17 August 2010

DfID drops PD

The Aid Thoughts blog posted this yesterday:
A leaked memo reveals that DfID will be dropping its commitment to the Paris Declaration on Aid Effectiveness.
This is a massive blow. The PD (as it’s known)  is very imperfect, and even the refinements we made in Accra in 2008 left plenty to be desired. But it’s the only real commitment the international community has made to improving donor systems for the management of aid – to making it easier to use, receive, negotiate. What’s worse, it’s one of the few places where recipient Governments are tied down to improvements in the way they themselves manage aid and their domestic resources.
Being newer to the game, I know nothing about the PD.  So I will use the thoughts of others being that they are much more knowledgeable on this than I. An excerpt from the follow up Aid Thoughts post that I have heavily edited to reduce space:
[DfID] has not abandoned the impulse towards better, more effective aid. As I’ve pointed out above, the PD does not directly address or measure the effectiveness of aid. Thus, even without the PD, DfID is quite capable of pursuing the effectiveness of its aid portfolio.
DfID has also not abandoned any hope of coordination with other donors nor of making aid easier to manage. These can be addressed from without the framework the Paris and Accra agreements provide. Ideas like the marketization of aid are not covered in the PD.
DfID’s decision will cause itself a problem in its dealings with developing country Governments and will also hamper developing country Government efforts to get the most out of aid.
Governments which rescind their backing to reform opaque budgeting and auditing systems can now point to DfID’s example and say they remain committed to ideals but no longer wish to tie themselves down on targets, deadlines or specific changes.
When local Governments show reluctance to improve their accounting or withdraw support for an independent Auditor General, DfID’s protests are now likely to be met by a response of: ‘What do you care how systems are reformed? Renew your commitment to using them before you start to tell us how to manage them.’
DfID will also lose the ability to make legitimate threats or remind recipient Governments of their requirements under the PD. The PD actually makes it explicit that the amount of aid that the donor is required to funnel through a Government depends on how good their public financial management systems are, as independently assessed. This carrot and stick are now removed from DfID’s armoury.
The reversal of DfID’s support to the PD has two major consequences. Firstly, it provides other donors with an ‘out’, particularly those donors who find it difficult to meet PD targets due to their own institutional strictures. Secondly, it removes a front-runner from the pack, leaving the rest with less of a catch-up distance when the PD is assessed.
Of course, one donor defecting from the agreement hasn’t at a stroke reduced it to a mess. But it sets a bad precedent and removes on of the strongest proponents of it.
Reform of aid and developing country processes is painful, slow and difficult. We don’t really need anything to make it more so.
Be sure to follow the Aid Thoughts blog and others that I have listed on the left-hand side to look out for new posts related to DfID and the PD.