Budget support training
Module 2
Public policies (national/sector development strategy)
(First eligibility criterion)
Version October 2013
What do you need to know?
• Imagine: you work at a Delegation. The EC provides sector
budget support to Education (ministry of Education and
Culture). With one of your contacts you have had some
informal conversations about the threat to cultural heritage
in the country, as has happened in Iraq, Afghanistan and
Mali.
• A few weeks later this medium level official presents you
with a document titled “National Policy on Cultural
Heritage” and asks whether this policy could be supported
with BS as well. What do you need to know?
• 5 minutes buzzing
2
Outline of module 5
1. Public policies, coverage and objectives
2. Why is it an eligibility criterion for BS?
3. What to assess and when?
4. How to assess?
3
Running Head 12-Point Plain, Title Case
A public policy is a series of interlinked actions (= policy)
designed and implemented by the state (= public)
Macroeconomic
policies
Structural policies
(1)
• Fiscal policy
• Governance
• Monetary policy
• Public sector
management
• Exchange rate
policy
• Trade policy
• Public debt policy
• Decentralisation
• Public finance
management
Structural
policies (2)
• Land use policy &
land reform
• Market regulation
• Financial sector
regulation
Sector policies
• Public services
(education,
health,..)
• Social security
• Social protection
• Environmental
regulation
Policies contribute individually or jointly
to various objectives
 Macroeconomic stabilisation
 Equity, vertical (income distribution) and horizontal (equal development across
regions)
 Resource allocation: i.e. providing public services: health, education; providing
public goods (law & order, defence); building infrastructure
The public policy process
Strategy/policy
formulation
Budget preparation,
approbation and execution
Situation
aimed at
by the
policy
Public services delivery
(infrastructure, social
services, law and order,
….)
Public Finance
Management
Initial
situation
(economic,
social,
political)
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Public policies are designed and implemented by a
series of public institutions
• General government comprises
•
•
•
•
Central government
State government, in federal countries
Local government
Social security funds are sometimes combined into a separate
subsector
• Public sector includes, in addition to the general government,
corporations and quasi-corporations controlled by the government
units (including the central bank)
It is essential to understand the role,
responsibilities and activities of these actors
6
Outline of module 3
1. Public policies, coverage and objectives
2. Why should it be an eligibility criterion?
3. What to assess and when?
4. How to assess?
7
Running Head 12-Point Plain, Title Case
The existence of a relevant and credible policy is
essential:
for the partner government
for a fruitful use of BS
 It is possible to implement badly
a relevant and credible policy….
BS is a modality to support
policies:
 … but is not possible to
implement properly a policy that
is not relevant and credible
A strategy/policy must exist
and
 The existence of a
policy/strategy is a prerequisite
for government accountability
 it must be owned by the
partner country
It is the interest of both the partner government and the Commission that
their policy dialogue aims at improving the relevance and the credibility of
the policy
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Running Head 12-Point Plain, Title Case
Is a key
component of
BS
Must be informed
• To contribute to
the design and
implementation of
the partner’s policy
Remember
BS =
Money
+
policy dialogue
+
(capacity building)
The
policy
dialogue
• To help the
Commission with
assessing and
managing risk
It should address:
 The design and implementation of the government’s policy/strategy
 The design and implementation of reforms (in particular PFM)
 The annual results (outcomes) of the strategy and the nature of the policy
response
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Outline of module 3
1. Public policies, coverage and objectives
2. Why should it be an eligibility criterion?
3. What to assess and when?
4. How to assess?
10
Running Head 12-Point Plain, Title Case
Assessing the partner’s policy requires
Analysing the
partner’s policy
documents
• PRSP
• Sector policy
programmes
• Institutional reform
programs
• Etc.
Understanding the
partner’s policy
• What do they want to
do? (what are the
objectives?)
• How do they want to
do it (instruments
deployed, resources
mobilised and
allocated, institutions
involved, …)
Concluding
• BS is or is not the
most appropriate aid
modality to support
the partner’s policy.
• The policy is or is not
sufficiently relevant
and credible to be
eligible for EU budget
support
The focus of the assessment will differ according to the type of BS
GGDC: governance, broad sustainable development, poverty eradication
SBC: restoration of vital state functions & basic social services
SRC: sector reforms, sector governance, service delivery.
Running Head 12-Point Plain, Title Case
When should public policy eligibility be
assessed?
Public policy must be eligible when the programme is approved
and at the time of each budget support disbursement
during design
 Assess:
• the relevance of the policy
• the credibility of the policy
during implementation
 Assess
 progress made in
implementing the policy
 results achieved
 whether the policy continues
to be sufficiently relevant
and credible
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Outline of module 3
1. Public policies, coverage and objectives
2. Why should it be an eligibility criterion?
3. What to assess and when?
4. How to assess?
13
Eligibility assessment during design
• « Is the policy sufficiently relevant and credible for the BS
programme objectives to be largely achieved ? »
• Delegations to provide 6-8 pages document accompanying
the BS Action Fiche and covering 5 points:
1.
2.
3.
4.
5.
Policy framework
Policy relevance
Policy credibility
Conclusion: EU Delegation’s appreciation of eligibility
Expected progress in policy implementation
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1° Description of the policy framework

Policy formulation:
 Where is the policy defined?
 Period covered? Linkages with political cycles or other political
processes?
 Approval process?
 Involvement of stakeholders in formulation.



Existence and quality of monitoring and evaluation framework?
(reflects policy objectives, includes indicators, availability of a
Performance Assessment Framework or PAF)
Review mechanisms and donor coordination (regular review
process led by Government? Is it published? Stakeholders
involved? )
Coherence of the policy with other government policies
(coherence national, sector, local; intra-sectoral)
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A good policy document should:

Be authored and endorsed by the Government (not the donors)

Address the role of the government in the sector/area and
distinguish regulatory functions and service delivery

Define allocation of responsibilities between Ministries involved
and tiers of government, and identify capacity constraints and
requirements to mitigate them

Focus on the resources requirements to implement the policy,
including current and capital expenditures

Have a strong result orientation

Set up clear mechanism for monitoring, review and updating the
policy document
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2° Relevance
Does the policy address (in an efficient and effective way)
 the overall objectives of poverty reduction, sustainable
and inclusive growth and democratic governance?
 the specific challenges and objectives identified in the
public policy and supported by the specific BS contract?
Does the policy aim at strengthening domestic
accountability and national control mechanisms?
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3° Credibility
Credibility depends on:
 the track record in policy implementation;
 adequate funding of the policy. Related questions:
 Are there (appropriate) cost estimates of the policy?
 Are the cost estimates reflected in the budget and in the
medium-term fiscal and expenditures frameworks?
 Is the budget comprehensive or are there important offbudget revenues and expenditures?
 Is the financial sustainability of the policy realistically
assessed (domestic revenue mobilisation, external financing,
contingent liabilities)?
 In case of fiscal decentralisation: are national budgets and
sub-national budget allocations and mandates consistent?
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3° Credibility (continued)
• Existence of a common performance assessment
framework (PAF) to monitor/measure policy
implementation
 Existence of baselines/targets/performance objectives with SMART/RACER
performance indicators

Institutional capacity and ownership:
 Existence of capacity assessment for the ministries or agencies
in charge of the policy
 Indications that the policy is sufficiently owned by the
institutions that have to implement it

Analytical basis and data quality
 Is there a move towards evidence based policy formulation
and decision making? Or is the lack of reliable data
undermining the policy programme and the possibility to
monitor it?
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4° Delegation’s assessment of eligibility
 Based on its analyses, the EU Delegation concludes whether or not
the government policy is considered sufficiently (or no) relevant
and credible and if its implementation can be supported with a
Budget Support programme.
5° Expected outputs in policy implementation
 Basis for monitoring progress during implementation of the policy
must be specified.
 Available PAF and review documents should be used.
 If no available PAF, the EU Delegation should spell out how
eligibility will be monitored.
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Eligibility assessment during implementation
This assessment is meant to verify:
 whether the policy continues to be sufficiently relevant and
credible, and;
 whether there has been satisfactory progress in policy
implementation.
The assessment must take into consideration exogenous
shocks (external and internal)
Based on the same template than the baseline assessment of
eligibility, but must focus on progress in policy implementation
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Key messages
 Assessment of the relevance and the credibility of the policy
is a continuous task of the EC Delegations. It imposes:
 a comprehensive analysis of the situation at
identification/formulation stage and the monitoring of the
progress of the policy during implementation;
 to demonstrate that the policies supported by the BS contracts
contribute to the overall objectives and to their specific
announced objectives.
 This requires an important collection and assimilation of
information and informed opinions. The policy dialogue and
the coordination with the Government and the donors
should make this task more efficient and less difficult.
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