- Enhancing aid predictability remains one of the central challenges of the aid effectiveness agenda, IMF has sent out a strong message ahead of the Accra meeting, which starts next week.
"Developing countries need firm and reliable commitments of available financing over the medium term to do their own planning and to link development strategies with budgetary frameworks and ensure aid money is used effectively," said IMF's Elliott Harris of the Policy Development and Review Department, who has been the fund's focal point in preparatory process for Accra.
"It is an opportunity to deepen implementation of the Paris Declaration by establishing an action-oriented agenda," he also added.
IMF explains that for effectiveness of aid, clear indications of amount of resources likely to be available enable recipient governments to identify gaps, establish realistic performance objectives, and ultimately move towards achieving measurable development results.
However, the body also adds that donors, too, need clarity about how their aid will be used. "When recipient countries have a consistent track record of implementing clearly identified development policies and programs, donors have the confidence that their partner countries will continue implementation over the longer term, and will further strengthen and improve their systems for managing all public resources effectively," said IMF.
The body believes that lack of predictability prevents effective planning and implementation of development programs, further saying, in aid-dependent countries, it often obstructs consistent implementation of appropriate macroeconomic policies and the effective management of the macroeconomic impact of aid.
It continued that when aid commitments are unclear, or not made in time, governments cannot budget effectively. "When actual donor financing falls short of commitments, recipient governments cannot honor their own spending commitments without incurring domestic or external debt, both of which have adverse effects on their macroeconomic performance," added IMF.
The fund has also through a number of studies and surveys found out that many factors impede predictable aid, pointing that in most donor countries, aid budgets are appropriated annually, making it difficult to pledge support formally over the medium term.
IMF further suggests that aid allocation criteria are sometimes not well defined and vary over time, and donor agencies are increasingly required to demonstrate how past aid has been used before making longer-term commitments for the future, thereby making is difficult to provide predictable commitments.
Looking ahead, IMF believes there are many ways that can be employed to enhance predictability, giving as an example, where donors can make indicative commitments that are adequate for planning purposes. "Effective support for building the capacity of partner country institutions and systems can enhance the transparent and effective use of public resources," IMF added.
It continued that greater capacity can also improve the overall management of aid, generating longer-term aid commitments and helping prevent slippages that disrupt disbursements. "Moreover, donor conditionality that is based on the principles of simplicity, criticality, feasibility, and parsimony can be formulated to support country ownership and program alignment with partner country priorities, thus minimizing its contribution to a lack of predictability," IMF advised.
As observed by IMF, Accra meeting comes at a crucial moment, just past midpoint to 2010 target date set by the Paris Declaration on Aid Effectiveness, and halfway toward 2015 deadline for reaching the Millennium Development Goals (MDGs) set by United Nations.
Besides reviewing advances in, and assessing obstacles, the meeting next week aims to broaden aid effectiveness dialogue to newer actors and chart a course for strengthening aid effort.
IMF like other players have however concluded that progress will not come easily, saying the past three years have shown how difficult it is to bring about all necessary changes to the processes, preferences, and priorities that have governed actions of donors and recipient countries for decades.
The 2-4 September event, which carries forward Paris Declaration also aims to see commitments made by Paris Club of nations being carried further in helping poor nations, mostly in sub-Saharan Africa, reach set targets and development goals.
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