The Committee on Development adopted the own-initiative report by Charles GOERENS (ALDE, LU) on the future of EU budget support to developing countries. It welcomes the Commission’s initiative through the Green Paper on budget support, which is aimed principally at promoting the development of partner countries, and calls for the numerous types of undesirable development and the wastage of money which have been noted in recent years in relation to budget support at the expense of European taxpayers and which in most cases did not result in any penalties, to be exposed and in future prevented by means of independent assessment and appropriate penalties (e.g. by means of a percentage deduction from future instalments).
Members point out that budget support must not be used to reinforce the EU’s particular economic and strategic interests, but to reach development objectives of and for developing countries, especially to eradicate poverty and hunger.
Risks of European budget support: the report draws attention to the innovative role played by the EU in the field of budget support and the added value which the Commission brings, owing to its expertise in this area. It notes that budget support can enhance not only the accountability of governments but also donor coordination through the necessary dialogue on budgetary issues. Members call on the Commission to make budget support its principal form of aid and to promote the setting of a collective EU target for budget support.
However, the dynamic approach adopted by the Commission and a majority of budget support providers entails a number of risks which must be duly taken into account; The committee calls on the Commission to carry out national assessments of the likely risks and benefits of budget support in partner countries, stressing the need to strengthen both the Commission’s monitoring mechanisms and parliamentary scrutiny and the provision of information to civil society in countries in receipt of budget support. Optimum procedures must be established for auditing the public finances of recipient countries as a precondition for any disbursement of funds.
Specifying the main indicators: Members recall that clearly defined, widely supported and closely monitored indicators are essential in order to demonstrate the concrete effects of budget support in third countries. The budgetary authorities should be updated regularly on the indicators and guidelines that shape the decision-making process in relation to budget support. These indicators must be better tailored to the specific needs of partner countries in order to avoid the ‘one size fits all’ approach taken by the Commission, which is potentially counterproductive.
Democratic scrutiny: the committee calls for budget support to be made contingent on democratic parliamentary scrutiny of the budget in recipient countries. It wants the broad participation of parliaments and consultation of civil society in partner countries, so as to ensure that decisions about the use of budget support funds can be taken democratically. Members also call on the Commission to ensure, before budget support is granted, that the aims of the intervention are part of the national programmes of the recipient country and that the principles of coordination, complementarity and coherence in relation to other donors are respected, as well as additionality to the resources allocated by the recipient country. They insist that national parliaments adopt Country Strategy Papers and the multiannual budget in consultation with civil society, prior to policy dialogue with donors on budget support, in order to empower parliamentary scrutiny and call for the development of EU-level independent evaluation systems and a complaints mechanism open to those affected by EU aid.
General aims of budget support: Members ask the Commission to supply a comprehensive financial analysis of general and sectoral budget support granted to local government and to consider whether part of budget support should be decentralised with a view to ensuring genuine ownership by local government stakeholders, as well as to assess the risks involved in doing so. They call on the EU to respect and promote genuine ownership of developing countries over their development strategy and to refrain from crowding out national policy-makers through policy dialogue surrounding budget support. Budget support should focus as a priority on the government departments that have the greatest impact on poverty reduction, in particular health and education ministries.
The committee also considers the budget support should also:
Predictability of budget support: Members calls on donor countries to coordinate budget support more effectively and make such support more predictable, and points out that they need to be willing to enter into long-term commitments with partner countries. They are concerned at the effects of macro-economic destabilisation and the impact on the most vulnerable sections of the population which a sudden break in budget support might cause. They propose that, on the basis of concerted action by donors and following consultation of the civil society and parliament of the partner country concerned, a mechanism be set up for the gradual reduction of budget support payments, which could attenuate such impacts, encourage political dialogue and enable concerted solutions to be found to the difficulties encountered. Members consider the predictability of aid flows to be one of the most important factors for ensuring the quality of spending, as it enables the partner countries to undertake long-term expenditure planning and to sustain improvements in sectoral policies.
Fight against corruption: the committee calls on the Commission to take all necessary measures in order to combat corruption in the recipient countries, including suspension of disbursements if necessary. In this context it calls on the Commission to maintain a close and regular dialogue with partner governments on corruption issues and pay sufficient attention to the capacity-building needs of particular recipient countries in terms of accountability and anti-corruption mechanisms.
Control and coordination: Members reiterate their previous calls on the Commission to move from control over inputs to the checking of results against indicators, by improving its reporting system so that it concentrates on the effectiveness of the programmes. They call on the Commission and Member States to create a public register in which budget support agreements, procedures and development indicators are transparently listed, with a view to reinforcing the domestic democratic institutions and to ensuring mutual accountability. Member States are asked to make use of the European External Action Service to strengthen their coordination with the Commission as regards budget support so as to avoid duplication and inconsistency.
Delegated acts: since the use of budget support is an important strategic decision in the Union’s relation with its partner countries, Members consider that Article 290 TFEU (delegated acts) must apply to the definition of the eligibility criteria for this aid modality, giving the Council and Parliament, as co-legislators, full co-decision powers over its adoption, including – if necessary – the right of revocation of the delegated act.