Aid Information Management in Practise

– Malawi ExperiencesAaron BattenEconomist, Debt and Aid Division Ministry of Finance, Malawi

ICGFM Winter Conference6 December 2010

Background to Malawi’s Aid Environment Challenges of Aid for Effective PFM Malawi’s Approach to Aid Information

Management How is Malawi’s Aid Information

Management Improving PFM Role of International Aid Transparency

Initiatives vs. Country Level Aid Information Management Systems

Next steps for Malawi

Overview

Malawi is heavily dependant on foreign aid ◦ 12% of GDP, 40% of Budget, 80% Development

Budget Aid delivery is highly fragmented

◦ 28 Bilateral & Multilateral Donors + Emerging donors◦ In 2009/10FY 452 active projects:

25 use Government’s Consolidated Account at RBM 90 implemented with Line Ministries and use RBM

project accounts 140 implemented with Line Ministries using commercial

bank accounts 150+ implemented with various NGOs

Background to Malawi AIMS

How do you translate information from disparate donors and activities into a common budgeting framework?

How best can donor information be used to inform domestic sector planning efforts?

Which donor activities should be included in the Budget process, and what information do you need to be able to make these distinctions?

How can Government best manage aid flows that are not included in the budget?

Challenges for Effective PFM

In 2008, Malawi moved from an ad-hoc aid information system to a formal system of information exchange between MoF and all its donor partners

Information stored and analysed through web based Aid Management Platform (AMP)

System now collects information on all aid financed activities in Malawi and is updated on a monthly basis

Malawi’s Aid Information Management System

What information to collect?

-Unique AMP ID

-Status

-Use of Budget Systems

-Sectors

-Geographic Location

-Description

-Executing Agencies

-Implementing Agencies

-Key Activity Dates

-Type of Assistance

-Aid Modalities

Management of both on and off budget funds Government now tracks disbursements both to On-

Budget funds and for projects which circumvent Government systems◦ For some large donors (USAID, Japan) this can comprise

100% of their assistance

Full list of activities greatly improves sector planning efforts

Information allows production of Extra-Budgetary Addendum to the official Budget documents◦ Allows off-budget funds to still be approved by Parliament

How has Malawi AIMS Reform improved PFM?

Translation of donor information into a common budget format

Centralised AIMS means all aid projects (on and off budget) can be allocated to domestic sectors, MGDS Themes, Budget Votes

Rather than having donors allocate projects to sectors (or arbitrarily by Government), system uses Implementing Partners as a consistent allocation rule

How has Malawi AIMS Reform improved PFM?

IATI aims to develop a set of international standards for the way donors report information about aid spending. ◦ Donors commit to an aid information reporting cycle◦ Recipients access all donor information through a

single web-portal◦ Reduce the burden of information collection from

recipient countries◦ Improve projection and commitment information◦ Provide aid information to a wide audience outside of

planning and finance ministries

International Aid Transparency Initiatives & Country Level AIMS

By removing the responsibility of aid information collection from aid recipients donors can: ◦ ‘Information Dependency’ can reduce demand

for effective AIMS at country level◦ Provide less frequent information exchange and

reduce institutional connections between donor and recipient

◦ Introduce a common information format that may not be applicable to the dynamic information needs of recipient countries

International Aid Transparency Initiatives & Country Level AIMS

Basic Principle: Domestic ownership and demand for quality aid information is the key for using AIMS to improve PFM◦ International aid transparency initiatives are

useful but should focus on strengthening country level exchange

◦ Without a link to the budgeting process, AIMS will work in parallel to the national budget planning, potentially undermining the accountability cycle.

Strengthening International Initiatives

Lack of multiyear forecasts from donors limits ability to produce MTEF (40% funding unknown)

Exclusion of NGO’s funded from international sources limits sector planning information

Aid disbursements should be linked to project monitoring and output based budgeting efforts

Create direct link for AMP information to enter into Government’s Integrated Financial Management Information System (IFMIS)◦ This work is being undertaken by Budget Division...

Next Steps for Malawi AIMS