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Putting aid on budget: A case study of Mozambique

Alex Warren-Rodríguez

Mokoro Ltd

24 September 2007

SARPN acknowledges the CABRI website as the source of this report: www.africa-sbo.org/cabri/index.php?page=4th_Annual_Seminar
Readers can access the full set of papers presented at the November 2007 CABRI conference, as well as the country background papers, on the CABRI website.
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Introduction

  1. Coinciding with the signature of the Paris Declaration on Aid Effectiveness (OECD, 2005b), donor countries and aid recipient governments in the developing world have been working in recent years to bring official development assistance (ODA) to these governments on budget. That is, to channel, to the extent possible, ODA through existing planning, budgeting and public financial management systems, with the aim of aligning aid with country-led programmes, strengthening local government systems and, ultimately, increasing aid effectiveness in these countries.


  2. In this context, this paper presents a case study of efforts undertaken in Mozambique in recent years to put aid on budget. The purpose of this exercise, as stated in the terms of reference to this study, is to produce lessons that can be useful for other countries in Sub-Saharan Africa, in terms of allowing them to lead country-level processes that ensure that external development assistance is properly reflected in national budget documents, both ex ante (e.g. in the budget presented to parliament) and ex post (e.g. out-turn accounts) terms. To this end, this case study provides evidence of trends and recent efforts to put aid on budget in Mozambique and tries to identify factors positively driving this process, as well as those hindering it. It also derives some recommendations on how donors and government can continue in their efforts to improve aid capture on budget in Mozambique.


  3. With these aims in mind, the paper is organised into three main sections. It starts, in section 2, by presenting the general case of Mozambique. To this end, it briefly outlines the main traits of the Mozambican political and government systems. This is followed by an analysis of the current Mozambican aid context, examining recent aid flows to this country, its breakdown by donor/country of origin, aid modalities used, and the relative importance of these aid flows, both in terms of their weight on the local economy as well as in relation to Mozambique’ aids position vis-à-vis other important aid recipients. This section also includes a presentation of the Mozambican institutional framework for planning and budget formulation and the main elements of its public financial management system. This later part of Section 2 also provides a short description of recent developments in this sphere as well as remaining constraints faced by the government to bring aid on budget. Finally, a brief note is made on the main institutional elements for aid management that exist in Mozambique.


  4. Having presented the general case of Mozambique, Section 3 moves on to provide evidence of initiatives by the Mozambican government and donor agencies operating in Mozambique to put aid on budget in its different dimensions. This exercise follows the methodology described in the inception report to this study (Mokoro, 2007), which distinguishes between seven different dimensions of aid capture in national budget documents: aid (i) on plan, (ii) on budget; (iii) on parliament (or ‘through budget’); (iv) on treasury; (v) on accounting; (vi) on audit and (vii) on report. Whenever possible, this section examines the quality of aid capture in each of these spheres and discusses plausible factors driving or hindering donor and government efforts in this sphere. It also examines in greater detail some specific events that have had a critical impact in shaping patterns of aid capture on budget in Mozambique, to further illustrate factors underlying these dynamics.


  5. Finally the paper concludes with a third wrap-up section reflecting on key findings identified throughout this case study of Mozambique providing some concluding comments. It does this in terms of identifying key factors facilitating and constraining efforts to put aid on budget as identified in Section 2, suggesting areas for further analysis and work in this sphere, and deriving some lessons that can be used by government in other developing countries.




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