A new year, a new donor budget and the fallacy of additional resources

Donor budgets are annual and modular. The legislation ruling these budgets covers normally all expenditures in all departments. This means expectations on donor flexibility are often unrealistic. While the role of parliaments in poor countries might be taken into account, often the role of donor legislation, parliaments in the donor countries and the limited importance of development in donor country political priority setting are often forgotten.

A budget in most countries is annual. This means a budget starting in January is normally proposed by the desk officer in March, April, balanced for priorities within the hierarchy and government and finally discussed, amended and approved by the parliament around November. The actual calendar depends on the donor. From that moment on, the allocation for departments, programmes, budget lines and even individual allocations is fixed for the rest of the year. Changes are still possible. However, the procedures can be difficult. In most countries, the legislation supports limiting expenditure and makes additional expenditure difficult. At the higher levels, there is a need to go back to the parliament, at the intermediate level, it might be necessary to go to the Chancellor of the Exchequer. At the lower levels, changes might be allowed within the department or even at the level of the desk officer.

Lessons learned:

  1. On the cabinet level, a government decides on the broad strokes. So the only cabinet level decision might be on the total Official Development Assistance budget for the year (allocation is annual, spending might be multi-annual). Within this budget, it is mostly the preserve of the Minister for development coöperation to make allocations.
  2. As most governments don’t allow the printing of money, additional funding for a development issue normally means savings within the same department. “Additional funding” for development is only possible if there is a disaster or other major event that convinces the parliament and the public to change its priorities, by reallocating e.g. national health service budget to disaster relief. There might be a constituency of potential health service clients who would oppose this move. International conferences, resolutions or best practices normally don’t qualify for getting this treatment. Real additional funding would e.g. mean that a government moves its benchmark for development spending up (e.g. from 0.7 % to 0.75 %).
  3. For all practical purposes, “Additional funding” for one development item, like climate change adaptation means to diminish the funding for less sexy development priorities, like primary education, health systems or democratic governance between elections. The call for additional funding is a call to diminish the funding for other development issues. The choices for savings are seldom explicit. How many people should we stop feeding to increase the funding for coördination?
  4. Who pays the piper calls it tune: If it is not on the budget, it is not important. If an item is recognized as a budget line or a programme in the official budget, it is ingrained in the DNA of the donor. Continuity is near guaranteed, even over the years. If there is only an agreement signed to give the item top priority, but there is no dedicated budget, allocation of scarce funding will be difficult. It will depend on the priority the desk officer can impose on his minister for actually paying up. However, being buried in the budget on a lower level might be useful to stay under the radar, e.g. when supporting innovative interventions with low political backing and public appeal.
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