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Programme Support And Public Finance Management : A New Role For Bilateral Donors In Poverty Strategy Work

U Brobäck and S Sjölander  (2001)
173 pages (674KB)

What should bilateral donors in developing countries be doing in the areas of programme support and public finance management? This question is the focus of a paper undertaken for the Swedish International Development Cooperation Agency (Sida). Donors including Sida, has recently taken a stronger programme focus in its development assistance work. Another change is the increasing recognition that efficient public administration systems are necessary to turn financial resources into concrete measures promoting growth and welfare systems. This recognition has led the World Bank to adopt a completely new approach to public administration reform.

This report analyses the key issues at the heart of programme support and public finance management and discuses the problems, details and method used with this form of support. It concentrates on the development of poverty-focused assistance to African countries.

Sida and other bilateral donors and multilateral organisations are moving more clearly towards a policy that involves supporting poverty reduction, principally in Africa, via different forms of programme support (PS). The purpose of PS is to finance improved welfare services, and all forms of that support are linked to policy reforms in the partner country.

  • Programme support can be described as a means to support implementation of a general policy or expenditure programme developed by a partner country, often in concert with donors.
  • Regardless of the form of PS donors/lenders choose, there is a common need to develop systems and institutional capacity building in public administration in partner countries.
  • For PS to help alleviate poverty through the creation of welfare services, the different functions within public administration must work effectively. The public administration apparatus must have access to competent staff.
  • PS is provided through budget support, sector programme support and via debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative.
  • The HIPC Initiative has helped to create an important link between debt relief and poverty reduction through the Poverty Reduction Strategy Papers (PRSPs).
  • The rationale behind PRSPs is that rapid, sustainable economic growth should be the core of poverty reduction strategies. The expectation is that this will lead to lasting poverty alleviation.

In a programme management model whose aim is to transfer funds to recipient countries’ public finance managements systems, it is important for donors to be able to asses the quality of these systems.

  • The multiplicity of diagnostic and analytical instruments means that they overlap extensively creating problems for donors and partner countries alike.
  • The World Bank has endeavoured to develop homogenous and complete tools for financial management analysis and bilateral donors should participate in this process.
  • The diagnostic tools of the future should address system, process and capacity under the same roof.
  • The development of analysis tools in the past seems to have been driven not by the partner country’s development needs, but by the donor’s self-interest.

Source: Brobäck, U. and Sjölander, S. , 2001, ‘Programme Support And Public Finance Management : A New Role For Bilateral Donors In Poverty Strategy Work’, Swedish International Development Cooperation Agency (Sida), Stockholm

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