Speech by Minister Lilianne Ploumen, at the IOB-AIID Conference ‘Budget Support: Policy, Prejudice and Practice’

Toespraak | 04-12-2012

Ladies and gentlemen,

When I saw the title of this conference, I couldn’t help thinking of Jane Austen.

‘Policy, Prejudice and Practice’ calls to mind the title of that old favourite, Pride and Prejudice.

The debate on this book continues to this day.

Is it, or is it not, the first feminist novel? ─ almost two hundred years after Pride and Prejudice was first published, we’re still asking that question.

I do hope, ladies and gentlemen, that the debate on budget support will not take 200 years.

The IOB report could be useful in speeding it up.

It presents some remarkable findings.

The theory goes that general budget support is suitable for countries with solid socioeconomic policies and institutions that can implement them.

The IOB, however, argues that donors have departed from this theory.

The selection criteria have not been taken seriously.

Rather than using sound policy and good governance as entry conditions, they have become objectives.

And budget support has turned from a financing instrument into a policy dialogue ─ using funds as a carrot.

The IOB argues that this development has had two major effects.

First: it has opened the way for traditional aid conditionalities.

As a result, the ownership of recipient countries can no longer be guaranteed.

And second: the emphasis on improving governance has weakened budget support’s capacity to fight poverty.

But the changes in the rationale for intervention have also had important implications for the evaluation of budget support, at least in the Netherlands.

The IOB now argues that donors have been looking at the wrong indicators.

The report says that countries receiving budget support have made a lot of progress in social sectors, especially education and health care.

And it says that the poorest of the poor have benefited from this more than proportionally.

According to the IOB, countries with budget support climb up the Human Development Index faster than countries without budget support.

Ladies and gentlemen,

Let me put pride and prejudice aside.

Let me acknowledge that we may have been a little too harsh on budget support.

To be honest: I myself had more or less lost faith in the instrument.

Too little impact,

too little local ownership, and

too little accountability to the people of recipient countries.

The IOB report offers me a fresh perspective.

There might be a place for budget support in the Dutch development toolbox in the future.

But only under strict conditions.

The IOB insists on applying selection criteria rather than imposing conditionalities ─ and I understand that.

But these cannot be purely technical criteria.

Giving budget support is a matter of trust.

Giving budget support requires a political assessment.

Fortunately, the European Union is now also moving in this direction.

At the moment, however, around 40 per cent of the EU’s total development budget is sector or general budget support.

My government has some serious doubts about this.

We feel that the EU should pay more attention to the political situation before giving countries budget support.

To democracy.

To human rights.

To the rule of law.

Without them, budget support should be a no-go-area.

And if the political situation moves in the wrong direction, we should reconsider.

I’m fully aware that this is a sensitive issue.

But budget support should not be a blank cheque.

In recent years, countries like Germany, Sweden, Finland and the Netherlands have worked hard to adjust EU policies on budget support.

And serious progress has been made.

Earlier today, I spoke with Commissioner Piebalgs on this subject.

The EU is now sailing a more political course and paying more attention to budget transparency in recipient countries.

I applaud that.

Ladies and gentlemen,

The IOB basically argues that budget support is suitable for fighting poverty, not for forcing reforms.

Here’s my position on the matter.

There is indeed no point in trying to ‘buy’ reforms.

The question we have to answer is whether a country is ready for budget support.

Our approach needs to be tailored to each case.

For this is the only way to get public support.

People don’t like their taxes going to dubious regimes.

And rightly so.

But even when a country is ready for budget support, we should not leave it at that.

Yes, upward accountability is very important.

But downward accountability perhaps is even more critical.

The governments of recipient countries should be answerable to their citizens.

This is why, in my view, budget support should be combined with support for civil society.

Government needs opposition.

Power needs countervailing power.

Not only in developing countries, by the way, but also in the Netherlands.

I myself have spent a significant part of my life working for NGOs, from Mama Cash to Cordaid.

In my view, Dutch, local and international NGOs are crucial for development.

If, of course, they are accountable and transparent.

If they have a strong constituency and firm roots in society.

And if they act with budgetary rigour and are not afraid to address sensitive issues.

So if I decide to give a country budget support in the future, you can be sure that there will be a civil society programme in place as well.

People in developing countries can and should build their civil society themselves.

Because they know best what’s good for their own future.

Ladies and gentlemen, I´ll leave it at that.

Thank you for listening.

And ─ although it may not be Pride and Prejudice ─ thank you for an interesting report, Mr Ruben.