Roundtable Topic 2: Alignment

This page comprises information on background resources for Roundtable 2, compiled by the United Nations Development Programme. It does not necesserily represent the views of the Third High Level Forum organizers.

To access detailed information on the background resources for Programmatic assistance listed below, please visit the UNDP Aid Effectiveness Portal.

Background Resources: Programmatic assistance

OECD DAC, "Harmonising donor practices for effective aid delivery: Vol. 2 – Budget support, sector-wide approaches and capacity development in public financial management", 2006
This is one of a series of good practice papers produced by the DAC to guide donors. It defines PBAs as having the following features: (a) leadership by the partner country; (b) a single comprehensive programme and budget framework; (c) a formalised process for donor co-ordination and harmonisation of donor procedures for reporting, budgeting, financial management and procurement; (d) efforts to increase the use of local systems for programme design and implementation, financial management, monitoring and evaluation. As well as increasing country ownership, PBAs are designed to increase the coherence between sectoral policy, spending and results, strengthen national capacity and reduce transaction costs, by anchoring assistance in an agreed, overall programme of action. It stresses that a PBA are not a particular aid modality, but an approach that can encompass projects, technical assistance or budget support.

OECD DAC, "2006 Survey on monitoring the Paris Declaration: Overview of the results", 2007
The survey revealed that PBA was one of the most problematic indicators to apply. The DAC itself understands the term as “fairly restrictive”, covering budget support, SWAps and “other arrangements in which there are equivalent efforts towards joint planning and harmonisation of procedures”. However, for the 2006 survey, many donors insisted on a looser definition. The survey revealed a baseline of 43%, but the real figure is likely to be substantially lower. On the whole, however, it found a strong trend towards the adoption of both budget support and SWAp-type arrangements, especially in the social sectors.

Marcus Cox, Samuel Wangwe, Hisaaki Mitsui and Tran Thi Hanh, "Independent Monitoring Report on implementation of the Hanoi Core Statement", Hanoi, November 2007
This recent independent monitoring of aid effectiveness in Vietnam argues that moving towards PBAs is a key strategic priority, not just for increasing donor harmonisation, but also for overcoming Vietnam’s legacy of scattered project aid and ensuring that donor assistance is as strategic as possible. PBAs provide a framework through which government and donors can agree on key priorities, and programme both national and ODA resources coherently to achieve them. However, effective PBAs need to evolve over time. Ministries need to develop the capacity to articulate clear priorities and preferred approaches, and to lead on aid management and capacity development. Effective alignment of donor assistance involves in parallel with greater sectoral capacity. The report also contains a discussion of the dilemmas that the PBA target can cause. Vietnam has set its own target of 75% PBAs. However, the government has also expressed a preference for more than half of its ODA to be provided for large infrastructure projects, which are traditionally delivered in project form. Donors and government are unclear as to whether they should broaden the definition of PBAs to cover well-aligned project aid, or to adjust the target downwards.

Agulhas, "How have programme-based approaches helped countries establish effective leadership over development assistance?", Paper for the 2006 Asian Regional Forum on Aid Effectiveness, September 2006
This paper is based on three case-studies of PBAs in Asia: Vietnam’s general budget support instrument (PRSC); an education SWAp in India and a sectoral budget support programme in social service delivery in Pakistan. It concludes that PBAs are potentially a very effective platform for increasing country leadership and policy alignment, by encouraging the partner country to lead on developing policies and frameworks to coordinate external assistance. It concludes that PBAs can be effective even in sectors where country leadership capacity is beginning from a low base, but may require a lengthy period of intense engagement to demonstrate results. Systems alignment within PBAs remains a difficult challenge, with many donors still imposing additional rules and procedures. The report notes that PBAs vary considerably in the extent to which they embody the Paris Declaration commitments, and that donors must use PBAs as a platform to continue to pursue greater aid effectiveness.

OECD DAC, "Harmonising donor practices for effective aid delivery: Vol. 2 – Budget support, sector-wide approaches and capacity development in public financial management", 2006
The DAC Guidelines contain a chapter on general and sectoral budget support. As well as facilitating macroeconomic stabilisation and providing resources for the implementation of national development strategies, it notes that budget support can reduce transaction costs, facilitate donor coordination and enhance the predictability of ODA flows. It can help partner countries improve the allocation of their development resources, while reinforcing accountability by underscoring the importance of the budget as a tool of government policy. However, there are also potential disadvantages for partners, including increased volatility in aid flows and (on occasion) excessive conditionality. It advises donors to refrain from any earmarking of budget support, and to draw their conditionality as far as possible from the partner’s own development strategies.  

IDA and Associates, "Evaluation of General Budget Support: Synthesis Report", May 2006
This evaluation was commissioned by a consortium of donors and partner countries, and involved 7 studies including Vietnam. It notes that budget support was intended to bring about a step-change in the nature of dialogue and conditionality, centred on the implementation of a national development strategy. However, this change has happened only gradually, and has been more significant in the eyes of donors than partner countries. It has contributed to the alignment of assistance with partner budget cycles, as well as (by definition) the use of country systems for aid delivery. It has also contributed to donor harmonisation, although budget support arrangements themselves are not always fully harmonised. The high-level dialogue and review mechanisms around budget support have proved to be a useful complement to sectoral processes. One of its most important effects has been to increase the level of discretionary funding available to partners, which in turn increases the importance of the planning and budgeting process. It has also provided an important boost to improving public financial management. It found that there had been an overall increase in spending in the social sectors as a result of budget support, but that it was too early to identify long-term development impacts.