Feasibility study for a potential use of budget support to deliver ESI funds : final report.
Date: 2018-09-17
Institutions: Directorate-General for Regional and Urban Policy
Subjects: EU Member State, European Regional Development Fund, European Social Fund, European social budget, administrative formalities, economic and social cohesion, economic reform, feasibility study, financial aid, fund (EU), report

Feasibility study for a 
potential use of Budget 
Support to deliver ESI Funds  

Final report 

Written by: Karin Attstrom (Ramboll), Jonathan Wolsey (Ecorys) and Silvia Vignetti (CSIL) 
September 2018 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 
Directorate-General Regional and Urban Policy 
Directorate B Policy 
Unit B.1 Policy development and economic analysis   

E-mail: REGIO-B1-STUDIES@ec.europa.eu 

European Commission 
B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Feasibility study for a 
potential use of Budget 
Support to deliver ESI Funds 

Final report 

2018 

EN 

Directorate-General for Regional and Urban Policy 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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The authors express their gratitude to those who made themselves available for interviews. The authors are 
also grateful for the very helpful insights from the Commission staff and particularly to Peter Berkowitz, 
Stéphanie Gantzer-Houzel, Urszula Romańska, Joëlle Salmon and to other members of the Steering Group. 

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ISBN 978-92-79-93460-5 
doi: 10.2776/1942 

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Abstract 
The overall objective of the study was to assess the advantages and disadvantages of a potential 
use of budget support for the delivery of parts of the ESI Funds, and to assess the feasibility of 
using a delivery mechanism based on budget support to deliver Cohesion Policy. It took as a point 
of departure the available evidence on budget support, as implemented in third countries, by the 
European Commission and other multilateral and bilateral donors. The available evidence and 
analysis show that the potential benefits of using budget support to deliver ESI Funds are limited, 
while the risks may be substantial, notably concerning the ability to control the legality and 
regularity of spending. The study concludes that some aspects of budget support may be relevant 
and feasible to use to deliver the ESI Funds, such as payment for policy reforms and payment for 
results. The benefits would likely be generated mainly in the implementation phase of the 
programming cycle, by alleviating the administrative burden for both the European Commission 
and Member States. 

Key words: Feasibility study, European Funds, ESI Funds, ESF, ERDF, administrative burden, 
budget support, assurance, results, disbursement linked indicators, standard cost options, policy 
reform 

2018 

EN 

Directorate-General for Regional and Urban Policy 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONTENTS 

1. 
2. 
2.1 
2.2 
2.3 

2.4 

2.5 
2.6 

2.7 
2.8 
3. 

3.1 

3.2 
3.3 
3.4 

3.5 

4. 

4.1 
4.2 
5. 

5.1 
5.2 
5.3 

5.4 
6. 

INTRODUCTION 
BUDGET SUPPORT AS AN AID MODALITY 
Budget support includes a financial and incentive dimensions 
There are not one but multiple types of budget support 
Results have not been uniform across the different budget 
support approaches 
Differences between donors in their budget support 
approaches 
The decision to use budget support reflects multiple factors. 
Differences in the scope and nature of the conditions for 
disbursement 
Sector focus of budget support programmes 
Use of similar instruments in non-development context 
BUDGET SUPPORT IN ESI FUNDS: LIKELY IMPACT AND 
TRADE-OFFS 
Sound financial management and assurance on legality and 
regularity 
Simplification and accountability 
Focusing on inputs, outputs, results and/or policy actions 
Support to national, regional and/or local levels and the 
partnership principle 
Conclusions on the potential value added of using budget 
support elements for ESIF 
USING ELEMENTS OF BUDGET SUPPORT TO DELIVER 
ESI FUNDS 
Payments based on policy actions 
Payments based on outputs and results 
ADMINISTRATIVE COSTS OF IMPLEMENTING BUDGET 
SUPPORT IN ESIF 
Administrative costs at the level of Commission services 
Administrative costs at the level of Member States 
Aspects to be considered when designing budget support 
elements for ESI Funds 
Administrative costs at the level of beneficiaries 
SUMMARY OF OPTIONS ACCORDING TO THE 
ASSESSMENT CRITERIA 

1 
2 
2 
3 

4 

7 
8 

8 
12 
13 

14 

14 
18 
20 

21 

23 

30 
32 
37 

42 
42 
44 

45 
46 

51 

 
 
 
 
 
 
 
 
  
 
 
 
 
FIGURES 

Figure 1: Total budget support as % of bilateral ODA disbursed 2011-2014 
(OECD database, 2016; WB, 2015b) ......................................................... 7 
Figure 2: Sector composition of EC Sector Budget Supports in 2015 (EC, 2015)
 ........................................................................................................... 12 
Figure 3 Current system versus condition based payments .......................... 30 

TABLES 

Table 1: Four approaches to budget support and their respective achievements 
(synthesis of evidence by authors) ............................................................ 5 
Table 2: Use of different types of budget support according to objectives 
(synthesis of evidence by authors) ............................................................ 8 
Table 3: Prior actions in the World Bank’s Energy Efficiency Development Policy 
Loan in Poland (2011) ............................................................................ 10 
Table 4: Key performance areas and indicators for variable tranches: South 
Africa – Employment Creation, Sector Policy Support to the Economic Cluster 
Programme of Action (EC – 2009/14) – Result areas 1 and 2. ..................... 10 
Table 5 Basic mapping of delivery mechanisms according to the type of 
condition for payment ............................................................................ 24 
Table 6 Suitability of output/result based conditions for payment in different 
areas of intervention .............................................................................. 28 
Table 7 Assessment of the evolution of administrative costs for the European 
Commission under the three policy options ............................................... 47 
Table 8 Assessment of the evolution of administrative costs for the Member 
States/regions under the three policy options ............................................ 49 
Table 9 Comparison of policy options in terms of assessment criteria ........... 51 

APPENDIX 1 REVIEWED LITERTURE 

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
1 

EXECUTIVE SUMMARY 

The overall objective of the study was to assess the advantages and disadvantages of a potential 
use  of  budget  support  for  the  delivery  of  parts  of  the  ESI  Funds,  and  to  assess  the  feasibility  of 
using a delivery mechanism based on budget support to deliver Cohesion Policy. It has taken as a 
point of departure the available evidence on budget support, as implemented in third countries, by 
the  European  Commission  and  other  multilateral  and  bilateral  donors.  The  findings  from  the 
literature review were used to analyse the potential added value and likely disadvantages of using 
budget  support  to  deliver  ESI  Funds  compared  to  the  existing  delivery  system  of  shared 
management. Through the analysis, the study identified options, including elements of the budget 
support  delivery  mechanism,  which  could  be  of  relevance  to  implement  in  an  ESI  Fund  context. 
Finally, it assessed the likely costs and benefits of implementing these options.  

It  should  be  kept  in  mind  that  it  is  difficult  to  provide  strong  judgements  on  the  potential  value 
added  and  likely  disadvantages  of  using  budget  support  compared  to  the  current  shared 
management  delivery  of  ESI  Funds,  due  to  the  very  different  context  in  which  the  instruments 
operate (e.g. inside the European Union vs. in international cooperation, the difference in amounts 
disbursed,  the  regional  focus  of  ESI  Funds  etc.).  Likewise,  the  cost  benefit  analysis  is  mainly 
qualitative, based on assumptions, due to lack of hard data on administrative cost of implementing 
budget support, making it difficult to carry out a robust and full-fledged quantitative assessment of 
likely costs and benefits. 

What is budget support? 

in  accordance  with  the  beneficiary  country’s  budget  procedures, 

For the purposes of this study, budget support is defined as a delivery mechanism which involves a 
transfer  of  financial  resources  to  the  national  budget  of  a  partner  country  and  that  will  be 
implemented 
financial 
management system and public procurement system. The provision of budget support is generally 
accompanied  by  a  policy  dialogue  between  the  donor  and  the  partner  country  to  agree  on  policy 
actions  or  development  results  which  budget  support  should  contribute  to,  and  generally  also  by 
capacity  development  and  technical  assistance.  Payments  are  made  based  on  conditions  (as 
opposed  to  actions  or  activities  carried  out),  where  performance  frameworks  with  disbursement 
linked  indicators  are  used  to  assess  progress  and  achievements  towards  the agreed objectives  of 
the support. 

A defining feature of budget support is that it includes both a financial dimension (transfer of funds 
to a beneficiary country’s Treasury) and an incentive dimension by providing financial incentives to 
governments  to  achieve  objectives,  mostly  related  to  macroeconomic  stability,  Public  Finance 
Management  (PFM),  reform  implementation  and  service  provision.  There  is  not  a  single  model  of 
budget support operations, but instead a variety of types, which can be differentiated based on the 
level  of  earmarking:  (i.e.  the  way  the  provision  of  budget  support  is  justified  against  certain 
expenditures in the country’s budget); the traceability (i.e. funds are identifiable in the expenditure 
classification of the country’s budget); the type of conditionality (i.e. the nature of budget support 
is partly determined by the scope and nature of conditions for disbursements).  

The multiple ways in which these  criteria can  be combined mean that there is no one-size fits all 
budget support but rather a multitude of approaches, adapted to the specific context and needs of 
both donor and partner countries.  

 
 
 
 
 
 
 
 
 
2 

For  the  purposes  of  this  study,  four  “ideal”  types  of  budget  support  have  been  studied  and  are 
discussed in the report: 

  General  Budget  Support  (GBS)  is  meant  to  support  the  implementation  of  a  national 
development  strategy,  with  the  policy  dialogue,  disbursement  conditions  and  capacity 
development  assistance  focused  on  the  overall  policy  objectives  and  budget  priorities  of  the 
partner country. 

  Sector  Budget  Support  (SBS)  is  meant  to  support  the  implementation  of  a  sector 
development  programme  and  the  policy  dialogue,  disbursement  conditions  and  capacity 
development assistance are thus focused on sector specific policy issues and budget allocation 
priorities.  GBS  and  SBS  instruments  are  mostly  distinguished  by  the  nature  of  the  conditions 
attached to the aid rather than by their financial characteristics. 

  Support  for  policy  action  is  meant  to  support  policy  reforms.  It  supports  and  links 
disbursements mostly to ‘prior actions’ (i.e. reform/process indicators) to be undertaken by the 
partner  government  (and  which  have  to  be  achieved  for  disbursements  to  be  made).  The 
distinction  between  general  and  sector  support  is  generally  not  made,  as  often  the  policy 
actions are cross-cutting in nature, and may support prior actions across more than one sector. 
Support  for  policy  actions  can  be  implemented  as  a  ‘pure’  budget  support,  i.e.  providing  a 
financial  transfer  to  the  national  budget  of  a  partner  country  or  using  different  financial 
modalities (e.g. payments to ring-fenced programmes or top-ups to existing programmes). 
  Payment  for  Results  approaches  is  an  aid  delivery  approach  in  which  the  donors  pay  for 
results or outputs (e.g. a fixed amount for reaching a certain  number of children in school, or 
$200  for  each  additional  child  who  completes  primary  school  and  takes  a  standardized  test), 
and in which the recipient (a government entity) has large responsibility for and wide discretion 
in using funds.  

Even  if  evidence  is  mixed,  the  expected  positive  effects  of  using  budget  support  modalities  on 
policy  dialogue,  alignment,  results,  and  transaction  costs  have  been  generally  more  limited  than 
initially envisaged. Regarding policy dialogue, there is limited evidence of improved alignment and 
quality of the dialogue. In terms of result orientation, budget support operations are usually linked 
to  a  Performance  Assessment  Framework  (PAF)  that  contains  not  only  impact  and  outcome 
indicators, but also output, activity and process/input measures; thereby not always being as result 
oriented  as  initially  intended.  In  Payment  for  Results  approaches,  delivery  of  outputs  and  results 
has  strengthened  the  results  focus,  even  if  these  approaches  also  have  disadvantages  (potential 
gaming  behaviours,  concentration  on  indicators  rather  than  on  general  performance,  difficulty  to 
identify and negotiate indicators, etc.). Generally, budget support approaches are also perceived to 
have  led  to  a  reduction  in  transaction  costs  compared  to  the  project  modality,  but  evidence  is 
scarce  and  gains  easily  offset  by  excessively  complex  assessments  procedures  and  disbursement 
conditions. 

The  focus  of  budget  support  programmes  has  been  primarily  on  social  sectors.  Sector  Budget 
Support,  although  increasingly  used  in  productive  sectors  such  as  energy  or  agriculture,  is 
predominantly concentrated in service delivery sectors such as health and education. Program for 
Results  operations  have  slightly  different  focus,  including  areas  such  as  health,  water  and 
resilience.  The  availability  and  easier  identification  of  output  or outcome indicators  in  sectors  like 
health,  education,  and  water  can  be  considered  as  one  factor  behind  the  use  of  Sector  Budget 
Support or Program for Results types of budget support in these sectors. 

Certain  sector  characteristics  affect  the  effectiveness  of  budget  support,  and  sectors  which  are 
more complex and involve different types of stakeholders are generally considered less suitable for 
budget support. Private sector involvement is considered a factor which can complicate the use of 
budget  support.  In  addition,  the  budget  support  delivery  mechanism  is  rarely  used  for  large 

 
 
 
 
 
 
3 

investments which entail infrastructure, such as transport, due to high value contracts, the risk of 
corruption and ensuing reputational risk.  

Conditions attached to budget support programmes can be classified according to their scope and 
nature. In the case of General Budget Support, the conditions are multi-sectoral in nature, while in 
the  case  of  Sector  Budget  Support,  the  focus  is  narrower  (sector  or  sub-sector).  Within  the 
Program  for  Results,  the  scope  of  the  conditions  is  generally  at  the  sub-sector  or  programme 
levels. Regarding the nature of conditions, the main choice is whether they relate mainly to policy 
actions  and  reforms  to  be  undertaken  or  to  specific  outputs  and  results  to  be  reached  (or  to  a 
mixture of both).  

The  study  has  not  found  examples  of  using  budget  support  approaches  in  non-development 
contexts,  and  it  has  so  far  mainly  been  used  in  low-  and  middle-income  countries.  DG  NEAR 
increasingly  uses  budget  support  in  neighbourhood  countries  to  promote  reforms,  but  this  is  a 
recent  development.  It  is  hence  difficult  to  fully  assess  results  of  these  efforts  yet.  First 
experiences gained on process and results have been integrated into the assessment. 

What  would  be  the  likely  impact  and  trade-offs  of  using  budget  support  in  ESI 
Funds? 

The objective of this study was to assess the advantages and disadvantages of the potential use of 
budget  support  for  the  delivery  of  (parts  of)  the  ESI  Funds  and  to  assess  the  feasibility  of  using 
budget  support  type  delivery  mechanisms  in  the  framework  of  ESI  Funds.  Overall,  the  study 
concluded that there is little evidence that general or sector budget support delivery of ESI Funds 
would  be  more  effective  and  efficient  than  the  current  shared  management  system.  Any  change 
would involve significant trade-offs with uncertain outcomes and gains, as summarised below. 

Sound financial management and legality and regularity 
The  use  of  budget  support  mechanisms  could  have  a  positive  impact  on  sound  financial 
management  by  enabling  managers  of  EU  funds  in  Member  States  to  face  fewer  layers  of 
requirements  on  process  and  procedures  and  to  spend  more  time  on  implementing  programmes 
and on ensuring the efficiency and effectiveness of support. Using budget support mechanisms may 
however  not  necessarily  lead  to  increasing  sound  financial  management.  The  study  showed  that 
ESI  Funds  already  have  many  elements  in  place  to  incentivize  sound  financial  management  (e.g. 
performance  frameworks,  monitoring  and  evaluation  frameworks,  use  of  clear  intervention  logics, 
transparent  selection  procedures,  etc.);  and  a  switch  to  budget  support  would  lead  to  an  unclear 
and potentially mixed impact on sound financial management.  

A  clear  finding  of  the  study  is  that  implementing  budget  support  in  ESI  Funds  would  lead  to 
increased  fiduciary  risk  and  a  less  detailed  assurance  on  legality  and  regularity  of  expenditure, 
when  compared  to  the  current  ESI  Funds  delivery  system.  The  assurance  would  be  based  mainly 
on  verifying  that  conditions  for  support  were  met,  and  underlying  spending  in  Member  States 
would  not  be  fully  scrutinized.  This  would  have  a  strong  impact  on  the  European  Commissions’ 
possibility to provide detailed assurance on the legality and regularity of the expenditures from the 
EU budget.  

This  may  not  automatically  translate  into  higher de-facto  risk of  irregularities,  but  would  strongly 
affect the ability to detect and correct them, e.g. the assurance provided on payments made by the 
Commission to Member States. Underlying fiduciary risk may be particularly complex to address on 
issues  such  as  the  fight  against  fraud  and  respect  of  EU  law.  Some  rules  and  requirements,  in 
particular regarding state aid and public procurement, apply to all investments and are not specific 
to ESI Funds, and the use of national system would not change underlying rules. However, the high 
error  rates  still  associated  with  the  application  of  state  aid  and  procurement  rules  indicate  that 
Member  States  still  face  many  difficulties  in  correctly  interpreting  and  applying  the  rules.  Full 

 
 
 
 
 
 
 
 
4 

reliance  on  national  system  may  therefore  result  in  overall  weaker  compliance  with  these  rules. 
Budget support would require a shift in paradigm, in the sense that it would require setting up new 
arrangements  (i.e.  using  ex-ante  assessments  for  example,  or  other  systemic  checks)  to  ensure 
that systems to ensure compliance with law are appropriate. 

Simplification and accountability 
Trade-offs have also been identified  between simplification and accountability, as well as between 
simplification  and  sound  financial  management.  Since  budget  support  relies  on  national  budget 
implementation and control procedures, there would be no  parallel or additional management and 
control system for funding of ESI Funds delivered through budget support. This would be a source 
of  simplification.  However,  the  more  simplification  is  pursued  –  in  particular  when  programme 
implementation  and  control  rely  on  national  rules  –  the  more  difficult  it  becomes  to  ensure  high 
levels of accountability, both results and on legality and regularity. Experience from implementing 
budget  support  operations  in  external  actions,  shows  that  budget  support  intends  to  enhance 
accountability within the recipient  country (e.g. putting an emphasis on parliamentary scrutiny of 
expenditure,  focusing  on  transparency  requirements,  etc.)  but  that  it  is  more  difficult  to  ensure 
accountability  at  the  level  of  the  donor.  The  level  of  accountability  may  also  be  quite  variable 
depending on national procedures and practices in place.  

Results orientation and performance frameworks 
The  ESI  Funds  system  for  the  2014-2020  programming  period  already  has  a  performance 
framework  and  well-defined  structures  to  monitor  it.  Result  orientation  is  reflected  in  the 
programming  phase  in  the  ESI  Funds:  the  intervention  logic  is  explicit,  with  performance 
frameworks  including  financial,  output  and  result  indicators  with  corresponding  targets.  The 
evidence  on  budget  support  showed  that  heterogeneous  approaches  to  result  orientation  were 
used, with budget support focusing on policy actions/processes but also a mix of  outputs, results 
and  process  indicators.  It  is  deemed  uncertain  whether  using  budget  support elements to  deliver 
ESI Funds would actually improve results orientation. 

Support to national, regional and/or local levels 
Elements  such  as  the  level  of  administrative  and  budgetary  autonomy  at  the  regional  and  local 
level  are  important  when  it  comes  to  analysing  the  possibility  to  implement  budget  mechanisms 
not only at national, but also  at regional/local level. There is little experience with  - and evidence 
from - budget support applied at regional or local levels. There may be greater scope to implement 
budget support at regional/local level in the EU than in the development context since the level of 
administrative  capacities  in  European  regions  and  territories  generally  are  higher  than  low  and 
middle-income  countries  where  budget  support  is  currently  mostly  used.  It  should  also  be 
considered that directly providing budget support at regional or lower levels of government may be 
politically sensitive, and that it could interfere with national systems of budget transfers already in 
place.  

The partnership principle 
The effect of using budget support as a delivery mechanism for ESI Funds on the application of the 
partnership principle would largely depend on existing set-up in Member States. The risk could be a 
lower  level  of  involvement  of  relevant  partners  in  decision-making  processes.  It  concerns  in 
particular  regional/local  authorities,  social  or  private  partners  and  non-government  organisations 
representing  civil  society,  who  are  important  stakeholders  in  Cohesion  policy  overall,  and  for 
certain  types  of  intervention  such  as  business  support  and  innovation,  small  scale  local 
development and social inclusion. Their mobilisation would require specific consideration depending 
on whether budget support would complement or replace current delivery mechanisms.  

 
 
 
 
 
 
 
 
 
5 

Using Elements of Budget Support to deliver ESI Funds 

Based  on  the  analysis  conducted,  in  addition  to  fully-fledged  budget  support,  two  further  options 
for implementing budget support mechanisms in ESI Funds have been retained for analysis in the 
study:  Payments  based  on  policy  actions  and  Payment  based  on  outputs  and  results.  Whereas  a 
fully-fledged  budget  support  option  could  be  largely  inspired  from  budget  support  mechanisms 
used in external actions, the options of Payments based on policy actions and Payments based on 
outputs  and  results  would  need  to  be  designed  specifically  for  ESI  Funds.  For  each  of  the  two 
options, main implications at the different stages of the programming cycle are presented. 
A common feature of the two options is that they aim to shift the basis of reimbursement from the 
real  cost  at  the  project  level  towards  conditions,  e.g.  output,  results  and  processes  at  an 
aggregated level, for example at the level of the programme or of part of the programme. 

Payments based on policy conditions 
ESI  Funds  have  already  contributed  to  and  will  continue  to  contribute  to  pursuing  structural 
reforms,  improving  administrative  capacity  and  the  effectiveness  of  government.  Along  with 
strengthening  infrastructure  endowment,  human  capital,  and  endogenous  potential,  payments 
based on policy actions is a tool that could be used to pursue the objective of supporting reforms 
and institution building. 

The  primary  rationale  of  payments  based  on  policy  conditions  would  be  to  provide  incentives  to 
Member  States to  commit  to  certain  policy  actions/processes  rather  than  to  cover  their  cost.  The 
basis for payments would not be based on outputs (for example number of civil servants trained), 
but  rather  be  linked  to  policy  actions,  procedures  or  processes  being  implemented.  Programming 
payments  based  on  policy  actions  could  take  as  starting  point  existing  diagnostics/  dialogue 
mechanisms,  such  as  Country  Specific  Recommendations  (CSRs)  issued  to  Member  States  in  the 
framework  of  the  Semester.  Sectoral  or  sub-national  obstacles  to  effective  investments  could,  in 
turn,  be  identified  during  the  programming  process  of  ESI  Funds  (or,  for  example,  during  the 
process of producing position papers for the Commission).  

Disbursement linked conditions (progress indicators) should be clearly defined and mechanisms for 
verification of progress would need to be established. A key challenge would be to put a price tag 
on  the  policy  action  to  be  undertaken,  with  the  aim  to  provide  sufficient  incentives  for  Member 
States while avoiding adverse effects. The monitoring of the implementation of policy actions focus 
on the implementation of the agreed policy actions and of identified indicators of progress (process 
indicators). Visibility for EU funding may be difficult to achieve, due to the incentive nature of the 
support.  The  need  for  a  communication  strategy  could  be  assessed  on  a  case  by  case  basis, 
depending on the type of policy action being supported, and the level of public interest expected. 

Payments based on output and results 
Payments based on output/results is a delivery  approach in which  payments are  made  for results 
or  outputs  (e.g.  a  fixed  amount  is  paid  when  a  number  of  children  in  school  has  been  reached), 
and  in  which  the  recipient  (a  government  entity)  usually  enjoys  high  level  of  autonomy  for 
implementing  the  funds.  In  this  approach,  the  focus  is  on  results  rather  than  processes  to  get 
there.  

Output  and  results  based payment  requires  well  defined  intervention  logics  with  clear  output  and 
results indicators. There should not be a significant time-lag between the intervention itself and the 
benefits/change it seeks to realise, e.g. more complex interventions where results take a long time 
to materialise are less suitable for output and results based payments. It is also essential that the 
link  between  the  intervention  and  the  benefit/change  is  clear,  e.g.  that  outputs/results  achieved 
can  be  reasonably  attributed  to  the  activities  or  actions  implemented.  In  principle,  disbursement 
can  be  linked  to  any  level  of  the  intervention,  from  activities  (number  of  trainings  produced)  to 
outputs (number of people trained) and results (employment of trained people). Results indicators 

 
 
 
 
 
 
 
6 

are, however, more challenging to define and to use for disbursement, since they often entail time-
lags and are prone to influence by external factors. A challenge in this type of approach is to define 
the  “right”  disbursement  indicators  depending  on  the  policy  area  and  type  of  intervention 
supported.  Visibility  could  be  strengthened  if  Member  States  are  required  to  make  results  of  EU 
funding publicly available. 

To  implement  an  output  and  results-based  payment  system  would  likely  not  require  significant 
changes to the current shared management system. It could be done within the existing ESI Funds 
architecture, using existing authorities responsible for implementation of programmes and controls. 
It would however require setting up a solid and robust system for data verification and monitoring, 
to  provide  information  on  progress  on  disbursement  linked  indicators.  A  key  issue  or  challenge 
would be to define the cost or “price” of a specific output or result, and  it  would  be necessary to 
develop  methodologies  and  guidelines to that  aim.  The  methodologies  currently  used  to  calculate 
standards scales of unit costs could provide inspiration and relevant lessons learnt.  

Assessment  of  administrative  costs  of  implementing  Budget  Support  elements 
in ESI Funds 

The study has analysed  the likely impact in  terms of  administrative costs of introducing a budget 
support  delivery  system  in  ESI  Funds  or  in  implementing  budget  support  elements  in  ESI  Funds 
(e.g. payments on the basis of policy action and payments on the basis of outputs/results). A full 
quantitative assessment is not feasible in the context of this study due to the lack of relevant and 
comparable data on administrative costs and burdens incurred notably in the framework of budget 
support mechanisms. 

Overall,  the  analysis  indicates  that  the  overall  impact  on  administrative  cost  for  both  the 
Commission and Member States would be mixed. Implementing budget support or payments based 
on policy actions or outputs/results would most likely lead to an increase in administrative costs in 
the programming phase. In payments based on policy action it would require the Commission and 
Member  States  to  engage  in  a  potentially  complex  dialogue  to  define  objectives,  progress 
indicators, disbursement conditions, verification mechanisms etc. on an ad hoc basis and adapted 
to  each  context.  In  payments  based  on  outputs  and  results,  programming  would  also  entail 
defining  disbursement  linked  indicators,  calculation  of  costs  and  setting  up  monitoring  and  data 
verification systems. 

The  main  gains  for  both  the  Commission  and  Member  States  would  likely  be  realised  in  the 
implementation  and  control  phase.  Part  of  the  ESI  Funds  management  and  control  system  would 
be replaced by national procedures and processes. This would most  likely result  in  a reduction of 
the administrative cost of controls and audits. Whether beneficiaries would also experience reduced 
administrative  burden  is  unclear,  since  it  would  largely  depend  on  the  level  of  complexity  of 
Member States (and regional or local) public financial management systems. No gains are expected 
in  terms  of  reporting,  monitoring  and  evaluation.  In  payments  based  on  outputs  and  results 
system, an increase of the administrative cost would be likely, related to the need to ensure robust 
and valid data collection and verification mechanisms. In payments for policy action resources and 
skills for monitoring policy conditions would be required at the level of the Commission.  

Conclusions 

The  analysis  conducted  showed  that  fully-fledged  budget  support  (sector  or  general  budget 
support) is not a delivery mode which is considered adequate to deliver the entirety of ESI Funds. 
ESI Funds cover a broad  range of investment areas  with different policy objectives  and  risks and 
there is no available evidence that delivering the entirety of ESI Funds via budget support would be 
more  effective  and  efficient  than  shared  management.  This  is  also  evidenced  by  the  fact  that  all 
donors  using  the  budget  support  continue  to  use  other  types  of  delivery  mechanisms  (project  or 
programme  based  support).  A  switch  to  a  fully-fledged  budget  support  would  entail  significant 

 
 
 
 
 
 
 
7 

trade-offs;  while  it  may  bring  simplification,  it  would  increase  the  fiduciary  risks  and  could 
ultimately carry  reputational risks for the Commission  and  EU  funding  in general. Finally, there is 
little experience with using budget support mechanisms at sub-national level, which is where most 
of ESI Funds are delivered. A switch to budget support for the entirety of ESI Funds may therefore 
lead to a significant weakening of the regional/local dimension of parts of ESI Funds.  

Payments based on outputs and results could constitute a simple and effective delivery mechanism 
for parts of ESI Funds. By putting the focus on achieved outputs and results, this type of approach 
holds  a  potential  for  simplification  and  to  increase  result  orientation,  in  areas  where  outputs  and 
results can clearly be attributed to the implementation of a specific programme. Hence, payments 
for outputs/results therefore have more potential in some ESI Funds areas than others, and could 
be explored in  areas  such as human  capital, social inclusion,  energy efficiency, part of  innovation 
and  business  support.  Experience  from  the  use  of  simplified  cost  options  in  ESI  Funds  should  be 
taken into account when designing concrete delivery options in these fields. 

Payments  for  policy  action  could  be  added  to  the  ESI  Funds  delivery  portfolio  with  a  view  to 
increasing  ESI  Funds'  effectiveness  in  addressing  a  broad  range  of  structural  and  administrative 
challenges.  Mechanisms  that  link  disbursements  to  the  implementation  of  policy  actions  to  be 
undertaken may be interesting to explore when it comes to supporting structural reforms, tackling 
sub-national  or  sectoral  bottlenecks,  or  provide  support  to  soft  investments  (such  as  capacity 
building  actions  or  support  to  the  public  administration).  The  detailed  design  of  each  payment 
based on policy actions scheme would have to be tailored to the Member States in question and the 
issues they face, which could be a challenge to implement. 

 
 
 
 
 
 
8 

RÉSUMÉ EXÉCUTIF 

L’objectif global de l’étude était d’évaluer les avantages et les inconvénients d’un éventuel recours 
à l’appui budgétaire pour l’octroi de parties des Fonds structurels et d’investissement européens et 
d’évaluer la faisabilité du recours à un mécanisme d’octroi s’appuyant sur l’appui budgétaire pour la 
mise  en  œuvre  d’une  Politique  de  cohésion.  L’étude  a  eu  comme  point  de  départ  la  littérature 
existante  sur  l’appui  budgétaire,  tel  que  celui-ci  a  été  mis  en  œuvre  dans  les  pays  tiers,  par  la 
Commission européenne et par d’autres bailleurs de fonds multilatéraux et bilatéraux. Les résultats 
de  la  revue  de  la  littérature  ont  été  utilisés  pour  analyser  l’éventuelle  valeur  ajoutée  et  les 
probables  inconvénients  du  recours  à  l’appui  budgétaire  pour  l’octroi  des  Fonds  structurels  et 
d’investissement  européens  par  rapport  au  système  d’octroi  existant  de  gestion  partagée.  Par  le 
biais  de  l’analyse,  l’étude  a  identifié  des  options,  notamment  des  éléments  inspirés  de  l’appui 
budgétaire, dont la mise en œuvre pourrait être pertinente dans un contexte des Fonds structurels 
et d’investissement européens. Enfin, elle a évalué les coûts et les avantages probables de la mise 
en œuvre de ces options.  

Il  convient  d’avoir  à  l’esprit  qu’il  est  difficile  d’aboutir  à  des  avis  définitifs  sur  l’éventuelle  valeur 
ajoutée  et  les  probables  inconvénients  du  recours  à  l’appui  budgétaire  par  rapport  à  l’octroi  de 
l’actuelle  gestion  partagée  des  Fonds  structurels  et  d’investissement  européens  en  raison  du 
contexte  différent  dans  lequel  les  instruments  sont  utilisés  (par  exemple  à  l’intérieur  de  l’Union 
européenne par opposition à la coopération internationale, la différence des montants déboursés, la 
priorité  régionale  des  Fonds  structurels  et  d’investissement  européens,  etc.).  De  même,  l’analyse 
coût/bénéfice  est  essentiellement  qualitative,  basée  sur  des  hypothèses,  du  fait  du  manque  de 
données  concrètes  sur  les  coûts  administratifs  de  la  mise  en  œuvre  de  l’appui  budgétaire,  ce  qui 
complique  la  réalisation  d’une  évaluation  quantitative  saine  et  exhaustive  des  coûts  et  des 
avantages probables. 

Qu’est-ce que l’appui budgétaire ? 

Pour les besoins de la présente étude, l’appui budgétaire est défini comme  un mécanisme d’octroi 
qui comprend un transfert de ressources financières vers le budget national d’un pays partenaire et 
qui  sera  mis  en  œuvre  conformément  aux  procédures  budgétaires,  au  système  de  Gestion  des 
finances  publiques  (GFP)  et  au  système  de  passation  de  marchés  publics  du  pays  bénéficiaire. 
L’octroi  de  l’appui  budgétaire  est  généralement  accompagné  d’un  dialogue  politique  entre  le 
bailleur de fonds et  le pays partenaire afin de convenir des mesures de politique publique ou des 
résultats  en  matière  de  développement  que  l’appui  budgétaire  devrait  contribuer  à  obtenir  et 
généralement aussi du renforcement des capacités et de l’assistance technique. Les paiements sont 
effectués  en  fonction  des  conditions  (par  opposition  aux  actions  ou  aux  activités  réalisées)  -  des 
cadres de performance dont les indicateurs sont liés aux décaissements étant utilisés pour évaluer 
les progrès et l’atteinte des objectifs convenus dans les programmes d’appui. 

Un trait caractéristique de l’appui budgétaire est qu’il comprend à la fois une dimension financière 
(transfert  des  fonds  à  la  Trésorerie  du  pays  bénéficiaire)  et  une  dimension  incitative  par  la 
présence d’incitations financières aux gouvernements pour l’atteinte des objectifs, essentiellement 
liés  à  la  stabilité  macroéconomique,  à la  Gestion  des  finances  publiques,  à la  mise  en  œuvre  des 
réformes  et  à  la  prestation  des  services.  Il  n’existe  pas  un  seul  modèle  d’opérations  d’  appui 
budgétaire, mais plutôt une variété de types, qui se distinguent en fonction du niveau  de ciblage : 
(c’est-à-dire la façon dont  l’appui budgétaire est justifié par rapport à certaines dépenses  dans le 
budget du pays) ; la traçabilité (c’est-à-dire que les fonds peuvent être identifiés dans la rubrique 
dépenses  du  budget  du  pays) ;  le  type  de  conditionnalité  (c’est-à-dire  que  l’appui  budgétaire  est 
partiellement  déterminé  par  le  champ  et  la  nature  des  conditions  à  remplir  pour  les 
décaissements).  

 
 
 
 
 
 
 
 
9 

Les multiples combinaisons possibles de ces critères impliquent qu’il n’existe pas de modèle unique 
d’appui budgétaire mais plutôt  une  multitude d’approches adaptées au contexte spécifique et aux 
besoins du bailleur de fonds et des pays partenaires. Pour les besoins de la présente étude, quatre 
types d’appui budgétaire ont été examinés et sont détaillés dans le rapport : 

 

 

 

 

L’Appui  budgétaire  général  (ABG)  vise  à  appuyer  la  mise  en  œuvre  d’une  stratégie  de 
développement  nationale,  le  dialogue  politique,  les  conditions  de  décaissement  et  l’assistance 
en  matière  de  renforcement  des  capacités  étant  centrés  sur  les  objectifs  de  la  politique 
générale et les priorités budgétaires du pays partenaire. 
L’Appui  budgétaire  sectoriel  (ABS)  vise  à  appuyer  la  mise  en  œuvre  du  programme  de 
développement  d’un  secteur  et  du  dialogue  politique au  niveau  du  secteur;  les  conditions  de 
décaissement et l’assistance en matière de renforcement des capacités portent par conséquent 
sur les questions politiques spécifiques au secteur et les priorités d’affectation budgétaire. Les 
instruments  ABG  et  ABS  se  distinguent  essentiellement  par  la  nature  des  conditions  liées  à 
l’aide plutôt que par leurs caractéristiques financières. 
L’Appui pour l’action politique  vise  à appuyer les réformes de  politique.  Il appuie et lie les 
décaissements  essentiellement  aux  « actions  prioritaires »  (c’est-à-dire  des  indicateurs  de 
réforme/processus) à entreprendre par le gouvernement partenaire (et qui doivent être réalisés 
pour  que  les  décaissements  soient  effectués).  Il  n’y  a  généralement  pas  de  distinction  entre 
l’appui  général  et  l’appui  sectoriel,  étant  donné  que  les  actions  politiques  sont  généralement 
transversales par nature, et sont susceptibles d’appuyer des actions prioritaires dans plus d’un 
secteur. L’Appui aux actions politiques peut être simplement mis en œuvre sous la forme d’un 
appui  budgétaire,  c’est  à  dire  en  fournissant  un  soutien  financier  au  budget  national  du  pays 
partenaire  ou  en  utilisant  des  modalités  financières  différentes  (par  exemple  les  paiements  à 
des programmes circonscrits ou des suppléments aux programmes existants). 
Les approches Paiement pour les résultats constituent un mécanisme d’aide selon lequel les 
bailleurs  de  fonds  paient  pour  les  résultats  ou  les  réalisations  (par  exemple  un  montant  fixe 
pour  toucher  un  certain  nombre  d’enfants  scolarisés  ou  200  USD  pour  chaque  enfant  qui 
termine  le  cycle  primaire  et  prend  part  à  un  test  normalisé)  dans  lequel  le  bénéficiaire  (une 
entité  gouvernementale)  a  une  grande  responsabilité  et  jouit  d’une  grande  discrétion  dans 
l’utilisation des fonds.  

Même  si  les  résultats  varient  d’une  étude  à  l’autre,  les  effets  positifs  attendus  du  recours  aux 
modalités  d’appui  budgétaire  sur  le  dialogue  politique,  l’alignement,  les  résultats  et  les  coûts  de 
transaction ont été généralement  plus limités que les prévisions de départ. En ce  qui concerne  le 
dialogue  politique,  il  existe  peu  d’éléments  tendant  à  démontrer  l’amélioration  de  l’alignement  et 
de  la  qualité  du  dialogue.  En  termes  d’orientation  vers  les  résultats,  les  opérations  d’appui 
budgétaire sont habituellement liées à un Cadre d’évaluation de la performance (CEP) qui contient 
non  seulement  l’impact  et  les  indicateurs  de  résultats,  mais  aussi  la  réalisation,  l’activité  et  les 
mesures du processus/apport.  Elles ne  sont par conséquent pas aussi orientées vers les résultats 
que l’indiquaient les prévisions initiales.  

Les  approches  Paiements  pour  les  résultats,  présentent  aussi  des  inconvénients  (éventuels 
« comportements  de  joueur »,  concentration  du  dialogue  sur  les  indicateurs  plutôt  que  sur  la 
performance  générale,  difficulté  à  identifier  et  à  négocier  les  indicateurs,  etc.).  De  manière 
générale, on estime que les approches d’appui budgétaire ont conduit à une réduction des coûts de 
transaction  par  rapport  à  l’approche  projet,  mais  l’évidence  est  limitée  et  les  gains  facilement 
compensés  par  des  procédures  de  monitoring  et  dévaluation  ainsi  que  des  conditions  de 
décaissement excessivement complexes.  

L’accent  des  programmes  d’appui  budgétaire  a  été  essentiellement  mis  sur  les  secteurs  sociaux. 
Même s’il est de plus en plus utilisé dans les secteurs productifs tels que l’énergie ou l’agriculture, 
l’Appui  budgétaire  sectoriel  est  essentiellement  concentré  dans  les  secteurs  de  prestation  de 

 
 
 
 
 
 
10 

services  tels  que  la  santé  et  l’éducation.  Les  opérations  de  Programme  pour  les  résultats  portent 
sur des secteurs légèrement différents, notamment la santé, l’eau et la résilience. La disponibilité 
et  une  identification  plus  facile  des  réalisations  ou  des  indicateurs  de  résultats  dans  des  secteurs 
tels  que  la  santé,  l’éducation  et  l’eau  peuvent  être  considérés  comme  un  facteur  à  la  base  du 
recours  à  l’appui  budgétaire  ou  aux  approches  de  type  Programme  pour  les  Résultats  dans  ces 
secteurs. 
Certaines caractéristiques du secteur affectent l’efficacité de l’appui budgétaire et les secteurs qui 
sont  plus  complexes  et  qui  impliquent  différents  types  de  parties  prenantes  sont  généralement 
considérés comme les moins appropriés pour l’appui budgétaire. L’implication du secteur privé est 
perçue  comme  un  facteur  susceptible  de  compliquer  le  recours  à  l’appui  budgétaire.  En  outre,  le 
mécanisme de l’octroi  de l’appui budgétaire  est rarement utilisé pour de gros investissements qui 
comprennent des infrastructures telles que  les transports, en raison de la valeur des contrats, du 
risque de corruption et du risque de réputation qui s’y rapportent.  

Il est possible de classer les conditions liées aux programmes d’appui budgétaire selon leur champ 
et leur nature. Dans le cas de l’Appui budgétaire général, les conditions sont multi-sectorielles par 
nature,  tandis  que  dans  le  cas  de  l’Appui  budgétaire  sectoriel,  la  focalisation  est  plus  étroite 
(secteur  ou  sous-secteur).  Avec  le  Programme  pour  les  résultats,  le  champ  des  conditions  se 
trouve  généralement  au  niveau  du  sous-secteur  ou  du  programme.  En  ce  qui  concerne  la  nature 
des conditions, le principal choix consiste à savoir si elles se rapportent essentiellement aux actions 
de politique publiques et aux réformes à entreprendre ou aux réalisations s ou résultats spécifiques 
à atteindre (ou à un mélange des deux).  

L’étude  n’a  pas  trouvé  d’exemple  d’approche  de  recours  à  l’appui  budgétaire  dans  des  contextes 
autres que de « développement » et il a été jusqu’ici essentiellement utilisés dans les pays à faibles 
revenus  ou  à  revenus  intermédiaires.  La  Direction  générale  du  voisinage  et  des  négociations 
d’élargissement  recourt  de  plus  en  plus  à  l’appui  budgétaire  dans  les  pays  candidats  pour 
promouvoir  les  réformes,  mais  il  s’agit  d’une  évolution  récente.  Il  est  encore  par  conséquent 
difficile de pleinement évaluer les résultats de ces efforts. Les premières expériences acquises sur 
le processus et les résultats ont été intégrées dans l’étude. 

Quel serait l’impact et les compromis probables du recours à l’appui budgétaire 
des Fonds structurels et d’investissement européens ? 

L’objectif de la présente  étude était d’évaluer les avantages et les inconvénients d’une éventuelle 
utilisation de l’appui budgétaire pour l’octroi de (parties des) Fonds structurels et d’investissement 
européens et d’évaluer la faisabilité du recours à des mécanismes d’octroi de type appui budgétaire 
dans  le  cadre  des  Fonds  structurels  et  d’investissement  européens.  Dans  l’ensemble,  l’étude  a 
conclu qu’il existe peu d’éléments permettant de penser que l’utilisation d’appui budgétaire général 
ou  sectoriel  des  Fonds  structurels  et  d’investissement  européens  serait  plus  efficace  ou  efficiente 
que  l’actuel  système  de  gestion  partagée.  Tout  changement  impliquerait  des  compromis 
considérables pour des résultats et des gains incertains comme cela est résumé ci-dessous. 

Saine gestion financière et légalité et régularité 
L’utilisation  des  mécanismes  d’appui  budgétaire  pourrait  avoir  comme  conséquence  une  saine 
gestion financière en permettant aux gestionnaires des fonds de l’UE dans les Etats membres d’être 
confrontés  à  moins  d’exigences  en  matière  de  processus  et  de  procédures,  de  consacrer  plus  de 
temps à la mise en œuvre des programmes et de veiller à l’efficience et à l’efficacité de l’appui. Le 
recours  aux  mécanismes  d’appui  budgétaire  peut  toutefois  ne  pas  nécessairement  aboutir  à  une 
gestion  financière  plus  saine.  L’étude  a  montré  que  les  Fonds  structurels  et  d’investissement 
européens  disposent  déjà  de  nombreux  éléments  d’incitation  à  une  saine  gestion  financière  (par 
exemple les  cadres  de  performance,  les  cadres  de  suivi  et  d’évaluation,  l’utilisation  d’une  logique 

 
 
 
 
 
 
 
11 

d’intervention  claire,  les  procédures  de  sélection  transparentes,  etc.) ;  et  un  passage  à  l’appui 
budgétaire aurait un impact peu clair et potentiellement mitigé sur la saine gestion financière.  

L’un  des  résultats  clairs  de  l’étude  est  que  la  mise  en  œuvre  de  l’appui  budgétaire  des  Fonds 
structurels et d’investissement européens conduirait à une augmentation du risque fiduciaire et à la 
réduction  de  la  garantie  relative  à  la  légalité  et  à  la  régularité  des  dépenses,  par  rapport  au 
système  d’octroi  actuel  des  Fonds  structurels  et  d’investissement  européens.  La  garantie  se 
fonderait essentiellement sur la vérification que les conditions pour l’appui ont été satisfaites et que 
les  dépenses  sous-jacentes  dans  les  Etats  membres  ne  seraient  pas  pleinement  examinées.  Ceci 
affecterait  sérieusement  la  capacité  de  la  Commission  européenne  à  fournir  une  garantie  par 
rapport à la légalité et à la régularité des dépenses du budget de l’UE.  

Ceci  peut  ne  pas  se  traduire  automatiquement  par  un  risque  d’irrégularités  de  facto  plus  grand, 
mais cela affecterait la capacité à les détecter et à les corriger, par exemple la garantie fournie sur 
les  paiements  effectués  par  la  Commission  aux  Etats  membres.  Le  risque  fiduciaire  sous-jacent 
peut être particulièrement complexe à gérer par rapport à des questions telles que la lutte contre la 
fraude  et  le  respect  de  la  législation  de  l’UE.  Certaines  règles  et  exigences,  notamment  celles 
relatives  à  l’aide  de  l’Etat  et  aux  marchés  publics,  s’appliquent  à  tous  les  investissements  et  ne 
sont pas spécifiques aux Fonds structurels et d’investissement européens et l’utilisation du système 
national  ne  changerait  pas  les  règles  sous-jacentes.  Toutefois,  les  taux  élevés  d’erreurs  encore 
associés  à  l’application  de  l’aide de l’Etat  et  les  règles  de  passation  de  marchés  publics indiquent 
que les Etats membres ont encore beaucoup de difficultés à correctement interpréter et à appliquer 
les  règles.  Une  dépendance  totale  au  système  national  peut  par  conséquent  aboutir  à  une 
observation  plus  laxiste  de  ces  règles.  L’appui  budgétaire  nécessiterait  un  changement  de 
paradigme,  en  ce  sens  que  cela  requerrait  la  prise  de  nouvelles  dispositions  (c’est-à-dire 
l’utilisation des évaluations ex ante par exemple ou d’autres vérifications systémiques) pour veiller 
à ce que les systèmes censés garantir la bonne observation de la législation soient appropriés. 

Simplification et transparence comptable 
Des  compromis  entre  la  simplification  et  la  transparence  comptable  ont  aussi  été  identifiés,  ainsi 
qu’entre  la  simplification  et  une  saine  gestion  financière.  Etant  donné  que  l’appui  budgétaire 
dépend  de  l’exécution  du  budget  national  et  des  procédures  de  contrôle,  il  n’existerait  pas  de 
gestion  et  de  contrôle  parallèles  et  additionnels  des  Fonds  structurels  et  d’investissement 
européens octroyés à travers l’appui budgétaire. Ceci serait une source de simplification. Toutefois, 
plus  la  simplification  est  recherchée,  notamment  lorsque  la  mise  en  œuvre  du  programme  et  du 
contrôle  dépend  des  règles  nationales,  plus  il  est  difficile  de  veiller  à  des  normes  strictes  de 
conformité, à la fois en matière de résultats et sur la légalité et la régularité. L’expérience acquise 
de  la  mise  en  œuvre  des  opérations  d’appui  budgétaire  dans  les  actions  externes  indique  que 
l’appui  budgétaire  vise  à  améliorer  la  transparence  comptable  dans  le  pays  bénéficiaire  (par 
exemple la mise d’un accent sur le contrôle parlementaire des dépenses, en se concentrant sur les 
exigences  de  transparence,  etc.)  mais  il  est  plus  difficile  de  veiller  au  respect  des  normes 
comptables au niveau du bailleur de fonds. Le niveau de respect des normes comptables peut aussi 
tout à fait varier en fonction des procédures et des pratiques nationales en vigueur.  

Orientation vers les résultats et cadres de performance 
Le système des Fonds structurels et d’investissement européens pour la période de programmation 
2014-2020  dispose  déjà  d’un  cadre  de  performance  et  de  structures  de  suivi  bien  définies. 
L’orientation vers les résultats se reflète dans la phase de programmation des Fonds structurels et 
d’investissement  européens :  la  logique  d’intervention  est  claire,  les  cadres  de  performance 
incluent  les  aspects  financiers,  les  réalisations  et  les  indicateurs  de  résultats  avec  les  cibles 
correspondantes.  Les  études  sur  ’l’appui  budgétaire  ont  montré  que  des  approches  hétérogènes 
concernant l’orientation vers les résultats ont été utilisées, l’appui budgétaire mettant l’accent sur 
les actions/processus mais aussi sur un ensemble de réalisations s, de résultats et d’indicateurs du 

 
 
 
 
 
 
12 

processus.  Il  reste  à  voir  si  l’utilisation  de  certains  éléments  inspirés  de  l’appui  budgétaire  pour 
l’octroi des Fonds structurels et d’investissement européens améliorerait véritablement l’orientation 
vers les résultats. 

Appui aux niveaux national, régional et/ou local 
Les  éléments  tels  que  le  niveau  d’autonomie  administrative  et  budgétaire  aux  niveau  régional  et 
local  sont  importants  lorsqu’il  est  question  d’analyser  la  possibilité  de  mettre  en  œuvre  les 
mécanismes budgétaires non seulement au niveau national mais aussi au niveau régional/local. Il 
n’existe  que  peu  d’expérience  ainsi  que  peu  d’éléments  en  matière  de  mise  en  œuvre  d’appui 
budgétaire aux niveaux régional ou local. Le potentiel pour la mise en œuvre de l’appui budgétaire 
au niveau régional/local dans l’UE serait plus grand que dans un contexte de développement étant 
donné  que  les  capacités  administratives  dans  les  régions  et  les  territoires  européens  sont 
généralement supérieures à celles dans les pays à faibles revenus ou à revenus intermédiaires où 
l’appui budgétaire est actuellement majoritairement utilisé. Il convient également de tenir compte 
du  fait  que  l’octroi  direct  de  l’appui  budgétaire  au  niveau  régional  ou  à  une  échelle  inférieure  de 
gouvernement  peut  être  politiquement  sensible  et  qu’il  pourrait  avoir  des  interférences  avec  les 
systèmes nationaux de transfert budgétaire déjà en place. 

Le principe du partenariat 
L’effet  du  recours  à  l’appui  budgétaire  comme  mécanisme  d’octroi  des  Fonds  structurels  et 
d’investissement  européens  sur  l’application  du  principe  de  partenariat  dépendrait  largement  des 
cadres existants dans les Etats membres. Le risque pourrait être un plus faible niveau d’implication 
de partenaires pertinents dans les processus de prise de décisions. Cela concerne en particulier les 
autorités  régionales/locales,  les  partenaires  privés  ou  sociaux  et  les  organisations  non 
gouvernementales qui représentent la société civile et qui sont des parties prenantes importantes 
dans la politique de Cohésion, et certains types d’intervention tel que le soutien aux entreprises et 
à  l’innovation,  le  développement  local  à  petite  échelle  et  l’inclusion  sociale.  Leur  mobilisation 
nécessiterait  une  considération  spécifique  selon  que 
l’appui  budgétaire  complèterait  ou 
remplacerait les mécanismes d’octroi actuels. 

Utilisation des éléments inspirés de l’appui budgétaire dans le cadre des Fonds 
structurels et d’investissement européens 

Sur la base de l’analyse effectuée, deux options additionnelles aux appuis budgétaires traditionnels 
ont  été  retenues  pour  la  mise  en  œuvre  des  mécanismes  d’appui  budgétaire  dans  le  cadre  des 
Fonds structurels et d’investissement européens : Les paiements basés sur les actions de politique 
publique et les paiements basés sur les réalisations s et les résultats. Alors qu’une option d’appui 
budgétaire  « intégrale » pourrait  s’inspirer  largement  des  mécanismes  d’appui  budgétaire  utilisés 
dans  les  actions  extérieures  de  l’UE,  les  options  de  paiements  basés  sur  les  actions  de  politique 
publique  et  de  paiements  basés  sur  les  réalisations  s  et  les  résultats  devraient  être  conçues 
spécialement  pour  les  Fonds  structurels  et  d’investissement  européens.  Pour  chacune  des  deux 
options,  les  principales  implications  au  niveau  des  différentes  étapes  du  cycle  de  programmation 
sont présentées. 

Une  caractéristique  commune  aux  deux  options  est  qu’elles  visent  à  faire  passer  la  base  du 
remboursement du coût réel au niveau du projet aux conditions, par exemple les réalisations, les 
résultats  et  les  processus  à  un  niveau  cumulé,  par  exemple  au  niveau  du  programme  ou  d’une 
partie du programme.  

 
 
 
 
 
 
 
 
 
 
 
13 

Paiements basés sur les conditions de politique publique 
Les  Fonds  structurels  et  d’investissement  européens  ont  déjà  contribué  et  continueront  de 
contribuer à la poursuite des réformes structurelles, à l’amélioration des capacités administratives 
à  et  l’efficacité  du  gouvernement.  En  même  temps  que  l’accroissement  du  financement  aux 
infrastructures,  au  capital  humain  et  au  potentiel  endogène,  les  paiements  basés  sur  les  actions 
politiques  constituent  un  outil  qui  pourrait  être  utilisé  pour  poursuivre  l’objectif  d’appui  aux 
réformes et au renforcement des institutions. 

les  mécanismes  existants  de  diagnostique  /  dialogue,  tels  que 

La raison d’être fondamentale des paiements basés sur les conditions de politique publique  serait 
de  fournir  des  incitations  aux  Etats  membres  pour  qu’ils  s’engagent  à  certaines  actions 
politiques/processus plutôt que de couvrir leurs coûts. La base des paiements ne serait pas fondée 
sur  les  réalisations  s  (par  exemple  le  nombre  de  fonctionnaires  formés),  mais  plutôt  liée  aux 
actions  de  politique  publique,  aux  procédures  ou  aux  processus  en  cours  de  mise  en  œuvre.  Les 
paiements  de  programmation  basés  sur  les  actions de  politique  publique  pourraient  prendre pour 
point  de  départ 
les 
Recommandations spécifiques pour pays émises à l’intention des Etats membres dans le cadre du 
Semestre  européen.  Les  obstacles  sectoriels  ou  infranationaux  à  l’efficacité  des  investissements 
pourraient,  à  leur  tour,  être  identifiés  pendant  le  processus  de  programmation  des  Fonds 
structurels et d’investissement européens (ou par exemple pendant le processus de production des 
documents d’orientation pour la Commission).  
Les conditions liées aux décaissements (indicateurs de progrès) doivent être clairement définies et 
les mécanismes de vérification des progrès devraient être arrêtés. Un défi majeur serait de mettre 
une  étiquette  de  prix  sur  l’action  de  politique  publique  à  entreprendre  dans  le  but  de  fournir 
suffisamment d’incitation aux  Etats membres tout en évitant les effets indésirables. Le suivi de la 
mise en œuvre des actions de politique publique met l’accent sur la mise en œuvre des actions de 
politique publique convenues et sur les indicateurs de progrès identifiés (indicateurs de processus). 
La visibilité du financement de l’UE peut être difficile à réaliser en raison de la nature incitative de 
l’appui.  Le  besoin  d’une  stratégie  de  communication  pourrait  être  évalué  au  cas  par  cas,  en 
fonction  du  type  d’action  de  politique  publique  appuyée  et  du  niveau  d’intérêt  que  le  public  lui 
porte. 

Paiements basés sur les réalisations et les résultats 
Les  paiements  basés  sur  les  réalisations  /les  résultats  constituent  une  approche  d’octroi  dans 
laquelle les paiements sont effectués pour les résultats ou les réalisations (par exemple un montant 
fixe  est  versé  lorsqu’un  nombre  d’enfants  scolarisés  a  été  atteint)  et  dans  lequel  le  bénéficiaire 
(une entité gouvernementale) jouit habituellement d’un niveau d’autonomie élevé dans l’utilisation 
des fonds. Dans cette approche, l’accent est mis sur les résultats plutôt que sur les processus pour 
atteindre ces résultats.  

Le  paiement  basé  sur  les  réalisations  et  les  résultats  nécessite  habituellement  une  logique 
d’intervention bien définie avec des réalisations et des indicateurs de résultats clairs. Il ne devrait 
pas exister un très grand décalage dans le temps entre l’intervention elle-même et les avantages/le 
changement  qu’elle  cherche  à  réaliser,  par  exemple  les  interventions  plus  complexes  dans 
lesquelles  les  résultats  mettent  du  temps  à  se  matérialiser  sont  moins  appropriées  pour  les 
paiements  basés  sur  les  réalisations  et  les  résultats.  Il  est  aussi  essentiel  que  le  lien  entre 
l’intervention  et  l’avantage/changement  soit  clair,  i.e.  il  faudrait  que  les  réalisations  /résultats 
atteints puissent  être raisonnablement attribués aux activités ou aux actions mises  en œuvre. En 
principe, les décaissements peuvent être liés à tout niveau de l’intervention, des activités (nombre 
de formations réalisées) aux réalisations  (nombre de personnes formées) et aux résultats (emploi 
pour les personnes formées). Les indicateurs de résultats sont, toutefois, plus difficiles à définir et 
à  utiliser  pour  les  décaissements,  étant  donné  qu’ils  impliquent  souvent  des  décalages  dans  le 
temps et sont aussi vulnérables à l’influence de facteurs externes. Un défi dans ce type d’approche 
consiste  à  définir  les  indicateurs  de  décaissement  « appropriés »  en  fonction  du  domaine  de  la 

 
 
 
 
 
14 

politique publique et du type d’intervention appuyés. La visibilité pourrait être renforcée si les Etats 
membres étaient tenus de rendre publics les résultats du financement de l’UE. 

La  mise  en  œuvre  d’un  système  de  paiement  basé  sur  les  réalisations  et  les  résultats  ne 
nécessiterait  pas  de  changements  considérables  par  rapport  à  l’actuel  système  de  gestion 
partagée. Cela pourrait être fait dans les limites de l’architecture existante des Fonds structurels et 
d’investissement  européens,  en  mettant  à  contribution  les  autorités  en  place  responsables  de  la 
mise en œuvre des programmes et des contrôles. Cela nécessiterait toutefois la mise en place d’un 
système solide et rigoureux de vérification et de suivi des données afin de fournir des informations 
sur  les  progrès  relatifs  aux  indicateurs  liés  aux  décaissements.  Une  question  ou  un  défi  crucial 
consisterait à définir le coût ou le « prix » d’une réalisation ou d’un résultat spécifique, et il pourrait 
être  nécessaire  d’élaborer  des  méthodologies  et  des  directives  à  cette  fin.  Les  méthodologies 
actuellement  utilisées  pour  calculer  les  échelles  de  normes  des  coûts  d’unité  pourraient  servir  de 
source d’inspiration et d’enseignements.  

Estimation des coûts administratifs de la mise en œuvre des éléments inspirés 
de l’appui budgétaire dans les Fonds structurels et d’investissement européens 

L’étude  a  analysé  l’impact  probable  en  termes  de  coûts  administratifs  de  l’introduction  d’un 
système d’octroi d’appui budgétaire dans les Fonds structurels et d’investissement européens ou de 
la  mise  en  œuvre  d’éléments  inspirés  de  l’appui  budgétaire  dans  les  Fonds  structurels  et 
d’investissement (par exemple les paiements sur la base de l’action politique et les paiements sur 
la  base  des  réalisations  /résultats).  Un  analyse  quantitative  complète  n’est  pas  possible  dans  le 
contexte de la présente étude en raison du manque de données pertinentes et comparables sur les 
coûts  et  fardeaux  administratifs  engagés  notamment  dans  le  cadre  des  mécanismes  de  l’appui 
budgétaire. 

Dans  l’ensemble,  l’analyse  indique  que  l’impact  global  sur  les  coûts  administratifs  pour  la 
Commission  et  les  Etats  membres  serait  mitigé.  La  mise  en  œuvre  de  l’appui  budgétaire  ou  des 
paiements  basés  sur  les  actions  politiques  ou  les  réalisations  /résultats  aboutirait  très 
probablement à une augmentation des coûts administratifs dans la phase de programmation. Pour 
les paiements basés sur les actions de politique publique, cela nécessiterait que la Commission et 
les Etats membres s’engagent dans un dialogue potentiellement complexe pour définir les objectifs, 
les indicateurs de progrès, les conditions de décaissement, les mécanismes de vérification, etc., sur 
une  base  ad  hoc  et  adaptée  à  chaque  contexte.  En  ce  qui  concerne  les  paiements  basés  sur  les 
réalisations et les résultats, la programmation comprendrait aussi la définition des indicateurs liés 
aux décaissements, les coûts de calcul et la mise sur pied de systèmes de suivi et de vérification de 
données.  

Les principaux gains pour la Commission et les États-membres seraient probablement réalisés dans 
la  mise  en  œuvre  et  la  phase  de  contrôle.  Une  partie  de  la  gestion  des  Fonds  structurels  et 
d’investissement  européens  et  du  système  de  contrôle  serait  remplacée par  les  procédures  et  les 
processus nationaux. Une telle démarche aurait très probablement pour résultat une réduction des 
coûts  administratifs  des  contrôles  et  des  audits.  L’on  ne  sait  pas  si  les  bénéficiaires  connaîtraient 
aussi une réduction du fardeau administratif, étant donné que cela dépendrait largement du niveau 
de  complexité  des  systèmes  de  gestion  des  finances  publiques  locaux/régionaux  des  États-
membres.  Il  n’est  attendu  aucun  gain  en  termes  de  publication  d’informations,  de  suivi  et 
d’évaluation :  dans  un  système  des  paiements  basés  sur  les  réalisations  s  et  les  résultats,  une 
augmentation  des  coûts  administratifs  serait  probablement  liée  à  la  nécessité  de  veiller  à  une 
collecte  de  données  rigoureuse  et  valable  et  des  mécanismes  de  vérification.  Dans  les  paiements 
pour  l’action  politique  cela  nécessitera  des  ressources  et  des  compétences  pour  suivre  les 
conditions politiques au niveau de la Commission.  

 
 
 
 
 
 
 
 
15 

Conclusions 

L’analyse  effectuée  a  démontré  qu’un  appui  budgétaire  « intégral » (Appui  budgétaire  général  ou 
sectoriel)  n’est  pas  un  mode  d’octroi  qui  est  considéré  adéquat  pour  l’utilisation  des  Fonds 
structurels  et  d’investissement  européens.  Les  Fonds  structurels  et  d’investissement  européens 
couvrent un large éventail de secteurs d’investissement comportant des objectifs de politique et de 
risques  différents  et  il  n’existe  pas  d’évidence  que l’octroi  de  l’intégralité  des Fonds  structurels et 
d’investissement  européens  à  travers  l’appui  budgétaire  serait  plus  efficace  et  efficient  que  la 
gestion partagée. Ce constat se vérifie également par le fait que tous les bailleurs de fonds ayant 
recourt à l’appui budgétaire continuent habituellement de recourir à d’autres types de mécanismes 
d’octroi  (appui  à  des  projets  ou  à  des  programmes).  Un  passage  à  un  appui  budgétaire 
« intégral » supposerait  des  compromis  considérables.  Mais  alors  qu’il  peut  entraîner  la 
simplification, il pourrait augmenter  les risques fiduciaires et pourrait à terme entraîner un risque 
de  réputation  pour  la  Commission  et  le  financement  de  l’UE  en  général.  Enfin,  l’expérience  en 
matière d’utilisation des mécanismes d’appui budgétaire au niveau infranational est limitée, or c’est 
à ce  niveau que l’essentiel  des Fonds structurels et d’investissement européens sont orientés. Un 
passage à l’appui budgétaire pour l’ensemble des Fonds structurels et d’investissement européens 
peut par conséquent aboutir à un affaiblissement considérable de la dimension régionale/locale des 
Fonds structurels et d’investissement européens.  

Les  paiements  pour  les  réalisations  /résultats  pourraient  constituer  un  mécanisme  simple  et 
efficace  de  l’octroi  de  parties  des  Fonds  structurels  et  d’investissement  européens.  En  mettant 
l’accent  sur  les  réalisations  et  sur  les  résultats,  ce  type  d’approche  permet  potentiellement  une 
simplification et d’accroitre l’orientation  vers les résultats, dans les domaines où  les  réalisations  s 
et les résultats peuvent être clairement attribués à la mise en œuvre d’un programme spécifique. 
Par  conséquent,  les  paiements  pour  les  réalisations  /résultats  ont  plus  d’effet  dans  certains 
domaines  d’utilisation  des  Fonds  structurels  et  d’investissement  européens  que  dans  d’autres  et 
pourraient être testés dans des domaines tels que le capital humain, l’inclusion sociale, l’efficacité 
énergétique,  et  en  partie  dans  l’innovation  et  le  soutien  aux  entreprises.  L’expérience  acquise  de 
l’utilisation  des  options  simplifiées  en  matière  de  coûts  des  Fonds  structurels  et  d’investissement 
européens doit être prise en compte lors de la conception des options d’octroi dans ces domaines. 

Les paiements pour les actions de politique publique pourraient être ajoutés au portefeuille d’octroi 
des Fonds structurels et d’investissement européens dans le but d’en augmenter l’efficacité dans la 
résolution d’un large éventail de difficultés structurelles et administratives. Il peut être intéressant 
d’examiner les mécanismes qui lient les décaissements à la mise en œuvre des actions de politique 
publique à entreprendre lorsqu’il s’agit d’appuyer des réformes structurelles, de lever les obstacles 
infranationaux  ou  sectoriels  ou  de  fournir  un  appui  aux  investissements  « légers »   (comme  les 
actions  en  matière  de  renforcement  de  capacités  ou  l’appui  à  l’administration  publique).  La 
conception  détaillée  de  chaque  paiement  basé  sur  les  actions  de  politique  publique  doit  être 
adaptée  aux Etats membres en question  et aux  défis auxquels ils sont confrontés, ce  qui peut  se 
révéler difficile à mettre en œuvre. 

 
 
 
 
 
 
 
 
1.  INTRODUCTION 

1 

This report constitutes the draft final report  of the “Feasibility study for a potential use of Budget 
Support to deliver ESI Funds”. The overall objective of the study was to assess the advantages and 
disadvantages of a potential use of budget support for the delivery of parts of the ESI Funds, and 
to  assess  the  feasibility  of  a  delivery  mechanism  based  on  budget  support  to  deliver  Cohesion 
Policy. 

For  the  purposes  of  this  study,  budget  support  is  understood  as  a  delivery  mechanism  which 
involves a transfer of financial resources to the national budget of a partner country and that will 
be  implemented  in  accordance  with  this  country's  budget  procedures,  financial  management 
system  and public procurement  system.  This budgetary transfer  is accompanied  by intense  policy 
dialogue, conditionalities, technical assistance and/or capacity building. 

In  its  nature  the  study  is  explorative,  e.g.  it  has  analysed  and  assessed  if  budget  support,  in 
theory,  could  be  a  relevant  instrument  to  use  in  delivering  the  ESI  Funds.  It  needs  to  be 
acknowledged that it is innately difficult to provide strong judgements on the value added of using 
budget  support  compared  to  the  current  shared  management  delivery  of  ESI  Funds,  due  to  the 
very different context the instruments operate in. 

The  current  report  is  a  synthesis  of  interim  deliverables  produced  in  the  study.  It  contains  the 
following sections. 

  Chapter 1 provides an overview of budget support as an aid modality used in development 

cooperation, based on an extensive literature review, interviews and case studies.  

  Chapter 2 assesses the feasibility of using budget support to deliver ESI Funds, drawing on 
experiences  from  development  cooperation  and  relating  them  to  the  ESI  Funds  context, 
highlighting likely trade-offs and challenges.  It concludes with  an  analysis of the  potential 
value added of using budget support mechanisms in ESI Funds delivery. 

  Chapter 3 outlines two options for using budget support mechanisms in ESI Funds, based 
on the analysis undertaken and applying experiences from budget support operations in the 
ESI Funds context. 

  Chapter  4  provides  an  assessment  of  likely  changes  to  administrative  costs  for  involved 
stakeholders,  if  budget  support  mechanisms  were  to  be  used  to  deliver  ESI  Funds.  The 
assessment is mainly qualitative due to lack of robust and comparable data. 

In Appendix to the report, a complete list of literature reviewed in the study can be found.  

The  study  was  carried out by  a  multidisciplinary  team, consisting of  Karin  Attstrom  from  Ramboll 
(DK),  Jonathan  Wolsey and  Suzanne Tossings  from  Ecorys  (NL),  Silvia Vignetti, Emanuela Sirtori, 
Julie Pellegrin and Louis Colnot from CSIL (IT).  

 
 
 
 
 
 
 
2 

2.  BUDGET SUPPORT AS AN AID MODALITY 

This section summarizes some of the key conclusions emanating from the overview of budget. This 
section summarizes some of the key conclusions emanating from  the overview of budget support 
as  an  aid  instrument.  It  emphasizes  the  key  findings  related  to  the  types  of  budget  support 
approaches available. The main conclusion in that respect is that while budget support programmes 
all share common key features (use of country systems, use of performance  measurement), there 
is  a  variety  of  budget  support  approaches  which  have  been  implemented.  The  choice  of  the 
approach  reflects  the  preferences  of  donors,  as  well  as  the  context  and  the  sectors  in  which  the 
programmes operate. 

2.1  Budget support includes a financial and incentive dimensions 

Budget support is a transfer of funds to the budget of a partner country. The OECD-DAC, in 
what is the most commonly used definition of budget support, defines it as a method of financing a 
partner country’s budget through a transfer of resources from an external financing agency to the 
partner  government’s  national  treasury.  The  funds  thus  transferred  are  managed  in  accordance 
with  the  recipient’s  budgetary  procedures  (OECD,  2006)1.    The  major  budget  support  providers 
define  the  instrument  broadly  similarly.  In  its  2017  Budget  Support  Guidelines2  (p.15),  the  EC 
specifies that Budget support involves the transfer of financial resources to the National Treasury of 
a  partner  country,  following  the  fulfilment  by  the  latter  of  the  agreed  conditions  for  payment  set 
out in the contract. Transfers are made in euros to a Government account held at the Central Bank 
and then converted into local  currency  to  the  National  Treasury Account.    From  those  definitions, 
one can deduct that the defining characteristic of budget support relates to its financial dimension: 
it  is  a  transfer  of  additional  (foreign  exchange)  resources  to  a  country  and  subsequently  to  that 
country’s treasury. 

Budget  support  has  also  an  incentive  dimension.  Budget  support  is  however  more  than  a 
financial  transfer  of  resources.  It  is  also  intended  –  through  conditionality  and  dialogue  -  to  give 
financial  incentives  to  governments  to  achieve  objectives,  mostly  related  to  macroeconomic 
stability, Public Finance  Management  (PFM), reform implementation and service  provision. In that 
vein, the provision of budget support is accompanied by a policy dialogue with a partner country to 
agree on the reforms or development results which budget support can contribute to, and generally 
also by capacity development/technical assistance. The 2017 EC Budget Support Guidelines make 
that distinction between the financial and non-financial dimension of budget support rather explicit. 
In that respect, budget support is often referred to as a package, consisting not only of a financial 
transfer, but also of policy dialogue, performance assessment and capacity development. The fact 
that budget support has these  multiple dimensions (i.e. transferring additional resources  but also 
giving financial incentives) has often complicated the analysis of budget support.  

Different applications and combinations of the financial and incentive dimensions imply that there is 
a  large  spectrum  of  budget  support  approaches.  Donors  have  applied  the  financial  and  incentive 
dimensions of budget support differently. There is not a single model of budget support operations, 
but  instead  a  variety  of  types,  which  can  mostly  be  differentiated  on  the  based  on  the  following 
criteria:  

 

The  level of  earmarking:  (i.e.  the  way  the provision  of  budget  support is  justified  against 
certain expenditures in the country’s budget) 

1 OECD (2006). Harmonising Donor Practices for Effective Aid Delivery, DAC Guidelines and Reference Series, OECD 2006  

2 European Commission (2017). Budget Support Guidelines – DG DEVCO and DG NEAR, Brussels, September 2017  

 
 
  
 
 
 
 
                                                
 
3 

 

 

The traceability (i.e. funds are identifiable in the expenditure classification of the country’s 
budget). 

The  type  of  conditionality  (i.e.  the  nature  of  budget  support  is  partly  determined  by  the 
scope and nature of conditions for disbursements).  

The multiple ways in which these  criteria can  be combined mean that there is no one-size fits all 
budget support but rather a multitude of approaches (discussed in the next section). 

2.2 

There are not one but multiple types of budget support 

The standard distinction is between general and sector budget support. For a long period – 
until new approaches were developed (see below), budget support has been mostly provided either 
as  General  Budget  Support  (GBS)  or  as  Sector  Budget  Support  (SBS).  The  OECD  specifies  that 
General  Budget  Support  is  meant  to  support  the  implementation  of  a  national  development 
strategy,  with  the  policy  dialogue,  disbursement  conditions  and  capacity  development  assistance 
focused on the overall policy objectives and budget priorities of the partner country. On the other 
hand,  Sector Budget Support is  aimed at  supporting  the implementation of a  sector  development 
programme,  with  the  policy  dialogue,  disbursement  conditions  and  capacity  development 
assistance  thus  focused  on  sector  specific  policy  issues  and  budget  allocation  priorities  (OECD, 
2006).  The  two  instruments  are  therefore  mostly  distinguished  by  the  nature  of  the  conditions 
attached to the aid rather than by their financial characteristics. Reflecting this, some donors, such 
as  the  World  Bank  (WB),  do  not  make  an  explicit  difference  between  sector  and  cross-
sector/general  budget  support  operations.  Box  1  below  outlines  the  main  features  of  general  and 
sector budget support approaches for the EU and the World Bank, the two largest budget support 
providers. 

Box 1: comparing the EC sector and general budget support with the World Bank 
Development Policy Loans 

The European Commission provides budget support in a combination of fixed tranches linked 
to  the  eligibility  criteria,  and  variable  tranches  linked  to  progress  in  meeting  (annual)  targets 
related  to  outcome  or  output  indicators  (health,  education,  public  financial  management,  etc.). 
Targets  related  to  policy  actions  may  also  be  used.  Any  undisbursed  amount  is  in  principle 
reallocated  to  other  programmes  within  the  same  country.  The  support  is  conditional  upon  the 
“ 
country  meeting  a  set  of  eligibility  conditions  in  macroeconomic  policy,  PFM  and  public  policy. 
The support is un-earmarked and provided  either as General  Budget  Support  or Sector  Budget 
Support  (under  the  current  terminology  outlined  in  the  2017  EC  Budget  Support  Guidelines, 
General  Budget  Support  could  be  associated  to  the  EC’s  Sustainable  Development  Goals 
Contracts and its Resilience Building Contracts while Sector Budget Support could be associated 
to Sector Reform Performance Contracts).  

As for the World Bank, the main instrument it uses to provide budget support is Development 
Policy  Loans  (DPL),  which  was  introduced  in  2005.  Development  Policy  Loans  are  loans  (often 
including a significant grant component) which may be extended either to member countries, or 
to  sub-national  governments  of  members,  provided  that  they  have  budgetary  and  legislative 
autonomy. Development Policy Loans differ from the EC budget support operations in that they 
support  and  link  disbursements  mostly  to  ‘prior  actions’  (i.e.  reform/process  indicators)  to  be 
undertaken  by  the  partner  government  (and  which  have  to  be  achieved  in  order  for 
disbursements to be made). Also, the distinction between general and sector budget support is 
not made in Development Policy Loans. Often, they are cross-cutting in nature, as they support 
prior actions across more than one sector. 

“Payment for Results” aid (or cash on delivery) is a more recent type of budget support. 
Payment for Results aid, for which Cash on Delivery (COD) aid is the most common type, is an aid 
delivery  approach  in  which  the  donors  pay  for  outcomes  or  outputs  (e.g.,  a  fixed  amount  for 
reaching  a  certain  number  of  children  in  school,  or  $200  for  each  additional  child  who  completes 
primary  school  and  takes  a  standardized  test),  and  in  which  the  recipient  (a  government  entity) 
has  full  responsibility  for  and  discretion  in  using  funds.  The  donors  in  this  approach  thus  take  a 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 

‘hands-off’  stance  towards  the  beneficiary’s  policies.  Cash  on  delivery  funds  are  sometimes 
transferred into the budget of a government entity and use country systems; that's why they can 
be considered as a form of budget support (although they are typically not called as such). Cash on 
delivery mechanisms may also be implemented without budgetary transfer. Other characteristics of 
Payment for Results generally include the fact that outcome/output measures or units of progress 
are  verified  independently  and  are  disseminated  publicly.  One  challenge  for  such  approaches 
relates to the need to select well-defined and verifiable tangible indicators – given the difficulties in 
that  respect,  the  disbursement-linked  indicators  in  Payment  for  Results  programmes  consist  in 
most cases of a mix between output/results and process indicators. 

The World Bank’s Program for Results (PforR) is a good example of Payment for Results 
aid3. In 2012, the World Bank introduced a new instrument, the Program-for-Results. Program for 
Results  aimed  to  fill  a  gap  by  offering  ‘programme  support’,  with  its  two  other  modalities, 
Development Policy Financing and Investment Project Financing, addressing respectively policy and 
project support needs. Program for Results places more direct emphasis on results by making them 
the  basis  for  disbursement  of  funds.  Under  the  Program  for  Results,  financing  proceeds  are 
disbursed  upon  the  achievement  of  verified  results  specified  as  disbursement-linked  indicators. 
Money  is  not  traced,  and  the  disbursements  are  not  dependent  upon  or  attributable  to  individual 
transactions  or  expenditures.  All  Program  for  Results  operations  set  out  a  results  framework  that 
includes defined objectives and  indicators that the government can monitor, measure, and report 
on routinely. For every programme, the World Bank identifies an Implementing Agency, which is in 
charge  of  collecting  data on  indicators,  and  a  Verification  Agency  which  is  in  charge  to  verify  the 
satisfactory achievement of results and to report them to the World Bank. Based on this the World 
Bank authorizes the payment. 

Payment  for  Results  aid  objectives  are  partly  aligned  to  the  objectives  of  more 
traditional  forms  of  budget  support,  but  also  represent  an  alternative  to  traditional 
budget  support.  A  key  objective  of  Payment  for  Results  Aid  is  to  support  accountability  and 
transparency  in  development  spending:  Payment  for  Results  Aid  is  meant  at  increasing  recipient 
governments' accountability to their citizens for delivering the services that they need, rather than 
increasing  accountability  to  donor  agencies  for  implementing  a  plan  that  was  funded  up  front. 
Payment for Results approaches are partly a response to the perceived intrusiveness of traditional 
budget support approaches. From that perspective, Payment for Results aid  proponents have also 
advocated for the complete removals of eligibility conditions (besides a good measure of progress 
and a credible way to verify it).  

2.3  Results have not been uniform across the different budget support approaches 

In traditional approaches, such as General Budget Support, expected positive effects on 
policy  dialogue,  alignment,  results,  and  transaction  costs  have  been  more  limited  than 
initially  envisaged.  This  is  the  case  partly  because  donors  have  often  been  reluctant  to  take  a 
‘hands-off’ approach in the management of these types of operations.  Less ambitious and slightly 
more focused budget support operations, in the form of (often earmarked) Sector Budget Support 
supporting  sector  or  sub-sector  strategies  or  programmes  or  more  recently  Payment  for  Results 
interventions,  have  gained  prominence  as  a  result.  Table  1  summarises  the  respective 
achievements of the different approaches.  A category of budget support is presented in the table 
as  “budget  support  with  policy  action”  to  reflect  the  World  Bank’s  Development  Policy  Loans 
approaches as opposed to EC General Budget Support. 

3 The UK’s Department for International Development (DFID) is also engaging increasingly in COD-related approaches.  
Recently, it has developed the Results Based Aid (RBA) instrument as an alternative to other forms of financial aid. RBA is only 

disbursed to governments if pre-agreed outcomes or outputs have been delivered 

 
 
 
 
 
 
 
 
                                                
5 

Table 1: Four approaches to budget support and their respective achievements (synthesis of evidence by authors) 

Aligning to 
government 
policies 

Enhancing 
policy 
dialogue 

Enhancing the 
focus on 
'results' 

Reducing 
transaction 
costs 

General 
budget 
support 

Budget 
support 
with 
policy 
actions 

Effective 
alignment to 
national 
development 
plans or 
poverty 
reduction 
strategies, 
although a 
risk of 
governments 
adjusting their 
policies to 
donor 
preferences is 
present. 
Donor 
requires prior 
actions to be 
achieved, not 
necessarily 
fully aligned to 
government 
policies 

GBS has led to 
a formalization 
of policy 
dialogue, but 
the quality and 
impact of 
policy dialogue 
has generally 
been mixed.  

Policy dialogue 
partly used as 
a tool to 
ensure 
achievement of 
policy actions; 
policy changes 
as a condition 
for budget 
support. 

GBS is usually 
linked to a 
Performance 
Assessment 
Framework (PAF) 
that contains 
indicators, which 
may constitute a 
mixture of 
outcome, output, 
activity and 
process/input 
measures. Such 
structures often 
did not exist 
before. 
Not a focus on 
outputs or 
outcomes, but on 
policy changes 
(reform/process 
indicators). 

GBS is perceived 
to have led to a 
reduction in 
transaction costs 
compared to the 
project modality, 
but is likely to 
have been modest 
due to quality of 
harmonisation, 
excessively 
complex 
assessments and 
disbursement 
conditions. 

Broadly same 
conclusion as GBS. 
Review of policy 
actions can be 
relatively 
transaction-heavy 
process. 

Strengthened 
financial 
management 
using country 
systems 
An important 
objective of GBS 
was that it could 
enhance domestic 
accountability and 
PFM, but this has 
not been automatic 
due to weak 
administrative 
capacities of 
countries, and 
beneficiaries 
focusing more on 
being accountable 
to donors. 

Uses country 
systems, but this is 
not the focus of 
the instrument 

Sector focus 

LIC/MIC 

N/A 

Mostly used in Low 
Income Countries; 
its use has 
significantly 
declined. 

The expected 
broader 
impacts of 
budget support 

Poverty reduction 
and expansion in 
service delivery 
was expected. 
Impact on 
poverty reduction 
limited, but 
expansion of 
service delivery 
one of the main 
results of GBS. 

Has been used in 
both LICs and 
MICs. 

Strong focus on 
building the 
institutions and 
legal 
frameworks, with 
mixed results. 
Financial impact 
on service 
delivery. 

World Bank DPOs 
focus on mostly 
on cross-cutting 
sectors such as 
public-sector 
governance and 
rule of law 

 
 
 
Aligning to 
government 
policies 

Enhancing 
policy 
dialogue 

Enhancing the 
focus on 
'results' 

Reducing 
transaction 
costs 

SBS for 
sector 
strategies 
or 
programm
es 

"Payment 
for 
results" 
approach 

Effective 
alignment to 
sector 
policies, 
typically 
SWAPs, 
although a 
risk of 
governments 
adjusting their 
policies to 
donor 
preferences is 
present, 
especially in 
LICs. 

Gives 
recipients 
more 
flexibility in 
policy 
approach. The 
approach pays 
for improved 
performance.  

SBS policy 
dialogue takes 
place within 
the framework 
of 
government-
led SWAPs, but 
the impact of 
SBS on that 
dialogue has 
been mixed. 
Quality of 
dialogue partly 
dependent on 
sector 
expertise of 
the donors, 
which has 
been mixed. 
Policy dialogue 
is not an 
explicit part of 
the approach, 
although 
discussions 
with the 
recipient do 
take place 
during the 
programming 
phase. Donors 
take a more 
"hands-off" 
approach. 

The expected 
broader 
impacts of 
budget support 

SBS has helped 
expand service 
delivery, but has 
been less helpful 
in addressing the 
issues underlying 
poor quality of 
services. 

Strengthened 
financial 
management 
using country 
systems 
Extent of use of 
country systems 
has varied, with 
frequent use of 
earmarking/tracea
bility/additional 
reporting or 
auditing 
requirements. 
Evidence on 
progress in 
financial 
management 
mixed.   

6 

Sector focus 

LIC/MIC 

In MICs, the use of 
SBS has been 
predominant 
compared to GBS. 

SBS has been 
predominantly 
used in service 
delivery sectors 
such as health 
and education, 
although there 
has been more 
focus lately on 
productive 
sectors and on 
institutional 
reforms. 

In case of SBS, 
efforts were 
made to align 
SBS performance 
frameworks to 
the SWAP's 
monitoring 
structures and 
processes, but 
this was 
sometimes only 
partially 
achieved. 

SBS is perceived 
to have led to a 
reduction in 
transaction costs, 
but is likely to 
have been 
modest, similarly 
to GBS. One factor 
has been the 
sometimes lack of 
alignment 
between SBS and 
SWAP structures, 
as well as the 
existence of 
parallel projects. 

Strong focus on 
results. Donors 
pay for outcomes 
or outputs (these 
can sometimes 
include policy 
actions), and 
transfer 
ownership and 
responsibilities 
for strategies to 
the recipient 
country. 

Potentially low 
transaction costs 
for both the donor 
and the recipient, 
as there is less 
need for policy 
dialogue 
structures. 
However, cost of 
independent 
verification 
exercises (for 
assessment of 
indicators) can be 
high. 

Disbursement 
usually through 
government 
systems to a 
specific 
programme, giving 
recipients the 
flexibility in the 
use of the funds. 
Approach meant to 
make recipient 
governments 
primarily 
accountable to own 
citizens and not to 
donors. 

Objectives 
limited to 
performance 
indicators 
(related to 
mostly service 
delivery) in the 
programme of 
intervention. 

The World Bank 
PforRs focus 
mostly on health, 
water and 
resilience 
programmes. 

Used in both MICs 
and LICs, only 
limited experience 
with it until now. 

 
 
 
7 

2.4  Differences between donors in their budget support approaches 

There  are  large  variations  in  the  extent  to  which  donors  use  budget  support.  Figure  1,  which 
shows  overall  budget  support  as  a  percentage  of  bilateral  ODA  over  the  past  years  (2011-2014), 
highlights  that  the  World Bank  is  the  largest  provider  as  a  percentage  of  its  aid  portfolio  (more  than  a 
third of its total portfolio). The EC is also one of the largest users of budget support, however according 
to OECD data the total share is only 12.6% of its bilateral ODA (EC data shows of share of around 20% 
for the same years).4 Except for the UAE and New Zealand, other large donors all provide 5% or less of 
their bilateral ODA through the budget support modality.  

Figure  1:  Total  budget  support  as  %  of  bilateral  ODA  disbursed  2011-2014  (OECD  database, 
2016; WB, 2015b5) 

35.4% 

31.1% 

12.9% 12.6% 

8.3% 8.2% 

6.5%  6.0% 4.6%  4.4% 3.9%  3.5% 3.0% 2.6%  2.6% 2.3%  2.3% 2.1% 2.0% 

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

Budget  support  donors  combine  budget  support  with  other  types  of  delivery  mechanisms.  All 
multilateral  and  bilateral  donors  studied  organise  their  aid  delivery  system  around  a  portfolio  of 
instruments  –  they  combine  budget  support  with  the  use  of  other  modalities,  e.g.  support  for  specific 
projects or programmes. Donor choices  of  instruments (e.g. between  projects, programme support and 
budget support and between types of budget support approaches) cannot be fully explained, since many 
factors play a role in donor's decisions. However, some patterns of use can be identified. In general, the 
choice  of  modality  depends  on  the  objectives  to  be  reached,  donor  related  preferences  and  domestic 
accountability issues (this is further discussed in the next section). 

There  are  also  differences  in  the  types  of  budget  support  approaches  used  across  donor 
agencies.  As  discussed  at  the  beginning  of  this  conclusion,  there  are  significant  differences  between 
donors  in  terms  of  the  level  and  types  of  budget  support  approach  used,  from  general  budget  support 
operations to small traceable budget support programmes. Not all budget support operations are grants, 
for  example  the  World  Bank  uses  budget  support  for  disbursement  of  loans.  Between  and  within  donor 
agencies, there is also a large differentiation in terms of the objectives of their budget support operations 
and  the  sectors  in  which  they  operate,  with  some  programmes  having  a  strong  ‘institutional  change’ 
dimension  and  others  a  more  ‘service  delivery’  objective.  Meanwhile,  most  programmes  operate  at  the 
central  government  level  –  subnational  budget  support  remains  very  uncommon,  although  there  are 
some examples 

4 When the OECD refers to EU Institutions in its statistics, it refers to the total amount of funds available to EU institutions, including the 
EIB.  
5 World Bank (2015b). "Annual Report 2015". World Bank: Washington, D.C. 

 
 
 
 
 
 
 
 
                                                
 
8 

2.5 

The decision to use budget support reflects multiple factors. 

The  objectives  of  the  donors  partly  explain  their  choice  of  modality,  but  aid  modality 
preferences and domestic accountability issues also play an important role. Differences between 
donors in the use of the instrument partly reflect the different objectives to be reached. The table below 
matches the type of instruments with the expected objectives. Table 2 also outlines (as further discussed 
in section 1.4) that the type of instrument can also be influenced by the sector of intervention. 

Table 2: Use of different types of budget support according to objectives (synthesis of 
evidence by authors) 

Objectives 

Create specific large-scale 
physical/social infrastructure necessary 
for growth  
Support the delivery of a sector 
programme (focused on sector delivery)  

Support policy and institutional actions  

Support for an overall development 
policy 

Instruments used most 
commonly  
Project support (including 
via blending facilities) 

Sector or programme 
approaches (e.g. SBS, 
PfR…) 
Budget support focusing 
on policy actions 
General budget support 

Main thematic sectors 
concerned  
"Hard" large-scale 
infrastructures (transport, 
environnement…) 
Sectors strategies in areas such 
as health, education, water. 

Structural/administrative 
reforms 
No thematic sector 

2.6  Differences in the scope and nature of the conditions for disbursement 

Conditions attached to budget support programmes can be classified according to their scope 
and nature.   
For the scope, the main variable is whether conditions relate to the implementation of the overall national 
budget or to a specific sector or sub-sector. This mostly depends on the type of approach used (general 
budget  support/sector  or  sub-sector  support/programme  support).  In  the  case  of  General  Budget 
Support,  the  conditions  will  be  multi-sectoral in  nature,  while  in  the  case  of  sector budget  support, the 
focus will be more narrow (sector or sub-sector). With Program for Results, the scope of the conditions is 
generally at the sub-sector or programme level. 

Regarding  the  nature  of  conditions,  the  main  choice  is  whether  they  relate  mainly  to  policy 
actions/structural reforms to be undertaken or to specific (sector) outputs/outcomes to be reached (or to 
a mixture of both).  

In terms of the nature of conditions, one of the forms of conditions is process or policy action indicators 
or ‘priority actions’: this has long been the approach favoured by agencies like the World Bank. The World 
Bank’s Development Policy Loans focus for instance on discrete (prior) actions that are under the direct 
control of governments, and they generally link disbursements to evidence that those actions have been 
taken. If those actions are not met, the amount disbursed is reduced (or alternatively, the disbursement 
awaits the realization of the action). The prior actions for the Energy Efficiency Development Policy Loan 
in Poland are shown in  

 
 
 
 
 
 
 
 
 
 
Table 3 below. 

9 

 
 
 
 
Table 3: Prior actions in the World Bank’s Energy Efficiency Development Policy Loan in Poland 
(2011) 

Policy area 

Prior actions 

10 

to 

Policy  area  1:  Developing  the 
framework 
Efficiency Strategy. 
Policy  area  2:  Decrease  Supply-side 
Energy Use 

legal 
the  Energy 

support 

Policy area 3: Improvements in Demand-
Side Energy Efficiency 

Policy area 4: Renewable Energy 

-  Approval in 2011 of the Energy Efficiency Law 

- 

- 

to 

increase 

incentives 

Provide 
the  share  of 
cogeneration by allowing co-generators to price their 
bulk  heat  up  to  the  average  price  of  heat  produced 
by heat-only boilers. 
Issuance  of  a  draft  regulatory  statement  which 
covered all the key areas of implementation of Smart 
Meters 

-  Allocation  of  PLN  200  million  for  financing  the 
Thermo-Modernization  and  Renovation  Fund  in  fiscal 
year 2011. 
Introduction  of  the  Electronic  Tolling  System  (ETS) 
for heavy vehicles on major national roads section. 
-  Submission  of  the  government’s  National  Renewable 

- 

Energy Action Plan (NREAP) to the EC 

Another approach in terms of the nature of conditions, which is exemplified by the variable tranche of the 
EC  or  DFID’s  performance  tranche,  is  to  have  a  proportion  of  the  budget  support,  in  the  order  of  50% 
over the last few years in the case of the EC, to be disbursed in proportion to the percentage of  outcome 
or output indicators in a Performance Assessment Framework (PAF) or a sector performance framework 
that  have  been  met.  An  example  of  such  variable  tranche  is  illustrated  in  Table  4  (taken  from  the 
Employment  Creation  Programme  in  South  Africa).  The  narrative  used  by  donors  around  these 
performance  tranches  is  one  of  rewarding  good  performance  although  recipient  governments  may  also 
see it as a sanction. Any undisbursed amount is in principle reallocated to other programmes within the 
same country.  

Finally, it should be noted that the indicators used in result-based aid, including Program for Results, are 
often  relatively  similar  with  the  ones  used  in  the  EC’s  variable  tranches.  Box  2  lists  the  disbursement-
linked  indicators  in  a  World  Bank  Program  for  Results  in  Morocco  (National  Initiative  for  Human 
Development Phase 2). 

Table 4: Key performance areas and indicators for variable tranches: South Africa – 
Employment Creation, Sector Policy Support to the Economic Cluster Programme of Action (EC 
– 2009/14) – Result areas 1 and 2. 

Key  performance  areas/indicators  for  variable 
tranches 

Baseline 
(Financial 
year 
2008/09) 

Target 
2009/10  –  2nd 
Variable 
Tranche 

Target 
2010/11  –  3rd 
Variable 
Tranche 

Result area 1: Creating more quality jobs for the economically marginalised 

Expanded  Public  Works  Programme.  Number  of  work 

282,000 

Annual target 

Annual target 

opportunities. 

500,000 

600,000 

Increase  the  number  of  trained  (with  diploma)  black 

3000 

Annual target 

Annual target 

agricultural entrepreneurs (focus on vulnerable groups) 

6,500 

10,000 

in  the  agricultural  sector  by  providing  a  package  of 

support services to prospective farmers.  

Increase 

financial 

support 

to 

retail 

financial 

R 21 million 

Annual target 

Annual target 

intermediaries  for  on  lending  to  the  enterprising  poor. 

R 25 million 

R 30 million 

Annual target 2009/10: R25 million 
Result area 2: Improving business enabling environment 

Industry Forum held annually.  

3 

Minimum 3 

Minimum 3 

 
 
 
 
 
 
 
11 

Key  performance  areas/indicators  for  variable 
tranches 

Baseline 
(Financial 
year 
2008/09) 

Target 
2009/10  –  2nd 
Variable 
Tranche 

Target 
2010/11  –  3rd 
Variable 
Tranche 

National  roll  out  of  the  Business  Investment  Climate 

0 

3 provinces 

5 provinces 

Process  Including  Red  Tape  Reduction  at  both 

15 district 

23 district 

provincial and district levels. 

municipalities 

municipalities 

Small  enterprises  accessing  quality  professional 

169,150 

200,000 

230,000 

business  development  and  technology  services  from 

Small  Enterprise  Development  Agency  (SEDA)  and 

other agencies (annual basis). 

Trade  and  Industry  Chamber  Strategic  Sessions  – 

2 sessions 

Minimum 2 

Minimum 2 

National Economic Development and Labour Council.  

sessions 

sessions 

Box 2: Example of Program for Results Disbursement-Linked Indicators: (National Initiative 
for Human Development (INDH) Phase 2 – Morocco, 2012/16).6 

DLI-1 (RI-1). Percentage of girls who reside in the educational dormitories (Dar Taliba) graduating to the 
next grade; 
DLI-2  (RI-2).  Percentage  of  the  population  provided  with  access  to  improved  water  supply  in  targeted 
rural communes by the Program; 
DLI-3  (RI-3).  Percentage  of  income-generating  activities  implemented  by  cooperatives,  associations  or 
companies  (sociétés  de  personnes)  which  are  viable  two  years  after  having  benefited  from  financing 
under the Program; 
DLI-4 (RI-6). Percentage of infrastructure projects financed under the Program judged by the auditors as 
conforming to technical specifications, after final commissioning; 
DLI-5 (RI-8). #5.1: Percentage of women in the following local governance bodies: CLDH and CPDH; and 
#5.2: Percentage of youth (18–35 years old) in the following local governance bodies: CLDH and CPDH; 
DLI-6 (RI-9). Percentage of projects under the rural and urban subprograms of the Program contracted 
by local government (communes and Conseil d’Arrondissement), associations, or cooperatives; 
DLI-7 (RI-14). Percentage of provinces and prefectorates in the Program Area which have put in place a 
plan of action to address audit recommendations; 
DLI-8  (RI-15).  Percentage  of  priority  audit  recommendations  included  in  action  plans  which  are 
implemented; and 
DLI-9 (RI-17). #9.1: Preparation of Environmental and  Social  Guide related  to the  Program; and #9.2: 
Percentage  of  key  actors  (DAS  and  local  facilitation  teams)  trained  in  the  use  of  such  guide  on 
environmental and social safeguards. 

The ‘level’ of indicator used (i.e. closer to the input or the policy result expected) is partially based on the 
characteristics  of  the  targeted  policy  field.  It  should  be  noted  also  that  disbursement  linked  indicators 
(which would serve as a basis for payment)  are not always the same as indicators used to monitor and 
evaluate the policy. 

6 For each DLI, a target is established, the achievement of which will determine if the payment is made. 

 
 
 
 
 
 
 
 
 
 
                                                
12 

2.7  Sector focus of budget support programmes 

The  focus  of  budget  support  programmes  has  been  primarily  on  social  sectors.  Sector  Budget 
Support, although increasingly used in productive sectors such as energy or agriculture, is predominantly 
concentrated in service delivery sectors such as health and education (see Figure 2 below for composition 
of  EC  Sector  Budget  Support),  while  the  World  Bank’s  DPL  tend  to  be  more  cross-cutting  in  nature, 
focusing mostly on public sector governance and rule of law. Program for Results operations focus more 
on  health,  water  and  resilience  programmes.  The  availability  and  easier  identification  of  output  or 
outcome  indicators in  sectors  like  health,  education,  and  water  can  be  considered  as  one  factor  behind 
the bigger use of Sector Budget Support or Program for Results types of budget support in those sectors.  

Figure 2: Sector composition of EC Sector Budget Supports in 2015 (EC, 2015)7 

Certain  sector  characteristics  affect  the  effectiveness  of  budget  support.  Based  on  the  budget 
support ‘intervention logic’, the sector of intervention should not be a critical factor for the effectiveness 
of  a  budget  support  programme.  Nevertheless,  there  are  certain  characteristics  within  sectors  that  can 
contribute  to  a  higher  or  lower  effectiveness  of  budget  support,  both  from  an  incentive  and  financial 
impact perspective. A review by the authors of the evaluations of the EC cooperation in various sectors in 
recent years provides some elements of response in that regard. The main findings can be summarised 
as below: 

  Some  sectors  are  more  complex/fragmented  than  others  (i.e.  health,  transport,  agriculture) 
and/or have an important role for the market (agriculture), making the establishment of a clear 
sector policy dialogue more challenging, which complicates budget support operations. 

  Some  sectors  (education  and  health)  benefit  from  significant  donor  support,  making  the  use  of 

harmonised aid modalities such as budget support more necessary than in other sectors. 

 

Even in sectors where budget support is seen as more successful (such as education), the impact 
on  the  quality  of  service  delivery  and  institutional  reforms  is  generally  considered  as  relatively 
modest. 

  Some sectors (in particular transport) are seen as particularly vulnerable to PFM and governance 
issues, due to the presence of high value contracts, making donors more hesitant to use budget 
support.  On  the  other  hand,  a  sector  like  transport  is  relatively  (financial)  resource-intensive, 
making budget support an attractive tool to absorb the large amounts of funds allocated in such a 
sector, as opposed to multiple smaller-sized projects.  

 

The  evaluations  provide  little  information  about  the  financial  impact  of  budget  support  across 
sectors. 

7  European  Commission  (2015).  "Budget  Support:  Financial  Implementation,  Risk  Assessment,  and  Selected  Poverty,  Macroeconomic 
and Fiscal Results". DG DEVCO. 

 
 
 
 
 
 
                                                
 
13 

Budget support is rarely used for large investments alone. As table 2 underscores, this also means 
that budget support mechanisms are not commonly used to finance large infrastructure. When it comes 
to investing in "hard" large scale infrastructure, most donors tend to use the project modality. This may 
be  explained  by  several  factors,  including:  higher  reputational  risks  for  the  donor  on  large  value 
investments (large share of the budget, visible projects); risks to legality and regularity, notably around 
the issue of public procurement; and the fact that large infrastructure projects largely follow the project 
approach (project pipelines). Budget support, when used in the infrastructure sector, generally supports 
a well-defined reform agenda in the sector. 

2.8  Use of similar instruments in non-development context 

The  findings  and  budget  support  approaches  presented  in  this  chapter  partly  reflect  the  peculiar  (and 
challenging) contexts and development stages of the countries in which budget  support has been used: 
Low Income Countries (LICs) and Middle-Income Countries (MICs). They also reflect the political realities 
affecting relations between donor countries and aid recipients. They may differ in other contexts such as 
EU countries.  

Should budget support be transposed into a different context and used for different objectives, 
some  of  the  characteristics  to  be  applied  would  differ  from  those  presented  above.  There  are 
undoubtedly  elements  of  the  budget  approach  that  are  more  suited  to  a  development  background  and 
the  political  context  of  donor/recipient  countries  relations,  such  as  the  heavy  scrutiny  on  public  finance 
management,  than  to  an  OECD  country  background.  The  subsequent  chapter  will  assess  which  of  the 
elements outlined are more/less appropriate in a different context.   

The large variety of budget support approaches implemented, as described above, offers some 
flexibility should budget support be used for ESI Funds. Inevitably, some types of budget support 
may be more relevant for a context such as ESI Funds than others. Approaches defined as payment by 
results and to some extent Sector Budget Support  supporting sector strategies or  programmes attempt 
to address some of the shortcomings identified in more traditional forms of budget support, in particular 
the  continued  heavy  interference  by  donors’  in  the  recipient’s  policy  processes  (and  the  associated 
transaction costs). They also aim to ensure accountability through rigorous results focus. While yet to be 
comprehensively tested, the potential of approaches such as payment by results may be higher in OECD 
contexts  such  as  ESI  Funds,  where  the  level  of  policy  ownership  is  generally  stronger  and  the  allowed 
degree  of  intrusion  of  the  ‘donor’  into  the  recipient’s  affairs  may  be  more  limited  than  in  traditional 
budget support contexts. 

 
 
 
 
 
 
 
 
 
3.  BUDGET SUPPORT IN ESI FUNDS: LIKELY IMPACT AND 

TRADE-OFFS 

14 

As  described  in  earlier  sections,  there  are  several  types  of  budget  support,  and  no  “one  size  fits  all” 
mechanism  exists.  When  considering  the  feasibility  to  use  of  budget  support  to  deliver  ESI  Funds,  it  is 
important  to  keep  in  mind  certain  features  which  are  fundamentally  different  in  the  EU  versus 
development context. 

 

 

 

The  amounts  of  support  disbursed  through  ESI  Funds  are  considerably  larger  than  any  current 
budget support operation. As an example, the total payments made by DEVCO in year 2016 was 
EUR 6,579 million8 and by DG NEAR EUR 3,077 million9, a total of 9,656 million, out of which EUR 
1,72910 million was budget support (18% of total payments). Total payments made by DG REGIO 
in  2016  was  EUR  29,004  million11  and  by  DG  EMPL  EUR  8,795  million12,  giving  a  total  of  EUR 
37,799 million, e.g. the payments made from ERDF and ESF combined in 2016 were nearly four 
times what was being disbursed to support third countries, all modalities combined. 

EU  Cohesion  policy  is  mainly  delivered  at  the  regional  level,  whereas  most  budget  support  has 
been  delivered  at  national  levels.  The  implications  of  delivering  budget  support  at  the  sub-
national level are not fully understood, and there is little experience to draw on from international 
cooperation.  This  makes  it  difficult  to  assess  the  feasibility  of  using  budget  support  to  deliver 
Cohesion policy. 

The  EU  is  a  political  and  economic  Union,  based  on  a  Treaty  defining  the  role  and  relations 
between  the  Union  and  Member  States.  The  EU  budget  is  partly  funded  through  contributions 
from  the  Member  States.  In  development  cooperation,  most  funding  are  grants,  with  no  prior 
contribution  from  the  recipient  country  (albeit  co-funding  mechanisms  exists).  Hence,  the 
relationship  between  the  European  Commission  and  Member  States  is  very  different  from  the 
relation between donors and recipient countries, both from a financial and political perspective.  

In  the  following  sections  the  feasibility  of  using  budget  support  in  ESI  Funds  is  being  discussed.  The 
review  showed  that  studies  and  evaluations  of  budget  support  operations  have  not  provided  conclusive 
evidence on several of the expected benefits of using budget support (see Table 2). While there are some 
indications that it has contributed to strengthen the focus on results and reduced transaction costs, other 
expected benefits such as enhanced policy dialogue and alignment with government policies appear more 
difficult to verify. 

The analysis aims to highlight the trade-offs which would be inherent if budget support were to be used 
to  deliver  ESI  Funds.  Certain  aspects  or  features  of  the  funding  may  be  strengthened,  and  others  are 
likely  to  be  significantly  weakened,  compared  to  the  current  shared  management  delivery  system  in 
place.  Due  to  the  nature  of  the  instrument,  budget  support  would  inevitably  lead  to  less  control  and 
assurance on legality and regularity of the spending. 

3.1  Sound financial management and assurance on legality and regularity 

Likely impacts of using budget support on assurance on legality and regularity 

A  clear  finding  of  the  study  is  that  implementing  budget  support  in  ESI  Funds  would  lead  to  increased 
fiduciary risk and a less detailed assurance on legality and regularity of expenditure, when compared to 
the current ESI Funds delivery system. The assurance would be based mainly on verifying that conditions 
for  support  were  met,  and  underlying  spending  in  Member  States  would  not  be  fully  scrutinized.  This 
would  have  a  strong  impact  on  the  European  Commissions’  possibility  to  provide  detailed  assurance  on 

8 https://ec.europa.eu/info/publications/annual-activity-report-2016-international-cooperation-and-development_en 
9 https://ec.europa.eu/info/publications/annual-activity-report-2016-neighbourhood-and-enlargement-negotiations_en 
10 https://ec.europa.eu/europeaid/budget-support-trends-and-results-2017_en 
11 https://ec.europa.eu/info/publications/annual-activity-report-2016-regional-and-urban-policy_en 
12 https://ec.europa.eu/info/publications/annual-activity-report-2016-employment-social-affairs-and-inclusion_en 

 
 
 
 
 
 
                                                
15 

the legality and regularity of the expenditures from the EU budget.  This may not automatically translate 
into higher de-facto risk of irregularities but would strongly affect the ability to detect and correct them, 
e.g.  the  assurance  provided  on  payments  made  by  the  Commission  to  Member  States.  Underlying 
fiduciary risk on issues may be particularly complex to address on issues such as the fight against fraud 
and respect of EU  law.  Some rules  and requirements,  in particular  those  regarding state  aid and public 
procurement,  apply  to  all  investments  and  are  not  specific  to  ESI  Funds,  so  that  the  use  of  national 
system  would  not  change  underlying  rules.  However,  the  high  error  rates  still  associated  with  the 
application of state aid and procurement rules indicate that Member States still face many difficulties in 
correctly  interpreting  and  applying  the  rules.  Full  reliance  on  national  system  may  therefore  result  in 
overall weaker compliance with these rules. 

The  European  Commission  has  set  up  a  wide  range  of  control  mechanisms  and  tools  contributing  to  a 
high level of assurance of the legality and regularity of expenditures funded by ESI Funds. According to 
Article 59(2) of the Financial Regulation applicable to the EU general budget (966/2012), Member States 
shall take all necessary measures, including legislative, regulatory and administrative, to protect the EU's 
financial interests, namely by preventing, detecting and also correcting irregularities and fraud. The ESI 
Funds  multi-level  management  system,  based  on  strong  internal  control  and  full  traceability  of 
expenditure, is designed to ensure that all the relevant rules are complied with.  

In  the  current  system,  the  Commission  provides  assurances  on  legality  and  regularity  to  budgetary 
authorities,  by  systematically  examining  the  available  control  results  and  indicators  from  different 
sources,  including  the  results  of  its  own  audits  and  communicated  audits  from  programme  audit 
authorities, as well as the observations and recommendations issued by internal auditors, the European 
Court  of  Auditors  and  OLAF.  These  elements  are  assessed  to  determine  their  impact  on  the 
management’s assurance on legality and regularity.  

Results are examined per Operational Programme and a common denominator is traceability and control 
of  individual  operations  and  expenditures  as  means  to  obtain  assurance,  through  management 
verifications, on-the-spot controls and audits. In the current system, financial corrections can be imposed 
if ESI funds are affected by an error, irregularity or fraud. The origin and scope of errors can be identified 
and  ascertained  by  auditing  the  relevant  expenditure,  thanks  to  full  traceability  of  EU  funds.  Through 
these mechanisms corrective capacity is ensured. 

All in all, the current system  enables the Commission  to prevent and detect irregularities and carry out 
financial corrections, if necessary, thus providing  a high  level  of assurance  on legality and regularity on 
the underlying transaction at the expenditure level to the budgetary authorities.  

In a budget support delivery of ESI Funds investments, the focus of the assurance mechanisms would be 
transferred from the level of individual transactions to the conditions for payment. The assurance would 
be based on controlling that conditions are met, i.e. control of regularity and legality of payments would 
concern the payment from the EC to Member States, and not the subsequent spending in Member States 
of the EU budget. 

If ESI Funds were fully delivered according to Member States’ procedures, the management and control 
system  would  no  longer  be  based  on  full  traceability  of  EU  funding  at  the  most  detailed  level  of 
implementation.  Instead,  the  fiduciary  risk  would  have  to  be  assessed,  possibly  based  on  ex-ante 
assessment focusing on issues such as budget reliability, transparency of public finance, management of 
assets  and  liabilities,  policy-based  fiscal  strategy  and  budgeting,  predictability  and  budget  execution, 
procurement, accounting and reporting (e.g. quality and timeliness of budget reports and annual financial 
statements), as well as the robustness and quality of the statistical system. In PforR approaches, it is the 
programme  itself  that  is  being  assessed,  e.g.  the  involved  institutions  and  the  delivery  mechanisms, 
monitoring arrangements etc. 

 
 
 
 
 
 
 
 
 
16 

Since  the  assurance  mechanisms  would  shift  their  focus  from  the  level  of  operations  to  the  level  of 
aggregated conditions for payment, the Commission would not be able to control and provide assurance 
on  individual  operations  and  expenditures.  The  assurance  would  be  provided  through  risk  management 
on  the  underlying  PFM  system  and  the  conditions  being  met,  whether  it  is  conditions  in  terms  of 
achieving  tangible  targets,  or  more  intangible  conditions  related  to  processes  and  reforms.  Systematic 
and  detailed  first  level  checks  at  operation  level  (verification  by  Managing  Authorities)  would  not  be 
applicable anymore and instead national procedures would be used. 
The EU funds would not be traceable in the national/regional budgets and an audit trail as comprehensive 
and detailed as in the current ESI Funds framework would be impossible to implement. This would make 
checks on legality and regularity of expenditure at the level of  operations funded by ESI Funds, such as 
expenditures, eligibility criteria, horizontal objectives and compliance with public procurement and states 
aid  rules,  impossible.  National  audits  would  still  take  place  but  would  normally  cover  overall  public 
expenditure (i.e. not  EU  funds specifically)  and  it  would be  impossible to identify  errors or  irregularities 
related specifically to the EU budget.  

As the literature review showed, there are certain types of budget support which can provide some level 
of  traceability.  In  sector  budget  support,  it  is possible  to  consider  stronger traceability  by  allocating  EU 
funds  to  specific  budget  lines,  which  can  subsequently  be  subjected  to  audit  and  verifications  of 
expenditures  as  disbursement  conditions  for  the  budget  support  funding.  However,  integrating 
earmarking and traceability into budget support programmes has proven heavy to implement due to the 
very cumbersome procedures involved.  

Cash  on  Delivery,  such  as  Program  for  Results  (PforR)  by  the  World  Bank,  is  another  modality  of  the 
budget  support  family  which  allows  for  some  traceability.  Since  payments  are  made  based  on 
achievements  of  agreed  results  and  targets,  it  provides  assurance  that  funds  have  been  spent  on 
targeted  activities  or  expenditures,  which  can  be  considered  a  form  of  earmarking.  However,  PforR 
modalities  do  generally  not  require  a  full  audit-trail  of  expenditures  or  impose  controls  on  how  results 
were achieved (for example control of eligibility of expenditure, state aid and procurement), as this is the 
responsibility  of  the  beneficiary.  Ex-ante  assessments  are  carried  out  (as  in  other  budget  support 
modalities)  mainly  to  assess  the  overall  eligibility  criteria  and  fiduciary  risk,  combined  with  regular 
monitoring of risks (national audits, reports, external assessments) during implementation. The focus of 
the  control  mechanisms  is  generally  on  verification  of  indicators  reported,  and  not  on  the  expenditures 
incurred. 

In  principle,  it  could  be  feasible  to  implement  budget  support  in  ESI  Funds  with  strong  safeguards  and 
traceability, for example by requiring separate accounts which enable audit of expenditures funded from 
the EU budget.  

Even  if  mechanisms  for  traceability  and  earmarking  were  introduced,  they  could  still  not  provide  the 
same  level  of  assurance  on  expenditure  as  in  the  current  system.  Traceability  mechanisms  have  been 
adopted in some circumstances to keep more control on how donor’s resources are used. They included 
the following steps:  

 

 

 

the identification, jointly with the partner government, of the budget lines to be targeted; 

the  verification  of  spending  against  these  agreed  budget  lines  through  a  formal  financial  and 
procedural audit of expenditure data and supporting documentation necessary for the auditor to 
give an opinion on the amount of targeted budget support to be provided; 

disbursement of budget support using the conclusions of the audit as the justification for making 
the budget support payment.  

However,  such  additional  control  mechanisms  would  clearly  contradict  the  rationale  for  using  budget 
support, namely to increase ownership, simplification and flexibility. Evidence from the literature review 
shows  that  the  practice  of  financial  and  procedural  audit  of  expenditure  has  been  discontinued  in  the 
budget  support  context.  Such  audits  were  conducted  for  example  as  part  of  the  EC  traceable  budget 
support  approach  used  up  to  2007.  As  reported  by  Schmidt  (2005),  traceable  and  earmarked  budget 

 
 
 
 
 
 
17 

support was extremely cumbersome for both the donor and the partner countries (while also detrimental 
to domestic accountability), and for this reason abandoned.  

It  is  not  possible  to  assess  whether  some  traceability  of  ESI  Funds  delivered  through  budget  support 
would be more or less effective and efficient than the current ESI Funds system of shared management. 
However,  it  is  clear  that  introducing  traceability  mechanisms  in  budget  support  would  imply  additional 
reporting  and  audit  requirements  which,  in  turn,  would  partly  offset  any  advantage  in  terms  of 
simplification achieved with a budget support delivery system. 
To conclude, to deliver ESI Funds through a budget support modality would lead to significantly reduced 
possibility  for  the  Commission  to  provide  assurance  on  the  legality  and  regularity  of  expenditures.  The 
monitoring  of  sound  financial  management,  legality  and  regularity  would  have  to  be  provided  through 
national financial management systems and procedures. The Commission would primarily get information 
on  the  functioning  of  national/regional/sectoral  public  financial  management  procedures,  through 
fiduciary risk assessments and possibly ex-ante conditionalities/eligibility criteria for support. In a results-
based  payment  system,  some  ex-post  assurance  would  be  provided  through  disbursements  linked  to 
achievements,  thereby  reducing  the  risk  of  inefficient  spending,  since  only  the  actual  results  produced 
would be reimbursed.  

With  this  conclusion,  it  is  important  to  underline  that  a  less  assurance  on  expenditures  does 
not necessarily result in higher fiduciary risks. Less detailed assurance means that the Commission 
would  have  fewer  guarantees  due  to  structural  changes  in  the  delivery  system,  especially  regarding 
control  and  correction  mechanisms.  This  does  not  automatically  translate  into  higher  de-facto  risk  of 
irregularities but will strongly affect the ability to detect and correct them, i.e. the assurance provided on 
payments. A number of trade-offs exist in relation to this, as outlined and further discussed below. 

Likely impacts of using budget support on sound financial management 

One rationale for using budget support in development cooperation was to bring about gains in efficiency 
and  possibly  lead  to  more  effective  spending.  Moving  away  from  a  focus  on  inputs  and  processes  was 
intended  to  leave  more  space  available  for  managers  to  focus  on  sound  financial  management  issues, 
rather than procedures. Along the same lines, the rationale for using  "results-oriented" approaches was 
to  increase  the  accountability  for  results,  rather  than  processes.  In  addition,  fungibility  and  higher 
flexibility  of  expenditures  aimed  at  ensuring  an  effective  use  of  resources  at  the  level  of  the  overall 
budget  (rather  than  at  the  level  of  individual  spending  programmes  or  projects).  Finally,  one  main 
feature  of  budget  support  systems  is  the  dialogue  on  policies  and  public  financial  management.  This 
dialogue usually takes place at high level (strategic orientations) and is expected to foster sound financial 
management.  

It  is  difficult  to  say  to  what  extent  budget  support  mechanisms  in  ESI  Funds  would  have  an 
impact on sound financial management.  

On  the  one  hand,  budget  support  mechanisms  could  have  a  positive  impact  on  sound  financial 
management by enabling managers of EU funds in Member States to spend more time on implementing 
programmes and on ensuring the efficiency and effectiveness of support. If fungibility is possible, it may 
also  give  Member  States  more  flexibility  in  making  strategic  use  of  different  financing  sources.  For 
example,  when  the  same  area  of  investment  is  funded  by  several  sources  (several  national  funding 
sources  and  ESI  Funds/other  EU  funds),  fungibility  and  higher  flexibility  of  expenditure  could  possibly 
lead to synergies.  

On the other hand, fungibility increases the risk of funds being used to pay for recurrent expenditure or 
to flow to budgetary areas which do not fall within the scope of EU priorities. At the same time, priority 
setting  and  budgetary  procedures  in  Member  States  can  already  be  considered  solid  (compared  to 
developing countries), and overall effectiveness of spending could be improved. 

 
 
 
 
 
 
 
 
 
 
18 

In  a  budget  support  delivery  system,  elements  which  are  currently  in  place  to  foster  sound  financial 
management in ESI Funds at the level of the programme and individual operations would also disappear: 
these  include,  for  example,  the  existence  of  monitoring  committees  involving  all  relevant  partners, 
provisions  related  to  selection  criteria  and  procedures  to  select  individual  operations,  which  will  benefit 
from EU support, and requirements to have detailed performance frameworks linked to programmes. 

To  conclude,  a  switch  to  budget  support  in  ESI  Funds  would  entail  a  trade-off  between  assurance  on 
legality and regularity and sound financial management. Whereas the use of budget support would have 
a  negative  impact  on  the  capacity  of  the  Commission  to  deliver  assurance  on  legality  and  regularity  of 
expenditure,  it  may  contribute  to  freeing  more  space  for  policy  dialogue  and  accountability  on  results. 
Yet, the scope of potential gains in terms of sound financial management are difficult to assess, since ESI 
Funds  in  shared  management  also  foresee  a  number  of  mechanisms  to  ensure  sound  financial 
management, notably at the level of individual programmes and projects, which would disappear with a 
change of system.  

3.2  Simplification and accountability 

Potential for simplification in ESI Funds 

Reaching  high  levels  of  accountability,  both  in  terms  of  results  and  on  legality  and  regularity  inevitably 
leads to some degree of complexity. The number of layers of control installed may  also generate errors 
due to different interpretation or understanding of rules.  

The  management  of  ESI  Funds  is  generally  perceived  by  beneficiaries  and  programme  implementing 
bodies as quite complex. Some recent literature considers that the situation has worsened over the last 
programming periods, with additional regulatory requirements being added (EPRC, 2016). This situation 
entails the risk that potential beneficiaries are dissuaded from applying for funding from ESI Funds, which 
may have an impact on the attractiveness of ESI Funds and their expected contribution to the Treaty and 
Europe 2020 objectives. In this context, the need for simplification is one of the main challenges for the 
2014-2020 programming period and beyond. The aim is to reduce the ESI Funds administrative costs and 
burden at all levels, and in particular for Managing Authorities and beneficiaries. 

The EC has adopted several measures to simplify ESI Funds management. Various reforms were already 
introduced in the past years with a view to simplify different elements of the shared-management system 
and reduce the associated administrative burden.  Examples of key changes that have been introduced in 
the current programming period are the following:  

  Harmonization of the rules of the different Funds,  

  Making reporting duties lighter,  

  Clarification of eligibility and reimbursement rules and introduction of simplified cost options,  

 

Promotion of e-Cohesion initiatives,  

  Strengthening of the proportionality principles in various cases, for instance by reducing the audit 

and control over small scale operations. 

Nevertheless, there is widespread consensus that simplification remains a critical issue and that there is 
scope for a more radical simplification. 

One  advantage  of  using  the  budget  support  in  delivering  funding  from  ESI  Funds  is  assumed  to  be 
simplification  of  financial  management  and  control  in  the  implementation  phase.  Since  budget  support 
relies on national budget implementation and control procedures, there would be no specific management 
and  control  system  for  ESI  Funds  delivered  through  budget  support.  Issues  linked  with  the  potential 
duplication  of  procedures  and  rules  would  be  removed.  Other  simplification  areas  could  relate  to  the 
arrangements to ensure transparency concerning beneficiaries and individual operations (and associated 
communications  and  visibility  duties),  as  well  as  selection  arrangements,  including  eligibility  conditions. 

 
 
 
 
 
 
 
 
 
19 

Monitoring  and  reporting  duties  would  largely  remain  unchanged  (especially  in  the  case  of  PforR),  and 
even, in some cases be increased. Depending on domestic practices and on requirements spelled out in 
the  budget  support  agreement,  the  monitoring  system  may  be  less  or  more  complex  than  the  one 
currently in place. In  any case, monitoring of  financial indicators would no longer take place. Indicators 
would  concentrate  on  key  implementation  steps,  outputs,  outcomes  and  possibly  processes  or  policy 
actions. To some extent, policy dialogue could address the monitoring and reporting duties, for example 
by  identifying  areas  for  improvement  in  terms  of  selection  procedures,  monitoring,  or  transparency, 
without  the  detailed  levels  of  requirements  and  complex  procedures  as  in  the  current  delivery  system. 
This  could  bring  about  a  significant  reduction  of  transaction  costs  from  the  perspective  of  final 
beneficiaries. 

All  in  all,  the  simplification  potential  would  very  much  depend  on  national  rules;  with  the  highest 
simplification  potential  in  Member  States  where  national  control  and  audit  procedures  require  fewer 
resources. The size of simplification advantages would  also  depend  on  the  share  of ESI  Funds,  which is 
delivered through budget support.  

As the evidence from the literature review shows, gains from simplifications of the delivery system of ESI 
Funds through budget support mechanisms could take different forms:   

  Absorption  may  be  increased  at  the  start  of  the  programming  period,  since  budget  support 
mechanisms usually have lower start-up costs than projects (this  has also been observed in the 
ODA  context,  where  budget  support  allowed  major  donors  to  respond  to  absorption  pressures 
during the period 2000-2010); 

 

 

 

Legal certainty may partially increase, by reducing complexity associated with the need to apply a 
range  of  regulations,  delegated  and  implementing  acts  and  guidelines  at  EU  level,  thereby 
reducing the risk of divergent interpretations from different governance levels;  

Potential  reduction  of  the  error  rate,  thanks  to  the  possibility  to  apply  national  rules,  thus 
reducing  the  risk  of  misinterpretation,  which  is  one  of  the  main  reasons  for  irregularities 
(European Court of Auditor 2014, 2015a); 

Potentially  stronger  focus  on  results,  by  cutting  the  administrative  time  and  costs  of  fund 
management  and  control  and  concentrate  efforts  to  achieve  milestones  and  results  agreed  ex-
ante with the Commission. 

Finally, from the point of view of the donor, i.e. in the ESI Funds case, the European Commission level, it 
is difficult to say whether the introduction of budget support would lead to simplification or not. There is 
only  limited  evidence  from  the  development  context  showing  that  budget  support  mechanisms  entail 
lower transaction costs. The literature review indicates that donors tend to bear lower administrative and 
financial costs to implement budget support activities per unit of aid disbursed compared to project-based 
approaches. However, the reduction of transaction costs obtained by using budget support is considered 
modest. It is also uneven, depending on the policy area and the type of budget support adopted. The use 
of traceability arrangements in sector budget support, for example, negatively influences the reduction in 
transaction  costs.  It  is  also  to  be  noted  that  in  the  development  context,  no  equivalent  of  "shared 
management" exists, where duties and responsibilities are shared between two levels according to rules 
specifically designed for that purpose.  

Trade-off between simplification and accountability 

Trade-offs  exist  between  simplification  and  accountability,  as  well  as  between  simplification  and  sound 
financial  management.  The  more  simplification 
is  pursued  –  in  particular  when  programme 
implementation and control fully follow national rules – the more difficult it becomes to ensure high levels 
of  accountability,  both  on  legality  and  regularity,  and  on  results.  In  a  budget  support  delivery  system, 
irregular  expenses  at  the  level  of  individual  operations  would  be  difficult  to  identify  and  impossible  to 
recover.  In  the  same  vein,  ineligible  operations  (e.g.  which  do  not  fall  within  the  priorities  of  the 
programme) would not be identified.  

 
 
 
 
 
 
20 

There are also limits to the extent to which budget support could contribute to ESI Funds simplification. 
Some  EU  rules,  particularly  those  regarding  state  aid  and  public  procurement,  apply  to  all  investments 
and are not specific to ESI Funds. These rules would have to be complied with in any case (e.g. directives 
are transposed into national law), but the level of check and control on the actual compliance with these 
rules at the level of individual projects would depend on national systems. The high error rate associated 
with  the  application  of  state  aid  and  procurement  rules  indicates  that  Member  States  still  face  many 
difficulties  in  correctly  interpreting  and  applying  the  rules.  Budget  support  would  require  a  shift  in 
paradigm,  in  the  sense  that  it  would  require  relying  on  existing  arrangements  to  ensure  compliance  as 
there would not be dedicated controls set-up in the framework of an ESI Funds delivery system. 

Another limit is that simplification obtained through budget support in terms of management and control 
may  be  partially  offset  by  more  intense  exchanges  at  strategic  levels.  The  literature  review  and 
interviews  carried  out  highlighted  that  the  reduction  in  transaction  cost  observed  when  aid  is  delivered 
through budget support is usually more limited than expected by donors and recipient governments. One 
reason  relates  to  the  higher  focus  on  strategic  priority,  target  setting  and  policy  dialogue.  This  puts  a 
burden on recipient's administrations (in development cooperation usually line ministries and ministries of 
Finance), which off-set the gains derived from a simpler implementation system. In addition, according to 
the  literature  review,  the  nature  of  transaction  costs  also  changes  with  budget  support.  As  greater 
attention  is  dedicated  to  policy  rather  than  programme  management  tasks,  it  requires  a  different  skill 
set, both at the level of the donor and the level of the recipient, but not necessarily less staff. 

Finally, the parallel existence of different delivery systems also has a cost. If budget support mechanisms 
would coexist with shared management, simplification may be reduced. The actual level of simplification 
would also depend on the amount of ESI Funds channelled via budget support. 

3.3 

Focusing on inputs, outputs, results and/or policy actions 

One  of  the  expectations  behind  the  use  budget  support  mechanisms  is  to  increase  the  performance 
orientation of a policy. Spending programmes which involve a high number of rules to be complied with 
face the risk that "compliance" becomes the objective rather than actually reaching results and meeting 
the programmes'  targets.    As highlighted  for instance  by  the European  Court of  Audit  (2014),  “because 
there is so much emphasis on spending the EU budget (‘the input orientated approach’), those managing 
the activities and projects often focus on compliance with the conditions for getting and using the money, 
regardless of the results achieved”. By contrast, it is therefore expected that less rules would leave more 
time to focus on achieving results.  

There are no clear-cut differences between result frameworks across types of budget support approaches, 
although  some  tend  to  put  more  emphasis  on  policy  actions  (reforms  achieved,  processes),  and  some 
more on outputs or outcomes (PfR or sector budget support), even if PfoR approaches and sector budget 
support may also use process/reform related indicators in their  performance frameworks. Evidence from 
the literature review suggests that result frameworks in budget support vary and that this partly reflects 
differences in the policy objectives pursued by the different types of contracts. The evidence also showed 
that for similar types of instruments there was a heterogeneity in the type of result approaches used. For 
example, general budget support result frameworks often include a mix of outcome, output, activity and 
process/input  indicators.  They  also  tend  to  cover  various  sectors  within  the  development  strategy.  In 
budget support for policy action, which is linked to the implementation of structural/institutional reforms, 
the result framework exclusively or almost exclusively focuses on policy changes in terms of reforms or 
processes. Both general budget support  and budget support for policy action may include in their result 
framework  indicators  related  to  macroeconomic  and  budget  management,  to  PFM  system  and  public-
sector governance. Sector budget support result frameworks tend to be aligned to the result frameworks 
of the underlying sector strategy and include more often outcome indicators related to the use of sector 
public goods. In PfoR the result framework is usually centred on the definition of programme outputs and 

 
 
 
 
 
 
 
 
 
21 

outcomes related to service delivery on which the recipient country has full ownership and responsibility, 
even  if  "results"  indicators  in  PfoR  programmes  very  often  also  entail  process  or  reform  related 
indicators.  

ESI  Funds  programmes  already  have  performance  frameworks,  with  limited  scope  for  improvements 
through a budget support approach. The ESI Funds system for the 2014-2020 programming period has a 
performance  framework  and  well-defined  structures  to  monitor  it.  Result  orientation  is  reflected  in  the 
programming  phase  in  the  ESI  Funds:  the  intervention  logic  is  explicit,  with  performance  frameworks 
including financial, output and result indicators with corresponding targets. This was less the case in the 
2007-2013 programming period, a point which was highlighted in the recent ex-post evaluation of ERDF 
and  CF  (EC,  2016).  While  results  orientation  has  been  addressed in  a  more  systematic  way  in  the  new 
regulatory  framework  2014-2020,  the  performance  framework  indicators  are  currently  not  linked  to 
disbursement  of  funds,  which  mostly  occur  based  on  real  cost  or  simplified  costs  (except  for  the 
performance  reserve).    Switching  to  a  budget  support  approach  would  therefore  probably  provide  little 
value added in terms of setting up and monitoring performance frameworks, but the policy dialogue may 
put  more  emphasis  on  results  achieved  and  it  would  link  payments  from  the  Commission  to  Member 
States to the achievement of these indicators. 

Although  efforts  have  been  made  by  donors  to  establish  and  monitor  result  indicators,  this  remains  a 
difficult  exercise.  Even  in  cases  of  contracts  with  a  strong  focus  on  "results",  such  as  the  World  Bank 
PforR,  "result"  indicators  are  usually  a  mix  of  process/output  and  outcome  indicators.  Using  result 
indicators  to  assess  programme  effectiveness  is  adequate  where  intervention  logics  are  clear,  where 
there is little time-lag between the input and the production of the result, and where external factors do 
not influence the results too much.  

A switch to budget support in ESI Funds may also require reducing the number of indicators to be agreed 
upon  and  reported  (otherwise  the  administrative  burden  may  increase  in  a  disproportionate  manner). 
From the perspective of the EC, this may imply a more strategic form of performance orientation building 
on  reinforced  policy  dialogue  with  the  MS,  but  it  could  also  entail  a  risk  that  policy  dialogue  becomes 
focused on indicators linked to disbursement, thereby losing track of the bigger policy picture.  

3.4  Support to national, regional and/or local levels and the partnership principle 

The  literature  review  shows  that  there  is  little  experience  with  -  and  evidence  from  -  budget  support 
applied at regional or local levels. Decentralised budget support has been implemented in a small number 
of  cases  to  support  place-based  development  policies,  where  the  participation  of  decentralised/local 
authorities in delivering services at regional/local level has been given more attention during the last few 
years. 

In  the  development  context,  budget  support  has  often  been  provided  to  central  governments  because 
central governments usually have higher administrative capacity and enjoy budgetary and administrative 
autonomy.  The  preference  of  donors  to  have  national  governments  as  counterparts  in  budget  support 
policy dialogue and implementation is often also linked to concerns about fiduciary risks at decentralised 
level and capacity to monitor implementation. Finally, it is also in part due to the nature of the objective 
of the policies concerned (or the type of reforms that are supported). 

There is probably greater scope to implement budget support at regional/local level in the EU than in the 
development  context  since  the  level  of  administrative  capacities  in  European  regions  and  territories  is 
higher. However, given the more limited experience in implementing budget support at regional and local 
levels,  efforts  would  need  to  be  made  to  design  mechanisms  and  tools  tailored  to  a  regional/local 
approach. It should also be considered that directly providing budget support at regional or lower levels 
of government may be politically sensitive as it could interfere with national systems of budget transfers 
already in place.  

 
 
 
 
 
 
 
 
 
 
22 

The possibility to implement budget support at regional/local level in the ESI Funds context would depend 
on  the  level  of  regional  administrative  and  budgetary  autonomy.  It  may  be  more  difficult,  if  not 
impossible  to  provide  direct  financial  transfers  to  regional/local  budgets  if  no  or  only  partial  budgetary 
and legislative autonomy  exists in some territories. The feasibility for  regional/local  level  support  would 
also depend on the type of budget support concerned. For example, PforR approaches could be adopted 
at regional/local level even in the absence of budgetary autonomy by using a programme approach under 
the  responsibility  of  regional/local  authorities.  By  concentrating  payment  when  outputs  and/or  results 
materialise, PforR approaches can be very flexible  in adapting to local conditions of governance. On the 
contrary, general budget support and budget support for policy actions appear to be better suited to the 
national level due to the scope of the policy areas covered. Sector budget support might  be delivered at 
regional  level,  but  is  likely  to  require  high  administrative  and  budgetary  autonomy  in  the  sector 
concerned.  

There is a high degree of heterogeneity throughout Member States and regions as far as administrative 
and budgetary autonomy is concerned. As described in European Commission (2010c):  

a)  Federal  States  (Germany,  Austria  and  Belgium)  are  characterised  by  a  central  government  and 

regional authorities with own legislative and administrative competences respectively;  

b)  Countries  such  as  Italy  and  Spain  can  be  considered  regionalised.  They  have  established  an 
intermediate level of government with a wide set of competences (including RDI support, health 
protection,  civil  protection,  large  scales  transport  infrastructures)  and  enjoy  financial  autonomy 
as regards revenues and expenditures. 

c)  Scandinavian  countries  (Sweden,  Finland  and  Denmark)  are  unitary  countries  where  local 
governments  have  a  wide  range  of  responsibilities  in  relation  to  regional  development.  Sub-
national governments in these countries enjoy a significant degree of fiscal autonomy. 

d)  Unitary  States,  where  the  central  government  is  predominant,  can  be  found  among  both  the 
EU15  (France,  Portugal,  the  UK,  Greece,  Ireland,  The  Netherlands  and  Luxembourg)  and  the 
EU12  (Czech  Republic,  Hungary,  Poland,  Bulgaria,  Cyprus,  Estonia,  Latvia,  Lithuania,  Malta, 
Romania,  Slovakia  and  Slovenia).  At  the  sub-national  level  there  may  be  administrative  self-
governance, or not. Still, in this category of countries, some regional authorities have a key role 
in  programming,  project  selection  and  implementation  of  ESI  Funds  programmes  (France, 
Portugal and Poland for example).  

Sub-national governments play an important role in relation to capital expenditure particularly in federal 
and regionalised states where more than two third of total capital investment are undertaken at the sub-
national level.  

The feasibility of using budget support to deliver ESI Funds at regional level in the ESI Funds context also 
depends  on  the  type  of  policies  or  reforms  concerned.  The  key  condition  would  be  to  focus  on  policy 
areas where regions have corresponding competence to justify policy dialogue with regional government 
authorities,  and  for  which  expected  results  are  under  the  region’s  influence.  This  would  differ  from 
Member State to Member State. Statistics on capital formation disaggregated by economic function show 
that sub-national governments on average carry out expenditure especially on economic affairs (including 
transport,  telecommunications,  agriculture  and  fishing,  energy,  and  industry),  housing  and  community 
amenities, education  and  recreation  and  culture  (European  Commission,  2010c).  Sector  budget  support 
may be better suited in these sectors in order to support regional sector strategies, contributing to sector 
reforms or deliver local public services. PforR could also be suitable for local public service delivery (e.g. 
local  public  transport,  or  health),  SME  development  strategy  and  endogenous  local  development  plans, 
provided  clear  output  indicators  can  be  defined  and  regional  authorities  can  be  held  accountable  for 
results.  

While  existing  budget support  approaches  involve partnership  between  mainly a donor and the national 
government,  ESI  Funds  delivery  partnership  has  a  much  wider  and  deeper  meaning.  In  the  ESI  Funds 
context, in addition to regional and national public authorities, other EU, national and subnational actors 

 
 
 
 
 
23 

are  involved  in  the  design,  implementation,  monitoring  and  evaluation  of  programmes,  including 
economic and social partners and non-government organisations representing civil society. Consultation, 
participation  and  dialogue  with  partners  aim  to  enhance  commitment,  broader  expertise,  greater 
transparency and improved efficiency of the policy delivery process. Member States are currently obliged 
to  organise  a  partnership  at  all  the  levels  (Art.  5  Reg.  1303/2013).  Partnership  principles  and  criteria 
must be included in the Partnership Agreement and are subject to the Commission decision of approval.  

In budget support, donors welcome the involvement of stakeholders in the decision and implementation 
process. Although sometimes a condition in the agreement, there are usually no binding requirements on 
a partnership to be organised. The types of partners involved depend on the type of budget support. With 
general  budget  support  and  budget  support  for  policy  action,  the  key  role  is  played  by  the  national 
authorities, usually the Ministry of Finance, with a strong political commitment at Parliamentary level. For 
sector budget support and PforR, other line ministries and stakeholders can be involved. In development 
cooperation, budget support is a relatively untested area as far as partnerships are concerned (compared 
to the project-based approach). 

The effect of a budget support delivery on the application of the partnership principle in ESI Funds would 
depend  on  existing  set-ups  at  Member  States  level.  Member  States  would  have  to  rely  on  their  own 
mechanisms  to  ensure  the  involvement  of  stakeholders  in  the  policy  dialogue  and  decision-making 
process.  The  EC  could  require  specific  consultation  procedures  to  be  set  up  (a  conditionality/eligibility 
requirement  concerning  partnership  could  be  introduced).  In  general,  since  budget  support  allows 
recipient countries to rely on their own procedures to ensure participation of stakeholders, the advantage 
it may bring would be in terms of simplification and increased Member State ownership.  

The risk could be insufficient involvement of relevant partners in the decision-making process regarding 
the  definition  of  specific  policy  objectives  and  types  of  interventions.  This  concerns  in  particular 
regional/local authorities, social or private partners and non-government organisations representing civil 
society, who are important stakeholders in Cohesion policy  and for certain types of intervention such as 
business  support  and  innovation,  small  scale  local  development  and  social  inclusion.  They  are  currently 
the  key  stakeholders  implementing  ERDF  and  ESF.  How  to  maintain  their  mobilisation  would  require 
specific consideration in a budget support delivery of ESI Funds. 

3.5  Conclusions on the potential value added of using budget support elements for ESI Funds 

The  objective  of  this  study  was  to  assess  the  advantages  and  disadvantages  of  the  potential  use  of 
budget support for the delivery of (or parts of) the ESI Funds and to assess the feasibility of using budget 
support type delivery mechanisms in the framework of ESI Funds.  

As has been mentioned throughout the report, it is innately difficult to provide strong judgements on the 
value added of using budget support compared to the current shared management delivery of ESI Funds. 
To  a  large  extent  it  is  a  theoretical  exercise,  since  the  context  in  which  ESI  Funds  are  implemented  is 
very different from where development cooperation operates. 

That said, it can be concluded  that there is  little  concrete evidence  that general or sector  budget 
support  delivery  of  ESI  Funds  would  be  more  effective  and  efficient  than  the  current  shared 
management  system.  Any  change  would  involve  trade-offs  with  uncertain  outcomes  and  gains.  The 
followings  sections  summarise  main  findings  from  the  analysis  of  the  potential  added  value  of  budget 
support mechanisms for ESI Funds and the related disadvantages and risks. 

 
 
 
 
 
 
 
 
 
 
 
 
24 

3.5.1  The dual nature of budget support 

Budget  support  operations  have  a  financial  and  a  condition/incentive  dimension.  There  is  no 
universally  agreed  definition  of  which  elements  constitute  the  "budget  support  package".  However, 
definitions  usually  highlight  the  dual  nature  of  budget  support13:  it  usually  entails  1/  a  financial 
dimension-  it  involves  a  transfer  of  financial  resources  to  the  Treasury  of  partner  countries  which  are 
used  in  accordance  with  the  public  financial  management  system  of  the  partner  country;  and  2/  a 
condition/incentive  dimension-  disbursements  are  made  on  basis  of  the  fulfilment  of  a  certain  set  of 
conditions for payment, which are the subject of policy dialogue.  

There  are  large  differences  in  how  donors  implement  both  the  financial  dimension  and  the 
condition/incentive  dimension.  No  single  model  of  budget  support  operation  exists  across  donors. 
Each donor has developed its own budget support or budget support inspired instrument, depending on 
objectives to be reached, donor related preferences and domestic accountability issues. A broad range of 
budget  support  and  budget  support  type  instruments  have  therefore  been  included  in  this  study.  For 
instance,  instruments  of  the  "results"  family,  which  use  country  systems,  link  disbursements  with  the 
achievement  of  certain  results,  but  do  not  necessarily  flow  to  the  National  Treasury  of  the  partner 
country, have also been included in the analysis.  

The scope and nature of conditions for disbursements and the related policy dialogue are key. 
Conditions attached to budget support programmes can be classified according to 1/ their  scope, i.e. do 
the conditions relate to the implementation of the budget as a whole or to a specific sector or sub-sector; 
and  2/  the  nature  of  condition,  i.e.  do  the  conditions  to  be  achieved  relate  mainly  to  policy 
actions/structural reforms to be undertaken or to specific (sector) outputs/outcomes to be reached (or to 
a  mixture  of  both).  For  example,  the  World  Bank's  "development  policy  financing"  instrument  involves 
conditions  relating  mainly  to  policy  actions/structural  reforms  to  be  undertaken  by  partner  countries; 
whereas  the  Bank's  "programme  for  results",  links  disbursements  mainly  to  the  achievement  of 
outputs/outcomes  in  specific  national  (regional  or  local)  programmes.  Table  5  below  provides  a  basic 
mapping of a few EC, World Bank and IMF instruments according to the scope and nature of conditions 
attached. 

Table 5 Basic mapping of delivery mechanisms according to the type of condition for payment 

Nature of the  
condition 

Macroeconomic 
stability 

Mainly policy action 
oriented 

Mainly output/results 
oriented 

Scope of the  
condition 

Conditions linked to 
the overall 
implementation of the 
budget 

IMF: Balance 

of payment 

support  

Linked to the 
implementation of 
measures in a specific 
sector 

World Bank: 

Development 

Policy 

financing 

governance 

contracts  

EC: Good 

governance & 

development 

contract  

EC: Sector 

reform 

contract  

World Bank: 

Programme 

for results  

13 In its Green Paper on the Future of Budget Support (EC, 2010b, p.3), the EC provided the following definition of budget support: it is a “transfer 

of financial resources of an external financing agency to the National Treasury of a partner country, following the respect by the latter of agreed 

conditions for payment. The financial resources thus received are part of the global resources of the partner country, and consequently used in 

accordance with the public financial management system of the partner country.’" 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                
3.5.2  Advantages,  disadvantages  and  risks  related  to  the  financial  and  condition/incentive  dimensions  of  budget 

support mechanisms 
The  following  points  have  been  identified  as  potential  advantages  of  using  budget  support  type 
mechanisms, compared with the current ESI Funds delivery mechanisms:  

25 

  Budget  support  mechanisms  shift  the  focus  from  the  input  (real  cost  approach)  to  the  policy 

objectives pursued and the related results; 

  When implemented with a sector focus,  budget support focuses  on sector strategies throughout 
their  lifecycle,  from  formulation  to  implementation  and  ex-post  assessment,  explicitly  linking 
disbursements with their actual implementation;  

  Budget  support  can  be  used  as  a  delivery  modality  to  support  policy  actions  and  institutional 
development. Latest research (including in the 7th Cohesion report) show that structural reforms 
and  the  quality  of  local  governance  are  important  for  investment  policies  to  be  successfully 
implemented;  

  Budget  support  mechanisms  focus  on  strengthening  domestic  accountability  at  a  systemic  level 
instead  of  focusing  on  project  level  control  thereby  contributing  to  an  overall  improvement  of 
existing  public  finance  systems,  instead  of  developing  donor  sponsored  parallel  systems  of 
excellence; 

It should be noted that the first three of these advantages relate to the condition/incentive dimension of 
budget support instruments.  

Budget support mechanisms also have disadvantages and risks. The following ones have been identified 
as being the most significant compared with the existing ESI Funds delivery mechanisms: 

  Budget  support  is  an  instrument  associated  with  high  fiduciary  risk.  After  disbursement,  no 
distinction  is  made  between  national  and  donor  resources.  This  implies  that  donor  funds  are 
disbursed  using  the  same  public  financial  systems  as  national  funds  and  that  resources  are 
fungible (i.e. they may be used for different purposes than the ones initially intended). 

  Donors  may  face  challenges  in  ensuring  accountability  towards  their  budgetary  authority.  In 
budget  support  systems  accountability  is  entirely  based  on  national  structures,  making  it  more 
difficult  for  the  donor  to  set  up  accountability  chains  at  home  and  to  ensure  visibility  of  the 
investment/funding. 

 

 

Policy dialogue is a prominent  feature  of  budget support; yet there is little evidence  as to what 
extent it has really been conducive in improving policies and in delivering results.  

There is little evidence that transactions costs in budget support approaches are lower than with 
other aid modalities. However, there  are indications that resource  needs are different  compared 
with  a  traditional  project  approach:  budget  support  tends  to  be  more  resource  intensive  during 
the programming phase and less resource intensive during programme implementation.   

To  be  noted  that  the  first  two  points  relate  to  the  financial  dimension  of  budget  support-  type 
mechanisms; whereas the third one is linked to the condition/incentive dimension of the instrument. 

Overall, if a general analysis of common features of budget support instruments enables us to sketch out 
a  few  main  advantages  and  disadvantages  of  using  budget  support  type  delivery  mechanisms,  it  also 
reveals that advantages, disadvantages and risks would vary largely depending on two main variables: 

 

The  area  of  intervention  /nature  of  the  investment:  different  areas  of  intervention  /  types  of 
investments entail different risks and challenges;  

  The actual design of budget support operations: the literature review and case studies have 
shown  that  budget  support  operations  vary  a  great  deal  between  donors  and  operations.  The 
actual  characteristics  of  budget  support  operations,  and  choices  made  on  the  two  dimensions 

 
 
 
 
 
26 

(financial and condition/incentive) have a great impact on the analysis of the potential usefulness 
of the instrument for ESI Funds. 

The  financial  dimension  of  budget  support  has  limited  added  value  in  the  EU  context.  Main 
expectations  and  added  value  related  to  the  financial  dimension  of  budget  support  in  developing 
countries  include:  increasing  the  aid  predictability,  increasing  (budget)  flexibility  through  fungibility  of 
resources, achieving a better alignment of donor support with national policies, establishing dialogue on 
budgetary  allocations  (in  particular  pro-poor  policies),  dealing  with  capacity  and  absorption  challenges 
when using the project modality. Most of these issues are of less relevance for the EU context, thereby 
reducing  the  added  value  of  the  financial  dimension  of  budget  support  (i.e.  "budget  transfers"  vs. 
"transfers to a programme").  

Use  of  or  reliance  on  national  public  financial  management  systems  may  prove  interesting  in 
the ESI Funds context. One of the aspects of the financial dimension of budget support may be of more 
interest for the  ESI  Funds  context: the use of,  or the reliance  on,  national public financial  management 
systems.  Budget  support  mechanisms  use  country  systems  (and  are  often  selected  by  donors  and 
recipients  for  this  reason).  In  addition  to  the  potential  simplification  and  streamlining  of  programme's 
management, the literature and case studies provide some evidence that this has  resulted in improving 
public  financial  management  systems  and  domestic  accountability.  In  instruments  such  as  the  World 
Bank's  programme  for  results,  dialogue  on  public  financial  management  aspects  is  less  prominent,  but 
the  instrument  is  often  selected  by  beneficiary  countries  because  of  the  possibility  it  offers  to  rely  on 
national systems.  

Implementing  the  financial  dimension  of  budget  support  at  regional  or  local  levels  is 
technically  challenging.  Budget  support  usually  involves  a  transfer  of  financial  resources  to  the 
Treasury  of  partner  countries,  which  is  to  be  budgeted in  accordance  with  national practices.  This  does 
not  prevent  budget  support  mechanisms  to  be  implemented  at  the  regional/local  level.  However,  it 
presents significant challenges. Technically, funding can either be directly transferred at the regional (or 
local) level, or it can be paid in the national treasury and then be transferred to the regional/local level 
using national transfer mechanisms. Both options present some challenges: 

 

 

If  funding  is  to  be  transferred  directly  at  the  regional  (or  local)  level,  recipient  bodies  need  to 
enjoy the necessary administrative autonomy to receive funding directly into their budget. Direct 
budgetary  transfers  to  a  sub-national  level  of  government  may  also  be  politically  sensitive  and 
have an impact on internal transfers between levels of government.  

Transfers  into  the  national  treasury  also  appear  to  present  some  challenges  for  policy  areas 
where the territorial and place-based approach is key. The need to set up processes for internal 
transfers  may  also  complicate  the  use  of  the  instrument  and  limit  the  benefits  in  terms  of 
budgetary margin of manoeuvre at the level of the recipient.   

Several  potential  advantages  of  budget  support  mechanisms  may  also  be  reaped  using  ring-
fenced  payments  to  programmes.  Following  growing  criticisms  of  classical  budget  support 
(implemented in its general form, as a general support to the overall implementation of the budget) and 
due  to  political  constraints  (i.e.  some  partner  countries  not  willing  to  let  donors  have  a  say  in  their 
national  budgetary  procedures),  new  forms  of  budget  support  type  instruments  have  been  designed. 
These  would  be,  for  instance,  the  World  Bank's  Programme  for  Results  or  DFID's  'non-budget  support 
financial  aid',  which  have  many  of  the  common  characteristics  of  budget  support  (e.g.  use  of  partner 
governments’ public financial  management system, focus on aggregated results or processes instead  of 
individual projects…) but do not flow to the Treasury of the partner countries (they usually flow to ring-
fenced  partly  or  fully  donor  financed  programmes).  These  approaches  appear  as  most  promising  for 
investments  in  the  EU  context.  When  it  comes  to  supporting  reforms  or  policy  actions,  budget  support 
modalities may also be envisaged. 

The  financial  dimension  of  budget  support  mechanisms  has  an  impact  on  accountability  and 
assurance.  In  budget  support  mechanisms,  accountability  is  entirely  based  on  national  structures, 
making  it  more  difficult  for  the  donor  to  set  up  accountability  chains.  In  practical terms,  using  national 

 
 
 
 
 
27 

accountability mechanisms for ESI Funds would imply that less information would be available at the level 
of the Commission and of budgetary authorities on both the financial and operational implementation of 
the EU budget. In the same vein, assurance as to the correct application of EU law could not be obtained 
to the same level as in the current ESI Funds system in a budget support inspired system.    

3.5.3  The condition/incentive dimension of budget support mechanisms 

Some mechanisms linked with the condition/incentive dimension of budget support are worth 
exploring further. Three broad areas have been identified as potentially particularly interesting for ESI 
Funds:  

  Mechanisms  used  to  shift  from  the  focus  from  inputs  (real  cost  approach)  to  policy  objectives 

pursued and aggregated outputs and results; 

  Mechanisms to monitor the implementation of (sectoral) strategies, usually combined with policy 

dialogue 

  Mechanisms to support policy actions and/or institutional development.  

Not  all  these  mechanisms  have  an  added  value  for  investments  in  all  areas  of  intervention 
relevant for ESI Funds. Five broad categories of intervention areas commonly used when assessing the 
impact of Cohesion policy14 have been distinguished in the framework of this study:  

- 

- 

- 

- 

- 

investment in human capital15:  

support to innovation and businesses16:  

large-scale infrastructure17:  

small scale local development18:  

capacity building/administrative reform19:  

The literature review, case studies and interviews demonstrated that not all the mechanisms listed above 
have an added value in each of these areas of intervention. 

Budget  support  mechanisms  are  usually  not  used  to  invest  in  large  infrastructure.  When  it 
comes  to  investing  into  "hard"  large  scale  projects,  like  infrastructure,  most  donors  tend  to  use  the 
"project"  modality  and  to  reimburse  based  on  real  costs.  This  may  be  explained  by  several  factors, 
including: higher reputational risks for the donor on large value investments (large share of the budget, 

14    This classification is in line with that used in in macroeconomic models used for simulation of Cohesion policy impacts, such as Quest or 

Rhomolo. See, for instance, section 5 of “The impact of cohesion policy 2007-2013: model simulations with Quest III”, Work Package 14a of the 

Ex post evaluation of Cohesion Policy programmes 2007-2013, 

http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/expost2013/wp14a_final_report_en.pdf 
15 These are investments which are typically by public administration. While the results of these interventions in terms of output indicators (e.g. 

number of people trained) are easy to observe and measure, effects take time to materialise and socio-economic changes resulting from it (e.g. 

increased employment) only becomes apparent in the medium to long term. In addition, sectoral and national public administration reforms, 

measured in terms of processes and policy actions, are conducive to the materialisation of such effects. 
16 this category includes a broad range of interventions in the fields of business support and RDI implemented by multiple partners (e.g. SMEs, 

Higher Education Institutes, research providers...) While the results in terms of output indicators (e.g. number of firm assisted) are easy to 

observe and measure as soon as the project has been implemented, the outcomes (e.g. increase in business added value) materialise over time, 

long after the end of the projects. This is also an area of intervention where failure needs to be tolerated (i.e. good frontier projects may fail) and 

where policy learning is particularly important. 
17 This category includes investments in physical assets for the delivery of public services and goods in the fields of transport, 

telecommunications, environment, energy and social infrastructures. Individual projects involve high amounts and usually require public 

procurement. As soon as projects are implemented physical outputs are observable (e.g. n. of Km of road). However, effects (e.g. increased 

accessibility and mobility, decrease in travel time) normally require a medium to long timespan to materialise and are strongly influenced by 

network effects and national/sectoral regulatory frameworks.  
18 This category is quite broad and involves a combination of multi-sector interventions with a variety of objectives and beneficiaries. 

Interventions can include either hard or soft measures or a combination of the two. The main feature of this category is its local (rural or urban) 

nature, usually linked with a local place-based strategy. The identification and measurement of effects may be difficult, especially when a number 

of inter-related soft measures are involved. 
19 This category concerns spending to reinforce administrative capacity and to support administrative reforms. They are implemented by public 

administrations in order to produce changes mainly in terms of output and processes. The process change constitutes at the same time the output 

and the intended result. 

 
 
 
 
                                                
28 

visible projects); risks to legality and regularity, notably around the issue of public procurement; and the 
fact that large infrastructure projects largely follow the project approach (project pipelines).  

Policy action-oriented conditions may be worth exploring to support structural reforms and/or 
process  oriented  actions.  Mechanisms  to  links  disbursements  to  the  implementation  of  reforms  or 
policy  actions  to  be  undertaken  by  the  recipient  may  be  interesting  to  explore  when  it  comes  to 
supporting  structural  reforms  or  to  support  specific  processes.  Soft  investments  (such  as  capacity 
building  actions  or  support  to  the  public  administration)  may  also  be  supported  partially  using  policy 
related  payment  conditions.  The  literature  review  and  case  studies  have  shown  that  the  selection  of 
structural reforms to be supported and practical modalities of support are particularly important for such 
an  instrument  to  work.  This  would  need  to  be  considered  when  designing  a  potential  instrument  to  be 
used under ESI Funds. Elements such as the nature of structural reforms (i.e. rather consensual reform 
or facing a lot of resistance, big reform or small incremental changes), the areas concerned (i.e. reforms 
related to the labour market, business environment and regulation, etc.) and stakeholders involved would 
need  to  be  considered  when  designing  concrete  options,  so  that  the  suitability  of  using  policy  oriented 
conditions  for  disbursement  should  be  assessed  on  a  case  by  case  basis.  A  mechanism  of  payments 
based on the fulfilment of policy actions may be used to support reforms or incremental policy changes/ 
optimization process in thematic areas linked with investments carried out under ESI Funds.  

Payment conditions linked to aggregated outputs and results may be worth exploring in areas 
where there is a clear intervention logic and where outputs/results are quantifiable. By putting 
the focus on achieved outputs and results, this type of approach has an important potential to increase 
result  orientation  and  simplification.  However,  these  approaches  have  better  chances  to  work  in  areas 
when outputs and results are (relatively) easily attributed to the implementation of a specific programme 
and  where  their  costing  is  possible  in  a  relatively  simple  way.  This  may  be  possible  in  areas  such  as 
human  capital,  and  to  some  extent  in  the  areas  of  innovation  and  business  support,  and  for  parts  of 
energy efficiency measures (where outputs are clearly measurable and easily attributable to the action), 
measures  of  social  inclusion,  etc.  The  table  below  summarises  results  of  an  initial  assessment  of  the 
suitability of output/results based conditions for payment in different areas of intervention. 

Table 6 Suitability of output/result based conditions for payment in different areas of 
intervention 

Nature of the  
condition 

Area of  

Intervention 

Mainly output/results oriented 

Investment in human capital 

Suitable 

Support to innovation and 
businesses 

Moderately suitable 

Large-scale infrastructure 

Unsuitable 

Small scale local development 

Partially suitable 

Capacity building/ 
administrative reform 

Partially suitable 

 
 
 
 
 
 
 
 
29 

Based  on  the  analysis  conducted,  three  options  for  implementing  budget  support  mechanisms  in  ESI 
Funds were retained for the remaining parts of the study: 

1.  Fully-fledged (sector) budget support (as outlined in preceding sections) 
2.  Payments based on policy actions 
3.  Payment for outputs/results 

Whereas the fully-fledged budget support option would not  require any significant adaptation  compared 
to budget support mechanisms used in external actions, the options of payments based on policy actions 
and payments for outputs/results would need to be created specifically for ESI Funds. 

The  following  section  outlines  in  more  detail  how  these  two  options  could  be  implemented  in  the  ESI 
Funds. 

 
 
 
 
 
 
30 

4.  USING  ELEMENTS  OF  BUDGET  SUPPORT  TO  DELIVER  ESI 

FUNDS 

One of the main elements of the budget support which could be integrated in ESI Funds is the possibility 
of  linking  payments  to  specific  conditions  (relating  to  policy  actions  or  to  output/results  rather  than  to 
specific projects) being fulfilled by Member States, rather than reimbursing expenditures incurred at the 
level of individual projects. 

Figure 3 illustrates the level of reimbursement of costs in the current ESI Funds delivery system, thereby 
identifies  possibilities  for  moving  towards  payments  at  a  more  aggregated  level.  As  illustrated  in  the 
figure, payments based on policy and/or output/results conditions rather than expenditures entail a shift 
towards paying for aggregated achievements and not reimbursing costs incurred at the level of individual 
projects.  Simplified  costs  options  (SCOs)  have  already  enabled  reimbursement  by  the  European 
Commission  (EC)  based  on  deliverables/outputs  rather  than  expenditures.  However,  the  SCOs  have  so 
far been used mostly at the level of individual projects, and not at an aggregated level. 

Figure 3 Current system versus condition based payments 

Simplified cost options were first introduced in the delivery system of some ESI Funds in the 2007-2013 
period, mostly with an intention to reduce administrative costs, errors and uncertainty related to ex-post 
expenditure claims. The first simplified cost options to be introduced were flat rates for indirect costs in 
the ESF (as a means to simplify reimbursement). In 2009 SCOs were extended to ERDF, and broadened 
to also include unit costs and lump sums. Throughout the period 2007-2013, the use of SCO was optional 
to Member States, and the uptake was fairly limited, with high variation between Member States.  

In  the  2014-2020  period,  Article  67  of  the  CPR  provides  which  SCO  can  be  used  for  the  ERDF/CF,  ESF 
and EMFF, notably flat rate financing, standard scales of unit costs and lump sums. It is mostly optional 
to  use,  with  the  exception  of  ESF  operations  below  50,000  Euro  of  public  support  to  be  paid  to  the 
beneficiary. Following the entry into force of the revision of the common provisions regulation which was 
undertaken in the framework of the mid-term review/revision of the MFF, obligatory use of simplified cost 
options for smaller operations financed from ERDF will also be introduced (with a transition phase). The 
EC does usually not pre-approve Member States' calculation methods for this first generation of simplified 
cost  option  and  simplified  cost  is  usually  applied  both  for  the  payment  to  beneficiaries  and  for  the 
payment between the commission and the Member State.  

 
 
 
 
 
31 

With the 2014-2020 programming period, an additional possibility has been introduced in the ESF, with 
Article 14(1) of the ESF Regulation making it possible for SCOs under the form of standard scales of unit 
costs and lump sums to be adopted by the Commission via a delegated act. One of the advantages of this 
method is that it enables Member States to get full legal certainty concerning the use of approved SCOs.  
Another  difference  of  this  provision  is  that  it  enables  decoupling  of  payments  from  the  Commission  to 
Member States (using SCOs) from payments from the Member States to beneficiaries (using SCOs or real 
cost  at  the  discretion  of  Member  States).  The  delegated  act  providing  maximum  legal  certainty,  with 
considerable simplification potential has been quickly been taken up by Member States. 

A recent study by DG  REGIO20 examined the use of SCOs in the early implementation of ESI Funds and 
found that while the uptake of SCOs has improved since the last programming period, there are still large 
differences  between ESI Funds and between Member States. It  is estimated that approximately 36% of 
the  ESF  budget  is  implemented  using  SCOs,  while  for  ERDF/CF  the  share  is  only  2%.  The  same  study 
estimates  that  the  reduction  of  administrative  cost  and  administrative  burden  when  applying  SCOs  is 
considerable, between 1.2% and 1.7 % reduction for Managing Authorities and 4.5% to 6.3% reduction 
for beneficiaries, compared to the real cost approach (in average across all funds). The reasons reported 
for  using  SCOs  were  primarily  related  to  simplification,  but  also  higher  legal  certainty  and  less  risk  of 
errors, while the main reasons for not using SCOs were the perceived complexity and time necessary to 
implement the SCOs. 

To sum up, the use of SCOs has already led to simplification and reduction in administrative costs in ESI 
Funds,  but  there  is  still  potential  for  further  improvement.  Currently  SCOs  apply  mostly  to  individual 
project  level,  and  in  most  cases,  the  reimbursement  mechanisms  from  Member  States  to  beneficiaries 
need to follow the same approach as the payments from the EC to Member States (except when using a 
delegated act in ESF, Article 14(1)).  

If  payments  were  made  on  a  more  aggregate  level  (e.g.  covering  several  projects  aiming  at  the  same 
objectives, for example re-integration of long-term unemployed on the labour market), based on agreed 
targets  and  indicators  (conditions),  payments  from  the  EC  to  Member  States  could  be  decoupled  from 
Member  State  payments  to  individual  beneficiaries.  This  could  also  potentially  lead  to  further 
simplification and result orientation in the implementation of the funds.  

The  revision  of  the  common  provisions  regulation  which  was  undertaken  in  the  framework  of  the  mid-
term review/revision of the MFF also included a provision which enables payments based on conditions. A 
delegated  act  will  set  out  the  approach.  The  approach  will  be  piloted  in  the  2014-2020  programming 
period in a limited number of policy areas, such as energy efficiency. This revision was not yet in force at 
the time of finalizing this study.   

Systems where payments are carried out based on conditions and achievements at an aggregated level, 
being  either  policy  actions  and/or  outputs/results,  have  similarities  with  budget  support  in  particular 
when it comes to the incentive dimension. 

20 http://ec.europa.eu/regional_policy/en/information/publications/studies/2017/use-of-new-provisions-on-simplification-during-the-early-

implementation-phase-of-esif 

 
 
 
 
 
 
  
 
 
 
                                                
The  following  sections  outline  two  options  built  on  using  elements  of  budget  support  in  the  existing 
delivery system. The main principles of each option are briefly described, and key features are outlined in 
relation to the following areas: 

32 

1.  What would the main feature of the programming be? 

2.  Would eligibility conditions and/or pre-conditions be necessary? 

3.  On which basis would payments be made? 

4.  How would reporting, monitoring and evaluation work? 

5.  What would control and audit cover? 

6.  How would visibility be ensured? 

4.1  Payments based on policy actions 

Structural reforms and institution building is an important element of development strategies:  
As  underlined  in  the  7th  Cohesion  report,  improving  the  quality  of  government  and  implementing 
structural  reforms  may  have  an  impact  on  growth.  According  to  the  report,  large  potential  benefits  in 
terms of GDP, productivity and employment growth can be obtained through structural reforms relating 
in particular to market competition and regulation, taxation,  the labour market, unemployment benefits 
and investment in human capital and R&D.21 

The  report  also  provides  evidence  that  institutional  capacity  affects  policy  performance  and  that 
improving  institutions  may  have  an  important  impact  on  the  effectiveness  of  policy  making.  Since,  the 
quality  of  government  matters  for  regional  development  across  the  EU,  the  institutional  dimension 
becomes an important element of development strategies.  

The need to strengthen the link between policy reforms and the EU budget to foster convergence is also 
emphasised in the recently adopted Reflection Paper on Deepening of the Economic and Monetary Union. 

ESI Funds  have contributed  to  and will continue to contribute  to  pursuing  structural reforms,  improving 
administrative  capacity  and  the  effectiveness  of  government.  Along  with  strengthening  infrastructure 
endowment,  human  capital,  and  endogenous  potential,  payments  based  on  policy  actions  is  a  tool  that 
could be used to pursue this objective of supporting reforms and institution building. 

Existing elements promoting structural changes in Cohesion policy and lessons learnt:   
Cohesion  policy  has  already  been  contributing  to  tackling  structural  challenges  in  the  current  and  past 
programming  periods.  In  the  current  2014-2020  programming  period,  the  following  elements  can  be 
mentioned:  

  Macro-economic conditionality: 

Macroeconomic conditionality is enshrined in Article 23 of the Common Provisions Regulation and 
organised across two distinct strands:  

1/ First strand:  
The  Commission  may  request  a  Member  State  to  adjust  its  Partnership  agreement  and 
implementation  of  relevant  country  specific 
operational  programmes 
recommendations (CSRs) which fall into the scope of ESI Funds and render themselves to multi-
annual investments. In 2014-2020, the CSRs issued in the framework of the European semester 
were a central part of negotiations with Member States. This has been a key novelty compared to 
previous  period.  A  significant  number  of  CSRs  have  been  addressed  covering  areas  such  as 

to  support 

the 

21 See the 7th Cohesion report, and, for more details Varga J. and J. in’t Veld (2014). 

 
 
 
 
 
 
 
 
 
 
                                                
33 

innovation, energy and transport, health care, skills and education, and the reform of the public 
administration.  

However,  in  the  current  system,  only  those  CSRs  which  can  be  supported  through  multi-annual 
investments can be taken into account. More complex structural reforms or reforms that are not 
directly  linked  to  multi-annual  investment  programmes,  such  as  labour  market  reforms  or 
reforms  to  improve  competition  in  the  service  sector  and  which  require  regulatory  and/or 
administrative changes rather than investment, could not be taken into account. 

2/ Second strand:  
The  Commission  shall  propose  to  the  Council  the  suspension  of  commitments  if  the  Council 
decides that a Member State has not taken effective action to address (i) its excessive deficit or 
(ii) in two successive cases its excessive macroeconomic imbalances. The Commission shall also 
propose such a suspension in case of non-compliance with an economic adjustment programme. 
The second strand has not been used at the timing of finalising this study. 

  Ex-ante conditionalities:  

Ex-ante  conditionalities  have  been  introduced  for  the  first  time  in  the  Common  Provisions 
Regulation in the 2014-2020 programming period.  They constitute  minimum  conditions to  be in 
place  at national level  for ESI  Funds to be implemented in  an effective  and efficient  manner. In 
the 2014-2020 programming period, they include mostly correct transposition and application of 
EU  level  legislative  frameworks  and  existence  of  national  strategic  plans  in  areas  supported  by 
funds. They are therefore directly linked to the implementation of the ESI Funds. 

Several lessons can be drawn from the application of 2014-2020 ex-ante conditionalities: ex-ante 
conditionalities  proved  effective  to  reinforce  ESI  Funds  implementation  and  they  sometimes 
contributed  to  larger  structural  reforms  directly  (e.g.  some  ex-ante  conditionalities  required 
explicit changes in strategy, new policy developments or legal changes). The linkage between ex-
ante  conditionalities  and  the  CSRs/structural  reforms  has  varied  a  lot  across  policy  areas  and 
across national and regional contexts, but ex-ante conditionalities have been conceived more as 
enabling  conditions  directly  linked  with  investments  than  as  elements  triggering  structural 
reforms.  

  Thematic  Objective  11  –  enhancing 

institutional  capacity  and  efficient  public 

administration: 
In the ongoing programming period, thematic objective 11, which has a total allocation of €6,445 
million for the 2014-2020 period, includes investments  in the institutional capacity and efficiency 
of public administrations and public services (carried out at national, regional and/or local levels) 
with  a  view  to  support  reforms,  better  regulation  and  good  governance  and  capacity  building 
actions for all stakeholders delivering education, lifelong learning, training and employment, and 
social  policies.  Actions  that  can  be  supported  are  categorised  according  to  three  broad 
dimensions: 1/ Structures and processes: e.g. legal, regulatory and constitutional changes; public 
participation initiatives; process  reviews; introduction of new business models and management 
practices;  de-centralisation;  devolution  or  re-structuring  of  institutions;  impact  assessment; 
evaluation,  monitoring  and  audit  etc.;  2/  Human  resources:  e.g.  modernising  recruitment  and 
incentive  policies;  better  management  of  human  resources,  including  division  of  tasks  and 
responsibilities;  retention,  appraisal,  motivation,  empowerment,  career  development  and 
incentives  for  personal  development  etc.  and  3/  Service  delivery:  e.g.  optimising  and  re-
engineering  business  processes,  diversification  of  the  channels  for  the  delivery  of  services, 
systems and tools related to e-government, service benchmarking and ombudsman procedures.  

To  be  noted  that  many  the  current  elements  of  the  2014-2020  programming  period  are  ‘negative’ 
incentives  (payments  suspensions),  whereas  payments  on  the  basis  of  policy actions  also  would  enable 
the use of 'positive’ incentives. 

 
 
 
 
 
 
 
 
 
34 

Different types of policy actions – scope and nature of main structural and administrative challenges: 
Effective  policy  implementation  is  subject  to  a  number  of  challenges,  which  are  of  different  forms.  The 
nature  and  scope  of  policy  actions  needed  (i.e.  consensual  or  facing  a  lot  of  resistance),  the  sector  or 
area concerned (i.e. the labour market, business environment and regulation, etc.), the level of the policy 
actions  (i.e.  national/subnational  level)  and  stakeholders  involved  would  need  to  be  considered  when 
designing concrete options, so that the suitability of using policy oriented conditions for the disbursement 
of ESI Funds should be assessed on a case by case basis.  

The nature and scope of structural and administrative challenges should also be explored, since they can 
partly be addressed with different policy responses. The following types of structural and administrative 
challenges can be identified:   

  Structural reforms:  

These are big ticket reforms, which contribute to resilience of domestic economies, have positive 
spill-over effects on other Member states and potentially have a very important impact on growth 
in  the  long  run.  The  reforms  are  identified  in  the  framework  of  the  European  Semester process 
and they are usually at national level. The reforms can concern sectors/ areas in which ESI Funds 
operate,  such  as  a  reform  to  improve  the  business  environment  or  human  capital-related  and 
public administration related reforms, or they can cover sectors/areas not directly linked with ESI 
Funds such as tax reforms, the development of capital markets, and judiciary reforms.  

Example of structural reform:   
Improving the access to finance and the business environment could be an example of structural 
reform  to  implement.  CSRs  in  this  area  usually  mention  actions  to  implement  (improving  the 
access  to  finance  for  small  and  medium  enterprises,  removing  administrative  and  regulatory 
barriers  to  business,  removing  barriers  to  investment…)  reforms  to  improve  the  business 
environment  that  are  directly  related  to  ESI  Funds  in  the  areas  of  competitiveness  and 
innovation. 

  Sectoral/sub-national obstacles to effective investments:  

These are obstacles or bottlenecks, including institutional bottlenecks, which are either of sectoral 
relevance  or  which  are  mostly  relevant  at  the  sub-national  level.  These  influence  strongly  the 
regional environment and hamper social and economic cohesion at sector and subnational level. 
They are of core interest for cohesion policy. 

Example of sectoral / sub-national obstacles to effective investments:   
Implementation of broadband coverage in white areas in some regions of Europe is hampered by 
municipalities'  practice  to apply  fees  for  occupation of  public  road.  In  sparsely  populated  areas, 
such  operating  costs  undermine  the  profitability  of  any  operator,  even  in  the  case  of  highly 
subsidised infrastructure. In such a case, changes in municipal practice/ fees could be tackled via 
payments based on policy actions and may contribute to removing a sub-national obstacle to the 
effectiveness  of  funding.  It  may  also  contribute  to  implementing  more  effective  investments  in 
the areas of broadband via ESI Funds. 

  Enabling conditions:  

These  are  fundamental  enabling  conditions  for  effective  and  efficient  investments.  They  include 
relevant strategic policy and EU level legislative frameworks as minimum conditions to be in place 
at  national  level.  They  are  identical  for  all  Member  States.  They  may  contribute  positively  to 
structural  reforms  but  may  not  represent  sufficient  incentives  to  trigger  politically  difficult 
structural  reforms.  They  cover  only  minimum  conditions  applicable  to  areas  where  there  is 
investment by ESI Funds. 

 
 
 
 
 
 
 
 
 
 
 
35 

Example of enabling conditions: 
The  2014-2020  ex-ante  conditionality  for  transport  investments  requires  the  existence  of  a 
comprehensive  plan  or  framework  for  transport  investment  in  accordance  with  the  Member 
States’ institutional set up which supports infrastructure development and improves connectivity 
to  the  TEN-T  comprehensive  and  core  networks.  This  means  that  prior  to  any  transport 
investment a comprehensive strategy would need to be in place. Such masterplans would need to 
take account and may sometimes even trigger regulatory and/or institutional changes but it not a 
sufficient trigger to carry out a large (and potentially difficult) reform of the transport sector (e.g. 
tackling  elements  such  modification  of  the  operational  and  institutional  aspect  of  the  railway 
sector, for example). 

  Investments 

in 
administration:  

institution  building,  capacity  building  and  efficient  public 

These  are  (mostly  soft)  investments  made  to  support  institution  building,  capacity  building  and 
efficient public administration. These investments may accompany or be necessary to tackle any 
of the structural challenges listed above. 

Payments  based  on  the  fulfilment  of  policy  actions  may  be  a  relevant  mechanism  to  support  all  these 
types  of  structural  and  administrative  challenges.  However,  the  detailed  design  of  each  payment  based 
on policy actions scheme would have to be tailored to the type of challenge faced.  

In all cases, element such as ownership at Member State and/or sub-national level of the policy action(s) 
to  be  implemented  is  crucial.  Different  levels  of  institutional  and  political  complexity  relating  to  policy 
actions, maturity of policy process and administrative capacity to implement actions/processes also have 
to be taken into account when designing detailed mechanisms.  

General  elements  to  be  considered  when  designing  detailed  options  for  payments  based  on 
policy actions: 

 

Payments based on policy action may be worth exploring to tackle structural and administrative 
challenges. 

  Structural  and administrative  challenges  vary in terms of  scope  and  nature.  Specific features of 
these  challenges  need  to  be  considered  when  designing  detailed  policy  options  for  payments 
based on policy actions.  

  Structural  challenges  include  big ticket  structural  reforms,  but  also  sub-national  and/or  sectoral 

bottlenecks.  

 

Payments  based  on  policy  actions/processes  may  also  be  used  as  a  disbursement  modality  for 
parts of soft investments tackling institutional building issues and efficient public administration.  

  When  designing  detailed  modalities,  it  is  important  to  consider  where  the  main  focus  of  the 
instrument  needs  to be.  In  most  cases,  payments based  on  policy  actions  are  used  to  focus on 
the  incentive  dimension  (rather  than  to  supporting  the  cost  of  tackling  structural  and 
administrative challenges). 

  Ownership of policy actions to be implemented is important, which rather points towards a model, 

where this delivery system is voluntary rather than compulsory. 

The  following  paragraphs  describe  common  features  of  payments  based  on  policy  actions  mechanisms. 
Whenever relevant, potential differences when it comes to tackling different structural and administrative 
challenges  will  be  highlighted.  However,  the  design  of  one  or  several  fully-fledged  policy  options  would 
need to be undertaken in more details based on policy objectives pursued.  

 
 
 
 
 
 
 
 
 
36 

4.1.1  Programming 

Programming  payments  based  on  policy  actions  would  take  as  starting  point  existing  diagnostics  and 
dialogue mechanisms. For big ticket structural reforms, Country Specific Recommendations (CSRs) issued 
to Member States in the framework of the Semester could be used. Sectoral or sub-national obstacles to 
effective investments could, in turn, be identified during the programming process of ESI  Funds (or, for 
example, during the process of producing position papers for the Commission).  

To  ensure  ownership  a  limited  number  of  structural  and  administrative  challenges  should  be  identified. 
They  should  be  subject  to  a  programming/contracting  exercise,  whereby  relevant  policy  actions  to  be 
undertaken  are  identified  in  dialogue  between  Member  States  and  the  EC.  A  contract,  embedded  in 
existing  documents  (partnership  agreements,  or  operational  programmes,  or  national  reform 
programmes,  etc.)  or  in  newly  created  documents  should  outline  objective  of  policy  actions  to  be 
undertaken,  exact  measures  to  be  implemented  and  a  timeline.  Negotiations  would  focus  on  selecting 
policy  actions  that  address  relevant  structural  and  administrative  challenges,  individual  steps  to  be 
implemented and the necessary time-frame.  

As  policy actions  may require long terms efforts,  support  would  need to cover  several  years, and when 
relevant,  interim  payments  based  on  progress  indicators  or  milestones  should  be  identified.  Any 
disbursement  linked  conditions  (progress  indicators)  should  be  clearly  defined  and  mechanisms  for 
verification  of  progress  should  be  established.  Some  form  of  reimbursement  mechanism  may  be 
envisaged, in order to mitigate the risk of “back tracking” on policy actions or stalling once payment has 
been released. 

It is difficult to put a price tag on policy actions. As indicated earlier in the report, the primary rationale of 
payments  based  on  policy  conditions  is  more  to  provide  incentives  to  commit  to  certain  policy 
actions/processes rather than to cover their cost. However, mechanisms, methodologies and/or criteria to 
determine  the  size  of  the  incentive  would  have  to  be  designed  on  a  case  by  case  basis  for  each  fund/ 
policy area where this modality of payment is used. 

4.1.2  Eligibility conditions and preconditions 

In  a  system  of  payments  based  on  policy  actions,  no  specific  pre-conditions  would  be  necessary  apart 
from the existence of diagnostics / dialogue mechanisms enabling to identify necessary policy actions. For 
big ticket structural reforms, the CSRs could be used as a starting point. For other types of structural and 
administrative challenge, programming processes and/or other dialogue fora could be used.  

The  existence  of  a  shared  diagnostic  of  issues  to  be  tackled  is  important,  since  this  contributed  to 
increasing ownership of required policy actions.  

Given the strengthening of the economic governance in the EU over the last decade as a response to the 
economic  crisis  (e.g.  macroeconomic  conditionality  in  the  ESI  Funds),  the  payments  based  on  policy 
actions could also be linked with respecting the conditions of the Stability and Growth Pact.  

4.1.3  Basis for payments in payments based on policy actions 

In the case of a system of payments based on policy  actions, payments would not be based on outputs 
(for  example  number  of  civil  servants  trained),  but  rather  be  linked  to  policy  actions,  procedures  or 
processes being implemented. 

Payments  schedules  would  be  established  at  the  programming  stage.  They  would  include  intermediate 
and final  payments,  linked with the  achievement of  milestones and  policy actions  targeted. It  may  also 
include mechanisms for reimbursement in case of a back-track after payment. 

 
 
 
 
 
 
 
 
 
 
 
 
 
37 

4.1.4  Arrangements for reporting, monitoring and evaluation 

This option would  be subject to different  monitoring  and  evaluation  framework  compared  to  investment 
expenditures. The monitoring of the implementation of policy actions would take place in policy dialogue 
fora  and  review  mechanisms  agreed  between  the  EC  and  the  Member  State  or  the  relevant  body.  It 
would focus on monitoring of the implementation of the agreed policy actions and of identified indicators 
of progress. For big structural reforms, policy actions could be linked to the European Semester and the 
annual review of CSR implementation. 

Evaluation  of  support  could  be  undertaken  ex-post,  to  assess  the  contribution  of  EC  support  to  policy 
changes.  The  actual  impact  of  the  incentive  may  be  difficult  to  evaluate  using  standard  evaluation 
methods,  e.g.  to  what  extent  the  incentive  has  contributed  to  observed  policy  changes  and  what  has 
been the impact of these changes. In the case of transversal reforms, which essentially intend to improve 
the  policy  environment  across  sectors,  evaluation  may  not  be  straightforward,  and  results  may  be 
difficult  to  link  to  EC  support.  Evaluations  budget  support  in  third  countries  have  shown  that  the  link 
between the support provided and reforms is difficult to establish. 

4.1.5  Control and audits 

In  payments  based  on  policy  conditions,  assurance  mechanisms  would  focus  on  whether  the  conditions 
for payment are fulfilled, e.g. if disbursement linked indicators and targets have been met by the Member 
State. 

The  issue  of  assurance  would  be  less  prominent  than  for  investment  expenditures,  as  the  payments 
would not be linked to investment expenditures, but it would be more of an incentive nature.  

4.1.6  Visibility 

Visibility for EU funding may be difficult to achieve, due to the incentive nature of the support. The need 
for a communication strategy could be assessed on a case by case basis, depending on the type of policy 
action  being  supported,  and  the  level  of  public  interest  in  them.  Some  structural  reforms  may  be 
sensitive  and  controversial,  which  may  call  for  a  cautious  communication  strategy.  In  any  case, 
communication issues should be discussed when agreeing on the policy actions to be targeted. Elements 
such  as  why  is  a  reform  needed  and  what  types  of  communication  needs  are  going  to  occur  should  be 
discussed. The EU visibility should then be addressed on that basis.  

4.2  Payments based on outputs and results 

Payments  based  on  output/results  is  a  delivery  approach  used  in  development  cooperation  in  which 
donors pay for results or outputs (e.g.  a fixed  amount  is paid when a  number  of  children in  school  has 
been  reached),  and  in  which  the  recipient  (a  government  entity)  usually  enjoys  high  level  of  autonomy 
for implementing the funds. In this approach, donors usually take a rather ‘hands-off’ stance towards the 
beneficiary’s practices for implementation – focusing on results rather than processes to get there. Other 
characteristics  of  payments  based  on  outputs/results  generally  include  that  output/results  measures  or 
units of progress are verified by an independent body and are disseminated publicly. 

Output and results-based payment requires well-defined intervention logics with clear output and results 
indicators,  which  can  be  achieved  without  a  significant  time  lag  between  the intervention  itself  and  the 
benefits/change  it  seeks  to  realise.  It  is  also  essential  that  the  link  between  the  intervention  and  the 
benefit/change  is clear, e.g.  that outputs/results achieved can be reasonably  attributed  to the  activities 
or  actions  implemented.  In  principle,  disbursement  can  be  linked  to  any  level  of  the  intervention,  from 
activities (number of trainings produced) to outputs (number of people trained) and results (employment 
of trained people). Results indicators are, however, more challenging to define and use for disbursement, 
since they often entail significant time lags (the time necessary between activities implemented and the 
results observed) and are also prone to influence by external factors. A challenge is to define the “right” 
disbursement indicators depending on the policy area and type of intervention supported. 

 
 
 
 
 
 
 
 
 
 
38 

In relation to ESI Funds, which span across different policy fields and sectors, this type of approach would 
be  more  suitable  for  some  investment  areas  than  others.  A  screening  of  all  investment  areas  would 
probably  be  needed  in  order  to  identify  sub-areas,  which  may  be  relevant  for  outputs/results-based 
payments.  Depending  on  the  policy  areas,  the  appropriate  level  for  payment  (i.e.  activities,  outputs  or 
results) would need to be determined.  

The responsibility to achieve agreed outputs and results would be  placed on the relevant Member State 
authority.  One  of  the  advantages  of  such  an  approach  is  that  it  can  be  used  within  ring-fenced 
programmes.  For  ESI  Funds,  these  could  be  the  current  OP  structure.  Disbursement  linked  indicators 
could  be  set  at  the  level  of  the  programme,  for  parts  of  a  programme  or  at  the  level  of  a  group  of 
operations.  Such  an  approach  may  also  enable  implementing  entities  to  use  their  own  procedures  to 
disburse funding to final beneficiaries/projects. 

The rationale for using output/results-based payment approaches is thus more related to increasing 
efficiency and reducing the administrative burden, rather than policy dialogue. In a certain sense it could 
be seen as a prolongation or continuation of the process of simplification which is already underway with 
simplified cost options, but shifting the focus to a more aggregate level, instead of focusing on individual 
projects.  

4.2.1  Progreamming 

In  a  delivery  system  which  applies  payments  based  on  aggregated  outputs/results,  the  programming 
could follow the same principles as currently in ESI Funds, with Partnership Agreements and fund specific 
Operational  Programmes, e.g.  payments  based  on  outputs/results  could  be  a  become  a  reimbursement 
modality. It would require the EC to define types of actions (or criteria for types of actions) which would 
be  “eligible”  for  funding  through  payments  based  on  outputs/results.  The  main  criteria  to  define  which 
actions  could  be  covered  by  such  reimbursement  modalities  could  include:  areas  where  well  defined, 
sound and robust intervention logic can be developed, where outputs/results largely fall under the control 
of  the  implementing  body  and  where  time  lags  and  external  factors  are  limited.  In  order  to  reap 
significant simplifications, significant amount of expenditures/budget should be covered.  

At the programming stage Member States and the EC would negotiate which part(s) of a programme are 
to implement with output/results-based payments. Detailed mechanisms would need to be elaborated at 
the  level  of  Operational  Programmes,  adapted  to  the  type  of  actions,  the  context  and  implementation 
mechanisms. Important aspects to consider, irrespective of the investment area, would include: 

  Methodology to cost the output/result 

  Definition of disbursement-linked indicators, including baselines 

  Share or ratio of funding linked to specific output / results and intermediate milestones 

  Definition of payment tranches and preliminary timing 

 

Interim payments and reimbursement conditions 

  Data requirements and verification systems for disbursement linked indicators 

A  key  issue  or  challenge  in  this  approach  will  be  to  define  the  cost  or  price  of  the  output/result.  In 
development  cooperation,  the  rationale  in  payments  based  on  outputs/results  is  generally  not  to 
reimburse the actual costs of producing an output/result, but rather to establish an amount which creates 
an  appropriate  incentive  for  the  partner  country  to  achieve  the  agreed  objectives.  While  providing 
incentives  may  be  relevant  in  an  EU  context,  it  would  be  a  significant  shift  for  ESI  Funds  which  is 
currently based mainly on reimbursement of real costs or of proxy of real cost (simplified cost options). 
Hence,  the  approach  to  define  costs  of  disbursement  linked  indicators  would  likely  aim  to  establish  a 
proxy  for  real  costs  of  producing  the  agreed  aggregated  outputs/results,  rather  than  creating  an 
incentive. The incentive dimension may also be explored with performance tranches.  

 
 
 
 
 
 
 
 
39 

The methodology and principles for costing  would  need to be clearly defined in the legal framework,  to 
provide  sufficient  legal  certainty  to  Member  States.  In  a  system  with  payment  on  aggregated  and 
standardised disbursement linked indicators, the cost or price for aggregated outputs/results will need to 
be  defined  ex-ante,  including  principles  for  revisions.  This  would  be  done  in  the  programming  phase, 
based on a clearly defined fair, equitable and verifiable methodology22, as is the case with SCOs currently 
in use.  

The  methodologies  used  for  SCO  (flat  rates,  standard  scales  of  unit  costs  and  lump  sums)  include 
statistical  analysis  of  historical  costs,  calculations  methods  used  in  national  policies  and  draft  budgets. 
Methodologies to calculate the cost of reaching certain outputs/results could be based on the same types 
of  methodologies:  e.g.  use  of  historical  data,  statistical  data,  etc.  If  the  objective  is  to  provide  legal 
certainty  to  Member  States  to  ensure  uptake  of  the  instrument,  methodologies  used,  and  aggregated 
costs  to  be  reimbursed,  would  need  to  be  reviewed  ex-ante.  The  maximum  legal  certain  would  be 
reached  if  the  methodologies  and  corresponding  aggregated  costs  are  agreed  upon  by  the  EC  and 
member States authorities as part of the programming process.  

One  of  the  advantages  of  such  delivery  mechanisms  is  that  it  could  fully  be  implemented  in  shared 
management,  e.g.  Managing  Authorities  would  implement  the  outputs/results-based  payment  part  of 
their Operational Programmes. 

4.2.2  Eligibility conditions and preconditions 

In a delivery system based on payments for outputs/results, eligibility would mainly concern the type of 
action targeted by the support. As mentioned above in the section on programming, clear criteria will be 
needed to define which type of actions could be supported through this option.  

Certain  mechanisms  would  need  to  be  developed  or  strengthened,  such  as  systems  for  verification  of 
disbursement  linked  indicators  which  are  particularly  important  in  outputs/results-based  approaches. 
Member  States  would  need  to  have  systems  in  place  to  collect  and  verify  data  used  in  disbursement 
linked indicators.  

Data collection systems should meet requirements such as; 

  Sufficient quality and reliability of data (including baseline data) 

 

 

 

Timeliness of data 

Integrity and security of the data system 

Procedures and processes to verify disbursement linked data 

Conditions  on  data  collection,  data  management  and  verification  could  be  included  in  the  legal 
framework,  as  part  of  ex-ante  conditionalities  or  discussed  in  the  framework  of  individual  schemes. 
Independence  of  the  data  collection,  verification  and  monitoring  function  from  the  implementing  body 
should be required to ensure accountability. 

Similarly,  as  in  the  case  of  payments  based  on  policy  actions,  the  conditions  linked  to  the  economic 
governance of the EU could also be envisaged. 

4.2.3  Basis for payments 

Payment conditions would need to be adapted to the policy field targeted. When the intervention logic  is 
complex  (e.g.  marginalised  target  groups,  multiple  stakeholders  involved),  the  payments  would  most 
likely  need  to  be  based  on  activities  or  operations/outputs  rather  than  results.  The  same  is  valid  for 
interventions  which  are  highly  sensitive  to  external  factors,  such  innovation,  research  and  business 
development.  In  some  cases,  a  stronger  focus  could  be  put  on  results,  when  the  intervention  logic  is 
clear,  results  are  easily  quantifiable.  This  would  be  the  case,  for  example,  in  energy  efficiency  area 

22 Article 67(5) (a) CPR. 

 
 
 
 
 
 
 
 
 
 
                                                
40 

(where results – energy savings – can relatively easily be quantified and tracked) and in certain types of 
investment in human capital. 

In  combination  with  the  payments  based  on  fulfilled  conditions,  a  share  of  funding  could  be  made 
available  as  interim  payments.  Such  interim  payments  should  be  based  on  pre-defined  milestones/key 
implementation  steps.  Mechanisms  for  reimbursement  of  support  and  revisions  of  targets  should  be 
foreseen, as implementation may over- or under-perform due to unforeseen factors. 

Results targets would need to consider deadweight, e.g. what the development would have been without 
the intervention and what the expected “added value” of the intervention is23. This would need to be done 
on a case by case basis, for example by using historical data to estimate the costs of producing a certain 
result.  

4.2.4  Arrangements for reporting, monitoring and evaluation 

In this option, there would not be a need for major changes to the monitoring and evaluation framework 
already in place in ESI Funds. Payments based on outputs/results would mainly entail a shift in how the 
EC reimburse Member States, from real costs to conditions. It would likely not affect actual operations, or 
entail changes to the OP structure or implementation bodies, and thus the need to adapt the monitoring 
and evaluation system would be limited. 

However, there would be a need to ensure that the monitoring systems are sufficiently robust to enable 
tracking  of outputs  and  results,  in  particular  related  to  disbursement linked indicators.  It  would  also  be 
necessary  to  put  in  place  mechanisms  for  verification  of  the  data  collected  on  disbursement  linked 
indicators. This could be organised using existing management and control systems (for examples checks 
and audits done by the managing authority and audit authority) or putting in place a dedicated approach 
for payments based on outputs/conditions (e.g. use of an independent verifying body). 

Specific arrangements for monitoring and evaluation could be elaborated to enable drawing lessons  from 
interventions  funded  through  output/results-based  payments.  Results  based  payment  approaches  may 
provide an opportunity to compare across similar interventions and carry out counterfactual evaluations, 
to explore to what extent the reimbursement method chosen had an impact on results achieved. 

4.2.5  Control and audits 

An option of payments based on outputs/results could be integrated in the current assurance model used 
in ESI Funds. It would partially shift the focus of the assurance from control of expenditures to control of 
whether the conditions for payment were actually fulfilled. This requires a robust and reliable system to 
collect  data  on  disbursement  linked  indicators  and  mechanisms  to  audit  it.  Verifications  that  the 
conditions for payment were met could be included in the existing management and control system (e.g. 
they could be carried out by managing authorities and audit authorities, for example); or may be carried 
out  using  a  dedicated  external  verification  body.  Audit  would  focus  on  verifying  that  the  conditions  for 
payment have been fulfilled, e.g. that outputs/results have been reached. The audit would also need to 
cover the data collection system, to ensure that underlying data is complete, accurate and reliable. 

Requirements on the data collection system and methodology could be a part of the legal framework, an 
ex-ante conditionality or discussed for each individual output/result based scheme. 

23 For example, in an intervention targeting unemployed individuals, a certain number of individuals would have found employment without taking 

part in the intervention, this is the deadweight. With the intervention more individuals are able to enter employment, which constitutes the real 

added value. 

 
 
 
 
 
 
 
 
 
 
 
 
                                                
41 

4.2.6  Visibility 

In an ESI Funds context, this option would probably make EU support less visible at the individual project 
level, since individual projects would be funded through national systems, and EC payments would only 
occur  at  aggregated  level.  It  would  however  be  possible  to  require  communication  and  public 
dissemination of results at the aggregated level, as a means to ensure visibility of the EU support. 

Programmes  using  payments  based  on  outputs/results  in  development  cooperation  generally  include  a 
requirement  that  outputs/results  measures  or  units  are  disseminated  publicly.  Communication  provides 
transparency through public dissemination of the content of the support, the amount of progress, and the 
payment  details  for  each  increment  of  progress.  Similar  requirements  could  be  put  in  place  in  an  ESI 
Funds  context,  which  would  ensure  visibility  of  the  support,  and  also  strengthen  accountability  and 
transparency  of  EU  funding.  A  communication  strategy,  including  the  systems  and  tools  necessary  to 
disseminate information publicly, would need to be developped and implemented by the Member States. 

 
 
 
 
 
 
 
5.  ADMINISTRATIVE  COSTS  OF  IMPLEMENTING  BUDGET 

SUPPORT IN ESI FUNDS 

42 

Many parameters  need  to be taken into account  when switching  to a new  delivery system  or modifying 
features of an existing one. It is especially the case for the administrative costs of operating the delivery 
system for stakeholders involved at all levels. The adoption of budget support mechanisms in the delivery 
of ESI Funds would certainly have an impact on both administrative costs at the level of the Commission 
and  Member  States  authorities  and  on  administrative  burdens  incurred  by  beneficiaries.  Administrative 
costs are defined as “costs incurred by enterprises, the voluntary sector, public authorities and citizens in 
meeting legal obligations to provide information on their action or production, either to public authorities 
or  to  private  parties”24.  More  specifically  in  the  context  of  this  study,  administrative  costs  are  those 
necessary for the fulfilment of administrative tasks undertaken by the Commission services, national and 
regional authorities, beneficiaries in the whole ESI Funds programme cycle (thus covering programming, 
implementation, control and audit, monitoring and evaluation of the ESI Funds)25.    

This  section  analyses  the  likely  impact in  terms of  administrative  costs  of  introducing  a  budget  support 
delivery system or of some of its elements (e.g. payments on the basis of policy action or payments on 
the basis of outputs/results) in the existing ESI Funds mechanisms. The section makes a comparison with 
administrative  costs  and  burdens  incurred  in  the  current  ESI  Funds  delivery  system  and  it  is  based  on 
studies  on  administrative  costs  and  burdens  incurred  in  ESI  Funds,  studies  and  literature  on  budget 
support,  evidence  collected  and  discussed  during  the  course  of  the  study,  interaction  with  Commission 
services  and  experience  of  the  team  members.  A  full  quantitative  assessment  is  not  feasible  in  the 
context  of  this  study  due  to  the  lack  of  relevant  and  comparable  data  on  administrative  costs  and 
burdens incurred in the framework of budget support and due to uncertainties linked to Member States’ 
choices26. The qualitative dimension of the analysis has thus been strengthened, with the aim to establish 
the likely direction of changes and elements to be taken into  account when concretely designing budget 
support options for ESI Funds.  

The sections below distinguish administrative costs faced by the Commission, Member States authorities 
and beneficiaries.  

5.1  Administrative costs at the level of Commission services 

Even  though  budget  support  is  widely  used,  there  is  only  limited  evidence  available  concerning 
administrative costs borne at the level of the donor when using such an aid modality27. In addition, only a 
few  sources  provide  elements  of  comparison  between  administrative  costs  incurred  at  the  level  of  the 
donor  when  using  the  budget  support  modality  and  administrative  costs  incurred  at  donor’s  level  when 
using  the  project/programme  approach.  It  is  therefore  difficult  to  conclude  on  the  likely  impact  that 
introducing  budget  support  mechanisms  in  ESI  Funds  would  have  on  administrative  costs  for  the 
Commission. 
Administrative  costs  borne  by  the  European  Commission  in  the  current  shared  managed  system  are 
already significantly low (e.g. for ERDF and CF they amount to about 0.2% of disbursed funds on average 
for the last three years)28. This particularly low level of administrative costs can be explained by several 
elements,  ranging  from  the  unique  features  of  the  shared  management  system,  which  was  designed 
specifically to enable management of funds across levels of government, to the high amounts disbursed. 

24 European Commission (2015), “Better Regulation Toolbox”, p. 347. (see https://tinyurl.com/ydhq9ea6)  
25 This definition is adapted to the context of this study, based on the 2012 study “Measuring the impact of changing regulatory requirements to 
administrative cost and administrative burden of managing EU Structural Funds (ERDF and Cohesion Funds)” (https://tinyurl.com/chcscxw)  
26 These factors are explicitly highlighted as a major source of challenges in the “Better Regulation Guidelines”, p.27.  
27 For instance, the DEval report (2017), “What do we know about the effectiveness of Budget Support” highlights the lack of evidence on the 

costs for the donors (see https://tinyurl.com/y9u2vuv2, p. 41 for transaction costs) 
28 Ranging from 0.15% in 2014 (AAR DG REGIO 2014, https://tinyurl.com/yb8nw5ss, p. 74) to 0.26% in 2016 (AAR DG REGIO 2016, 

https://tinyurl.com/y97j6mau, p. 84) 

 
 
 
 
 
 
                                                
43 

Considering this already low level of administrative costs, any further reduction of administrative seems 
difficult to achieve. 

For  Commission  DGs  which  implement  budget  support  modalities  (DG  DEVCO  and  DG  NEAR),  budget 
support appears as a cost-effective way of implementing the EU budget: DG NEAR reports administrative 
costs  of  implementing  budget  support  of  about  2.32%  of  the  budget  disbursed  in  201629.  Figures 
reported  by  DG  DEVCO  are  similar.  For  both  DGs  these  figures  are  significantly  higher  than  costs 
calculated  by  DG  REGIO  to  implement  the  current  shared  management  system  for  the  ERDF  and  CF 
(amounting to 0.26% of the  total 2016  payments30). This suggests that  many factors need  to be  taken 
into account when comparing the administrative costs generated by two different delivery systems at the 
level of the donor, for example:  

-  both  DG  DEVCO  and  DG  NEAR  operate  in  contexts which  are  very  different  from  the  context  in 
which  ESI  Funds  are  disbursed.  Elements  such  as  the  level  of  development  and  administrative 
capacity certainly have an impact on the cost of managing aid operations for the donor.  

-  budget  support  operations  in  external  aid  are  also  much  smaller  in  absolute  amounts  than  ESI 
flows  within  the  EU,  which  may  have  different  implications  on  the  cost  of  implementation,  as 
further discussed below.  

Overall,  the  costs  of  implementing  budget  support  for  the  donor  are  potentially  quite  variable. 
Administrative  costs  to  design  and  manage  a  budget  support  operation  certainly  depend  on  features  of 
individual  operations.  Elements  such  as  the  number  and  nature  of  eligibility  conditions,  disbursement 
indicators and their verification protocols, or the actual level of ambition of policy  dialogue have a direct 
impact on the cost of designing and managing a budget support operation for the donor. Because of the 
characteristics  of  ESI  Funds  (wide  range  of  investments,  many  actors  involved  across  layers  of 
government,  exogenous  factors)  and  political  sensitivity,  budget  support  operations  would  probably  be 
quite complex operations, which may entail higher administrative costs than in external aid.  

This also suggests that administrative costs for the Commission would evolve in a budget support system 
compared  to  shared  management.  Additional  administrative  costs  would  be  mainly  related  to  a 
strengthened programming phase, with possibly complex and challenging negotiations. At the same time, 
as  implementation  as  well  as  controls  and  audits  would  increasingly  rely  on  national  public  financial 
management systems, the related costs would likely decrease for the Commission. It is unclear what the 
overall impact on administrative costs for the Commission would be. 

As  with  any  novelty,  there  is  also  some  evidence  that  switching  to  a  budget  support  system  generates 
some  start-up  costs.  This  is  evidenced,  for  example,  in  the  mid-term  evaluation  of  IPA  II:  "The 
programming of sector budget support has been a novelty in IPA II, requiring in-depth investigations and 
long-lasting considerations at planning stage. All these significant changes in the way how pre-accession 
support shall be programmed and implemented had so far some negative effects on speedy programming 
and contracting”.31  

Finally,  it  should  be  highlighted  that  the  implementation  of  different  budget  support  elements  would 
probably  have  a  differentiated  impact  on  administrative  costs  at  the  level  of  the  Commission.  Evidence 
from  studies  on  previous  simplification  and  result-orientation  efforts  in  ESI  Funds32  suggest  that  the 
payment for outputs/results option may have the potential to reduce administrative costs. For  example, 
the implementation of Simplified Cost Options has enabled a reduction of administrative costs at all levels 

29AAR NEAR 2016, p. 55 (https://tinyurl.com/yascc3br)  
30 AAR DG REGIO, 2016, p. 84. (https://tinyurl.com/y97j6mau)  
31 see https://ec.europa.eu/europeaid/sites/devco/files/ipa-ii-eval-final-report-vol-i_en.pdf, page 18 
32 These technical methods are alternatives to real costs in order to reduce administrative burdens, see for more details: European Commission 

(2012), “Simplifying Cohesion Policy for 2014-2020” (https://tinyurl.com/y7kpkoep)   

 
 
 
 
 
 
                                                
44 

in  the  current  ESI  Funds  system33.  While  the  definition  of  outputs/results  to  be  achieved  on  a  case  by 
case  basis  may  generate  some  administrative  work,  lessons  could  be  drawn  from  existing  attempts  to 
standardise  outputs/results  and  from  systems  to  be  put  in  place  for  that  purpose  in  the  legislative 
framework34.  This  may  mitigate  the  complexity  of  programming  for  payment  for  outputs/results.  For 
other  types  of  budget  support  or  for  payments  on  the  basis  of  policy  action,  negotiations  on  a  case  by 
case basis would still be needed and if the legislative framework could provide for an overall framework, 
standardisation or economies of scale are more difficult to reach.  

5.2  Administrative costs at the level of Member States 

Literature  and  empirical  evidence  on  administrative  costs  borne  by  partner  governments  when 
implementing budget support operations are more numerous than those analysing costs for donors35. The 
following  section  highlights  key  findings.  These  findings  come  primarily  from  the  experience  of  middle-
income countries, which are closer to EU countries. It has to be reminded, though, that these may vary 
when applied to the EU context.  

As  the  budget  support  mechanisms  rely  primarily  on  national  systems  rather  than  on  ad  hoc  delivery 
systems  (especially  during  the  implementation  phase),  differences  between  Member  States/  regions 
public  financial  management  systems  are  expected  to  be  the  main  determinant  of  the  magnitude  and 
distribution  of  changes  in  administrative  costs.  For  this  reason,  the  effect  of  using  budget  support 
mechanisms on administrative costs is ambiguous at the level of Member States. If core tasks related to 
allocating  funding  to  individual  projects  and  project  management  of  investment  expenditure  would  still 
have  to  be  carried  out,  the  use  of  national  systems  would  most  likely  reduce  costs  incurred  in  the 
implementation  phase  and  on  controls  and  audits.  On  contrary,  programming  and,  to  a  lesser  extent, 
monitoring and evaluation would likely generate additional administrative costs for the Member States, to 
a different extent depending on the chosen option: 

 

 

 

In  the  sector  budget  support  option,  given  the  importance  of  strategic  aspects  and  the  related 
policy  dialogue,  programming  would  likely  lead  to  relatively  higher  costs  for  Member 
States/regions. Monitoring and Evaluation would also lead to a slight increase of costs because of 
the likely complexity of evaluations (based on sector causal chains) and their role in showing the 
achievement of outputs/results linked to payment disbursement. 

In the payment for output/results option, programming would likely increase costs related to the 
definition of outputs/results indicators and payment conditions related to that. This increase could 
be mitigated if processes/methodologies to define payments conditions and the related indicators 
triggering payment are sufficiently specified and standardised in the legislative framework36, as 
highlighted above. In the monitoring and evaluation phase, costs are likely to slightly increase in 
particular  due  to  requirements  linked  to  disbursement  indicators  and  increasingly  complex 
evaluations. 

In  the  payment  based  on  policy  action  option,  costs  incurred  at  the  programming  stage  would 
most  likely  increase  due  to  political  and  technical  conversations  to  identify  policy  action  to  be 
targeted  and  to  discuss  elements  which  are  going  to  trigger  payments.  This  increase  could  be 
mitigated  by  a  close  alignment  with  existing  procedures  (CSR,  European  Semester).  Costs  for 
monitoring and evaluation would most likely  slightly increase because  of requirements linked to 
assessing  whether  disbursement  conditions  are  being  fulfilled  and  because  of  increasingly 
complex evaluations. 

33 See for instance the Spatial Foresight/SWECO/T33 (2017), Study on the “use of new provisions on simplification during the early 

implementation phase of the European Structural and Investment (ESI) Funds”. (https://tinyurl.com/ybj746ow)  
34 See for instance the Commission Delegated Regulation (EU) 2017/90 of 31 October 2016 amending Delegated Regulation (EU) 2015/2195 on 

supplementing Regulation (EU) No 1304/2013 of the European Parliament and of the Council on the European Social Fund, regarding the 

definition of standard scales of unit costs and lump sums for reimbursement of expenditure by the Commission to Member States.  
35 Also see for example the DEval report (2017), “What do we know about the effectiveness of Budget Support” (https://tinyurl.com/y9u2vuv2)  
36 Evidence from the current ESIF system regarding standard scales of unit costs and lump sums for reimbursement of expenditure by the 

Commission to Member States suggests that a standardised framework similar to the required one in the Payment for Results option is achievable 

(see: https://tinyurl.com/ycr2tmzp or https://tinyurl.com/ycr2tmzp)  

 
 
 
 
 
                                                
45 

In all three options, a reduction of administrative costs at the level of the Member States/ regions would 
be  more  likely  to  materialise  during  the  implementation  phase  and  for  controls  and  audits.  It  would 
especially be the case for the sector budget support option, which would fully use national public financial 
management  systems.  For  payment  for  outputs/results  and  payment  based  on  policy  action,  the 
decrease would depend on the exact architecture of the delivery system (especially to what extent use is 
made  of  national  public  financial  management  systems  and  to  what  extent  additional  requirements  are 
built into the EU delivery systems). 

5.3  Aspects to be considered when designing budget support elements for ESI Funds 

There  are  a  number  of  more  general  considerations  that  are  likely  to  affect  administrative  costs  at  the 
level  of  both  the  Commission  and  Member  States/regions  if  budget  support  or  budget  support  inspired 
options were to be used. They relate notably to the distinguishing features of ESI Funds.  

The context of ESI Funds is characterised by a high degree of complexity: a wide range of investments, a 
multilevel  governance  system,  the  presence  of  exogenous  influences  and  potentially  high  political 
sensitivity.  These  elements  are  not  always  part  of  budget  support  operations  in  the  external  action 
context.  In  addition,  the  EU-Member  State  political  and  administrative  relationships  are  different  within 
the  EU  than  in  the  context  of  a  donor-recipient  relationship.  Complexity,  historical  relationships  and 
political sensitivity would likely result in increased overall administrative costs in the context of ESI Funds 
compared to the external action context.  

The  size  of  budget  support  operations  in  Cohesion  Policy  could  also  be  a  driver  of  changes  in 
administrative  costs.  There  is  limited  evidence  on  the  patterns  linking  administrative  costs  to  the  total 
expenditure  under  budget  support  mechanisms.  Indeed,  the  share  of  administrative  costs  could  be 
proportional to the total budget, increase less than proportionally (“economies of scale”)37, especially for 
large disbursement, or even more than proportionally (“diseconomies of scale”, especially if the start-up 
costs  –see  below-  are  not  compensated  by  the  amounts  delivered  through  Budget  Support).  With  this 
important  uncertainty,  the  decision  on  the  amount  of  funding  to  be  channelled  via  budget  support  or 
budget support inspired mechanisms could have an important impact on the evolution of administrative 
costs. 

In addition, the transition towards a budget support system would induce specific start-up costs38 to set 
up a new system  and this  needs  to be added to  the operating costs to run a delivery  system.  Capacity 
issues  might  notably  generate  substantial  start-up  costs  because  of  the  need to  develop  different  skills 
related  to  strategic  programming  for  all  the  considered  options.  The  existence  of  start-up  costs  implies 
that  the  effects  on  administrative  costs  of  introducing  budget  support  or  budget  support  inspired 
mechanisms  would  likely  change  over  time.  For  instance,  empirical  evidence  has  shown  that  partner 
governments  typically  experience  increased  costs  during  the  transition  towards  budget  support,  with  a 
reversal  tendency  as  policy-learning  progress  and  processes  become  routines39.  However,  the  split 
between start-up and operating costs would probably depend on the specific option chosen. For example, 
the  continuation  of  the  current  OP  structure  could  help  mitigate  start-up  costs  for  payment  for 
outputs/results  or  payment  for  policy  action,  if  they  are  introduced  into  an  otherwise  not  significantly 
changed management and control system.  

Individual  features  of  the  three  considered  budget  support  options,  particularly  regarding  their 
operational designs (e.g. eligibility conditions, disbursement indicators, degree of ambition of the policy 
dialogue, organisation of the implementation…) might lead to different levels of change in administrative 
costs.  It  is  especially  the  case  for  the  payment  for  outputs/results  and  for  payment  for  policy  action. 

37 At the Commission level, economies of scale are considered likely to be achievable if large disbursement in ESIF are conducted via Budget 

Support 
38 See for instance European Commission (2017), “External evaluation of the Instrument for Pre-Accession Assistance IPA II”. 

(https://tinyurl.com/y89rfrwh)   
39 For transaction costs, see the DEval report (2017) “What do we know about the effectiveness of Budget Support”, p. 19. 

(https://tinyurl.com/y9u2vuv2) 

 
 
 
 
 
 
  
 
                                                
46 

Under these two options, it would be possible to, at least partially, retain the current ESI Funds system, 
whereas introducing fully-fledged sector budget support, if not applied to the whole of ESI  Funds, would 
mean introducing a new parallel delivery system. In case of the latter, the co-existence of two systems 
could lead to additional costs. The option to completely replace the existing shared management system 
with budget support would not entail additional costs due to the coexistence of two systems. However, as 
evidenced in the previous tasks of the study, the use of full-fledged budget support does not appear to be 
a  suitable  option  for  all  types  of  investments  carried  out  under  ESI  Funds.  Since  the  possibility  that 
Budget Support would completely replace the current shared management system does not seem to be 
realistic, all three options identified are likely to be either additional to the existing shared management 
system (this would be the case for the fully-fledged sector budget support and potentially for payment for 
policy  action  –  if  the  system  is  not  embedded  into  the  existing  ESI  Funds  delivery  system)  or  could  be 
embedded  into  the  existing  shared  management  system  (this  could  be  the  case  for  payment  based  on 
outputs/results  and  potentially  for  payment  for  policy  action,  if  embedded  into  existing  features  of  the 
ESI Funds system).  

Considering all these aspects, a clear-cut reduction of administrative costs in the short-run could not be 
the primary rationale to shift the ESI Funds delivery system towards budget support mechanisms. In the 
medium to long-term, individual features of the budget support option chosen would determine the level 
of administrative costs generated at the different administrative levels.  

5.4  Administrative costs at the level of beneficiaries 

The adoption of budget support mechanisms would have an ambiguous effect on administrative costs for 
beneficiaries.  The  direction  of  changes  and  their  scope  would  differ  quite  significantly  depending  on 
features  of  the  national  public  financial  management  systems  under  the  three  identified  policy  options. 
High  variability  would  thus  be  expected  between  Member  States,  to  be  partly  explained  by  national 
preferences  in  relevant  trade-offs  (e.g.  simplicity-flexibility  versus  assurance  level)  and  administrative 
organisation. The specificities of each policy option would however be likely to favour diverging effects on 
beneficiaries:  

 

 

 

The sector budget support option would have an ambiguous effect on the beneficiaries, but with 
potential  for  simplification.  As  rules  and  process  would  almost  entirely  depend  on  the  Member 
States a risk of gold-plating would exist. 

The  payments  for  outputs/results  option  could  induce  a  significant  reduction  of  administrative 
burden  for  beneficiaries.  However,  since  disbursements  would  be  linked  to  aggregated 
outcome/results  which  also  depend  on  the  behaviour  of  beneficiaries,  a  possibility  would  exist 
that  (part  of)  the  risk  of  non-achieving  the  aggregated  targets  would  be  transferred  to 
beneficiaries. 

The payment for policy action option would likely have neutral effects on administrative costs for 
beneficiaries.  In  such  a  delivery  system  there  would  be  no  or  a  loose  connection  between 
individual projects and policy conditions linked to structural reforms. In fact, these reforms would 
mainly reflect the behaviour of the Public Administration itself. 

To sum up the main findings, the following tables provide more details on the qualitative assessment of 
the likely evolution of administrative costs for the European Commission and the Member States/regions 
by main phases of the programme cycle (programming, implementation, controls and audits, monitoring 
and  evaluation).  They  are  based  on  a  colour  code  system  (red:  increase,  grey:  neutral  or  ambiguous, 
green: decrease) presenting the projected evolution of administrative costs. When sufficient evidence is 
available, additional details on the magnitude of the expected evolution is provided. 

 
 
 
 
 
47 

Table 7 Assessment of the evolution of administrative costs for the European Commission under the three policy options 

Programme 

Sector Budget Support – tasks and projected evolution of 

Payment for Results – tasks and projected evolution 

Policy Action – tasks and projected evolution of 

Phase 

administrative costs 

of administrative costs 

administrative costs 

Programming negotiations would focus on the strategic 

Negotiations between the European Commission and 

The European Commission would have to negotiate 

dimensions for the relevant sectors. It would imply more 

the Member States would cover elements such as 

with the Member States elements such as Country 

emphasis on policy dialogue between the Commission and 

eligible actions or technical issues (e.g. costing, 

Specific Recommendations to be targeted and design of 

the Member States (e.g. negotiation on payment tranches 

selection of indicators, existence of an adapted data 

the structural reforms contracts (including the design 

and schedule).  

collection system…). The extent and difficulty of these 

of the incentive mechanisms).  

Additionally, ex-ante assessments would be more critical 

negotiations would notably depend on the extent to 

The negotiations are expected to be more challenging 

and burdensome for the Commission (e.g. ex-ante 

which the legislation provides an open or relatively 

than in the current system, given the complex and 

assessment of the public financial management system). 

closed framework. 

political nature of conditions. However, programming 

As a consequence, administrative costs related to 

As a consequence, a slight increase in costs would 

would be in the continuity of existing processes 

i

g
n
m
m
a
r
g
o
r
P

programming would be likely to rise significantly for 

be likely for the European Commission, especially 

(notably the CSR).  

the European Commission.  

during the first programming period. 

As a consequence, a slight increase in costs would 

As funds would flow directly into the national budget, the 

As the core of this Budget Support option would be 

As the core of this Budget Support option would be the 

responsibilities of the European Commission during 

the achievement of specified outputs/results, the 

implementation of agreed-upon policy conditions (e.g. 

implementation would be limited. Periodical reviews by the 

European Commission would have limited 

progress in implementing structural reforms), the 

Commission would still be necessary, but lighter than in 

responsibilities in the implementation of projects per 

European Commission would have limited 

the ESI Funds system (reports would be more focused 

se. 

responsibilities in the implementation phase. 

than the current annual implementation reports, e.g. on 

The costs for the European Commission would likely 

The costs for the European Commission would likely 

information related to payment tranches).  

decrease, with a magnitude depending on the exact 

decrease, with a magnitude depending on the exact 

This could lead to a limited decrease in costs for the 

operational design (e.g. whether schemes are 

operational design. 

European Commission. 

included in current OP structure or organised 

be likely for the European Commission. 

differently). 

The role of the European Commission would shift from 

The role of the European Commission would shift from 

The role of the European Commission would shift from 

detailed audits and controls of expenditure to reviewing 

detailed audits and controls of expenditure to 

detailed audits and controls of expenditure to reviewing 

national budget execution and audit reports of the sector. 

reviewing the achievement of selected indicators. 

the progress of policy conditions. It would not consider 

As a consequence, costs would likely decrease for the 

Assurance processes would still have to be organised 

expenditure per se. 

Commission, at the expense of assurance. 

(focusing mainly on the achievement of conditions 

As a consequence, costs would likely decrease for the 

and on the underlying system to collect and 

Commission. 

aggregated data). 

n
o
i
t
a
t
n
e
m
e
p
m

l

I

s
t
i
d
u
A

d
n
a

s
l
o
r
t
n
o
C

 
 
 
 
 
 
 
 
 
 
 
Programme 

Sector Budget Support – tasks and projected evolution of 

Payment for Results – tasks and projected evolution 

Policy Action – tasks and projected evolution of 

Phase 

administrative costs 

of administrative costs 

administrative costs 

As a consequence, costs would likely remain stable 

for the Commission. 

g
n
i
r
o
t
i
n
o
M

,
g
n
i
t
r
o
p
e
R

n
o
i
t
a
u
a
v
E

l

d
n
a

The European Commission would focus on monitoring and 

The European Commission would focus on monitoring 

The European Commission would focus on monitoring 

reviewing the entire sector (strategic level), with 

and reviewing the progress of outcomes/results. The 

of policy progress, with comparable involvement than 

comparable involvement than in the current system (e.g. 

reliability of indicators and systems to collect data 

in the current system (e.g. periodic reviews).  

periodic reviews). Monitoring of sectors, including data 

would be central and would likely require important 

Even though the type of evaluation would change 

gathering and statistics would become key. The type of 

monitoring. The type of evaluation would change 

significantly, the role of the European Commission 

evaluation would change significantly. 

significantly 

should remain similar. 

As a consequence, the costs for the European Commission 

As a consequence, the costs for the European 

As a consequence, the costs for the European 

would likely slightly increase.  

Commission would likely slightly increase. 

Commission would likely be similar. 

48 

 
 
 
 
 
 
 
 
 
 
 
 
 
Table 8 Assessment of the evolution of administrative costs for the Member States/regions under the three policy options 

Programme 

Sector Budget Support – tasks and projected evolution 

Payment for results – tasks and projected evolution of 

Policy Action – tasks and projected evolution of 

phase 

of administrative costs 

administrative costs 

administrative costs 

Programming negotiations would focus on the 

Negotiations between the European Commission and the 

The European Commission would have to negotiate 

strategic dimensions for the relevant sectors. It would 

Member States would cover elements such as eligible 

with the Member States elements such as Country 

imply more emphasis on policy dialogue between the 

actions or technical issues (e.g. costing, selection of 

Specific Recommendations to be targeted, design of 

Commission and the Member States/regions (e.g. 

disbursement indicators, existence of an adapted data 

the structural reforms contracts (including the design 

negotiation on payment tranches and schedule). 

collection system…). The extent and difficulty of these 

of the incentive mechanisms).  

Coordination costs between various levels of 

negotiations would notably depend on the extent to 

The negotiations are expected to be more challenging 

government (national/regional/local) and between 

which the legislation provides an open or relatively 

than in the current system, given the complex and 

sectoral bodies and horizontal bodies would be 

closed framework. 

political nature of conditions. However, programming 

substantial. 

As a consequence, a slight increase in costs would be 

would be in the continuity of existing processes 

i

g
n
m
m
a
r
g
o
r
P

49 

As a consequence, administrative costs related to 

likely for the Member States, especially during the first 

(notably the CSR).  

programming would be likely to rise quite 

programming period. 

As a consequence, a slight increase in costs would 

significantly for the Member States. 

be likely for the Member States. 

The Member States would have full responsibility for 

The Member States would be responsible for the 

The Member States would be responsible for the 

the implementation of projects/funds under this 

implementation of projects/funds under this option, 

implementation of projects/funds under this option, 

budget support option. Tasks such as project selection 

potentially using national public financial management 

potentially using national public financial management 

and project monitoring would still have to be carried 

systems or the current ESI Funds structure (Operational 

systems or the current ESI Funds structure 

out, but under purely national rules. 

Programmes). 

(Operational Programmes). 

The use of national public financial management 

The costs for the Member States would likely 

The costs for the Member States would likely 

systems would be likely to lower costs (no 

decrease, with a magnitude depending on the exact 

decrease, with a magnitude depending on the exact 

requirements for a parallel system with specific rules). 

operational design. 

operational design. 

The magnitude of changes would depend on the 

Member States. 

n
o
i
t
a
t
n
e
m
e
p
m

l

I

s
t
i
d
u
A

d
n
a

s
l
o
r
t
n
o
C

Audits and controls would be entirely performed in the 

Required controls and audits for the Cohesion Policy 

Required controls and audits for the Cohesion Policy 

framework of the national public financial 

would shift from real costs to output and/or result 

would shift from real costs to the progress of structural 

management systems of the Member States. A 

indicators.  

reforms.  

summary at the sector level could form the basis for 

Regular financial controls and audits would still be 

Regular financial controls and audits would still be 

EU assurance.  

conducted in the framework of the national public 

conducted in the framework of the national public 

The effect on costs for the Member States would 

financial management systems of the Member States. 

financial management systems of the Member States. 

therefore likely be ambiguous.  

The effect on costs for the Member States would 

The effect on costs for the Member States would 

therefore likely be ambiguous. 

therefore likely be ambiguous. 

 
 
 
 
 
 
 
 
 
 
 
Programme 

Sector Budget Support – tasks and projected evolution 

Payment for results – tasks and projected evolution of 

Policy Action – tasks and projected evolution of 

phase 

of administrative costs 

administrative costs 

administrative costs 

d
n
a

g
n
i
r
o
t
i
n
o
M

,
g
n
i
t
r
o
p
e
R

n
o
i
t
a
u
a
v
E

l

The Member States would focus the monitoring on 

The Member States would have to maintain a monitoring 

The Member States would focus the monitoring on the 

strategic sector results rather than on real costs. They 

and reporting system in line with the requirements 

progress of structural reforms (most likely at the 

would also present their progress to the Commission 

related to the disbursement indicators.  

national level). However, reporting would still be a 

during reviews.  

The Member States would likely have to conduct more 

significant task. Reviews would take place with the 

The Member States would likely have to conduct more 

complex evaluations (outcome/result-oriented). 

European Commission. 

complex evaluations (causal links within a sector). 

These changes would likely slightly increase the 

Evaluations may become more complex (e.g. 

These changes would likely slightly increase the 

costs for the Member States. 

contribution of the incentive to the structural reforms). 

costs for the Member States. 

These changes would likely slightly increase the 

costs for the Member States. 

50 

 
 
 
 
 
 
 
 
 
 
51 

6.  SUMMARY OF OPTIONS ACCORDING TO THE 

ASSESSMENT CRITERIA 

The different budget support or budget support inspired options can be compared using the six 
assessment criteria developed during this study (task 3). It allows capturing main strengths and 
weaknesses of each of the three options at one glance. 

Table 9 Comparison of policy options in terms of assessment criteria 

Assessment 
criteria 

Strategic 
framework 

Fully fledged (sector) 
Budget Support 

Payment for 
outputs/results 

Payment for policy 
action 

Shift from inputs to 
outputs/results + 

Appropriate mostly in 
sectors with a clear 
intervention logic and 
enough control over 
outputs/results - 

Improvement of reform 
incentive, thereby 
tackling underlying 
obstacles to effective 
investments +  

May be politically 
sensitive - 

Sectoral approach which 
aims at shifting the focus 
on sector policy objectives 
+ 

Policy adequacy for all 
areas covered by ESI 
Funds not demonstrated 
(e.g. not adequate for all 
types of investments, e.g. 
large investments in hard 
infrastructure) - 

Technically challenging to 
implement at 
regional/local level; may 
also be politically sensitive 
- 

Good 
governance 

No clear advantages for 
partnership issues = 

Fully flexible delivery 
(national systems) + 

Regional/local dimension 
weakened - 

No clear advantages 
for partnership issues 
= 

Flexible delivery (can 
be fully embedded in 
existing shared 
management) + 

Regional/local 
dimension depending 
on design of the 
instrument = 

No clear advantages for 
partnership issues = 

Flexible delivery (could 
be embedded in shared 
management) + 

Regional/local 
dimension depending 
on design of the 
instrument = 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52 

Sound 
financial 
management 

Sound financial 
management depending 
on the quality of policy 
dialogue and of underlying 
systems = 

Sound financial 
management partly 
depending on the 
quality of underlying 
systems = 

Focus on incentivising 
reforms which intend to 
increase the long term 
effectiveness of 
investments + 

Legality and 
regularity 

Administrative costs 
depending on the set 
up (likely to be lower if 
embedded in the 
existing system) = 

Ambiguous effect on 
fiduciary risk, fungibility 
issues depending on the 
design of the 
instrument, 
reputational risk  = 

Ambiguous effect on 
administrative costs, 
start-up costs likely = 

Slight reduction in 
administrative costs 
after an initial phase 
+ 

Some increase in the 
fiduciary risk - 

Assurance provided at 
the level of 
aggregated results + 

Very high fiduciary risk, no 
traceability of funds, 
fungibility issues and 
reputational risk - 

Evidence of improvements 
of national public finance 
systems in external aid 
exists, but unclear 
whether these would 
materialise in a                
non-development context  
= 

Simplification  Potential simplification 
depending on Member 
States national public 
financial management 
systems + 

Real simplification 
based on evidence 
from the use of 
simplified cost options 
+ 

New dimension of 
support (process and 
reform-oriented), 
neutral on simplification 
= 

Result 
orientation  

Focus on strategic 
orientations; less 
information on operations, 
more information on 
outcomes and policy 
processes = 

Strongly result-
oriented, as 
disbursements directly 
linked to aggregated 
outputs/results + 

Results less the focus 
than improvements in 
policy processes, which 
the aim to increase long 
term effectiveness of 
investments = 

Main  take-away  from  the assessment  of the  feasibility  of the  three  options  for  ESI  Funds  can  be 
summarized as follows:  

Fully-fledged  budget  support  is  not  a  delivery  mode,  which  is  adequate  to  deliver  the 
entirety of ESI Funds.  ESI Funds cover a broad range of investment areas with different policy 
objectives and risks. Budget support is not adequate to deliver all types of investments across all 
of them. For example, there is clear evidence that budget support mechanisms are not adequate 
to deliver large investments in hard infrastructure. There is no evidence that delivering the entirety 
of ESI Funds via budget support would be more effective and efficient than shared management. A 
switch  to  a  fully-fledged  budget  support  would  entail  trade-offs  which  need  to  be  taken  into 
account: if the use of budget support entails a significant potential for simplification, the impact on 
sound  financial  management  and  result  orientation  of  ESI  Funds  would  be  mixed,  while 
accountability  issues,  fiduciary  risk,  including  reputational  risk  for  the  EU  budget  would  increase 
significantly.  The  impact  on  administrative  costs  is  mixed,  with  a  likely  overall  increase  of 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53 

administrative costs for the Commission and a mixed picture for Member States and beneficiaries. 
Finally,  there  is  little  experience  with  using  budget  support  mechanisms  at  sub-national  level. 
While budget support at sub-national levels is possible, it is technically challenging and potentially 
politically sensitive. A switch to budget support for the entirety of ESI Funds may therefore lead to 
a significant weakening of the regional/local dimension of parts of ESI Funds.  

Payments  for  outputs/results  could  constitute  a  simple  and  effective  delivery 
mechanism for parts of ESI Funds. By putting the focus on achieved outputs and results, this 
type  of  approach  has  an  important  potential  for  simplification  and  to  increase  result-orientation. 
However, these approaches are not easily implementable in all areas. Payments for outputs/results 
are  adequate  when  outputs  and  results  can  clearly  be  attributed  to  the  implementation  of  a 
specific  programme,  where  there  is  sufficient  control  of  implementing  bodies  over  outputs  and 
results  to  be  generated, when  time-lags  are  not  too  important  and  where  the  impact  of  external 
factors is not too important. Payments for  outputs/results therefore have more potential in  some 
ESI Funds areas than others. They could be explored, for example, in areas such as human capital, 
social  inclusion,  energy  efficiency,  rural  development,  part  of  innovation  and  business  support. 
Experience from the use of simplified cost options in ESI Funds should be taken into account when 
designing concrete delivery options in these fields. 

Payments  for  policy  action  could  be  added  to  the  ESI  Funds  delivery  portfolio  with  a 
view  to  increasing  ESI  Funds'  effectiveness  in  addressing  a  broad  range  of  structural 
and  administrative  challenges.  Mechanisms  to  link  disbursements  to  the  implementation  of 
policy  action  to  be  undertaken  may  be  interesting  to  explore  when  it  comes  to  supporting 
structural  reforms,  tackling  sub-national  or  sectoral  bottlenecks,  or  provide  support  to  soft 
investments  (such  as  capacity  building  actions  or  support  to  the  public  administration).  The 
detailed design of each payment based on policy action scheme would have to be tailored to policy 
objectives of each ESI  Fund and to the type of structural and administrative challenges faced. In 
all cases, element such as ownership at Member State and/or sub-national level of policy action to 
be  implemented,  administrative  capacity  to  implement  actions/processes  and  political  sensitivity 
have to be taken into account when designing detailed mechanisms.  

 
 
 
 
 
 
 
 
 
 
 
 
 
1 

APPENDIX 1 
REVIEWED LITERATURE 

 
  
 
 
 
 
 
2 

Literature on Budget Support 

ADE  (2007).  "Evaluation  of  EC  Cooperation  in  the  field  of  rural  and  agricultural  development  in 
partner countries". Report prepared for the European Commission. 

ADE (2014). Evaluation conjointe des opérations d’appui budgétaire au Maroc, Rapport final  

ADE (2016). "Study on EU Budget Support during the 2007-13 Multiannual Financial Framework 
period", project financed by the European Union 

Natsios,  A.  (2006).  “Five  Debates  on  International  Development:  the  US  Perspective” 
Development Policy Review, 2006. 

Andrews,  M.  (2013).  “The  Limits  of  Institutional  Reform  in  Development:  Changing  Rules  for 
Realistic Solutions”. Cambridge: Cambridge University Press 

Bandstein, S. (2007). “What Detemines the Choice of Aid Modalities? A framework for assessing 
incentive structures”, Swedish Agency for Development Evaluation. 

Bannerjee,  A.,  He,  R.  (2006).  “Making  Aid  Work”,  in  W.  Easterly  (ed.)  Reinventing  Foreign  Aid, 
Cambridge, Mass.: MIT Press. 

Bigsten,  A.,  Platteau,  J.,  Tengstam,  S.  (2011).  “The  Aid  Effectiveness  Agenda:  The  Benefits  of 
Going Ahead”, Gothenburg: SOGES 

Birdsall, N., and W. Savedoff (2011). "Cash On Delivery, A new approach to foreign aid", Center 
for Global Development, Washington, D.C.  

BMZ  (2008):  Budget  Support  in  the  Framework  of  Programme-Oriented  Joint  Financing  (PJF), 
Strategies 181 

Booth,  D.  (2011).  "Aid,  institutions  and  governance:  what  have  we  learned?".  Development 
Policy Review, 29(s1), s5-s26. 

Chene,  M.,  (2010).  “Fiduciary  Safeguards  for  Minimising  Corruption  Risks  When  Using  Budget 
Support”. U4 Anti-corruption Resource Center. 

Clist, P., Isopi, A., & Morrissey, O. (2012). "Selectivity on aid modality: Determinants of budget 
support from multilateral donors". The Review of International Organizations, 7(3), 267-284. 

Cordella,  T.  and  Dell’Ariccia,  G.  (2007).  “Budget  support  versus  Project  Aid:  A  Theoretical 
Appraisal”, The Economic Journal, 114 (523), pp. 1260-1279.  

Co-sécreatariat  du  CICID  (2007).  "Doctrine  d'emploi  des  aides  budgetaires  globales  dans  les 
Etats etrangers". France coopération: Paris. 

DANIDA (2014). “Review of Budget Support Evaluations”. DANIDA: Copenhagen 

Devarajan, S., & Swaroop, V. (1998). The implications of foreign aid fungibility for development 
assistance. World Bank Policy Research Working Paper No. 2022. 

DFID (2007). " 
Statistics publication. 

Statistics on International Development 2002/03-2006/07". National 

DFID (2011a). "DFID Statistics on International Development 2011".  

DFID (2011b). “Implementing DFID’s strengthened approach to budget support: Technical Note” 

DFID (2016). “Transparency data: Table 1 DFID Gross Public Expenditure 2010/11 to 2014/15”.  

DG  DEVCO  (2014).  Budget  Support  -  Financial  Implementation,  Risk  Assessment  and  Selected 
Macroeconomic  and  Fiscal  Country  Results  2013  (Pilot  Report).  European  Commission,  DG 
DEVCO, March 2014  

DG DEVCO (2015). Budget Support 2015 Report, forthcoming.  

 
  
 
 
 
3 

DG  DEVCO  (2016).  "Providing  EU  Budget  Support  in  Decentralised  Contexts,  A  Methodological 
Note" February 2016. 

DRN (2011). "Thematic global evaluation of European Commission support in the sectors of ESI 
(Employment  and  Social  Inclusion)  in  partner  countries  (including  vocational  training).  Report 
prepared for the European Commission. 

Easterly,  W.  &  Pfutze,  T.  (2008).  "Where  Does  The  Money  Go?  Best  and  Worst  Practices  in 
Foreign Aid", Brookings Global Economy and Development Working Paper 

ECDPM  -  Loquai, C.,  and  E. Fanetti. (2011a).  "Supporting domestic accountability in developing 
countries: Taking stock of the approaches and experiences of German development cooperation 
(synthesis report)". Maastricht: ECDPM.  

ECDPM - Vanheukelom, J., Colin, S., Seters, J. van. (2011b). "The future of EU budget support to 
third countries?" (Briefing Note 22). Maastricht: ECDPM.  

Ecorys  (2016).  "Evaluation  of  EU  support  to  the  transport  sector  in  Africa  2005-2013".  Report 
prepared for the European Commission. 

EuropeAid (2004). “Project Cycle Management Guidelines”, March 2004. 

European  Commission  (2000).  "Communication  "Community  support  for  economic  reform 
programmes and structural adjustment: review and prospects", COM(2000) 58  

European Commission (2008). "Budget support : A question of mutual trust", Luxembourg 2008  

European  Commission  (2010a).  "Communication  form  the  Commission  to  the  European 
Parliament,  the  Council,  the  European  Economic  and  Social  Committee  and  the  Committee  of 
Regions: The future approach to EU Budget Support to third countries" 

European  Commission  (2010b).  Green  Paper  "The  future  of  EU  budget  support  to  third 
countries", COM(2010) 586  

European  Commission  (2011).  Communication  "The  future  approach  to  EU  budget  support  to 
third countries", COM(2011) 638  

European  Commission  (2012).  Budget  Support  Guidelines  -  Programming,  Design  and 
Management. A modern approach to Budget support. Development and Cooperation Directorate-
General, Brussels, September 2012  

European Commission (2014a). "Annual Report 2014 on the European Union's development and 
external  assistance  policies  and  their  implementation  in  2013",  Commission  Staff  Working 
Document, SWD(2014) 258  

Europan Commission (2014b). “Sector Budget Support Guidelines”. DG Enlargement: Brussels  

European Commission (2015). "Budget Support: Financial Implementation, Risk Assessment, and 
Selected Poverty, Macroeconomic and Fiscal Results". DG DEVCO. 

European Court of Auditors (2010). The Commission’s management of general budget support in 
ACP, Latin American and Asian countries, Special Report no. 11/2010  

European  Parliament  (2011).  “Briefing  paper:  The  future  of  EU  budget  support  in  developing 
countries”. Directorate-general for external policies of the union. 

Faust,  J.  et  al  (2012).  The  future  of  EU  budget  support:  political  conditions,  differentiation  and 
coordination, European Think-Tanks Group, May 2012  

Faust,J. & Koch, S. (2014). “Foreign Aid and the Domestic Politics of European Budget Support”, 
German Development Institute. 

Gavas,  M.  (2012).  The  European  Commission’s  legislative  proposals  for  financing  EU 
Development Cooperation. Background Note. February. 

 
  
 
 
4 

Handley, G. (2009). “Sector Budget Support in Practice: Literature Review”. Mokoro & Overseas 
Development Insitute: London 

Hoven,  I.  (2009).  “Perspectives  on  Budget  Support:  Why  and  how  we  are  delivering”.  ECDPM: 
Maastricht 

ICAI  (2012).  “The  Management  of  UK  Budget  Support  Operations”.  Report  9,  Independent 
Commission for Aid Impact 

IEG  (2010).  "Poverty  Reduction  Support  Credits:  An  Evaluation  of  World  Bank  Support".  The 
World Bank: Washington, D.C. 

IMF (2005). “The Macroeconomics of Managing Increased Aid Flows: Experiences of 

IOB (2012). Budget Support: Conditional Results, IOB Evaluation 

ITAD  (2013).  “Joint  Evaluation  of  Budget  Support  to  Tanzania:  lessons  learned  and 
recommendations for the future”. ITAD September 2013 

Kaca, E., Sobják, A. & Zawztowt, K. (2014). “Learning from Past Experiences: Ways to Improve 
EU  Aid  on  Reforms  in  the  Eastern  Partnership”.  The  Polish  Institute  of  International  Affairs: 
Warsaw 

Koch,  S.  et  al  (2011).  "EU  development  policy  to  2020:  meeting  the  internal  and  external 
challenges: Concept paper for the DIE EU-Leuchtturm project 2011-2012, 24 February 2011 

Koeberle,  S.  and  Z.  Stavreski  (2005).  “Budget  Support:  Concept  and  Issues”,  The  World  Bank, 
May 2005  

Koeth,  W.  (2014).  "The  New  Instrument  for  Pre-Accession  Assistance  (IPA  II):  Less  Accession, 
More Assistance?". EIPA Working Paper 2014/W/01. 

Lawson, A. et al. (2002). “General Budget Support Evaluability Study: Phase 1  - Final Synthesis 
Report”. London: Overseas Development Institute 

Lawson, A. (2007). "DFID Budget Support to Sierra Leone, 2004-2007: Achievements & Lessons 
for the Future." Report to the UK Department for International Development  

Lawson,  A.  (2009).  "Evaluating  the  Transaction  Costs  of  Implementing  the  Paris  Declaration". 
Concept Paper. Fiscus: Oxford.  

Lawson  et  al.  (2014).  “Synthesis  of  Budget  Support  Evaluations:  Analysis  of  the  Findings, 
Conclusions and Recommendations of seven Country Evaluations of Budget Support”, report  for 
DG DEVCO, November 2014  

Manrique  Gil,  M.  (2015).  “Budget  support  in  EU  development  policy:  An  evolving  framework”. 
Briefing, European Commission: Brussels 

Molenaers, N., Cepinskas, L., & Jacobs, B. (2010). "Budget support and policy/political dialogue: 
Donor practices in handling (political) crises" IOB, University of Antwerp. 

National  Audit  Office  (2008).  Department  for  International  Development:  Providing  budget 
support to developing countries. London: The Stationary Office 

ODI  -  De  Renzio,  P.,  Andrews,  M.  &  Mills,  Z.  (2010).  “Evaluation  of  Donor  Support  to  Public 
Financial  Management  (PFM)  Reform  in  Developing  Countries”  Overseas  Development  Institute: 
London 

OECD  (2006).  Harmonising  Donor  Practices  for  Effective  Aid  Delivery,  DAC  Guidelines  and 
Reference Series, OECD 2006  

Open Society Foundation (2014). “EU budget support to Eastern Partnership Countries: Moldova, 
Georgia & Ukraine”. Eastern Partnership Civil Society Forum 

 
  
 
 
5 

Pack, H. and J.R. Pack (1993). “Foreign aid and the question of fungibility”, Review of Economics 
and Statistics, 75 (2) (1993), pp. 258–265. 

Particip  (2010).  "Thematic  global  evaluation  of  European  Commission  support  to  the  education 
sector  in  partner  countries  (including  basic  and  secondary  education)"  Report  prepared  for  the 
European Commission. 

Particip (2012). "Thematic evaluation of the European Commission support to the health sector" 
Report prepared for the European Commission. 

Particip (2013). "Evaluation of Budget Support in South Africa, Final Report" Report prepared for 
the European Commission. 

Penrose,  P.  (2008).  "European  Commission  Budget  Support  Programmes:  Nature,  Dialogue  and 
Design" 

Perakis,  R.  and  Savedoff,  W.  (2015).  “Does  Results-Based  Aid  Change  Anything?  Pecuniary 
Interests, Attention, Accountability and Discretion  in  Four Case  Studies." CGD  Policy Paper 053. 
Washington DC: Center for Global Development. 

Renzio,  P.  de,  Andrews,  A.  and  Mills,  Z.  (2011).  “Does  donor  support  to  public  financial 
management  reforms  in  developing  countries  work?  An  analytical  study  of  quantitative  cross-
country evidence”.  

Saurenbach,  V.  (2012).  “Sector  Budget  Support  in  the  European  Neighbourhood  Policy: 
Promoting  reform  through  conditionality”.  Department  of  European  Interdisciplinary  studies, 
College of Europe: Bruges  

Schmidt,  P.  (2005).  "Budget  Support  in  the  EC's  Development  Cooperation".  German 
Development Institute (DIE). 

Tavakoli,  H.  &  Helger,  E.  (2011).  “Pieces  of  the  Puzzle:  evidence,  dilemma’s  and  the  emerging 
agenda for budget support”. Overseas Development Institute: London 

Transparency International (2010). “Fiduciary Safeguards for minimising Corruption Risks” 

Unwin, T. (2004). “Beyond Budgetary Support: Pro-poor development agendas for Africa”, Third 
World Quarterly, Vol. 25 (8), pp. 1501-1523. 

USAid (2005). “Key findings of five USAid studies”. PPC Evaluation Paper No 7. 

Van Lieshout, P. et al. (2010). “Less Pretension, More Ambition: Development Policy in Times of 
Globalization”. Amsterdam University Press. 

Wahlers,  G.  (2008).  "Budgethilfe:  als  Instrument  der  Entwicklungszusammenarbeit".  Konrad 
Adenauer Stiftung. 

Williamson, T. & Dom, C. (2010). "Making sector budget support work for service delivery". ODI 
Project Briefing 36-38. London: Overseas Development Institute  

World Bank (2004). “OP 8.60 - Development Policy Lending”, August, 2004 

World Bank (2010). "Annual Report 2010". World Bank: Washington, D.C. 

World  Bank  (2012a).  “2012  Development  Policy  Lending  Retrospective:  Results,  Risks,  and 
Reforms”. Operations Policy and Country Services World Bank: Washington, D.C. 

World  Bank  (2012b).  “Development  Policy  Financing”.  The  World  Bank  Operations  Manual: 
Operational Policies 

World Bank (2014a). “OP 8.6: Development Policy Financing”. 

World Bank (2014b). “OP 10.00: Investment Project Financing”. 

 
  
 
 
6 

World  Bank  (2015a).  "2015  Development  Policy  Financing  Retrospective:  Results  and 
Sustainability" Operations Policy and Country Services. The World Bank Group. 

World Bank (2015b). "Annual Report 2015". World Bank: Washington, D.C. 

World Bank (2015c). “Programme-for-results: two-years review”, Operations Policy and Country 
Services, March 17. 

World Bank (2015d). “Bank Polucy: Program-for-Results Financing”.   

World Bank (2016). "PforR: Program for Results - Portfolio". The World Bank Group. 

Yeo,  T.  (2006).  “Trade,  Development  and  Environment:  The  Role  of  DFID;  Tenth  Report  of 
Session 2005-06;” Report, Together with Formal Minutes, Oral and Written Evidence (Vol. 1014). 
Ordered by The House of Commons Environmental Audit Committee. The Stationery Office.  

 
  
 
 
 
 
 
7 

Literature Cohesion policy 

Ahner,  D.  (2009).  “What  do  you  really  know  about  European  Cohesion  Policy?”,  Retrieved  from 
http://economia.unipr.it/DOCENTI/WOLLEB/docs/files/Ahner.pdf.  

Algemene  Rekenkamer  (2016).  EU  Trend  Report  2015  -  Developments  in  the  financial 
management of the European Union 

Ardielli,  E.  and  Halásková  M.  (2015).  “Evaluation  of  good  governance  in  EU  countries”,  Acta 
academica  karviniensia,  Slezská  univerzita  v  Opavě,  OPF  Karviná,  2015,  s.  5-17,  ISSN  1212-
415X  

Barca, F. (2009). “An agenda for a reformed Cohesion Policy. A place-based approach to meeting 
European Union challenges and expectations”, independent report prepared at the request of the 
EU Commissioner for Regional Policy.  

Charron,  Nicholas,  Lewis  Dijkstra  and  Victor  Lapuente.  2015.  ‘Mapping  the  Regional  Divide  in 
Europe:  A  Measure  for  Assessing  Quality  of  Government  in  206  European  Regions’. Social 
Indicators Research. vol 122 (2): 315-346. 

Commission  of  the  European  Communities  (2001).  “European  Governance:  A  White  Paper”, 
COM(2001) 428 final.  

Committee  of  the  Regions  –  COR  (2012),  Division  of  Powers  between  the  European  Union,  the 
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