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Budget Support, Budget Transparency and Domestic Accountability in Mozambique

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Abstract

Donors have provided foreign aid in the form of budget support in order not only to promote growth and poverty reduction but increasingly also to strengthen domestic accountability in the recipient country. Yet, despite numerous studies and evaluations, little information has been provided on how individual elements of budget support work towards domestic accountability. This article reconstructs the donors’ accountability-claim and hypothesises effects of budget support on budget transparency and domestic accountability. Evidence from empirical research in Mozambique confirms the effectiveness of budget support to improve budget transparency, and therefore supports the core accountability-claim. Moreover, the article provides insights from the demand-side, where domestic accountability institutions play an active role in the process of answerability.

Abstract

Les donneurs ont attribué des aides étrangères sous la forme d’un soutien budgétaire dans le but de promouvoir la croissance et de réduire la pauvreté mais également de plus en plus pour renforcer la responsabilité nationale dans le pays bénéficiaire. Désormais, malgré de nombreuses études et évaluations, peu d’informations sur la manière dont les éléments individuels sur le travail d’aide budgétaire envers le pays bénéficiaire ont été divulguées. Cet article reconstitue l’affirmation de responsabilité des donneurs et d’hypothétiques effets de l’aide budgétaire sur la transparence budgétaire et sur la responsabilité nationale. Une preuve provenant d’une recherche empirique au Mozambique confirme l’efficacité de l’aide budgétaire pour améliorer la transparence budgétaire et ainsi aider le cœur de l’affirmation de responsabilité. De plus, l’article fournit des aperçus du côté de la demande, où les institutions de la responsabilité nationale jouent un rôle actif dans le processus de responsabilité.

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Figure 1

Notes

  1. Early expectations of budget support comprise reduced transaction costs, greater predictability of aid flows, increased allocative efficiency in public spending, increased effectiveness of the state and public administration, and stronger domestic accountability (Lawson et al, 2003).

  2. In 2005, the international community agreed upon five principles to improve the effectiveness of foreign aid by signing the Paris Declaration on aid effectiveness. These principles comprise: (i) ownership, (ii) alignment, (III) harmonisation, (iv) managing for results, (v) mutual accountability. These principles have been reaffirmed in subsequent agreements in Accra (2008) and Busan (2011).

  3. The views and assessments have been attained during a field trip to Maputo in May/June 2014 in semi-structured interviews with representatives from CSO, parliament, media firms, governance experts as well as budget support donors. The empirical work presented in this paper substantially benefited from the author being embedded into an evaluation of accompanying measures to budget support (see Krisch et al, 2015) by the German Institute for Development Evaluation (DEval).

  4. A recent evaluation of budget support to Mozambique, for instance, did not take into account the perspective of representatives from DAI (Lawson et al, 2014).

  5. Narrow definitions like Huntington’s (1991) ‘two turnover’ concept have been opposed by more comprehensive and continuous understandings of democratic consolidation (see Przeworski, 1991; Linz and Stepan, 1996; O’Donnell, 1996; Diamond, 1997).

  6. This article adopts the definition of democracy as ‘liberal democracies’ inherent to Schedler’s (1998) concept. Concurring with Robert Dahl’s concept of polyarchy, a liberal democracy entails civil and political rights as well as fair, competitive and inclusive elections (see Schedler, 1998, p. 92).

  7. The most widely-shared intervention logic, applied in numerous multi-donor evaluations of budget support, has been established by OECD/DAC (2012, p. 9).

  8. In addition, budget transparency has been described as pre-requisite for increased domestic accountability in various strategy documents and evaluations (EC, 2008, p. 19; DFID, 2011, p. 6; Dijkstra et al, 2012, p. 35; EC, 2012, p. 39; DANIDA, 2013, p. 17).

  9. Budget support was first discussed in 1998 among four donors: Denmark, Norway, Sweden and Switzerland (Batley, et al, 2006, p. 18). The group expanded to the G19 that includes the following donors: African Development Bank, Austria, Belgium, Canada, Denmark, European Union, Finland, France, Germany, Italy, Ireland, Norway, Portugal, Spain, Sweden, Switzerland, The Netherlands, The United Kingdom, and The World Bank (Lawson et al, 2014, p. 50).

  10. Between 2005 and 2012, the largest number of indicators (17 per cent on average, 57 in total) in the PAF dealt with PFM. With the latest reduction of indicators, the relevance of PFM increased up to 20 per cent in 2012. (see Lawson et al, 2014, p. 64).

  11. Referring to the donors’ use of budget support as a leverage for technocratic and democratic governance, Molenaers et al, (2010, p. 18) distinguish between policy and political dialogue, respectively.

  12. Note that existing evaluations of budget support have applied a narrow definition of budget support related TA/CD. For example, Lawson et al (2014, p. 76 f) conceive additional programmes and projects as elements of budget support only if they are part of the same financing agreement with budget support or if their existence is closely related to the budget support programme.

  13. Note that some agencies did not reply to the query. Figures are therefore lower bound estimations.

  14. See also Macuane et al (2008, p. x), who conclude that government and donors are the most influential actors in the budget process.

  15. For a detailed list of reforms in PFM, see Lawson et al (2014, p. 102 f).

  16. The DAI perspective coincides with the assessment of a recent IMF report. It states that the roll out of e-SISTAFE substantially increased the budget system coverage and helped to improve the frequency and timeliness of high quality fiscal reports (IMF, 2015, p. 7).

  17. Donor initiatives to support parliamentarians (by UNICEF, AWEPA and the Westminster Foundation) to increase their capacity in budget oversight have been ongoing. Yet, a direct link to donors’ engagement in budget support was denied by interviewed MPs.

  18. For alternative data sources confirming this trend, see the assessments of Public Expenditure and Financial Accountability (PEFA) (http://www.pefa.org/en/assessment_results?country_value[0]=MZ&tid[]=302 (accessed 11 February 2016). See also IMF (2015, p. 30).

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Acknowledgements

The author would like to thank the interviewees for sharing their experiences and insights with him. He is grateful for inputs from colleagues at the German Institute for Development Evaluation (DEval) as well as participants of the 4th Global Conference on Transparency Research held in June 2015 who commented on the draft version of this article. The author would also like to thank the anonymous referees for their feedback, and Christof Hartmann for peer reading and advice in the publication process. The author is indebted to the German Institute for Development Evaluation (DEval) for facilitating an extended field trip to Maputo.

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Schmitt, J. Budget Support, Budget Transparency and Domestic Accountability in Mozambique. Eur J Dev Res 29, 246–262 (2017). https://doi.org/10.1057/ejdr.2016.17

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