Debate

Minister for Development Aid and budget support

Without budget support, Sweden refrains from important opportunities to contribute to the positive effects that evaluations show that the form of support has when it is not overloaded with too many short-term requirements. At the same time, the criteria for budget support cannot be quantified without unreasonable simplifications - for example, where is the approved level of adequate democracy and respect for human rights? Instead of giving up, the Minister for Development Aid should explain what results have actually been achieved and simplify the regulations, writes Bertil Odén.

A debate has flared up about general budget support - a form of aid that was high on the agenda five or six years ago, but has lost ground sharply over the past two years. Ironically, this has taken place in parallel with new international evaluations showing that budget support can deliver many of the positive effects that are expected and that are very much in line with the principles of the Paris Declaration, including stronger ownership, accountability and transparency. It can also work more predictably for the recipient. On the other hand, budget support works poorly when donors overload it with too many short-term demands for political and economic changes that are not rooted in the recipient.

Ekot's Saturday interview with Minister for Development Aid Gunilla Carlsson some time ago clearly showed that she wants to phase out budget support in Swedish development assistance, even though she cannot do so as quickly as she would like due to the current agreement. This is nothing new. Her hesitation was already expressed in an interview in the Riksdag and the Ministry in 2010 and is also reflected in this year's budget bill. During her time as Minister for Development Aid, the number of countries receiving Swedish budget support has halved from eight to four. Burkina Faso, Mali, Mozambique and Tanzania remain today.

Strangely enough, one of her arguments in Saturday's interview was that budget support is not cost-effective, which is exactly the opposite of what emerges from the evaluations.

Strangely enough, one of her arguments in Saturday's interview was that budget support is not cost-effective, which is exactly the opposite of what emerges from the evaluations. Another argument was that she did not see what "we achieve for results". Which is correct in the sense that it is not possible to link the Swedish development assistance crowns to e.g. the construction of a specific school or which households have received “Swedish” stoves.

One of the main points of this form of assistance is that several donors together support a country's development policy and at the same time support reforms and capacity in the partner country's budget and control system. In this way, numerous bureaucracies can be avoided and transmission costs reduced for both donors and recipients. Indicators and conditions mainly apply to results and should therefore fit in with the current trend in development assistance. On the other hand, it is not possible to separate Swedish development assistance from other development assistance and domestic budget funds.

All development assistance whose primary purpose is to contribute to development is based on reasonable trust between the parties. Budget support is the form of assistance where this is most evident. It is therefore also most vulnerable to events that erode this trust, e.g. corruption scandals and decisions by the recipient government - even those far from budgetary and development policies - that can disrupt public opinion in donor countries. A change of government in a donor country can have the same effect.

The criteria for Swedish budget support since 2008 are:

  • Clear commitments and respect for human rights and democracy.
  • National strategy for poverty reduction that is democratically rooted and feasible.
  • Long-term sustainable economic policy for growth with development and poverty reduction as goals and with macroeconomic stability as a prerequisite.
  • Public financial management systems that are sufficiently transparent, robust and efficient for the objectives of the support to be achieved.
  • Clear commitment and action taken by the partner country's government to combat corruption.

The Government's directive for budget support means that a payment is preceded by four different decisions. At each decision, a reassessment shall be made of the appropriateness of budget support to the country in question. Even if a positive such assessment has been made on the first three occasions, something may have happened that makes this not the case when the actual payment is to be made a number of months later. Sweden is thus probably the country that has created the most complicated system for its budget support.

Aid, including budget support, is mainly provided in countries that are in a gray area between full-fledged democracies and pure dictatorships. Several institutes try with different methods to grade the level of democracy in the countries of the world, an extremely meticulous task. Economist Intelligence Unit publishes every year a democracy index where 167 countries in the world are ranked according to five different criteria. The countries are divided into four categories: full-fledged democracies (25), deficient democracies (53), hybrid regimes (37) and authoritarian regimes (52). According to the EIU's index for 2011, two of the total of twelve long-term partner countries for Swedish development assistance (Mali and Zambia) fell into the category of deficient democracy, seven into the category of hybrid regime and three into the category of authoritarian regime. This means that development assistance operates in imperfect environments in many ways.

If poverty reduction is to continue to be the overarching goal of Swedish development assistance, it should be inevitable to work in countries where the situation with regard to democracy and human rights has significant shortcomings.

If poverty reduction is to continue to be the overarching goal of Swedish development assistance, it should be inevitable to work in countries where the situation with regard to democracy and human rights has significant shortcomings. There is, of course, a "pain limit" for the type of regime Sweden can cooperate with. Assessing where it is located and how it should be weighed against the possibilities of contributing to poverty reduction and long-term development is the core issue in that assessment.

Gunilla Carlsson's increasingly tight approach to budget support may have several causes:

  • she does not believe that it goes hand in hand with her “performance agenda”, ie she can not put blue and yellow flags on specific projects and activities to show taxpayers where their money is going. The performance agenda also means an effort to minimize risk. For those who regard budget support as high risk and projects run by Swedish actors as low risk, there is therefore a strong incentive to opt out of budget support.
  • her as it seems strong distrust of many actors in aid, including aid-receiving governments. Then budget support becomes extra difficult to digest, compared to projects where the illusion that she herself has control can be more easily maintained.
  • all five criteria that must be met are complicated and ultimately become political, in terms of assessing whether they are met and can hardly be quantified without unreasonable simplifications. Where is the level of approval for adequate democracy and respect for human rights? How do you assess in advance whether economic policy is sustainable in the long term? Where is the limit for a sufficiently open and efficient financial control system and how is it measured if a government's measures to fight corruption are sufficient? Since they must be assessed four times in the Swedish process before the budget support is paid, there is a significant risk that somewhere along the way something will happen in one of the five areas that make it politically inconvenient for the Swedish government / aid minister to be held accountable.

Excluding budget support as a form of aid would mean that Sweden waives an important opportunity to contribute to improvements in a partner country's overall development policy and budget use.

Excluding budget support as a form of aid would mean that Sweden waives an important opportunity to contribute to improvements in a partner country's overall development policy and budget use. Instead of giving up, the Minister for Development Aid should invest resources in explaining what budget support is, what results have actually been achieved, and simplifying the regulations. I would call that a positive speaking aid.

This is a debate article. The author is responsible for analysis and opinions in the text.

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