Mariana Durlesteanu: Aid effectiveness and development results:  what needs to change and how can the international aid system deliver >>>

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8 September, 2008 - 03:00

Mariana Durlesteanu:

Aid effectiveness and development results:  what needs to change and how can the international aid system deliver?

Introductory statement

Distinguished audience,

Ladies and Gentlemen,

On behalf of the Government of Moldova, let me express my gratitude for the invitation to the 3RD HIGH LEVEL FORUM ON AID EFFECTIVENESS hosted by the Government of Ghana. It is an honor for me to represent my country at such an important Forum and to have the opportunity to address the audience on issues that are so closed to my heart.

At the very beginning, I would like to underscore that, in my opinion, the recent efforts undertaken at the international level aimed at bringing the issue of aid effectiveness high on the agenda have proved to be helpful: in the case of Moldova, together with our development partners, we have made good progress towards improving ownership, strengthening the institutional capacity for aid coordination, improving the national systems (particularly the financial system).

In my view, achieving greater “aid effectiveness and development results” is about everything: increased ownership, better alignment of aid to national priorities and use of national systems, improved monitoring and evaluation, better coordination of donor programs, and increased transparency of external funds. And, if you allow me, I will go one by one.

As I have already mentioned, we have made good progress towards improving ownership. However, the credit for this goes to the Government. And I am saying this because the real achievements refer to the fact that we finally have national priorities. After a long process, which included the development of the first PRSP and of the subsequent National Development Strategy, we have clear and limited development objectives which are reasonably coordinated with the available financial resources and are shared by the majority of stakeholders. And I would like to acknowledge that this was achieved with the support of several donors.

At the same time, in the process of prioritizing among objectives, we have faced significant pressure on behalf of other donors. So, on one hand, we are taught to have fewer priorities and realistic documents, and, on the other hand, every single donor organization wants to see its area of expertise as a separate priority in our documents. This means that, in addition to the internal fights, which we need to have to temper the appetite of all our national stakeholders, we also need to spend a lot of time and energy to convince some donors that we can not do everything in four years.

On the issue of alignmentofaid to the national priorities, the progress has been mixed. For instance, reaching a consensus on national priorities does not necessarily mean that all project proposals coming from our development partners fit these priorities. At a glance everything looks nice - all projects show poverty reduction as the main outcome now. However, when reading specific activities sometimes it is really difficult to find the link with the general outcome or any other priority defined in our development documents. At one stage or another, some donors continue to insist on some issues regardless of the general view of the national stakeholders (here I do not mean only the Government). And, I can say from experience, it is very difficult to impede a proposed project from happening. When we try to tell donors that we do not need this kind of assistance, they will make a lot of noise saying to other donors or to the press that the Government refuses the assistance aimed at poverty reduction.

With respect to the Moldovan Government’s efforts, I would like to mention that we are undertaking a comprehensive public finance management reform and have initiated the reform of internal public audit. Also, to ensure a better coordination between the external assistance projects and the need of support to implement reforms we have recently combined the functions of policy coordination with external aid coordination by establishing a single division in the Government Office. We have made some initial attempts to increase the use of the national systems and institutions within the World Bank financed projects. The successful reform of the treasury system has convinced the World Bank to give up on opening special accounts in commercial banks using instead treasury accounts. Also, within the World Bank supported projects we are allowed to use the national procurement rules for procurements of limited amount. At the same time, other donors, with much smaller projects, have no trust at all in our systems.

In the Paris Declaration we have all agreed that increasing the use of national systems is an important component of the recipe for improving aid effectiveness. However, for this to happen, donor institutions (especially multilaterals) need to change their internal policies/motivation: as long as some of them continue to live on money earned from providing project implementation services, the adoption of national systems will continue to remain an unrealistic goal, since they will always argue that the national systems are poor. On the other hand, if external assistance will continue to remain very fragmented and we will need to use various implementing systems, increasing ownership will remain unattainable.

Also, donors should agree on using the same tools for assessing the national systems. For instance, PEFA assessment is an instrument for evaluating public finance management policies accepted and used by the IFIs, while other donors come with alternative evaluations and often with different results. In general, increasing ownership in the absence of real harmonization will only lead to higher burden on the shoulders of government institutions. And in this case we will be forced to do a very rigorous cost-benefit analysis and deicide what projects are worth having and what not.

The next issue which is of high importance is how we measure the effectiveness of aid. Very often it happens that the results of individual evaluations by donor program are sparkling, while the evaluations at the national level in the same areas show very little results (for instance, in Moldova, there is a big discrepancy between donor reported results in agriculture projects and the development of the sector in general). That is why we believe that we should have joint evaluations, with the results of externally financed projects reported to the results obtained at the national level.

At the same time, we think that M&E systems should be kept simple and affordable. Sophisticated monitoring and evaluation mechanisms are becoming a fashion these days among donors and they want us to move from very poor M&E tools to systems that can be absorbed only by highly developed countries, well staffed with high level professionals. It is not clear if these organizations themselves are capable of applying correctly these mechanisms. Moreover, each institution continues to work on its own system and wants the Government to do the M&E of their programs according to their internal rules and guidelines. Again, unless these mechanisms are harmonized, the Government will not be able to play a meaningful role. I think governments should be supported in developing simple M&E systems which can be used both for projects undertaken with external and internal resources.

With respect to the coordination of external assistance, historically, in Moldova we had several institutions involved in this activity. Few yeas ago, the Government has decided to centralize and raise the status of this function by creating a special division in the Government Office (now also responsible for policy coordination) and establishing a special Committee in charge with external aid coordination headed by the Prime Minister. This has helped to improve coordination inside the Government; however, we are still far from having good coordination of external aid. There are still cases of projects financed by different donors working in the same areas and addressing the same issues.

Another problem that we are facing is the large number of uncoordinated missions by donor institutions. This is a big problem not only for the Government leadership, but also for the independent local consultants, who complain that they have to spend a lot of time in meetings without any motivation. It is not very clear why the same institutions keep sending missions in many cases asking the same questions, and not using their institutional memory.

Another issue which deserves serious attention is the need to increase the transparency of externally financed projects. Sometimes even the Government does not have data on projects implemented by donors, not talking about the rest of stakeholders. To improve transparency and to increase the participation of the civil society in the decision making process, the Moldovan Government has recently initiated the creation of a Participatory Committee which will include representatives of all stakeholders and which will, among other things, discuss and make recommendations to the Government regarding the approval of project proposals to be undertaken with external support. 

I would also like to briefly mention the quality of assistance. I believe that the lack of clear delimitation of mandates between multilateral organizations sometimes leads to poor quality of assistance. Again, in their desire to mobilize more money, some organizations deviate from their original mandates and, thus, from their comparative advantages. This also leads to duplication of efforts and inefficient use of resources.

In the end, I would like to reiterate that although Moldova has made good progress in the last years towards meeting its development objectives (we have stable growth indicators, managed to significantly reduce poverty), external assistance is still very important for us (6% of GNP) and we are determined to make the best use of it. I think the Paris Declaration formulates good objectives and if we take them seriously we should get good results.

Finally, let’s start with simple things, avoid overcomplicating procedures, and take the commitments as they are and not try to accommodate them to make them convenient to one institution or another. Moldova is highly committed to the Paris Declaration agenda and we hope to see the same attitude and approach on behalf of the entire donor community. We expect this Forum to come up with concrete and monitorable actions which will advance the implementation of Paris Declaration agenda.

Thank you very much for your attention and looking forward to a frank and fruitful discussion!