How the European Commission can take the lead in providing high-quality budget support for education and health

This paper evaluates the extent to which the current aid structure, particularly that of the European Community (EC), is meeting the health and education requirements of developing countries. It reviews the dynamic between the EC, European Union (EU) member states, and the International Monetary Fund (IMF), and suggests ways in which the EC can take the lead in providing high quality budget support.

The key message is that developing-country governments desperately need more long-term and predictable aid to finance the expansion of health care, education, and other vital social services. The EC is one of the biggest donors providing this kind of essential budget support, and has innovative plans to further improve and increase this aid. Key challenges for the EC include continuing to increase spending on budget support, de-linking its aid from the approval of the IMF and reducing the unnecessary delays caused by the Commission’s cumbersome bureaucratic procedures.

EU member states are urged to:

• support the plans of the EC to implement its proposed MDG contracts and provide financial support
  
• use their collective voice on the board of the IMF to push for the institution to cease working with countries that are stable at the macroeconomic level, and in remaining countries to press for more flexible fiscal frameworks
  
• use their collective voice on the board of the World Bank to push for it to adopt similar processes to the Commission’s best practice.

Developing governments on the other hand, are urged to:

• increase expenditure on health to 15 per cent of the national budget and spend on education to 20 per cent
  
• tackle corruption and ensure full transparency and accountability for government expenditure.