Public Sector Reform & Decentralisation

According to the EU’s recent methodological note on “Providing EU budget support in decentralised contexts” , three types of budget support may be considered with regard to supporting decentralisation, local governance and territorial development (DLGTD). Real-world programmes may contain selected elements of any of these types, or may combine them with elements of the other two.

• Type 1: budget support to decentralisation reforms and local authority (LA) systems development 

This budget support may be provided to help partner countries to implement their national policy regarding decentralisation and strengthening developmental LA systems. The scope and objectives of these BS programmes can be diverse.

Good governance and development contracts and sector reform contracts are often the best BS option for this type

• Type 2: budget support to decentralised service delivery

This type seek to strengthen decentralised multilevel delivery systems as well to empower frontline service delivery agents across the whole spectrum of the local public sector. They typically contain two sets of measures:

• decencentration of programme management responsibilities to sub-national branches of central agencies;

• effective forms of contractual delegation of key planning and implementation tasks to LAs.

Sector reform contracts are often the best BS option for this type.

• Type 3: budget support to place-based development/LA territorial development policies

Using budget support in supporting local/territorial development policies would be a major innovation. It would 

• localise budget support and help partner governments operationalise their commitment to territorial development through innovative central-local contracts
• support the reduction of spatial and social inequalities threatening social cohesion and political stability 

Such budget support would require adaptations in the way in which intervention are designed; they would also be easier to develop in relatively more advanced with large and capable LAs (metropolitan and regional authorities…).