Key elements of BS
Assessing the eligibility to be granted a budget support is not rigidly blueprinted or specified, though there are seven key elements (conditions) that should be met in case of SBS application.
1) Sector development strategy or program, specifying what government aims to achieve in the sector and how – distinguishing government’s regulatory role from its service delivery role, specifying the roles of nongovernment agents and outlining any necessary institutional reforms. The policy/strategy can usefully be set out in annual or more detailed action plans where priority activities are agreed.
2) State sector budget and its medium term perspective; the annual sector budget should increasingly reflect sector priorities and strategies. The sector approach works towards policy based budgeting, embracing all resources for the sector, with realistic medium-term sector expenditure plans, which, ideally, will form part of a coherent national approach to medium-term expenditure planning.
3) Efficient donor and sector coordination framework, under the government’s leadership comprising i) coordination of national stakeholders including governmental (central agencies and other concerned ministries and agencies) and non-governmental actors; ii) coordination with and among donors to provide the better planning of external aid to develop a certain sector.
4) Institutional setting and existing capacities. This item is closely linked to a pro-active capacity development strategy led by the government. Concern for government capacity has always been one of the driving forces behind sector approaches for external aid. The sector development strategy provides for a relevant capacity building plan to ensure its proper implementation.
5) Strategy/ program performance assessment/monitoring system with a focus on results planned and actually achieved and frequently involves a sectoral strategy/ program performance assessment framework (PAF) consisting of a set of input, output, outcome and possibly impact indicators. The evolution of the PAF is periodically monitored to assess progress towards the achievement of the sector’s strategy implementation objectives.
6) Stable and predicted macroeconomic policy which provides a stable environment for the sector, along with predictable resource levels for its development.
7) Efficient public finance management. A good PFM system ensures that policy priorities should be reflected in the budget allocations, promoted transparency of budget procedures and efficiency of price/quality relation at the domestic market and in state expenditure as well as guarantees a clear budget discipline.
It is worth mentioning that two last elements are largely common to all sectors and to the state on the whole, while elements 1 to 5 should be reviewed for each sector separately.