t h e   c a s e   i n   l a o s 
w h e re   i n t e r n a l   a u d i t   w a s   n o t   g o ve r n m e n t 
p fm  to p   p r i o r i t y   a n d   t h e   fo c u s   i s   o n   o t h e r 
c r i t i c a l   a r e a s   o f   p f m  r e f o r m   w h e r e   t h e 
Co m m i s s i o n   a n d   o t h e r   d o n o r s   a re   p rov i d -
ing suppor t. as regards n icaragua, the gbs 
f i n a n c i n g   a gre e m e nt   d e s c r i b e s   p fm  we a k -
n e s s e s   a n d   t h e   m a i n   c o r r e c t i v e   m e a s u r e s 
taken by the gover nment. progress on pfm 
r e fo r m   s p e c i f i c   o b j e c t i v e s   d e f i n e d   b y   t h e 
g ove r n m e nt   a n d   g b s  d o n o r s   i n   t h e   f ra m e -
wo r k   o f   a   j o i n t   f i n a n c i n g   a g re e m e n t   ( j fa) 
f o r   t h e   p r o v i s i o n   o f   g e n e r a l   b u d g e t   s u p -
p o r t   w a s   m o n i t o r e d   t h r o u g h   a   p e r f o r m -
ance assessment framework (paf). The con -
d i t i o n s   s e t   i n   t h e   f i n a n c i n g   a gre e m e nt   fo r 
the release of the gbs programme tranches 
e x p l i c i t l y   r e f e r   t o   b o t h   t h e   j fa  a n d   t h e 
paf. 

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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replY of The 
Commission 

2 0.
g e n e r a l   b u d g e t   s u p p o r t   ( g b s)   b y   d e f i n i -
t i o n   d o e s   n o t   a i m   t o   s u p p o r t   a   s p e c i f i c 
s e c t o r,   b u t   r a t h e r   a i m s   a t   p ro v i d i n g   a d d i -
t i o n a l   d i s c r e t i o n a r y   r e s o u r c e s   t o   s u p p o r t 
m a c r o e c o n o m i c   s t a b i l i t y,   p u b l i c   f i n a n c i a l 
m a n a g e m e n t   a n d   t o   e n h a n c e   t h e   p r o s -
p e c t s   o f   d e l i ve r i n g   i t s   p u b l i c   e x p e n d i t u re 
p r o g r a m m e s   a c r o s s   t h e   f u l l   r a n g e   o f   i t s 
d e ve l o p m e nt   p o l i c i e s.  i n   a   l i m i te d   n u m b e r 
o f   c a s e s   ( Ta n z a n i a   a n d   d o m i n i c a n   r e p u b -
l i c   u n d e r   t h e   n i n t h   e d f  a n d   Z a m b i a   a n d 
d o m i n i c a n   r e p u b l i c   u n d e r   t h e   1 0 t h   e d f) 
t h e   s p e c i f i c at i o n   o f   t h e   p ove r t y   re d u c t i o n 
g b s  o b j e c t i v e s   i n c l u d e s   o n e   s o c i a l   s e c t o r 
that is also a focal sec tor. while it has been 
t h e   C o m m i s s i o n’s   a p p r o a c h   t o   e m p h a s i s e 
social sec tors in the definition of the objec -
t i ve s   i n   t h e   d e s i gn   o f   i t s   g b s  p ro gra m m e s, 
implementation has never theless taken full 
account of progress across the entire range 
o f   p ove r t y   i n d i c ato r s   i n   t h e   co u nt r y ’s   p e r -
for man ce assessm ent framewor k . 

2 1.
Th e   Co m m i s s i o n   co n s i d e r s   t h at   i t s   co o rd i-
n a t i o n   w i t h   o t h e r   g b s   p r o v i d e r s   i n   m o s t 
c a s e s   i s   a d v a n c e d   a n d   s t r u c t u r e d .   T h e 
C o m m i s s i o n   a c t i v e l y   c o n t r i b u t e s   t o   t h e 
p r o c e s s   i n v o l v i n g   p a r t n e r   c o u n t r i e s   a n d 
g b s   d o n o r s   t h a t   l e a d s   to   t h e   d e f i n i t i o n   o f 
c o u n t r y - s p e c i f i c   p e r fo r m a n c e   a s s e s s m e n t 
f ra m e wo r k s.  Th e   Co m m i s s i o n   i s   co m m i t te d 
t o   t h e   2 0 0 7   e u   C o d e   o f   C o n d u c t   o n   C o m -
p l e m e n t a r i t y   a n d   d i v i s i o n   o f   l a b o u r   i n 
d e ve l o p m e nt   po l i c y   a n d   i nte n d s   to   e n s u re 
t h a t   g b s  o b j e c t i v e s   a r e   c o n s i s t e n t   w i t h 
t h i s   c o m m i t m e n t .   T h e   C o m m i s s i o n   c o n -
s i d e r s   t h a t   t h e   q u e s t i o n   o f   t h e   e x t e n t   t o 
which gbs programmes should have sec to -
ral obj ec t ives sh ould be fur the r ex plored.

a s   r e g a r d s   p a r a g u a y,   t h e   d i s b u r s e m e n t 
co n d i t i o n s   a l s o   i n c l u d e   a   l a rg e   n u m b e r   o f 
pfm -related criteria. The Commission, how -
e v e r,   a g r e e s   t h a t   p f m  o b j e c t i v e s ,   w h i c h 
c a n   b e   re l ate d   to   d i s b u r s e m e nt   co n d i t i o n s 
and indicators, can be more specific and is 
addressing this in the revision of its guide -
lin es.

19.
T h e   C o m m i s s i o n   i s   a w a r e   o f   t h e   s t r o n g e r 
fo c u s   o n   grow t h   a n d   i n f r a s t r u c t u re   i s s u e s 
in most recent national development strat -
egies compared to the ones of the last dec-
a d e.   i n   t h i s   co ntex t,   s u s t a i n a b l e   grow t h   i s 
i n d i c a t e d   a s   a   k e y   g l o b a l   o b j e c t i ve   i n   t h e 
inter vention logic in the Commission’s gbs 
g u i d e l i n e s   a n d   i s   a l s o   e x p l i c i t l y   e m p h a -
s i s e d   i n   a   n u m b e r   o f   m o r e   r e c e n t   g b s 
p r o g r a m m e s .   e v e n   w h e r e   g r o w t h - r e l a t e d 
i s s u e s   h a v e   n o t   b e e n   e x p l i c i t l y   i d e n t i f i e d 
a s   s p e c i f i c   o b j e c t i ve s   i n   g b s  p ro gra m m e s, 
they are t ypically addressed in the contex t 
o f   t h e   o v e r a l l   a s s e s s m e n t   o f   t h e   n a t i o n a l 
s t r a te g y   w h i c h   i s   m a d e   a t   t h e   t i m e   o f   fo r -
m u l a t i o n   a n d   b e f o r e   e a c h   d i s b u r s e m e n t 
through an assessment of progress against 
pa f  i n d i c a t o r s .   i n   t h e   c a s e   o f   ug a n d a , 
therefore, while growth-related issues have 
n o t   b e e n   ex p l i c i t l y   i d e nt i f i e d   a s   a   s p e c i f i c 
objec tive of the programme, these are nev -
er theless captured in the paf and assessed 
b y   t h e   Co m m i s s i o n   b e fo re   e a c h   d i s b u r s e -
m e n t .   T h e   r e v i s i o n   t o   t h e   i n t e r v e n t i o n 
l o g i c   i n   t h e   g b s  g u i d e l i n e s   w i l l   s e e k   t o 
clar ify the definition of specific objec tives. 
i t   i s   a nt i c i p ate d   t h at   t h i s   w i l l   b e   i n fo r m e d 
by the recently established budget suppor t 
evaluatio n met hodo l og y.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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22.
T h e   a r t i c u l a t i o n   o f   s p e c i f i c   o b j e c t i v e s   i n 
finan cing  agre e ments  w il l b e ma d e  cl earer 
a n d   m o r e   d e t a i l e d .   i n   a d d i t i o n ,   t h e   C o m -
m i s s i o n   w i l l   e s t a b l i s h   a   f r a m e w o r k   f o r 
assessing progress to be achieved over the 
lifetime o f a g en eral  b u dget p ro gramm e.

23.
T h e   C o m m i s s i o n   w e l c o m e s   t h e   a c k n o w l -
e d g e m e n t   o f   t h e   i m p r o v e d   c l a r i t y   a n d 
struc ture of 10th edf financing agreements 
w h i c h   a l s o   r e f l e c t s   t h e   C o u r t ’s   o b s e r v a -
tions in the 2008 and 2009 das repor ts and 
wi ll  fur ther   d evel op   this   ap p roac h   th ereby 
allowing it  to  be g eneral is ed.

23.  (a)
T h e   C o m m i s s i o n   i s   r e f i n i n g   i t s   g u i d a n c e 
to   p rov i d e   a   c l e a re r   f ra m e wo r k   fo r   a s s e s s -
i n g   t h e   re l e va n ce   a n d   c re d i b i l i t y   o f   d e ve l -
o p m e n t   s t r a t e g i e s   a n d   p f m  r e f o r m   p r o -
grammes.

23.  (b)
T h e   Co m m i s s i o n   h a s   r e c e n t l y   ( ju n e   2 0 1 0 ) 
established a struc tured approach to iden -
t i f y i n g   k e y   o b j e c t i v e s   a n d   m o n i t o r i n g 
p r o g r e s s   i n   p f m  r e f o r m s .   i t   i s   e x p l o r i n g 
h o w   t o   e x t e n d   t h i s   a p p r o a c h   t o   p o v e r t y 
reduc t ion st rategies.

6363

replY of The 
Commission 

B ox 1   – s elec ting  and  for mulat in g 
ob jec ti ves
weak Commission prac tice : n ic aragua

The gbs programme in n icaragua was con -
c e i v e d   t o   s u p p o r t   t h e   o b j e c t i v e s   o f   t h e 
n at i o n a l   d e ve l o p m e nt   p l a n   o f   t h e   g ove r n -
m e n t ,   w i t h   a n   e m p h a s i s   o n   i t s   r u r a l   c o m -
ponents. The rural focus of the programme 
i s   r e f l e c t e d   i n   t h e   i n d i c a t o r s   s e l e c t e d , 
w h i c h   r e l a t e   t o   k e y   a s p e c t s   i n   r e l a t i o n   t o 
the objec tives/pr ior ities of the plan. These 
include child malnutr ition, access to dr ink-
able water, access to the public healthcare 
s ys te m   a n d   a cce s s   to   l a n d,   i nve s t m e n t s   i n 
r u ra l   a re a s   a n d   t h e   d e ce nt ra l i s at i o n   o f   t h e 
public expe ndit ure. 

T h e   o b j e c t i v e s   r e l a t i n g   t o   p f m  i m p r o v e -
ment were defined by the gover nment and 
g b s  d o n o r s   i n   t h e   f r a m e w o r k   o f   a   j o i n t 
f i n a n c i n g   a g r e e m e n t   f o r   t h e   p r o v i s i o n   o f 
g b s,   i n c l u d i n g   a   p e r fo r m a n c e   a s s e s s m e n t 
f r a m e w o r k .   T h e   c o n d i t i o n s   s e l e c t e d   f o r 
t h e   r e l e a s e   o f   t h e   p r o g r a m m e’s   t r a n c h e s , 
w h i c h   e x p l i c i t l y   re fe r   t o   b o t h   t h e   j fa  a n d 
t h e   pa f.   T h e   C o m m i s s i o n   a g r e e s   t h a t   t h e 
l i n k   b e t we e n   o b j e c t i ve s,   ex p e c te d   re s u l t s, 
i n d i c a t o r s   a n d   d i s b u r s e m e n t   c o n d i t i o n s 
could be better ar ticulated and is address-
in g th is in t he revision  of its  gui d eli ne s.

2 6.
T h e   d y n a m i c   a p p ro a c h   t a k e n   b y   t h e   Co m-
m i s s i o n   i s   u s e d   by   t h e   m a j o r i t y   o f   g e n e ra l 
b u d g e t   s u p p o r t   p r o v i d e r s   i n c l u d i n g   t h e 
i m f,   w o r l d   ba n k   a n d   e u  m e m b e r   s t a t e s 
providin g ge neral budge t suppo r t.

2 7.
T h e   r i s k   o f   n o n - u t i l i s a t i o n   o f   b u d g e t   s u p -
p o r t   re s o u rce s   i s   a   s y n t h e s i s   o f   t h e   r i s k   o f 
n o n - c o m p l i a n c e   w i t h   t h e   t h re e   e l i g i b i l i t y 
c r i t e r i a   fo r   t h e   u s e   o f   t h e   i n s t r u m e n t .  Th e 
C o m m i s s i o n   w i l l   d e v e l o p   i t s   r i s k   a s s e s s -
m e nt   a n d   ex te n d   i t   b e yo n d   i t s   c u r re nt   u s e 
in  the  edf program min g phase.

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replY of The 
Commission 

3 2.
T h e   m e t h o d o l o g i e s   o f   t h e   u k  a n d   fr a n c e 
a r e   b a s e d   o n   t h e   s a m e   p e fa   a s s e s s m e n t s 
t h a t   t h e   Co m m i s s i o n   u s e s.  T h e re   i s   t h e re -
fo re   n o   s i gn i f i c a nt   d i f fe re n ce   i n   t h e   i n fo r -
m a t i o n   c o n t e n t   o f   t h e   eC ,   u k  o r   f r e n c h 
p f m   a s s e s s m e n t s .   T h e   o n l y   m a j o r   d i f f e r -
e n c e   l i e s   i n   t h e   u s e   o f   t h e   p e fa  i n   t h e   u k 
and french approach to develop an explicit 
j udg ement of fiduciar y  r isk .

The Commission is also fur ther developing 
i t s   r i s k   a s s e s s m e n t   f r a m e w o r k .   i t   i s   a l s o 
m a k i n g   m o r e   s y s t e m a t i c   u s e   o f   d o m e s t i c 
supreme audit institution repor ts in assess-
i n g   p f m  s y s t e m s ,   a s   e x p l i c i t l y   a d d r e s s e d 
i n   t h e   re v i s e d   g u i d a n c e   o n   p fm  re p o r t i n g 
issued in  june 2 0 10.

3 3.
The Commission agrees to promote greater 
u s e   o f   t h e   t o o l s   a v a i l a b l e   t o   c o m p l e m e n t 
a n d   d e e p e n   t h e   a s s e s s m e n t s   m a d e   u s i n g 
the inter nationally recognised pefa frame -
wor k . 

The Commission’s revised guidance on pfm 
r e p o r t i n g   w h i c h   w a s   i s s u e d   i n   ju n e   2 0 1 0 
explicitly requires repor ting on cor ruption 
and the Commission will continue to regu-
l a r l y   re v i e w   t h e   s co p e   fo r   a d d i t i o n a l   s t u d-
ies of cor r upt ion .

3 4.
un d e r   t h e   a u t h o r i t y   o f   t h e   s u p re m e   a u d i t 
i n s t i t u t i o n   o f   a   b e n e f i c i a r y   c o u n t r y,   a d d i -
t i o n a l   a u d i t s   a n d   o t h e r   s p e c i f i c   m e a s u re s 
a re   u s e f u l   fo r   i n c re a s i n g   t ra n s p a re n c y   a n d 
d e e p e n i n g   t h e   e x i s t i n g   d i a gn o s t i c s   o f   t h e 
p fm  s y s t e m .   i n   t h i s   c o n t e x t ,   t h e   Co m m i s -
s i o n ’s   g u i d e l i n e s   o n   g b s  u n d e r l i n e   t h e 
value of selec ted audits of inter nal control 
s y s t e m s   t o   g i v e   f u r t h e r   i n s i g h t s   i n t o   h o w 
to focus capacit y-building in pfm and miti -
g ate   r i s k s.  Th e   f u r t h e r   d e ve l o p m e nt   o f   t h e 
C o m m i s s i o n’s   r i s k   a s s e s s m e n t   f r a m e w o r k 
w i l l   p r o v i d e   a   m o r e   p r e c i s e   a p p r o a c h   t o 
i d e n t i f y i n g   k e y   r i s k s   a n d   d e f i n i n g   a p p r o -
pr iate meas ures  for  t heir reduc t ion .

28.
T h e   C o m m i s s i o n   m a n a g e s   t h e   r i s k s   a s s o -
c i a t e d   w i t h   g e n e r a l   b u d g e t   s u p p o r t   p r o -
grammes thro ug h the r igoro us as s e s sm e nt 
o f   t h e   e l i gi b i l i t y   c r i te r i a   a n d,   i n   p a r t i c u l a r, 
by   m o n i to r i n g   t h e   a c h i e ve m e n t   o f   a gre e d 
p e r f o r m a n c e   t a r g e t s .  w h e r e   t h e   C o m m i s -
s i o n   n o t e s   t h a t   p r o g r e s s   i s   i n s u f f i c i e n t , 
d i s b u r s e m e nt s   a re   w i t h h e l d   u nt i l   c re d i b l e 
reassurances or measures have been estab -
l i s h e d .   T h e r e   i s   t h u s   n o   f i n a n c i a l   r i s k   a s 
s u c h .  T h e   Co m m i s s i o n   i n t e n d s   t o   d e ve l o p 
a n d   e x te n d   i t s   r i s k   a s s e s s m e n t   f r a m e wo r k 
i n   t h e   co ntex t   o f   t h e   re v i s i o n   o f   i t s   g u i d e -
lin es.

29.
w e a k n e s s e s   i n   p f m  s y s t e m s   m a y   i m p l y 
p o t e n t i a l   m a n a g e m e n t   a n d   d e v e l o p m e n t 
r i s k   fo r   g ove r n m e nt   f u n d s   i n   t h e   co u nt r i e s 
c o n c e r n e d .   i t   i s   f o r   t h i s   r e a s o n   t h a t   t h e 
C o m m i s s i o n   a n d   o t h e r   d o n o r s   u n d e r t a k e 
d e t a i l e d   p fm   d i a gn o s t i c s,   u s i n g   t h e   i nte r -
n a t i o n a l l y   re c o g n i s e d   p e fa   m e t h o d o l o g y, 
i n   a d v a n c e   o f   e a c h   g e n e r a l   b u d g e t   s u p -
p o r t   o p e r a t i o n .   i n   a d d i t i o n ,   t h e   C o m m i s -
sion requires that potential general budget 
s u p p o r t   b e n e f i c i a r i e s   h ave   i n   p l a ce   a   re l e -
vant and credible pfm refor m strategy. The 
i m p l e m e n t a t i o n   o f   t h i s   s t r a t e g y   i s   c l o s e l y 
monitored and repor ted upon by the Com-
mission in collaboration with other donors, 
i n c l u d i n g   t h ro u g h   t h e   p e r i o d i c   u p d a t e   o f 
th e initial pefa as s essment.

30.
T h e   e x i s t e n c e   o f   c o r r u p t i o n   h i n d e r s   a i d 
e f fe c t i v e n e s s   i n   g e n e r a l   a n d   i t s   p o t e n t i a l 
impa c t is  by no  means  conf ined  to  g e ne ral 
budget suppor t programmes. what is clear 
is that the steady improvement in financial 
c o n t r o l   a n d   p u b l i c   p r o c u r e m e n t   s y s t e m s 
p u r s u e d   i n   t h e   c o n t e x t   o f   g e n e r a l   b u d g e t 
s u p p o r t   p r o g r a m m e s   e f f e c t i v e l y   r e d u c e s 
th e scope for cor rup t ion .

i n   t h e   gr e e n   p a p e r   t h e   C o m m i s s i o n 
a d d r e s s e s   t h e   i s s u e   o f   m e a s u r e s   t h e   e u 
s h o u l d   a p p l y   i f   t h e   r i s k   l e ve l   i s   co n s i d e re d 
high with  re gard to fraud and co r r u pti on .

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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replY of The 
Commission 

weak Commission prac tice : p araguay

T h e   p r e p a r a t o r y   d o c u m e n t s   o f   t h e   g b s 
programme in paraguay presented an over-
view of the main pfm weak nesses based on 
t h e   a v a i l a b l e   d i a g n o s t i c   a n d   d i s c u s s i o n s 
w i t h   t h e   g ove r n m e n t   s e r v i c e s.  Th i s   a n a l y -
s i s   w a s   b a s e d   o n   t h e   p fm  re fo r m   p l a n   i n i -
t i ate d   by   t h e   pa ra g u aya n   a u t h o r i t i e s.   d u r-
i n g   i t s   i m p l e m e n t a t i o n ,   t h e   p r o g r a m m e 
h a s   b e e n   i n s t r u m e n t a l   i n   a d d r e s s i n g   t h e 
m a i n   p fm  we a k n e s s e s   t h a t   h ave   b e e n   f u r -
t h e r   h i g h l i g h t e d   b y   t h e   p e fa  d i a g n o s t i c . 
T h e   p a r a g u a y a n   g o v e r n m e n t   p r e p a r e d   a 
t h o r o u g h   p f m  r e f o r m   p l a n   t h a t   h a s ,   s u c -
c e s s f u l l y,   p a s s e d   f r o m   o n e   e x e c u t i v e   t o 
t h e   n e x t   f o l l o w i n g   t h e   h i s t o r i c a l   c h a n g e 
of t he 2 0 07 ele c t ion s. The programme  als o 
p r o v i d e s   f o r   t e c h n i c a l   a s s i s t a n c e   t o   s u p -
p o r t   t h e   g ove r n m e nt ’s   re fo r m   p ro gra m m e, 
together with the wor ld bank and the  i nter 
amer ican d evelopment bank . Thus there is 
n ot  finan cia l r isk as s uc h.

The Commission will fur ther strengthen its 
r i s k   m a n a g e m e n t   f r a m e w o r k   a n d   a d d r e s s 
t h i s   i n   t h e   c o n t e x t   o f   i t s   r e v i s i o n   o f   t h e 
ge neral budget  suppor t g uidelin e s.

3 7.
i n   i t s   a p p r a i s a l   o f   e l i g i b i l i t y   fo r   a   b u d g e t 
s u p p o r t   p r o g r a m m e   t h e   C o m m i s s i o n 
under takes an assessment of the relevance 
a n d   c re d i b i l i t y   o f   t h e   u n d e r l y i n g   s t rate g y. 
Th i s   a s s e s s m e n t   w i l l   b e   m a d e   m o re   s t r u c -
t u r e d   a n d   w i l l   b e   m o r e   c l e a r l y   l i n k e d   t o 
gbs design. fur ther guidance will be incor -
porate d into th e  revis ed guideli n e s.

35.
T h e   m e a s u r e s   m e n t i o n e d   b y   t h e   C o u r t 
( a u d i t s ,   p u b l i c   e x p e n d i t u r e   t r a c k i n g   s u r -
v e y s   a n d   p u b l i c   e x p e n d i t u r e   r e v i e w s )   a r e 
l e n g t h y   p r o c e s s e s   t o   d e s i g n   a n d   m a n a g e 
to   e ve nt u a l   co m p l e t i o n .  Th e   d e ve l o p m e nt 
of the Commission’s risk assessment frame -
wor k  will  p rovide  a  more  p recise   approac h 
t o   i d e n t i f y i n g   k e y   r i s k s   a n d   d e f i n i n g 
a p p ro p r i ate   s e q u e n c i n g   a n d   p r i o r i t i s at i o n 
o f   m e a s u re s   to   m a n a g e   t h e s e   r i s k s.   i n   t h i s 
c o n t e x t ,   t h e   C o m m i s s i o n   i n t e n d s   t o   p r o -
mote the use o f s ho r ter-ter m me a s ures.

36.
T h e   i s s u e   o f   c o r r u p t i o n   h a s   a l r e a d y   b e e n 
a d d r e s s e d   i n   t h e   r e v i s e d   f o r m a t   f o r   p f m 
r e p o r t i n g   o n   o n g o i n g   p r o g r a m m e s   w h i c h 
w a s   e s t a b l i s h e d   i n   ju n e   2 0 1 0 .   m o r e -
o v e r,   i n   t h e   i m p l e m e n t a t i o n   o f   g b s  p r o -
g r a m m e s   t h e   e m e r g e n c e   o f   c o r r u p t i o n 
t y p i c a l l y   l e a d s   t o   a   r e i n f o r c e d   a n d   i n t e n -
s i v e   d i a l o g u e   w i t h   g o v e r n m e n t   o n   h o w 
t o   r e s p o n d   t o   t h e   i s s u e s .   fo r   i n s t a n c e ,   i n 
Tanzania (2008) and Zambia (2009) this led 
t o   t h e   s u s p e n s i o n   o f   b u d g e t   s u p p o r t   d i s -
b u r s e m e n t s   p e n d i n g   t h e   e l a b o r a t i o n   a n d 
p ro gre s s   m a d e   i n   a c t i o n   p l a n s   i n   re s p o n s e 
to specific cor rup t ion  cas es.

B ox  2 – re du cing fidu cia r y risk
g ood Commiss io n  p rac tice:  e t hiop ia

ethiopia is an interesting example of a pro -
g r a m m e   u s i n g   d e c e n t r a l i s e d   g o v e r n m e n t 
s y s t e m s   a n d   p r o m o t i n g   t h e i r   s t r e n g t h e n -
i n g .   w h i l e   i t   i s   n o t   i m p l e m e n t e d   b y   t h e 
C o m m i s s i o n   u n d e r   t h e   b u d g e t   s u p p o r t 
m o d a l i t y,   s o m e   o f   t h e   s p e c i f i c   f e a t u r e s 
could be a pp l ied to  gbs p rogram m e s.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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replY of The 
Commission 

4 3.
The Commission will review how it decides 
a m o u n t s   p r o g r a m m e d   fo r   g e n e r a l   b u d g e t 
s u p p o r t   ( s e e   p a r a g r a p h   4 4 ) ,   i n c l u d i n g 
t h r o u g h   t h e   c o n s u l t a t i o n   b a s e d   o n   t h e 
green   paper   on   budg et  suppor t,  in  vie w  of 
i n t r o d u c i n g   a   m o r e   s t r u c t u r e d   a p p r o a c h 
t h a t   w i l l   i n c l u d e   a   m o r e   e x p l i c i t   a s s e s s -
m e nt   o f   ex p e c te d   b e n e f i t s   a n d   r i s k s.   m o re 
p r e c i s e   o b j e c t i v e s   w i l l   c o n t r i b u t e   t o   t h i s 
a s s e s s m e n t .   T h i s   r e m a i n s   a   c o m p l e x   m a t -
te r   t h a t   w i l l   h ave   to   t a k e   i n to   a cco u n t   t h e 
o v e r a l l   o b j e c t i v e s   o f   g b s  o p e r a t i o n s   a n d 
t h e   g l o b a l   f ra m e wo r k   o f   t h e   Co m m i s s i o n’s 
cooperation with  th e par tn er  co untr y.

4 4.
w i t h i n   t h e   o v e r a l l   a m o u n t   a l l o c a t e d   t o   a 
p a r t n e r   c o u n t r y ’s   i n d i c a t i v e   p r o g r a m m e , 
the financial size of the potential gbs enve -
l o p e   d e p e n d s   o n   t h e   i m p o r t a n c e   o f   t h e 
expec ted benefits such as the achievement 
o f   t h e   o v e r a l l   o b j e c t i v e s   o f   t h e   Cs p  a n d 
the more specific ones in the focal areas of 
c o o p e r a t i o n .   T h e   p o t e n t i a l   g b s   e n v e l o p e 
m ay   b e   a d a p te d   i n   t h e   l i g ht   o f   t h e   a s s e s s-
m e n t   o f   r i s k .  T h e   p r o p o s e d   a m o u n t   i s   t h e 
result of dialogue and negotiation with the 
p a r t n e r   c o u n t r i e s   a n d   m e m b e r   s t a t e s   a n d 
takes into account other impor tant dimen-
s i o n s ,   s u c h   a s   t h e   g o v e r n m e n t ’s   t r a c k 
r e c o r d   w i t h   e f f e c t i v e l y   m a n a g i n g   b u d g e t 
suppor t, the presence of other budget sup -
p o r t   p rov i d e r s,   t h e   d e gre e   o f   co o rd i n at i o n 
an d oppor tunit y for polic y dialogue.

4 7.
The Com miss io n welcomes  t he Co ur t ’s  rec -
o g n i t i o n   o f   t h e   g e n e r a l l y   g o o d   p r e d i c t -
a b i l i t y   o f   i t s   g e n e r a l   b u d g e t   s u p p o r t   p ay -
m e nt s   a n d   o f   t h e i r   a l i gn m e nt   w i t h   co u nt r y 
budget  c ycles an d calen dars.

38.
pove r t y   re d u c t i o n   s t rate g y   p a p e r s   (p r s p s ) 
a n d   t h e i r   e q u i v a l e n t   n a t i o n a l   s t r a t e g i e s 
are the basis of all Commission aid and not 
j u s t   g b s.   m o r e   g e n e r a l l y,   a l l   d a C   d o n o r s 
intend to align their aid with prsps or their 
e q u i v a l e n t   n a t i o n a l   s t r a t e g i e s .  T h e   p r s ps 
i n   co u nt r i e s   re ce i v i n g   g b s  h ave   b e e n   s u b -
jec t to imf/ wor ld bank  joint  staff advisor y 
r e v i e w s ,   b a s e d   u p o n   w h i c h   b o t h   i n s t i t u -
tions have deemed the strategies sufficient 
basis for co nces s ion al l ending.

i m p r o v i n g   t h e   b u d g e t i n g   p r o c e s s   a n d   i t s 
l i n k a g e s   w i t h   n at i o n a l   d e ve l o p m e nt   s t rat-
e gi e s   i s   a t   t h e   ce n t re   o f   p fm  re fo r m s   s u p -
p o r t e d   t h ro u g h   g b s   p ro g r a m m e s.   fu r t h e r 
e f f o r t s   a r e   n e e d e d   t o   s t r e n g t h e n   t h e s e 
lin k ages.

39.
T h e   i s s u e s   o f   d e v e l o p m e n t   r i s k   a r e   n o r -
m a l l y   i n c l u d e d   i n   t h e   i d e n t i f i c a t i o n   a n d 
a c t i o n   f i c h e s   u n d e r   t h e   r i s k   h e a d i n g.  T h e 
Co m m i s s i o n   w i l l   m a k e   i t s   r i s k   a s s e s s m e n t 
f r a m e w o r k   m o r e   e x p l i c i t   i n   l i n e   w i t h   t h e 
approach cur rently taken for fragile states. 
fur ther guidance on the assessment of the 
development r isk will be incor porated into 
th e Commis sion’s  revis ed guide l in e s.

i n   t h e   c a s e   o f   ug a n d a ,   t h e   Co m m i s s i o n   i s 
c u r r e n t l y   w o r k i n g   w i t h   o t h e r   d o n o r s   t o 
i d e n t i f y   k e y   a r e a s   w h e r e   r i s k   m i t i g a t i o n 
mea su res may b e ap p rop r iate.

a s   r e g a r d s   pa r a g u a y,   t h e   r i s k s   i d e n t i f i e d 
by   t h e   Co m m i s s i o n’s   s t u d y   fo r  g b s  o f   ju n e 
2005 were used as background for formula -
tion. The gover nment of paraguay adopted 
i n   2 0 0 6   i t s   n e w   p ove r t y   s t rate g y   a p p ro a c h 
t h a t   i n t e n d e d   t o   a d d r e s s   t h e   w e a k n e s s e s 
fo u n d.  Th e   g b s  p ro gra m m e   wa s   co n ce i ve d 
t o   s u p p o r t   t h e   i m p l e m e n t a t i o n   o f   t h i s 
s t r a t e g y   ( a n d   n o t a b l y   i n s t i t u t i o n a l   b u i l d -
i n g ,   i n t e r i n s t i t u t i o n a l   c o o r d i n a t i o n   a n d 
social invest me nt p r ior itis ation ).

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replY of The 
Commission 

i n   t h e   f r a m e w o r k   o f   t h e   1 0 t h   e d f,   t h e   eC 
i s   p ro v i d i n g   c a p a c i t y - b u i l d i n g   s u p p o r t   t o 
t h e   g ove r n m e nt   p fm  a c t i o n   p l a n   b a s e d   o n 
t h e   p e fa  a s s e s s m e n t   fo l l o we d   b y   a   n e e d s 
a s s e s s m e n t .   T h i s   s u p p o r t   i s   i n   a   s e p a r a t e 
f i n a n c i n g   a g r e e m e n t   b u t   f o c u s e s   o n   t h e 
m a i n   p f m   a r e a s   d i s c u s s e d   b e t w e e n   t h e 
g o ve r n m e n t   a n d   t h e   g e n e r a l   b u d g e t   s u p -
p o r t   d o n o r   g r o u p.  T h e   e C   w i l l   i m p l e m e n t 
t h e   p r o j e c t   w i t h   t h e   f i n a n c i a l   s u p p o r t   o f 
th ree m ember  s tates.

B ox 4   – s elec tio n o f  cond ition s
weak Commission prac tice : b en in

 Ū

 Ū

i n d i c a t o r s   a n d   t a r g e t s   f o r   t h e   e d u c a -
tion   sec tor  in   b en in  were  se t  up  by   the 
government in its national development 
s t r a t e g y   a n d   a g re e d   w i t h i n   t h e   e d u c a -
t i o n   w o r k i n g   g r o u p   w h e r e   t h e   C o m -
m i s s i o n   i s   a   m e m b e r.   i n d i c a t o r s   a n d 
targ ets  refer  to  quantifiable  issu es   an d 
d o   n o t   i n c l u d e   s y s t e m a t i c a l l y   q u a l i t a -
tive aspec ts. analyses developed by the 
government and the donors in the joint 
annual reviews are also used by the del-
eg ation  to assess  overall pe r for ma n ce.

T h e   e x c l u s i o n   ( n e u t r a l i s a t i o n )   o f   t w o 
h e a l t h   i n d i c a t o r s   i n   t h e   c a l c u l a t i o n   o f 
t h e   v a r i a b l e   t r a n c h e   f o r   2 0 0 6   w a s   a 
p ra gm a t i c   re s p o n s e   to   t h i s   i s s u e   i n   o r-
d e r   t o   e n s u r e   c o n t i n u e d   p o l i c y   c o h e r -
e n c e.  T h i s   a r o s e   o u t   o f   a n   i n t e n s e   d i s -
cussion with the gover nment and other 
development par tners in the framework 
o f   re g u l a r   d i a l o g u e   o n   g e n e r a l   b u d g e t 
suppor t.

51– 55.
T h e   C o m m i s s i o n’s   c a p a c i t y - b u i l d i n g   s u p -
p o r t   i s   i n c r e a s i n g l y   p r o v i d e d   i n   l i n e   w i t h 
t h e   p r i n c i p l e s   o f   t h e   r e c e n t   ba c k b o n e 
s t r a t e g y   o n   Te c h n i c a l   C o o p e r a t i o n .   T h i s 
s t r a t e g y   s e t s   a   f r a m e w o r k   fo r   a s s e s s m e n t 
a n d   i d e n t i f i c a t i o n   o f   t h e   n e e d s .   i n   m a n y 
c a s e s   c a p a c i t y - b u i l d i n g   s u p p o r t   i n c l u d -
i n g   t o   s u p r e m e   a u d i t   i n s t i t u t i o n s ,   p a r l i a -
m e n t s   o r   i n   h e a l t h   o r   e d u c a t i o n   s e c to r s   i s 
provided t hro ug h s ep arate p rogram m es  to 
e n s u re   t h e   p ro g r a m m e s   a re   we l l   p l a n n e d, 
the funds are better allocated and spent on 
t i m e.   m o re ove r   a n a l ys i s   o f   c a p a c i t y   d e ve l -
opment needs must always take account of 
o t h e r   d o n o r s’  p ro gra m m e s   a n d   o f   t h e   n e c -
essar y divisio n o f l ab o ur in each   s e c tor.

57.
o f te n   g b s  p ro gra m m e s   f u n d s   a l l o c ate d   to 
capacity-building suppor t are only par tially 
committed. Consequently, the Commission 
h a s   i n c r e a s i n g l y   d e l i v e r e d   s u c h   c a p a c i t y -
b u i l d i n g   p r o g r a m m e s   t h r o u g h   s e p a r a t e 
p r o g r a m m e s ,   s u b j e c t   t o   s p e c i f i c   i d e n t i f i -
c a t i o n   a n d   f o r m u l a t i o n   p h a s e s .   ho w e v e r, 
c a p a c i t y   d e v e l o p m e n t   p r o g r a m m e s   h a v e 
t h e i r   o w n   c h a l l e n g e s   a n d   u s u a l l y   r e q u i r e 
s e ve r a l   ye a r s   b e fo re   b r i n g i n g   s u s t a i n a b l e 
res ult s.

B ox  3 – c a pac it y- building  s upp or t
weak Commiss ion p rac t ice:  b en in

T h e   l i n k   b e t w e e n   t h e   e u   g e n e r a l   b u d g e t 
s u p p o r t   t o   t h e   p f m  s y s t e m   i n   b e n i n   a n d 
o t h e r   d o n o r s’  s u p p o r t   h a s   o n l y   b e e n   p o s -
s i b l e   s i n c e   2 0 0 6 .   i t   i s   t h e   r e s u l t   o f   t h e 
d e v e l o p m e n t   o f   t h e   s t r a t e g i c   f r a m e w o r k 
‘g e s t i o n   b u d g é t a i re   a xé e   s u r   l e s   ré s u l t a t s’ 
( C a r- g b a r)   i n i t i a t e d   b y   t h e   C o m m i s s i o n . 
i t   w a s   a   l e n g t h y   a n d   d e m a n d i n g   p r o c e s s 
w h i c h   w a s   f i n a n c e d   b y   t h e   C o m m i s s i o n 
c a p a c i t y - b u i l d i n g   s u p p o r t   p ro g r a m m e   fo r 
the refor m towards public management by 
objec tives. 

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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replY of The 
Commission 

i n   c e r t a i n   c a s e s ,   s u c h   a s   i n   pa r a g u a y,   t a r -
g e t s   t h a t   a r e   n o   d i f f e r e n t   f r o m   t h e   b a s e -
l i n e   a r e   a p p r o p r i a t e   w h e n   t h e   a i m   i s   t o 
p r e s e r v e   a n   a l r e a d y   g o o d   p e r fo r m a n c e   i n 
th e face  of a r is ing populat ion. 

6 5.
T h e   C o m m i s s i o n   h a s ,   e a c h   t i m e   t h a t   i t 
a p p e a r e d   n e c e s s a r y,   o p t e d   t o   p r o v i d e   a n 
a d d i t i o n a l   t r a n c h e   t o   a d d r e s s   r e l e v a n t 
d e v e l o p m e n t   a n d   r e f o r m   i s s u e s ,   a n d   t o 
give fur th er impetus to t he refor m pro ces s 
and the polic y dialogue through additional 
cond itions.

6 6.
The Com miss io n welcomes  t he Co ur t ’s  rec -
ognition of the improvement in its analysis 
u n d e r   t h e   1 0 t h   e d f.   C o n c e r n i n g   p fm,   t h e 
C o m m i s s i o n   w i l l   i m p r o v e   i t s   g u i d a n c e   i n 
o rd e r   to   s e t   o u t   p re c i s e   re fo r m   o b j e c t i ve s 
i n   t h e   f i e l d   o f   p f m  a n d   t o   i m p r o v e   p f m  
mon itor in g.

6 7.
w h e r e   d a t a   i s   k n o w n   t o   b e   u n re l i a b l e   t h e 
C o m m i s s i o n   d o e s   n o t   u s e   t h i s   i n   v a r i a b l e 
tran ch e targ ets.

i n   c a s e   s e r i o u s   d e f i c i e n c i e s   a re   i d e n t i f i e d 
in   t he  n ation al  st atistic al  s ystem s,   suppo r t 
t o   r e l e v a n t   c a p a c i t y - b u i l d i n g   m e a s u r e s   i s 
s ys te m at i c a l l y   co n s i d e re d   by   t h e   Co m m i s-
sion .

a l t h o u g h   p e r f o r m a n c e   a g a i n s t   t a r g e t s   i s 
m e a s u r e d   a n n u a l l y,   i t   i s   m o r e   a p p r o p r i -
a t e   t o   a s s e s s   t h e   i n c e n t i v e   e f f e c t   o f   v a r i -
a b l e   t r a n c h e   t a r g e t s   o v e r   t h e   m e d i u m 
t e r m   w h e n   t r e n d s   c a n   b e   o b s e r v e d   a n d 
p r o g r e s s   c o n f i r m e d .   a t   t h e   s a m e   t i m e ,   a 
m o re   m e d i u m - t e r m   p e r s p e c t i ve   fo r   m e a s -
u r i n g   s u c h   t a rg e t s,   s u c h   a s   u n d e r   t h e   m d g 
c o n t r a c t s,   a l l o w s   a   b e t t e r   a p p r e c i a t i o n   o f 
progress.

 Ū

n o t   a l l   p f m - r e l a t e d   w e a k n e s s e s   c a n 
b e   a d d r e s s e d   i n   b u d g e t   s u p p o r t   v a r i -
able tranches but need to be addressed 
th roug h t he pfm g eneral co n dition s, in 
capacity-building and through polic y di-
alogue. Coordination with other donors 
i n   t h e s e   m a t t e r s   i s   a l s o   o f   i m p o r t a n c e 
( e . g .   i n   b e n i n   t a x   c o l l e c t i o n   i s   c l o s e l y 
followed   by  the   im f).   up   u nt il   2009   tax 
c o l l e c t i o n   i n   b e n i n   w a s   l e s s   o f   a   p ro b -
lem due to the then positive macroeco -
nomic environment, which explains why 
th is ind icato r was n ot s el ec ted  i n 2 0 0 8 . 
i t should be noted that ex ternal control 
is followed in the framework of the pfm 
refor m  p rogramme.

62.
po l i c y   d i a l o g u e   ro o t e d   i n   a   p a r t n e r   c o u n -
t r y ’s   o w n   b u d g e t a r y   a n d   p o l i c y   p ro c e s s e s 
is essential to ensure that the polic y meas-
u re s   n e e d e d   to   a c h i e ve   a gre e d   t a rg e t s   a re 
i d e n t i f i e d ,   d i s c u s s e d   a n d   f u l l y   r e s o u r c e d . 
s u c h   d i a l o g u e   h e l p s   t o   e n s u r e   a   c l e a r e r 
l i n k   b e t we e n   t h e   u s e   o f   re s o u rce s   ( i n c l u d -
ing budget suppor t) and achieving results, 
a n d   m u c h   n e e d s   t o   b e   d o n e   t o   m a k e   i t 
m o r e   e f f e c t i v e .   en s u r i n g   t h e   c o h e r e n c e 
b e t w e e n   t a r g e t s   a n d   r e s o u r c e s   i s   a   g o v -
e r n m e n t   r e s p o n s i b i l i t y   t h a t   t h e   C o m m i s -
s i o n   a n d   o t h e r   d e ve l o p m e n t   p a r t n e r s   c a n 
only influence indirec tly.  never theless, the 
Co m m i s s i o n   p u r s u e s   t h i s   i s s u e   a c t i ve l y   i n 
t h e   c o n t e x t   o f   i t s   r e g u l a r   d i a l o g u e   w i t h 
par t ner g over nm ents.

63.
T h e   C o m m i s s i o n   a n d   o t h e r   d e v e l o p m e n t 
p a r t n e r s   a i m   to   e n s u re   t h a t   b a s e l i n e s   a n d 
targets are clear, realistic and ambitious. at 
t h e   s a m e   t i m e,   t h e   i m p o r t a n ce   o f   re s p e c t -
i n g   c o u n t r y   o w n e r s h i p   r e q u i r e s   t h a t   t h e 
t a rg e t s   s e t   a re   t h e   u l t i m a te   re s p o n s i b i l i t y 
of t he nat ional  autho r ities.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

70.
C o m m i s s i o n   d i a l o g u e   o n   g b s  i s   f r a m e d 
b y   t h e   a r c h i t e c t u r e   o f   i t s   p r o g r a m m e s ,   i n 
p a r t i c u l a r   g e n e ra l   a n d   s p e c i f i c   co n d i t i o n s, 
a n d   b y   t h e   j o i n t   d o n o r   f r a m e w o r k   w i t h i n 
w h i c h   g b s  i s   d e l i v e r e d .   i n   2 0 0 9 ,   7 4  %   o f 
g b s  f u n d s   d i s b u r s e d   t o   a Cp  c o u n t r i e s 
w e r e   i n   t h e   f r a m e w o r k   o f   a   m e m o r a n d u m 
o f   u n d e r s t a n d i n g   t h a t   d e f i n e s   t h e   t i m i n g 
a n d   t h e   m o d a l i t y   o f   d i a l o g u e.   i n   t h e   s a m e 
ye a r,   7 7  %   o f   d i s b u r s e m e nt s’  p ro gre s s   wa s 
assessed following a common per for mance 
a s s e s s m e n t   f r a m e w o r k   a g r e e d   a n d   m o n i -
t o r e d   w i t h   t h e   p a r t n e r   g o v e r n m e n t s   a n d 
8 1   %   o f   d i s b u r s e m e n t s   w e r e   i n f o r m e d   b y 
a   j o i n t   g o ve r n m e n t - d o n o r   s t r u c t u re d   d i a -
logue mostly documented in aide -memoire, 
w h e r e   t h e   C o m m i s s i o n   a c t i v e l y   p a r t i c i -
pates.

71.
a l t h o u g h   t h e   C o m m i s s i o n ’s   g u i d e l i n e s 
o n   g b s  g i v e   s o m e   i n d i c a t i o n s   o n   h o w   t o 
c o n d u c t   p o l i c y   d i a l o g u e   w i t h   t h e   p a r t n e r 
c o u n t r y   a n d   w i t h   o t h e r   s t a k e h o l d e r s ,   t h e 
Co m m i s s i o n   i s   c o n s i d e r i n g   a   m o re   s t r a t e -
gi c   a p p ro a c h   to   p o l i c y   d i a l o g u e.   ef fe c t i ve 
p o l i c y   d i a l o g u e   d e p e n d s   o n   m a n y   c o m -
p l e x   c o u n t r y - s p e c i f i c   a s p e c t s   t h a t   c a n n o t 
a l w a y s   b e   a n t i c i p a t e d .   a t   t h e   s a m e   t i m e , 
t h e   C o m m i s s i o n   w i l l   c o n t i n u e   t o   p r o v i d e 
a   c o m p r e h e n s i v e   s e r i e s   o f   t r a i n i n g   p r o -
g r a m m e s   o n   t h e   p r i o r i t y   a r e a s   r e l a t e d   t o 
general budget suppor t programmes which 
a re   t a rg e t e d   a t   s t a f f   w i t h   d i re c t   re s p o n s i -
bilit y for managing  s uc h p rogra m me s.

72.
Th e   Co m m i s s i o n   a c k n ow l e d g e s   t h a t   g u i d-
a n ce   o n   d i a l o g u e   c a n   a l w ays   b e   i m p rove d 
and wor k is cur rently being under taken on 
th is  aspec t  o f g uidance to d el eg atio ns.

6969

replY of The 
Commission 

7 3.
a cr itical fac tor in ensur ing successful dia -
l o g u e   o n   t h e   n a t i o n a l   b u d g e t   a n d   p fm  i s 
t h e   s t a f f   e x p e r t i s e   i n   d e l e g a t i o n s .   w h e r e 
g b s  p ro g r a m m e s   h a ve   d e f i n e d   o b j e c t i ve s 
w h i c h   a re   n o t   s u f f i c i e nt l y   cove re d   by   s u c h 
e x p e r t i s e ,   t h e   C o m m i s s i o n   i n c r e a s i n g l y 
u s e s   d i v i s i o n   o f   l a b o u r   a r ra n g e m e nt s   w i t h 
m e m b e r   s t a t e s   a n d   o t h e r   p a r t n e r s   w h i l s t 
r e t a i n i n g   f u l l   r e s p o n s i b i l i t y   f o r   t h e   m a n -
a g e m e n t   o f   i t s   p r o g r a m m e s .   i n   a n y   c a s e , 
o v e r   t h e   m e d i u m   t e r m   t h e   C o m m i s s i o n 
seeks to ensure that cr itical areas of exper-
t i s e   a re   c o ve re d   t h ro u g h   re c r u i t m e n t   a n d 
th e rotation exercis e.

7 4.
T h e   c a p a c i t i e s   a n d   e x p e r t i s e   o f   t h e   d e l -
e g a t i o n   a r e   o f   u t m o s t   i m p o r t a n c e   fo r   t h e 
p r o p e r   m a n a g e m e n t   o f   g e n e r a l   b u d g e t 
suppor t operations. The presence of quali-
f i e d   s t a f f   o n   t h e   g r o u n d   i s   e s s e n t i a l   t o 
p u r s u i n g   t h e   re g u l a r   p o l i c y   d i a l o g u e   t h a t 
is  fun damental  to  t he  general  bud ge t   s up -
p o r t   i n s t r u m e nt.   fo r   t h i s   re a s o n ,   t h e   Co m-
m i s s i o n   c a r e f u l l y   r e v i e w s   s t a f f i n g   s i t u a -
t i o n s   w i t h   re g a rd   to   t h e   a p p ro p r i ate   s k i l l s 
n e e d e d   f o r   d e a l i n g   w i t h   g e n e r a l   b u d g e t 
suppor t. however, the allocation of staff is 
constrained by the provisions of the finan -
c i a l   f r a m e w o r k   a n d   t h e   a n t i c i p a t e d   z e r o 
growth  in Commission  st aff.

7 5.
Th e   Co m m i s s i o n   re q u i re s   s u f f i c i e nt   ex p e r -
t i s e   t o   a c t i v e l y   p a r t i c i p a t e   i n   d i a l o g u e 
re l ate d   to   g b s   p ro gra m m e s.   fo r   s u c h   p ro -
g r a m m e s ,   a   b r o a d - b a s e d   s t a f f   p r o f i l e   i s 
a p p r o p r i a t e .   i n   t h i s   w a y,   t h e   C o m m i s s i o n 
i s   a b l e   to   a c t i ve l y   fo l l ow   k e y   i s s u e s   o f   s e c -
t o r a l   d i a l o g u e   i n   t h e   c o n t e x t   o f   m o n i t o r -
i n g   ove ra l l   p ro gre s s   i n   p ove r t y   re d u c t i o n . 
i n   b e n i n ,   t h e   d e l e g a t i o n   p a r t i c i p a t e s   i n 
t h e   e d u c a t i o n   a n d   h e a l t h   s e c t o r s’  re v i e w s 
a s   we l l   a s   i n   t h e   d i s c u s s i o n s   o n   t h e s e   s e c -
t o r s’  p e r fo r m a n c e   d u r i n g   t h e   j o i n t   a n n u a l 
review.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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replY of The 
Commission 

7 8.
T h e   j o i n t   a n n u a l   r e p o r t s   o n   d e v e l o p m e n t 
c o o p e r a t i o n   w i t h   a Cp  c o u n t r i e s   t h a t   a r e 
p ro d u c e d   a n d   p u b l i s h e d   e a c h   ye a r   o n   t h e 
implementation of countr y strategy papers 
and national indicative programmes in aCp 
c o u n t r i e s   g i v e   a n   u p d a t e d   a n d   a c c u r a t e 
account of the status of implementation of 
a l l   p ro gra m m e s,   i n c l u d i n g   g e n e ra l   b u d g e t 
s u p p o r t .  Th i s   i n c l u d e s   t h e   p re s e nt at i o n   o f 
p o s s i b l e   d i f f i c u l t i e s   e n c o u n t e r e d   d u r i n g 
impleme nt ation.

8 1.
T h e   C o m m i s s i o n   o n l y   p r o c e e d s   w i t h   g e n -
e r a l   b u d g e t   s u p p o r t   w h e n   t h e   n e c e s s a r y 
c o n d i t i o n s   a re   i n   p l a c e.   fo r   t h i s   re a s o n ,   i t 
co n s i d e r s   t h at   a l l   o f   t h e   p o te nt i a l   b e n e f i t s 
can indeed be realised, although repor ting 
o n   t h e   i m p a c t   o f   g e n e r a l   b u d g e t   s u p p o r t 
present s s ign ific ant challenge s. 

Th e   Co m m i s s i o n   i s   n o t   a l o n e   i n   f a c i n g   t h i s 
i s s u e   w h i l e   t h e   s t ro n g   d e m a n d   f ro m   ex te r -
n a l   s t a k e h o l d e r s   fo r   m o re   i n - d e p t h   re p o r t -
i n g   i s   r e c o g n i s e d .   T h e   C o m m i s s i o n   t a k e s 
t h e s e   c h a l l e n g e s   s e r i o u s l y   a n d   i s   wo r k i n g 
t o   d e ve l o p   m o re   i n fo r m a t i ve   re p o r t i n g.   i t 
i s   e x p e c te d   t h at   a s   b u d g e t   s u p p o r t   e va l u -
at i o n s   p ro gre s s   t h e y   w i l l   i n c re a s i n g l y   fe e d 
i n t o   t h e   C o m m i s s i o n’s   a n n u a l   r e p o r t s   o n 
th e man agem ent of ex ter n al ass i st ance. 

T h e   C o m m i s s i o n   c a r e f u l l y   r e v i e w s   s t a f f -
i n g   s i t u at i o n s   w i t h   re g a rd   to   t h e   a p p ro p r i -
a t e   s k i l l s   n e e d e d   fo r   d e a l i n g   w i t h   g e n e r a l 
budget suppor t. however, the allocation of 
staff is constrained by the provisions of the 
f i n a n c i a l   f r a m e w o r k   a n d   t h e   a n t i c i p a t e d 
zero growth  in Comm ission st aff.

76.
i t   i s   t h e   C o m m i s s i o n’s   s t a n d a r d   p r a c t i c e 
t o   a c c o m p a ny   e a c h   d i s b u r s e m e n t   w i t h   a n 
i n fo r m at i o n   l e t te r   to   t h e   n at i o n a l   a u t h o r i -
t i e s .   s u c h   l e t t e r s   t y p i c a l l y   h i g h l i g h t   k e y 
areas to be  p u rsu ed in f ur t her di a l og ue.

77.
a   m o r e   s t r a t e g i c   a p p r o a c h   t o   p o l i c y   d i a -
l o g u e   w i l l   e n h a n c e   t h e   p r o s p e c t s   o f   s u c -
ce s s.  Th e   d o c u m e nt at i o n   o f   d i a l o g u e   i s   a n 
i m p o r t a n t   f a c t o r   i n   e n s u r i n g   s u s t a i n a b i l -
i t y   a n d   i m p a c t.  Th e   re v i s e d   g u i d e l i n e s   w i l l 
f o r e s e e   t h e   b e t t e r   d o c u m e n t a t i o n   o f   t h e 
dia logue.

B ox  5 – d ia lo g ue
weak Commiss ion p rac t ice:  p aragu ay

i n   pa r a g u a y,   c o u n t r y   c i r c u m s t a n c e s   h a v e 
l a rg e l y   a f fe c te d   t h e   d i a l o g u e   b e t we e n   t h e 
d o n o r   c o m m u n i t y   a n d   t h e   g o v e r n m e n t . 
C o n s e q u e n t l y,   t h e   C o m m i s s i o n ’s   e f f o r t s 
t o   r e a c h   c o o r d i n a t i o n   m e c h a n i s m s   h a v e 
y i e l d e d   m i t i g ate d   re s u l t s.  Th i s   wa s   d u e,   i n 
p a r t i c u l a r,   to   t h e   co ntex t   o f   t h e   e l e c t i o n s, 
r e s u l t i n g   i n   a   f u n d a m e n t a l   c h a n g e   o f   t h e 
g o v e r n m e n t   a n d   i t s   p o l i t i c a l   o r i e n t a t i o n s 
a n d,   t h e n ,   to   t h e   i n s t a l l at i o n   o f   t h e   n e w l y 
e l e c t e d   g o v e r n m e n t   w h i c h   a f f e c t e d   i n i -
t i a t i v e s   d u r i n g   1 8   m o n t h s   o f   p r o g r a m m e 
implem entatio n. 

i n   t h i s   c o n t e x t ,   t h e   t e c h n i c a l   d i a l o g u e 
w i t h i n   t h e   p r o g r a m m e   w a s   f o c u s e d   o n 
p e r f o r m a n c e   i n d i c a t o r s   a n d   t h e   C o m m i s -
s i o n   p a r t i c i p a t e d   a c t i ve l y   i n   t h e   d i a l o g u e 
on   the  deve lo pment  o f  the  so ci al   p o lic y   of 
t h e   g ove r n m e nt   w h i c h   i n c l u d e d   t h e   s o c i a l 
pro te c t i o n   ne t wo r k   ( m e e t i n g s,   wo r k s h o p s, 
i n t e r n a t i o n a l   e x p e r t s ,   p u b l i c a t i o n   o f   t h e 
polic y).

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replY of The 
Commission 

T h e   o e C d / d a C   j o i n t   e v a l u a t i o n   u n d e r -
t a k e n   i n   2 0 0 6   p r o v i d e d   e v i d e n c e   o f   g b s 
c o n t r i b u t i n g   t o   i m p r o v e d   s e r v i c e   d e l i v -
e r y   b u t   d i d   n o t   e x t e n d   t h i s   a n a l y s i s   t o   a n 
a s s e s s m e n t   o f   i m p a c t   o n   f i n a l   b e n e f i c i a r -
i e s .   i n   r e s p o n s e   t o   t h i s ,   t h e   C o m m i s s i o n 
h a s   s i n c e   t a k e n   a   p r o m i n e n t   l e a d e r s h i p 
r o l e   i n   d e v e l o p i n g   a   n e w   b u d g e t   s u p p o r t 
e va l u at i o n   m e t h o d o l o g y   ( fo r   g b s  a n d   s b s) 
w h i c h   c l e a r l y   s e t s   o u t   t h e   m a i n   c h a n n e l s 
through which budget suppor t contr ibutes 
t o   d e ve l o p m e n t   o b j e c t i ve s,   i n c l u d i n g   t h e 
i m p a c t   o n   f i n a l   b e n e f i c i a r i e s.  Th e   m e t h o d -
o l o g y   w a s   a p p r o v e d   b y   o eCd /d a C   m e m -
b e r s   i n   2 0 0 9   a n d   i s   i n   t h e   p ro ce s s   o f   b e i n g 
t e s t e d   i n   t h r e e   c o u n t r i e s .   T h e   r e s u l t s   o f 
t h e   t e s t   w i l l   a l l o w   t h e   f u r t h e r   r e f i n e m e n t 
o f   t h e   m e t h o d o l o g y   w i t h   a   v i e w   t o   c o m -
mencing per iodic joint evaluations (among 
oeCd/da C m embers)  from 20 11  onwards.

gi v e n   t h e   m u l t i p l e   a n d   c o m p l e x   f a c t o r s 
a t   w o r k   i n   d e l i v e r i n g   s u s t a i n a b l e   p o v e r t y 
r e d u c t i o n   i t   i s   u n r e a l i s t i c   t o   e x p e c t   a n y 
e v a l u a t i o n   m e t h o d o l o g y   o f   d e v e l o p m e n t 
a i d   c a n   f u l l y   r e s o l v e   t h e   i s s u e   o f   h o w   t o 
a t t r i b u t e   r e s u l t s   t o   d e v e l o p m e n t   p r o -
g r a m m e s .   T h i s   f u n d a m e n t a l   i s s u e   i s   n o t 
u n i q u e   to   g e n e ra l   b u d g e t   s u p p o r t   a n d   t h e 
i n h e r e n t   c h a l l e n g e s   i n   t h e   e v a l u a t i o n   o f 
s u c h   i n t e r v e n t i o n s   h a v e   b e e n   r e c o g n i s e d 
by the Cour t ’s repor ts related to struc tural 
funds.

8 8.
The Commission’s revised guidelines issued 
i n   ju n e   2 0 1 0   e x p l i c i t l y   a d d r e s s   t h i s   p o i n t 
o f   p fm  r e p o r t i n g.  T h e   r e v i s e d   p fm  r e p o r t 
s e t s   o u t   a   f r a m e w o r k   w h e r e b y   p r o g r e s s 
can be assessed on an annual basis against 
in itial refor m expec tat ions.

82.
T h e   C o m m i s s i o n   c o n s i d e r s   t h a t   t h e   u l t i -
m a t e   i m p a c t   o f   g b s  o n   p o ve r t y   re d u c t i o n 
d e p e n d s   o n   t h e   s p e c i f i c   c i r c u m s t a n c e s   i n 
each countr y. i t also depends on the effec -
t i v e   m a n a g e m e n t   o f   g b s   p r o g r a m m e s . 
fo l l o w i n g   t h e   c o re   p r i n c i p l e s   o f   t h e   pa r i s 
d eclaration and oeCd good prac tice in the 
design and management of general budget 
suppor t e nh ances  imp ac t.

84.
i nte r n a l   re p o r t i n g   o n   g e n e ra l   b u d g e t   s u p -
por t is being fur ther developed. never the -
l e s s   t h e   q u e s t i o n   o f   i m p a c t   w i l l   r e m a i n   a 
c h a l l e n g e   d u e   t o   t h e   d i f f i c u l t y   i n   a t t r i b -
u t i n g   r e s u l t s   t o   i n p u t s   u n d e r   t h e   g e n e r a l 
b u d g e t   s u p p o r t   m o d a l i t y .   a t   t h e   s a m e 
time, the ‘r esults or iented monitor ing sys-
te m’  h a s   a l s o   b e e n   re v i s e d   to   cove r   s e c to r 
p o l i c y   s u p p o r t   p r o g r a m m e s ,   w h i c h   a l s o 
i n c l u d e   s e c t o r   b u d g e t   s u p p o r t .   Co n s i d e r -
a t i o n   i s   b e i n g   g i v e n   a s   t o   h o w   t o   e x t e n d 
th is to gb s.   i n a ddit ion , th e Com mis sion is 
wo r k i n g   o n   a   d at a b a s e   co nt a i n i n g   h i s to r i -
cal data of all budget suppor t programmes 
inclu ding  the indicators mo nito re d.

85.
i n d e p e n d e n t   e v a l u a t i o n s   o f   c o u n t r y   p r o -
grammes car r ied out in 20 countr ies where 
budget suppor t has been a significant fea-
t u re   h ave   b e e n   p u b l i s h e d   by   t h e   Co m m i s -
sion. 

86.
The Commission is moving ahead to estab -
lish a body of evaluation evidence in order 
t o   b e t t e r   u n d e r s t a n d   c r i t i c a l   f a c t o r s   f o r 
s u c c e s s   a n d   t h e   n a t u r e   o f   t h e   i m p a c t   o n 
developme nt  o b j ec tives. 

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replY of The 
Commission 

conclusIons  and  
rEcommEndatIons

9 3.
T h e   C o m m i s s i o n   c o n s i d e r s   t h a t   i t s   m e t h -
odology for providing general budget sup -
p o r t   i s   i n   l i n e   w i t h   k e y   o eCd  p r i n c i p l e s 
a n d   b e s t   p r a c t i c e   a p p l i e d   b y   o t h e r   m a j o r 
general budget suppor t providers, par ticu -
larly in europe. The Commission is continu -
a l l y   s t r i v i n g   t o   i m p r o v e   t h e   m e t h o d o l o g y 
o f   i t s   a p p ro a c h   to   g e n e ra l   b u d g e t   s u p p o r t 
fo l l ow i n g   l e s s o n s   l e a r n e d   at   i nte r n a l   l e ve l 
b y   a l l   d o n o r s   p r o v i d i n g   g e n e r a l   b u d g e t 
s u p p o r t.   i n   t h i s   co ntex t   t h e   Co m m i s s i o n   i s 
re v i s i n g   i t s   g u i d e l i n e s   i n   o rd e r   t o   d e e p e n 
t h e   a s s e s s m e n t   o f   e l i g i b i l i t y   a n d   e n s u r e 
t h a t   e v i d e n c e   fo r   g e n e r a l   b u d g e t   s u p p o r t 
d e c i s i o n s   a re   p re s e n t e d   i n   a   m o re   p re c i s e 
and for malised way. The revised guidelines 
w i l l   a l s o   s t r e n g t h e n   t h e   a p p r o a c h   t o   t h e 
m a n a g e m e n t   i s s u e s   t h a t   t h e   C o u r t   i d e n -
t i f i e s   i n   t h i s   r e p o r t .   a t   a   l a t e r   s t a g e   t h e y 
w i l l   a l s o   b e   a m e n d e d   to   t a k e   i nto   a cco u nt 
t h e   c o n c l u s i o n s   a n d   r e c o m m e n d a t i o n s   o f 
the debate launched by the Commission at 
e u  l e ve l   w i t h   t h e   p u b l i c at i o n   o f   t h e   gre e n 
paper  on budget  s uppor t.

89.
T h e   C o m m i s s i o n   f o c u s e s   s t r o n g l y   o n 
i m p r o v e m e n t s   i n   p fm  s y s t e m s   a s   t h i s   i s   a 
key fac to r in redu c ing co r rup t io n .

i n   l i n e   w i t h   t h e   f u r t h e r   d e ve l o p m e nt   o f   i t s 
r i s k   a s s e s s m e n t   f r a m e w o r k ,   t h e   C o m m i s -
s i o n   w i l l   b e   b e t t e r   a b l e   t o   r e p o r t   o n   k e y 
r i s k s   a s   t h e y   e vo l ve   d u r i n g   t h e   i m p l e m e n -
t a t i o n   o f   i t s   g e n e r a l   b u d g e t   s u p p o r t   p r o -
grammes.

90.
i t   i s   c l e a r   t h a t   p e fa  i s   n o t   a   r i s k   a s s e s s -
m e nt   to o l   a s   s u c h ,   e ve n   i f   i t   e n a b l e s   i d e n-
tification  o f  main  pfm  weak nes ses.  p efa  is 
a diagnostic instrument to set the baseline 
fo r   t h e   p a r t n e r   c o u n t r y ’s   p fm  s y s t e m   a n d 
t o   s e r v e   a s   a   b a s i s   f o r   d i a l o g u e   o n   p f m 
refor m .

91.
T h e   C o m m i s s i o n   h a s   a l r e a d y   t a k e n   s t e p s 
to   b o l s te r   t h e   cove ra g e   o f   g e n e ra l   b u d g e t 
s u p p o r t   i n   i t s   2 0 1 0   a n n u a l   r e p o r t   a n d   i s 
r e a d y   t o   f u r t h e r   d e v e l o p   t h i s   i n   t h e   l i g h t 
of feedbac k from s takeh ol ders.

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replY of The 
Commission 

95.
T h e   C o m m i s s i o n   a p p r e c i a t e s   t h e   C o u r t ’s 
recommendations, both from recent annual 
re p o r t s   a n d   t h i s   a u d i t ,   a n d   i s   re f i n i n g   a n d 
deepening the scope of its methodological 
g u i d e l i n e s   fo r   b u d g e t   s u p p o r t   t o   a d d r e s s 
t h e s e   o b s e r v a t i o n s .   i n   t h i s   r e s p e c t   t h e 
C o m m i s s i o n   h a s   a l r e a d y   s t r e n g t h e n e d 
t h e   b a s i s   f o r   i t s   c o u n t r y - b a s e d   r e p o r t i n g 
o n   p u b l i c   f i n a n c i a l   m a n a g e m e n t   i n   o r d e r 
t o   p r o v i d e   a   m o r e   p r e c i s e   a n d   fo r m a l i s e d 
b a s i s   f o r   m o n i t o r i n g   t h i s   c r i t i c a l   a s p e c t 
o f   g e n e r a l   b u d g e t   s u p p o r t   e l i g i b i l i t y.  T h e 
r e v i s i o n   o f   t h e   g u i d e l i n e s   i s   e x p e c t e d 
t o   b e   f i n a l i s e d   i n   2 0 1 1   a n d   i s   e x p e c t e d 
t o   a d d r e s s   o r   d e e p e n   t h e   f o l l o w i n g   k e y 
areas:

9 6.
Th e   o b j e c t i ve s   o f   g b s  p ro g r a m m e s   d e r i ve 
direc tly from the objec tives of the national 
d e ve l o p m e nt   a n d   p ove r t y   re d u c t i o n   s t rat -
e gi e s   w h i c h   t h e y   a re   d e s i gn e d   to   s u p p o r t. 
such strategies are comprehensive in their 
coverage of the various dimensions of pov -
e r t y   a f f l i c t i n g   a   gi ve n   co u nt r y.  i n   o rd e r   to 
m o n i t o r   p r o g r e s s   i n   a   c o u n t r y ’s   p o v e r t y 
r e d u c t i o n   p r o g r a m m e s,   t h e   Co m m i s s i o n’s 
approach, in line with that of other donors, 
i s   t o   t a k e   a c c o u n t   o f   p r o g r e s s   a g a i n s t   a n 
a g re e d   s e t   o f   o b j e c t i ve s   d e r i ve d   f ro m   t h e 
n a t i o n a l   s t r a t e g y.  Th e   Co m m i s s i o n   a g re e s 
that the specific objec tives should be more 
p re c i s e   a n d   b e t te r   t a i l o re d   to   t h e   p a r t i c u-
lar  circumstance s of  th e countr y. 

 Ū

refinement of the allocation cr iter ia for 
genera l b udg e t su p p or t p ro gramm in g;

 Ū

r a t i o n a l i s a t i o n   o f   t h e   g e n e r a l   b u d g e t 
s u p p o r t   i n t e r v e n t i o n   l o g i c   t o   i m p r o v e 
th e de finit ion o f ob jec tives;

 Ū

defining the preliminar y analysis need -
ed for the identification of per formance 
indic ators;

 Ū

develo pme nt  o f a r isk  fram ewor k ;

 Ū

establishing a framework for monitoring 
p r o g r e s s   t o   b e   a c h i e v e d   o v e r   t h e   l i f e -
time of a general budget programme in 
national and sec toral pover t y reduc tion 
and  refor m  s t rategies ;

 Ū

i n c o r p o r a t i o n   o f   t h e   p r i n c i p l e s   o f   t h e 
b a c k b o n e   s t r a t e g y   o n  Te c h n i c a l   Co o p -
eratio n fo r cap ac it y devel op ment ;

 Ū

o u t l i n e   t h e   s t r a t e g i c   a p p r o a c h   t o   d i a -
logu e g u id ance;

 Ū

ident ify ke y rep o r ting  requ irem e nts.

i n   a d d i t i o n ,   t h e   r e v i s e d   e v a l u a t i o n   m e t h-
odology wil l  b e f inal ised.

r e co m m e n d a t i o n   1   –   s e l e c t i o n   a n d   fo r -
m u l a t i o n   o f   o b j e c t i v e s   a n d   e x p e c t e d 
res ults  o f G Bs pro grammes

(a)
The Commission will ensure better comple -
mentar it y bet ween gbs and other Commis -
sion  programmes.

(b)
T h e   C o m m i s s i o n   a g r e e s   t h a t   p r o g r a m m e s 
s h o u l d   b e   b e t te r   t a i l o re d   to   t h e   p a r t i c u l a r 
circumst ances  of th e countr y. 

(c )
T h e   o n g o i n g   r e v i s i o n   t o   t h e   g u i d e l i n e s 
o n   g e n e r a l   b u d g e t   s u p p o r t   i s   d e v e l o p i n g 
a   m o r e   p r e c i s e   f r a m e w o r k   fo r   m o n i t o r i n g 
p r o g r e s s   i n   n a t i o n a l / s e c t o r a l   s t r a t e g i e s 
an d public finan c ial man agem ent.

(d )
T h e   r e v i s e d   g u i d e l i n e s   w i l l   p r o v i d e   m o r e 
d e t a i l e d   g u i d a n c e   o n   t h e   i n t e r v e n t i o n 
l o g i c   u n d e r l y i n g   t h e   g e n e r a l   b u d g e t   s u p -
p o r t   p ro g r a m m e s   i n   o rd e r   t o   b e t t e r   a r t i c -
u l a t e   t h e   l i n k   b e t w e e n   o b j e c t i v e s   a n d 
results.

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replY of The 
Commission 

97.
T h e   d y n a m i c   a p p ro a c h   t a k e n   b y   t h e   Co m-
m i s s i o n   i s   u s e d   b y   t h e   m a j o r i t y   o f   o t h e r 
g e n e r a l   b u d g e t   s u p p o r t   p rov i d e r s   i n c l u d -
i n g   t h e   i m f,   wo r l d   b a n k   a n d   e u   m e m b e r 
states.

(c )
T h e   C o m m i s s i o n   i s   d e v e l o p i n g   r e v i s e d 
g u i d a n c e   t o   d e e p e n   i t s   a s s e s s m e n t   o f   t h e 
c r e d i b i l i t y   a n d   r e l e v a n c e   o f   n a t i o n a l   a n d 
s e c t o r   d e v e l o p m e n t   s t r a t e g i e s   w h i c h   w i l l 
in clude links to th e budget.

a s   a c k n o w l e d g e d   b y   t h e   C o u r t   i n   p a r a -
g r a p h   3 4 ,   t h e   C o m m i s s i o n   u s e s   a   n u m b e r 
o f   r i s k   m i t i g a t i o n   m e a s u re s.   fo r   i n s t a n c e, 
w h e r e   t h e   C o m m i s s i o n   n o t e s   t h a t   c o m -
p l i a n c e   w i t h   e l i g i b i l i t y   i s   n o   l o n g e r   m e t , 
d i s b u r s e m e n t s   a r e   w i t h h e l d   u n t i l   c r e d -
i b l e   r e a s s u r a n c e s   o r   m e a s u r e s   h a v e   b e e n 
e s t a b l i s h e d .   ho w e v e r,   t h e   C o m m i s s i o n 
a c c e p t s   t h a t   t h e   r i s k   m a n a g e m e n t   f r a m e -
w o r k   s h o u l d   b e   s t r e n g t h e n e d   a n d   b e t t e r 
struc tured.

recommendation 2 –  m anagement of the 
m a i n   r i s k s   t o   t h e   e f f e c t i v e n e s s   o f   G Bs  
pro gramm es

(d )
T h e   C o m m i s s i o n   w i l l   c o n s i d e r   h o w   t o 
i d e n t i f y   a n d   i n c o r p o r a t e   a p p r o p r i a t e   r i s k 
m i t i g a t i o n   m e a s u r e s   i n   t h e   c o n t e x t   o f   i t s 
r e v i s e d   r i s k   f r a m e w o r k .   i n   t h i s   c o n t e x t , 
t h e   Co m m i s s i o n   h a s   t a k e n   n o t e   o f   t h e   u k 
g u i d e l i n e s   t o   w h i c h   t h e   C o u r t   r e f e r s   i n 
paragraph  32 .

9 8.
T h e   C o m m i s s i o n   e n s u r e s   t h a t   i t   f o l l o w s 
o e C d   g o o d   pr a c t i c e   g u i d a n c e   o n   g e n e r a l 
b u d g e t   s u p p o r t   i n   o r d e r   t o   m a x i m i s e   t h e 
p o t e n t i a l   b e n e f i t s   o f   g e n e r a l   b u d g e t   s u p -
por t.

(a)
The Commission will review how it decides 
a m o u n t s   p ro gr a m m e d   fo r   b u d g e t   s u p p o r t 
t h r o u g h   t h e   c o n s u l t a t i o n   b a s e d   o n   t h e 
g r e e n   pa p e r   o n   b u d g e t   s u p p o r t ,   i n   v i e w 
o f   i nt ro d u c i n g   a   m o re   p re c i s e   a p p ro a c h   i n 
th e future.

(b)
a s   a c k n o w l e d g e d   b y   t h e   C o u r t ,   t h e   C o m -
m i s s i o n’s   ba c k b o n e   s t r a t e g y   o n  Te c h n i c a l 
C o o p e r a t i o n   i s   i n t e n d e d   t o   i m p r o v e   t h e 
e f fe c t i ve n e s s   o f   i t s   c a p a c i t y- b u i l d i n g   s u p -
por t.

The Commission will fur ther strengthen its 
r i s k   m a n a g e m e n t   f r a m e w o r k   a n d   a d d r e s s 
t h i s   i n   t h e   c o n t e x t   o f   i t s   r e v i s i o n   o f   t h e 
genera l b ud get  s up p or t  g uidel in e s.

(a)
Th e   Co m m i s s i o n   w i l l   s e e k   to   a s s e s s   a l l   k e y 
r isks at the o u tset of gb s p ro gramm es and 
u p d a te   t h e m   re g u l a r l y   d u r i n g   p ro gr a m m e 
implem ent atio n.

(b)
 Ū

 Ū

 Ū

Th e   Co m m i s s i o n’s   re v i s e d   g u i d a n ce   o n 
pfm repor ting which was issued in  june 
2010 direc tly addresses this recommen-
dation.

T h e   C o m m i s s i o n   a g r e e s   t o   p r o m o t e 
g r e a t e r   u s e   o f   t h e   t o o l s   a v a i l a b l e   t o 
c o m p l e m e n t   a n d   d e e p e n   t h e   a s s e s s -
m e n t s   m a d e   u s i n g   t h e   i n t e r n a t i o n a l l y 
recogn ised pefa fram ewo r k . 

T h e   C o m m i s s i o n ’s   r e v i s e d   g u i d a n c e 
o n   p fm   r e p o r t i n g   w h i c h   w a s   i s s u e d   i n 
june  2010  exp licitl y   requ ires   repor ti ng 
on   cor ru pt io n  and  the  Commiss i on   will 
co nt i n u e   to   re g u l a r l y   re v i e w   t h e   s co p e 
for ad ditio nal s tudies  of co r rup tio n.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

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replY of The 
Commission 

(b)
T h e   C o m m i s s i o n   i n t e n d s   t o   d e v e l o p   a 
r e v i s e d   a p p r o a c h   t o   t h i s   i s s u e   f o l l o w i n g 
th e con sult ation s under  th e gree n p aper.

recommend atio n 4  –  capac it y-b uildin g 
su pp o r t

T h e   C o m m i s s i o n’s   c a p a c i t y - b u i l d i n g   s u p -
p o r t   i s   p r o v i d e d   o n   d e m a n d - l e d   b a s i s 
w h i c h   h a s   re ce nt l y   b e e n   fo r m a l i s e d   i n   t h e 
b a c k b o n e   s t r a t e g y   o n   Te c h n i c a l   C o o p -
e r a t i o n .   T h i s   s t r a t e g y   s e t s   a   f r a m e w o r k 
f o r   a s s e s s m e n t   a n d   i d e n t i f i c a t i o n   o f   t h e 
n eeds.

(a)
Th e   Co m m i s s i o n   w i l l   e n s u re   t h at   i t s   n e e d s 
a s s e s s m e nt   f ra m e wo r k   i s   a p p l i e d   o n   a   s ys-
temat ic  basis.

(b)
based on the outcome of the needs assess -
m e n t   e xe rc i s e s,   t h e   Co m m i s s i o n   w i l l   s e e k 
t o   p r o v i d e   c a p a c i t y - b u i l d i n g   s u p p o r t   t o 
areas  wh ere its impac t will be ma xi mi s ed.

(c )
T h e   C o m m i s s i o n   h a s   i n c r e a s e d   i n   r e c e n t 
y e a r s   i t s   c a p a c i t y - b u i l d i n g   s u p p o r t   t o 
s u p r e m e   a u d i t   i n s t i t u t i o n s ,   p a r l i a m e n t s 
a n d   a n t i - c o r r u p t i o n   b o d i e s   a s   w e l l   a s   t o 
o t h e r   a r e a s   w h e r e   a p p r o p r i a t e .  T h e   C o m -
m i s s i o n   w i l l   c o n t i n u e   t o   p r o v i d e   c o m p l e -
m e n t a r y   s u p p o r t   t o   a re a s   o t h e r   t h a n   p fm 
whe re appropr iate.

(c)
T h e   C o m m i s s i o n   h a s   i n t r o d u c e d   r e s u l t -
b a s e d   c o n d i t i o n s   i n   b u d g e t   s u p p o r t   a n d 
h a s   i n t e g r a t e d   i m p o r t a n t   l e s s o n s   l e a r n e d 
ove r   t h e   ye a r s.   i t   i s   c u r re nt l y   re v i e w i n g   i t s 
e x p e r i e n ce,   i n c l u d i n g   t h e   e x te nt   to   w h i c h 
c o u n t r i e s   f i n d   r e s u l t - b a s e d   c o n d i t i o n s 
a n   e f f e c t i v e   i n c e n t i v e   t o   p e r f o r m   b e t t e r, 
t h r o u g h   t h e   c o n s u l t a t i o n   gr e e n   pa p e r   o n 
t h e   f u t u r e   o f   e u  b u d g e t   s u p p o r t .   i n   t h i s 
c o n t e x t   t h e   gr e e n   p a p e r   a i m s   t o   e s t a b -
l i s h   h ow   co n d i t i o n s   c a n   b e s t   co nt r i b u te   to 
p o l i c y   d i a l o g u e   a n d   p ro m o t e   a n d   c a p t u re 
progress in par tner countries’ development 
res ult s.

(d)
po l i c y   d i a l o g u e   i s   c e n t r a l   t o   a n y   g e n e r a l 
b u d g e t   s u p p o r t   p r o g r a m m e .   T h i s   i s   t y p i -
c a l l y   b a s e d   o n   a   m u l t i - d o n o r   f ra m e wo r k   i n 
which the Commission is ac tively engaged. 
a  m o re   s t rate gi c   a p p ro a c h   to   t h e   m a n a g e -
m e n t   a n d   d o c u m e n t a t i o n   o f   p o l i c y   d i a -
l o g u e ,   a l o n g   w i t h   c o n t i n u e d   a t t e n t i o n   t o 
training will fur ther enhance the effec tive -
n e s s   o f   d i a l o g u e .   i n   t h e   c o n t e x t   o f   b o t h 
t h e   gr e e n   p a p e r   a n d   i n   o n g o i n g   d i s c u s -
sions with eu  m ember states, the Commis-
s i o n   i s   i n   t h e   p ro ce s s   o f   re f l e c t i n g   o n   h ow 
to   o p t i m i s e   t h e   p o te nt i a l   i m p a c t   o f   p o l i c y 
d i a l o g u e   i n   t h e   co ntex t   o f   g e n e ra l   b u d g e t 
suppor t p ro grammes.

recommendation 3 – f inancial resources

Th e   Co m m i s s i o n   i nte n d s   to   re v i e w   t h e   c r i -
t e r i a   t h a t   i n f o r m   d e c i s i o n s   o n   a m o u n t s 
p r o g r a m m e d   f o r   g e n e r a l   b u d g e t   s u p p o r t 
t h r o u g h   t h e   c o n s u l t a t i o n   b a s e d   o n   t h e 
gre e n   pa p e r   i n   v i e w   o f   i nt ro d u c i n g   a   m o re 
struc tured ap p roach in the fut u re. 

(a)
T h e   C o m m i s s i o n   i n t e n d s   t o   d e v e l o p   a 
r e v i s e d   a p p r o a c h   t o   t h i s   i s s u e   f o l l o w i n g 
th e consult atio ns  under the gree n p aper.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

76

replY of The 
Commission 

recommendat ion 5 – c ondit ions

reco mmend at ion  6  – d ialo gu e

(a)
i n   t h e   c o n t e x t   o f   i t s   r e v i s i o n   t o   t h e   g e n -
e r a l   b u d g e t   s u p p o r t   g u i d e l i n e s   t h e   C o m -
m i s s i o n   w i l l   d e v e l o p   a   c l e a r   s e t   o f   i s s u e s 
to   t a k e   i nto   co n s i d e rat i o n   w h e n   a s s e s s i n g 
the appropr iate balance bet ween fixed and 
va r i a b l e   t ra n c h e s   i n   t h e   d e s i gn   o f   g e n e ra l 
budget sup po r t  p rogramm es.

(b)
T h e   C o m m i s s i o n   w e l c o m e s   t h e   a c k n o w l -
e d g e m e n t   o f   t h e   i m p r o v e d   c l a r i t y   a n d 
s t r u c t u r e   o f   1 0 t h   e d f  f i n a n c i n g   a g r e e -
m e nt s   i n   p a ra gra p h   2 3   w h i c h   a l s o   re f l e c t s 
t h e   C o u r t ’s   o b s e r v a t i o n s   i n   t h e   2 0 0 8   a n d 
2 0 0 9   d a s  r e p o r t s .   i t   i s   i n t e n d e d   t h a t   t h e 
re v i s e d   g u i d e l i n e s   w i l l   f u r t h e r   co n s o l i d ate 
th is  appro ach.

(c)
i t   i s   t h e   p a r t n e r   g o v e r n m e n t ’s   r e s p o n s i -
b i l i t y   t o   s e t   i n d i c a t o r s   a n d   t a r g e t s ,   a n d 
a s s e s s   t h e   ex p e c te d   i m p a c t   o f   a c t i o n s   a n d 
the budget planned to achieve the targets, 
a l t h o u g h   t h e   C o m m i s s i o n   a s s e s s e s   t h e 
q u a l i t y,   m e a s u r a b i l i t y   a n d   r e a l i s m   o f   t a r -
g e t s   a n d   e n g a g e s   i n   a   d i a l o g u e   o n   t h e s e 
issues. The revised general budget suppor t 
guidelines will provide more detailed guid-
a n c e   o n   t h e   d e s i g n   o f   v a r i a b l e   t r a n c h e s 
ta k in g  into accou nt  this  re comm e n d ati on .

(d)
T h e   C o m m i s s i o n   s e e k s   t o   e n s u r e   t h a t   a l l 
d i s b u r s e m e n t   d e c i s i o n s   a r e   m a d e   o n   t h e 
b a s i s   o f   a   m o re   s t r u c t u re d   a n d   fo r m a l i s e d 
demonst rat ion o f sat is f ac tor y p ro gre ss.

The Commission agrees that a more strate -
gi c   a p p ro a c h   to   p o l i c y   d i a l o g u e   e n h a n ce s 
t h e   p r o s p e c t s   o f   s u c c e s s   o f   i t s   g e n e r a l 
b u d g e t   s u p p o r t   p ro gra m m e s.   at   t h e   s a m e 
time, the management and documentation 
o f   s u c h   d i a l o g u e   i s   a n   i m p o r t a n t   f a c to r   i n 
en sur in g its sustain abilit y  and i mpa c t.

(a)
T h e   C o m m i s s i o n   i n t e n d s   t o   d e f i n e   a   d i a -
l o g u e   s t r a t e g y   a n d   i s   a d d r e s s i n g   t h i s   i n 
t h e   co nte x t   o f   t h e   re v i s e d   g e n e ra l   b u d g e t 
suppor t g uidelin es.

(b)
T h e   C o m m i s s i o n   i s   a w a r e   o f   t h e   i m p o r -
t a n ce   o f   t h e   ava i l a b i l i t y   o f   re l e va nt   ex p e r-
tise and addresses this issue in the contex t 
of the rotation of staff, recruitment of con -
t ra c t   a g e nt s   a n d   t h e   d e ve l o p m e nt   o f   a d d i -
t i o n a l   t r a i n i n g   c o u r s e s .   T h e   p r e s e n c e   o f 
qualified staff on the ground is essential to 
p u r s u i n g   t h e   re g u l a r   p o l i c y   d i a l o g u e   t h a t 
is  fun damental  to  t he  general  bud ge t   s up -
p o r t   i n s t r u m e n t .   ho w e v e r,   t h e   a l l o c a t i o n 
o f   s t a f f   i s   c o n s t r a i n e d   b y   t h e   p r o v i s i o n s 
o f   t h e   f i n a n c i a l   f ra m e wo r k   a n d   t h e   a n t i c i -
pated zero growt h in  Commis sion  s taff.

(c )
Th e   Co m m i s s i o n   w i l l   e x a m i n e   h ow   b e s t   t o 
s u m m a r i s e   t h e   m u l t i p l e   co u nt r y   d i a l o g u e s 
i n   w h i c h   i t   i s   i nvo l ve d   i n   i t s   a n n u a l   re p o r t 
on the management of ex ter nal  assistance.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

7777

replY of The 
Commission 

(d )
i t   i s   ex p e c te d   t h at   a s   e va l u at i o n s   p ro gre s s 
t h e y   w i l l   i n c r e a s i n g l y   f e e d   i n t o   t h e   C o m -
m i s s i o n’s   a n n u a l   r e p o r t s   o n   t h e   m a n a g e -
m e n t   o f   e x t e r n a l   a s s i s t a n c e.   i n   t h e   m e a n -
t i m e ,   t h e   C o m m i s s i o n   h a s   a l r e a d y   t a k e n 
s t e p s   t o   b o l s t e r   t h e   c o v e r a g e   o f   b u d g e t 
s u p p o r t   i n   i t s   2 0 1 0   a n n u a l   r e p o r t   a n d 
t h r o u g h   a d d i t i o n a l   c o u n t r y   i n f o r m a t i o n 
o n   b u d g e t   s u p p o r t   p r o v i d e d   t o   m e m b e r 
s t a t e s   a n d   t h e   e u r o p e a n   pa r l i a m e n t .   T h e 
Commission   is  ready   to  fur th er   de velo p  i ts 
r e p o r t i n g   o n   b u d g e t   s u p p o r t   i n   t h e   l i g h t 
of feedbac k from  stakeh older s.

99.
The Commissio n p u b l is hes  a w ide  ra ng e  of 
re p o r t i n g   cove r i n g   b u d g e t   s u p p o r t   i s s u e s 
s u c h   a s   t h e   a n n u a l   r e p o r t   o n   e x t e r n a l 
a s s i s t a n ce,   co u n t r y   f i c h e s   o n   b u d g e t   s u p -
p o r t   s e n t   t o   m e m b e r   s t a t e s   a n d   t h e   eu ro -
p e a n   pa r l i a m e nt,   co u nt r y   e va l u at i o n s   a n d, 
i n   aCp  c o u n t r i e s,   t h e   j o i n t   a n n u a l   re p o r t s 
on  th e imp le me ntation of  t he Csp. 

Th e   Co m m i s s i o n   i s   n o t   a l o n e   i n   f a c i n g   t h e 
i m p o r t a nt   c h a l l e n g e   o f   re p o r t i n g   co m p re -
hensively on the impac t of general budget 
s u p p o r t .   ne ve r t h e l e s s   t h e   s t ro n g   d e m a n d 
from ex ternal stakeholders for such repor t -
i n g   i s   r e c o g n i s e d .   T h e   C o m m i s s i o n   t a k e s 
t h e s e   c h a l l e n g e s   s e r i o u s l y   a n d   i s   wo r k i n g 
to   d e ve l o p   m o re   i n fo r m at i ve   re p o r t i n g   o n 
th e result s of it s  g bs p ro gramm e s.

re c o m m e n d a t i o n   7   –   re p o r t i n g   o n 
wheth er GBs  is me e ting  its obj ec ti ves

(a)
T h e   C o m m i s s i o n   a g r e e s   t h a t   i t   s h o u l d 
m o r e   s y s t e m a t i c a l l y   m o n i t o r   a n d   r e p o r t 
o n   p r o g r e s s   a n d   t h e   n e w   g u i d e l i n e s   w i l l 
address this. 

(b)
T h e   C o m m i s s i o n   h a s   t a k e n   t h e   l e a d   i n 
d e v e l o p i n g   a n   e v a l u a t i o n   m e t h o d o l o g y 
a n d   i s   i n   t h e   p r o c e s s   o f   t e s t i n g   i t   i n   c o l -
l a b o rat i o n   w i t h   d o n o r   p a r t n e r s   a n d   re c i p i -
ent gover nment s.

(c)
T h e   C o m m i s s i o n   i n t e n d s   t o   c l e a r l y   d i s -
t i n g u i s h   b e t w e e n   d e l i v e r y   p r o c e s s e s   a n d 
r e s u l t s   i n   i t s   r e p o r t i n g   o n   a i d   e f f e c t i v e -
n e s s .   T h e   C o m m i s s i o n   i s   w o r k i n g   o n   t h i s 
a s p e c t   i n   t h e   co ntex t   o f   t h e   re v i s i o n   o f   i t s 
guideline s.

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

special r eport no 11/2010 – The Commission’s management of general budget support in a Cp, latin a merican and asian countries

european Court of auditors

special report no 11/2010 

the commission’s management of general budget support in acP, latin american and asian countries

luxembourg: publications office of the european union

2011 — 77 pp. — 21 × 29.7 cm

isbn 978-92-9237-028-2

doi:10.2865/90830

how to obtain Eu publications

free publications:

•	

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via	EU	Bookshop	(http://bookshop.europa.eu);

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in  This  reporT,  The  CourT  assesses  wheTher  The  Commission 

manages iTs general budgeT supporT programmes effeCTivelY. 

for This purpose, The CourT eXamined wheTher The Commission 

appropriaTelY  seleCTs  and  formulaTes  The  objeCTives  of  iTs 

general budgeT supporT programmes, appropriaTelY manages 

The  main  risks To Their  effeCTiveness,  effeCTivelY  designs  and 

implemenTs These programmes and reporTs in a Clear, eXhausTive 

and aCCuraTe manner on The aChievemenT of Their objeCTives. 

The  CourT  makes  reCommendaTions ThaT  aim  aT  improving The 

meThodologY  and  managemenT  of  general  budgeT  supporT 

programmes in order To inCrease Their likelY effeCTiveness.

european CourT of audiTors