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Demand-Driven Planning Produces Harmonised Donor Support

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11 February 2010

Sergio Forte, right.A European Commission programme of budget support in Paraguay has enabled the government to address weaknesses within the country’s financial administration systems, according to Sergio Forte, Deputy Minister of Finance.

Furthermore, the EC’s knowledge of the consultancy market enabled the government to secure quality technical assistance with the relevant experience of operating in South America.

Though the government’s demands for a holistic approach in piloting a reform in its financial management systems led to programme delays, the ministry of finance can now boast a fully appropriated reform plan.

The basis for continuous dialogue with donors is now in place. In some cases, capacity development plans have been put on hold after ministries requested donors bring their operations closer in line with the government roadmap.

It’s a big change for the better, according to Mr Forte.

“In the past,” said Mr Forte, “there were various roadmaps from different ministries, which were supported by one or another donor with limited impact.”

The EC was the first donor to provide general budget support to the South American nation of Paraguay in 2006 with a programme worth around 24 million Euros. But the resulting success has encouraged other donors to follow suit.

Another strength of the EC’s support has been the quality of the technical assistance involved.

“This has been the best quality team I have seen in years and this is due to the deep market knowledge of the EC,” said Mr Forte.

The government’s insistence that some of the technical assistants came from or had experience of operating in South America was an important element in the terms of reference.

“[We wanted] experts with experience in other Latin American countries, who would be able to use their experience in this assignment,” said Mr Forte. “This is not unusual in Latin America as there is a lot of knowledge sharing in the region.”

In addition, the technical assistance team provided all their support over a two and a half month period where they were based within the ministry of finance.

“The team was practically assimilated into the ministry of finance, where they were provided with offices and worked closely with the relevant personnel on a day to day basis,” said Mr Forte.

EC budget support totalled around 7 million Euros per annum in 2007 and 2008, rising to around 16 million per annum in the 2009 – 2011 period.

Landlocked Paraguay has a population of just 6 million people with a Gross National Income per capita of some US $2,000 a year, according to the World Bank. Many Paraguayans make their living through agriculture, often as subsistence famers though the country has become a major soya exporter in recent years. Corruption is still a problem in Paraguay, which is one of the poorest countries in South America.

The presidential elections of 2008 were an important milestone in the democratic process in Paraguay, ushering in a new administration and ending the former ruling party’s six-decade hold on power.

DISCLAIMER: This information is provided in the interests of knowledge sharing and capacity development and should not be interpreted as the official view of the European Commission, or any other organisation.

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