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Budget support

Undermining democratic control

by Peter Hauff

In brief

Budget support makes sense for long-term tasks: Orphans in Dzodze, Ghana

Budget support makes sense for long-term tasks: Orphans in Dzodze, Ghana

Direct budget support programmes provide long-term finance for costly development projects. However, a study on EU budget support in Bur­kina Faso, Ghana and the Dominican Republic contends that it system­atically undermines the authority of parliaments.

The development policy of the European Union, with its emphasis on budget support, has a tough time in Berlin, where politicians are keenly critical of its inefficiency and poor cost control. German voices are not the only ones raised in opposition to the EU policy among its 27 member states. Hence the European Commission plans to launch a public consultation in 2011 that will bring donors and representatives of recipient countries to one table. A Green Book has been announced to serve as a basis for such talks. It will have to bear comparison with a study by the Siegburg-based Südwind Institute. The European Parliament’s Committee on Development (DEVE) distributed the booklet.

The title is ”Monitoring Budget Support in Developing Countries”. The study examines the effectiveness of recipient countries’ control mechanisms for overseeing budget support. The EU Commission has been providing such support for around 10 years, mainly to former colonies of EU members in Africa, the Caribbean and the Pacific (ACP countries). The big advantage of subsidising national budgets or the budgets of line ministries is that this approach enhances the partner government’s capacity to act and is in line with its procedures.

Nonetheless, critics express doubts. The principal criticism levelled by Svea Koch and Pedro Morazan of the Südwind Institute concerns the neglect of democratic accountability. “Putting aid on budgets is an important first step,“ the Siegburg researchers write, “however, it does not automatically improve the budget-oversight role of parliaments.”

Members of African parliaments tend to be the last to learn of the purpose and extent of foreign budget support, if they do so at all. The authors point out that donors only provide incomplete budget support if they fail to involve MPs. Because of its own guidelines, the EU confines itself to checking technical criteria with no regard for democratic control in the developing countries.

Few MPs in Accra, Ouagadougou or Santo Domingo ever considered themselves guardians of the national budget – and budget support has not done anything to change matters. Presidential systems and the political dominance of the executive constrain parliamentary monitoring, the researchers argue. Moreover, MPs do not have much assistance. “My office is the back of my car,” is how one Ghanaian MP described his symptomatic situation.

The EU Commission grants support to some countries with weak financial governance. However, the Commission is only in contact with the relevant executive bodies. Therefore, the core policy of all three governments that are assessed in the study is to make sure the money keeps flowing – regardless of how it is subsequently used. Budget support thus mostly strengthens the ministries supported, conclude the researchers.

Audit institutions are also strengthened, they admit, but point out that these bodies are not independent, which is a “significant problem” in all of the three countries studied. Budget support in practice, the authors bemoan, does not take account of the important role civil society should play in budgetary oversight.

Incidentally, two years ago Germany’s Federal Audit Office also demanded more democratic control – by the Bundestag, the lower house of the German parliament. The auditors’ main complaint was about Germany’s allocation of budget support: whether money flows depends on how the Federal Development Ministry (BMZ) assesses a partner country’s willingness to implement reform, which undermines the oversight by the Bundestag. (Peter Hauff)