Aid Modalities ~ Annex 1 | Table 2

NATIONAL POVERTY REDUCTION SUPPORT

Untagged budget support to a bilateral partner government to support macro-economic and social policies. Usually associated with a development policy dialogue.

Aid modality characteristics

General

· National in scope

· Aid provided to support partner govt’s development policies and programme

· Large-scale untagged funding

· Maximise use of partner government management and financial systems

· Usually includes support for capacity development in partner govt

Relationships and governance

· Should be underpinned by an arrangement with the partner government which provides clarity on the nature of the cooperation, the undertakings of each government and how it will be governed and monitored. This may be incorporated into an Economic/Budget Support Arrangement or pursued separately as a higher level arrangement.

· Ownership rests strongly with the partner government

· NZAID engages in a high level development policy/performance dialogue, preferably as a government-led multi-donor process.

Design and accountabilities

· Partner leads development of credible policy

· A credible national plan / poverty reduction strategy is central

· Design is effectively the partner government policy directions and implementation system

· Funding is provided directly into the partner government accounts

· Use Partner systems for implementation

· Use partner government’s performance framework

Advantages

Risk

· Supports partner government’s own policy and programmes

· Maximises alignment with and use of partner govt systems and avoids parallel implementation or structures

· Can provide for strong donor harmonization and focus engagement on higher order policy and outcomes

· NZAID is exposed to all the risk present within the partner govt’s policy, politics, and management and accountability systems

· Can be difficult to attribute results to NZAID’s contribution

· Can diminish NZAID connection to what is happening at the grassroots

When to use:

Where partner government has sound policy and programmes but lacks resources

· Partner govt is committed to a credible national development strategy that addresses poverty and aligns with NZAID development policies and risk of major government policy change not high

· Partner govt budget constraints directly impact on its ability to implement its poverty reduction strategy and provide services

· Where key stakeholders have been identified and engaged from the beginning

Where partner can use and account for the money well

· Partner govt has adequate levels of macro-economic management in place or being established, and public finance management and accountability systems have been assessed (such as via a PEFA), a credible public finance management improvement plan in place, supported by technical assistance as necessary

· A high level results-based monitoring framework in place or being developed

Where NZAID is well placed to support the modality

· A mature relationship and the partner government is open to NZ high level support

· NZAID has assessed and has the capacity to resource adequate engagement with partner government commensurate with high level support