Harmonization of donor practices
For several years, the donor community have been concerned with the growing evidence that, over time, the wide variety of donor requirements and processes for preparing, delivering, and monitoring development assistance are generating unproductive transaction costs for the partner countries. These concerns have been met by attempts to reduce transaction costs and improve the effectiveness of aid delivery and management through harmonization of donor procedures at the global, regional and country levels.
The High Level Forum on Harmonization in Rome identified three countries in ECA Region which would be pilot countries for harmonization: Kyrgyz Republic, Tajikistan and Serbia. Following the Rome meeting, the Government of the Kyrgyz Republic passed the Resolution in March, 2003 and appointed the Ministry of Finance (MoF) as the executing agency for harmonization program.
During the initial joint Government-Donors meeting on Harmonization the decision has been made to establish a Steering Committee and a Working Group (WG) on harmonization. The Steering Committee is chaired by the VPM Otorbaev and includes the Heads of country-based donor agencies. Its task is to oversee the process and provide policy advice to the Working Group. The WG is chaired by Mr. Mukanbetov, the Director of the MoF's Investment Policy Department, and consists of MoF specialists, WB and ADB experts on a permanent basis.
The main outcome of the work done by the Working Group and the Steering Committee includes:
- Identification and achievement of the agreement on the priority areas under the Harmonization Program;
- Development of the National Harmonization and Alignment Action Plan;
- Increased understanding of the harmonization concept and processes;
- Harmonized procurement procedures and documents that would serve as the basis for further discussions between the Government and the donors on harmonization of procurement procedures at the national level.
The National Harmonization and Alignment Action Plan focuses on four areas such as:
- Harmonization and alignment of aid at the level of national strategies and programs
- Financial management harmonization
- Harmonization of procurement procedures
- Harmonization of PIU/ PMU activities
The Document consists of two parts – the National Action Plan itself as a political part and the activities program as a technical part aimed at the implementation of the Plan.
Among other important actions and activities that had been undertaken under the overall aid harmonization and alignment process, include the following:
- Initiated discussions with the Government of the KR and among a few donors, such as the WB, ADB, DFID and SDC on the development of the Joint Country Assistance Strategy.
- Joint country portfolio reviews that are held on a regular basis and involves more partners. For instance, in 2003 the joint country portfolio review was conducted with the participation of the WB and the ADB, and in 2004 this group was joined by IsBD as a participant and Germany as observer.
- The Asian Development Bank used the Poverty Assessment Report produced by the WB as the main poverty document for its Country Assistance Strategy.
- The IMF agenda on structural reforms is closely coordinated with the WB and ADB policies.
- The ADB is looking at the possibility to use the diagnostic reviews by the World Bank such as the Country Financial Accounting Assessment (CFAA) in its work rather than duplicate this activity.
- The ADB and the WB have developed the uniform set of procedures and documents for the National Competitive Bidding (NCB) (services and works), Shopping (for services and works), Request for bids of small consulting services and tasks (firms and individuals).
- EC assisted the CDF/ NPRS Secretariat in creation of the monitoring and evaluation system and DFID helped with the development of the social statistics for NPRS and CDF monitoring purposes.
- DFID provides the Technical Assistance to enhance the government’s capacity in moving forward the harmonization agenda under the GSAC grant support.
- ADB, DFID and EBRD funded and the Government of the KR hosted the Regional Harmonization and Alignment Workshop for the Eastern Europe and Central Asia Region that took place in Bishkek on November 11-12, 2004 to discuss the effectiveness of the results -based assistance to meet the development and governance needs. The Workshop prepared the participants for the Second High Level Harmonization and Alignment Forum in Paris.
Second High Level Forum on Aid Effectiveness and Harmonization (HLF-2) was held in Paris during February 28- March 2, 2005. The CIS was represented only by Kyrgyz Republic as one of the 14 pilot countries for external aid harmonization and alignment, and the Russian Federation. Participants at the Paris High-Level Forum issued the " Paris Declaration on Aid Effectiveness," in which they commited their institutions and countries to continuing and increasing efforts in harmonization, alignment, and managing for results, and listed a set of monitorable actions and indicators to accelerate progress in these areas.
The next steps of the Kyrgyz Republic towards harmonization alignment of the donor aid will be based on the approved National Action Plan, the Paris Club recommendations, and the learned experience of other pilot countries.
Preparation and implementation of the Sector Wide Approach for the health sector and the development of the joint Country Assistance Strategy are among the priorities faced by the Government and the donors in the Kyrgyz Republic. The donors and the Government should determine the specific activities in order to enhance the institutional capacity for bringing forward the harmonization agenda. Also, the Government of the KR should work out and introduce the necessary amendments and addenda to the legislature stipulated in the approved National Action Plan.