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Thursday, 07 July 2011

Direct budget support: Partnership and dialogue are key to cooperation

A report by Charles Goerens (Parti Democratique, Luxembourg) on budget support to developing countries was voted during the plenary session of the European Parliament in Strasbourg.  Goerens underlined that "The policies of the European Union tend to make our partners agents of their own development - hence the notions of partnership, political dialogue and above all the partner country's ownership of development.  Budget support takes issue with a neo-colonialist approach and remains more loyal to the European Unions philosophy". Budget support involves the transfer of financial resources to a funding agency outside the Treasury of the partner country, provided that it meets the agreed payment terms. Goerens added, "Budget support is not a risky business if you take the precautions necessary for the judicious use of funds. Any disbursement presupposes an ability by the recipient country to manage funds appropriately. The fact that the IMF needs to first endorse any disbursement limit, reduces even further the potential for abuse." Partnership over dependence is the key to future cooperation and endogenous development is the only true form of sustainable development. The rapporteur also stresses that "Budget support is neither a panacea nor a financing instrument accessible to all countries.  Far from it. Conditionality excludes a large number of developing countries."

Source: ALDE