UNCDF (2010) Performance-based grant systems: concept and international experience (short version)

This three-page document outlines the rationale for United Nations Capital Development Fund’s support to performance-based grant systems (PBGs) and summarises the five purposes of the full version of this paper:

1. Give insights into the rationale and principles underlying PBGSs;
2. Stimulate a discussion of the issues and constraints that PBGSs seek to address;
3. Provides a comparative assessment and analysis of their outputs, outcomes and impact;
4. Details the range of ways in which PBGSs inter-relate and are articulated with other dimensions of support to local governments;
5. Analyses some of the technical and policy challenges faced in designing and implementing such fiscal instruments.

The provision of capital investment at local level through PBGSs can make a difference when addressing development challenges. The incentives of PBGs encourage local governments to improve their performance in a range of areas including revenue collection, planning, budget execution, downward/upward/horizontal accountability, financial management, and the safeguards contained in PBGs ensure that local capital is used for effective development purposes.

This 3-pager is a short version of the UNCDF paper with the same title and available at: http://capacity4dev.ec.europa.eu/public-pub.sector-reform-decentralisation/document/performance-based-grant-systems-concept-and-international-experience