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Comprehensive and transparent reporting on aid, and how it is used, is critical not only as a way of ensuring that donors align aid flows with national development priorities but also in order to achieve accountability for the use of development resources and results. The formulation of the budget is a central feature of the formal policy process in all countries. So the degree to which donor financial contributions to the government sector are fully and accurately reflected in the budget provides a significant indication of the degree to which there is a serious effort to connect aid programmes with country policies and processes.
This indicator is a proxy for measuring alignment. It measures the total volume of aid — not only budget support — recorded in countries’ annual budgets as a percentage of donors’ disbursements. The objective is to ensure that by 2010 aid is appropriately recorded in countries’ annual budgets so that partner authorities can present accurate and comprehensive budget reports to their legislatures and citizens.
Achieving progress against this indicator will require donors AND partner authorities to work together at different levels:
Donors should provide budget authorities with timely and comprehensive information on their scheduled disbursements in line with government’s system of classification.
Government should record comprehensive budget estimates for aid provided for the government sector (see definition below of government sector).
Government and donors should work together to ensure that aid recorded in budget estimates are as realistic as possible. In other words, budget estimates should roughly match the volume of aid that is actually disbursed within government’s fiscal year.
In practice, budgets can be unrealistic in two opposite directions: when budget estimates are either significantly higher, or significantly lower, than actual disbursements.
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