Georgia signs the Paris Declaration on Aid Effectiveness
In April Georgia became the 135th country to officially adhere to the Paris Declaration on Aid Effectiveness (PD) and the Accra Agenda for Action (AAA), initiatives launched in 2005 and 2008 to address some of the burning criticisms of inefficiency and ineffectiveness in the global aid industry. Minister of Finance Kakha Baindurashvili announced the government’s intentions to adhere to the PD at a National Donor Coordination Conference jointly hosted with the European Union delegation in December of last year.
Both donors and country recipients of aid are signatories to the Paris Declaration, including most bilateral donors (e.g. the European Commission, the U.S. government and the majority of EU member states), as well as many international financial institutions (e.g. the World Bank and Asian Development Bank). With the Georgian government’s recent adherence, every major actor involved in the aid industry in Georgia is now a party to the declaration.
Now that everyone is signed up, we wanted to understand what this means in practical terms. Will it affect the architecture of aid to Georgia and, if so, how? We find that, while the answer is unclear, the move towards a standard set of principles is a positive step that can enable meaningful change.
The PD is based on five core principles. In Georgia, these mean the following things:
- Country ownership: Donors should respect Georgia’s leadership in development and financial management and, if/when it lacks the capacity to lead, donors should take steps help it do so rather then working outside of country structures.
- Alignment: Donors should base their strategies on Georgia’s plans, such as the Basic Data and Directions and oher strategic documents mentioned below.
- Harmonization: Donors should avoid duplication with the work of other donors and work collectively.
- Managing for results: Donors and the Georgian government share equal responsibility to report on the results of their work in a meaningful way.
- Mutual accountability: Donors and the Georgian government share equal responsibility for the results of aid. In particular, the Georgian government must take an active leadership role in the forth principle, “managing for results”, rather than leaving it up to donors only.
Foreign aid plays a prominent role in Georgia’s annual budget. More than USD 1.5 billion (approximately GEL 2.1 billion) were delivered annually by donors between 2009-11 on the basis of pledges totaling USD 4.5 billion for post-war recovery, and the Ministry of Finance estimates that more than this amount were actually delivered. The state’s annual budget in each of those years was 6.75, 6.97 and 7.35 billion GEL, respectively. While it is complicated to estimate the share of aid in the country’s overall budget, it is safe to say that international donors play an important role in Georgia’s annual expenditures. The reliability of aid flows -- one area that the PD attempts to improve upon -- is therefore an important element of the government’s budgetary planning processes.
Complaints of weak aid coordination and ineffective aid have surfaced in relation to a number of sectors in Georgia. In its June 2011 report on implementation of the European Neighborhood Policy Action Plan, the EU noted that “The government should play a stronger role in donor coordination in the future.” The head of the EU delegation made similar remarks in a speech in early December. A 2010 report by FRIDE, a European think tank, concluded that “the complexity of democracy promotion in Georgia has led to weak coordination and cooperation among donors.” It criticized donors for changing priorities too quickly, failing to effectively prioritize sectors when need is great in many areas, overlapping and lacking longer-term strategies, and being too hesitant to push for greater democratic reform. Another report released this month by the World Association of Newspapers and News Publishers warned that in the field of media assistance, “some elements of the international aid agenda can prove counter-productive.” While we certainly can’t conclude that all aid to Georgia is poorly coordinated, reports such as these highlight the importance of the Paris Declaration principles.
There are a number of development strategies that can guide donor investments across all sectors in Georgia. The 2008 Joint Needs Assessment (JNA) became a de facto guide to coordination, but it is long outdated and, even when fresh, only addressed immediate post-war reconstruction needs. And while the JNA was the basis for the Ministry of Finance’s improved efforts to track and publish information about incoming aid, a full version of the document was never made public and is today largely irrelevant as a guide to donors. Another document that sometimes serves as an aid coordination mechanism in Georgia is the Basic Data and Directions (BDD), published each year alongside the state budget and outlining the government’s spending/policy priorities for the next four-year period. In a particular sector, more detailed strategies and action plans can serve as further guides. For example, in assistance to internally displaced persons or for criminal justice reform. The quality and relevance of these tend to vary by sector.
While some aid recipient countries have developed action plans to implement Paris Declaration commitments, the practice is not a requirement and is likely a donor-imposed condition on further aid disbursements. No recipient countries in the Middle East, Eastern Europe or Central Asia have developed action plans. Nor are there any notable consequences if a country fails to uphold the principles.
Many donor signatories themselves find it difficult to meet the full PD requirements. For example, a 2011 assessment of USAID’s adherence with the PD found that while there were numerous ongoing efforts to meet the obligations, in many cases there were “doubts about the applicability of PD principles, especially to some of the countries in which USAID works. [Staff] question both the ability and (in some cases) the willingness of host governments to assume the counterpart roles expected of them.”
According the OECD, which coordinates the PD, implementation of the principles is largely dependent on recipient countries’ own capabilities. In short, there is no requirement to make changes and no downsides if the principles are not met. The only obligation we could discern is that signatories must undergo a review of their compliance, which is conducted every 3-4 years.
The PD commitments are thus largely implemented on a voluntary basis and frequently not met in full, but they do provide a strong framework for donors and countries wishing to improve the results of aid. We think that is an excellent reason for the Georgian government to take steps to meet the commitments. In particular, the Georgian government should focus on the last two principles, "managing for results" and "mutual accountability".