Integrating aid into budget management

This paper discusses how traditional donor practices can cause problems for budget planning and management in aid dependent countries. It discusses recent attempts to reform the budget process, and the donor role in it. Based on this discussion, it concludes with some suggestions for a ‘Code of Good Practice’ for donors.<B>Code of good donor practice</B>respect Government leadership in defining national and sectoral policies, through a locally managed process of consensus buildingensure that donor funded technical assistance is driven by Government priorities, reports to Government managers, focuses on facilitation and capacity building, and supports priority public sector functions rather than individual donor projects or programmesconduct aid negotiations with the central budget authorities. Where a MTBF has been defined, donors should ensure it is fully financed before considering other proposals. Where no MTBF exists, or there is no financing gap, donors should ensure that Ministry of Finance are content that financing proposals fit within their budget priorities, and that counterpart and recurrent cost implications can be absorbed. Wherever possible, donors should make firm longer-term commitmentsensure that donor support is consistent with Government policies, and is nationally replicable and sustainable given likely future resources. This does not rule out donor involvement in pilot programmes to test alternatives to current policies, but does impose a duty on donors to ensure that pilots are based on service standards which are nationally affordableprovide Government with full and timely information on donor intentions and actual delivery, including a full breakdown of budgeted and actual spending, covering direct donor expenditure including TC in addition to funds disbursed to the Governmentwork with the existing Government structures and systems, helping to reform them where possible. Avoid creating competing structures or systems. Work with Government and other donors towards a situation where capacity and confidence is sufficient for all donors to rely on Government’s own procedures for planning, appraisal., implementation, disbursement, accounting, monitoring, audit and evaluationwhere Government priorities are shared and management is reasonable, minimise earmarking, providing general budget support to ease the management burden in responding to local needswork collaboratively with other stakeholders, with joint decision-making as far as possible, but with a clear process for resolving disagreements or failure of either side to implement what has been agreedGovernment regulations on remuneration and allowances should be strictly observed[Author]