Dialogue in Pursuit of Development - Are you looking for one of ...

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(vi) Establishing a more direct and stronger link between the
provision of financial assistance and the implementation
of policy reform
As self-help declines and dependency on external donor support rises, the
development policy dialogue should move from persuasion to leverage application.
The latter can only be successful if the entire donor coalition is
united in enforcing the agreed upon ‘conditionalities’. This means that ‘lead
donor positions’ should be supported, and not undermined. Alternatively,
donors should be guided by the conclusions and recommendations coming
from possible ‘peer reviews’ under NEPAD.
(vii) Improving the support of the policy dialogue by selecting
the proper aid modality
It will be of merit if donors avail themselves of the proper aid instruments
to facilitate the linking of financial assistance to the implementation of policy
reform. Experience of the 1990s indicates that a discussion/resolution of
project level issues can best be handled in the context of a project, while
the resolution of a sector policy issue is best handled in the context of
sector programmes. Similarly, the resolution of a general policy issue can
best be handled as part of a balance-of-payments support operation. With
the rising need for strengthening the policy dialogue donors should diversify
their aid instruments by adding non-project assistance to their programmes.
The latter would also have the advantage of quite easily permitting
co-financing operations with the Bretton Woods Institutions, which
would strengthen more harmonised and coordinated support for the policy
dialogue.
(viii) Revamping the lead arrangements for the economic
policy dialogue
Experimenting with new approaches to lead donor arrangements for the
policy dialogue is opportune. Current thinking about the proposed peer
review under NEPAD is of merit and deserves support. Peer reviews can
have the effect of enhancing the ‘African’ ownership of policy reform programmes,
but the process would have to be carefully watched to ensure that
it is sufficiently demanding of recipient countries to create a proper balance
between internal self-help efforts and donor support needed to achieve
domestic ownership and, thus, programme sustainability.