Select Committee on International Development Minutes of Evidence


Further supplementary memorandum submitted by the Department for International Development

DFID FOLLOW UP RESPONSE TO THE INTERNATIONAL DEVELOPMENT COMMITTEE INQUIRY OF 18 JUNE 2002

DFID DEPARTMENTAL REPORT 2002

ISSUE 8:  DIRECT BUDGET SUPPORT

Question:  (i) What evidence is there to show that further benefits can be gained from extending budget support from individual spending departments (for example, education in Ghana) to simply giving the support to the Finance Ministry of the country concerned?

Answer:

  1.  Provision of budget support direct to the Finance Ministry is preferable to provision directly to an individual spending department where a government is committed to poverty reduction, and where it allocates and spends resources effectively in line with this commitment. This is because it:

    —  Avoids undermining the integrity of the budget caused by resources being provided to individual spending departments that are not reflected in the budget.

    —  Helps to strengthen ownership of donor supported programmes by the government as a whole by increasing the responsibility of the key central ministries.

    —  Helps to increase the accountability of spending departments to Government and Parliament.

    —  Increases the pressure for improvements to central government financial management and accountability systems as greater reliance is placed on them.

    —  And as long as resources are transferred from the Finance Ministry to spending departments in a timely manner the same benefits should be achieved at the sectoral level as if the funds were provided directly.

  2.  DFID has been supporting improvements in education in a number of countries by providing budget support directly to Finance Ministries rather than to spending departments (eg in Rwanda, Tanzania and Uganda). In Uganda, the number of pupils in primary school tripled between 1990 and 1998—and more than doubled between 1996 and 1998—leading to large increases in the gross primary enrolment rate and the primary completion rate. During the same period, the number of pupils in primary school in Rwanda and Tanzania both increased by 20 per cent. This led to large increases in gross and net enrolment rates in Rwanda. However, due to the greater growth in the school age population, gross and net primary school enrolment (ie the percentage of pupils going to school) in Tanzania declined over this period, although the proportion of children completing school increased.

  3.  If a donor wishes to link its budget support to a particular sector, it should be channelled through the Finance Ministry but notionally earmarked to that sector, as DFID has done in the case of education in, for example, Uganda.

ISSUE 11:  AID TO SINGAPORE AND BRUNEI

Question:  Reasons for bilateral aid to Singapore and Brunei?

Answer:

  4.  The £5,000 expenditure for Brunei noted in Table 9 of the Departmental Report represents the cost of certain pensions and related payments where the UK has taken over responsibilities from the government. The same also applies to £79,000 of the £150,00 expenditure recorded for Singapore. These pensions are declining.

  5.  The remaining £71,000 for Singapore relates to scholarships financed under the Commonwealth Scholarship and Fellowship Plan. This centrally funded DFID programme mainly supports postgraduate students from developing Commonwealth countries to undertake study and research in the UK. It has been agreed that from financial year 2003-04, the Foreign and Commonwealth Office will assume responsibility for funding all new awards for Singapore and Brunei (which is also eligible to receive support under the Plan). DFID will fund existing awards with expenditure expected to finish in financial year 2004-05. DFID will not fund new scholarships for students from high income members of the Commonwealth.

Department for International Development

24 July 2002


 
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