EU reviews budgetary support to region

The European Union (EU) is reviewing whether budgetary support to the Caribbean and other developing countries, according to an official statement issued in Guyana.

"Budget support is, however, not a blank cheque. Policy dialogue constitutes a central part of its provision. Nor is it paid to every country. Eligibility criteria and disbursement conditions have to be met," the European Commission said in a statement.

The worldwide consultation on the future of budget support to developing countries is open to individuals, organisations or public bodies.

A statement from the European Commission (EC) Delegation in Guyana - home of the CARICOM Secretariat - quoted Ambassador Geert Heikens, head of EU delegation as saying that "since 1976, the EU has been a constant supporter of development in Guyana.

"The European Commission has important budget support programmes with Guyana, both general and also sector ones for sugar. We are confident that the consultations will enable us to continue to better provide effective assistance in the future."

It said that throughout the world, budget support is the transfer of financial resources from the EU to the national treasury of a partner country, following the respect by the latter of agreed conditions for payment.

In the case of Guyana, budget support has become the EU's main aid-delivery instrument, the Delegation observed.

Between 2003 and 2009, the EU made budget support commitments totalling over €13 billion (US$18.05 billion).

However, the EC noted that increasingly however, a number of questions about the quality, value for money and impact of budget support are being raised by a range of stakeholders. With this in mind, this worldwide consultation has been launched to refine our approach to budget support by drawing lessons from across the globe.

The Green Paper on Budgetary Support is aimed at finding out, among other things, how to decide on the amount of funds; combing the monies with other types of support to the beneficiary-country; whether budget support can contribute to lower-aid dependency; and how budget support can be used to strengthen domestic and mutual accountability.

The consultation also wants answers to what are the advantages and disadvantages of providing both general and sector-budget support within the same country, or having one single budget-support instrument; and how can donors meaningfully respond to any deterioration in the underlying principles while protecting the development benefits and predictability of budget support.

- CMC