General Budget Support

The Poverty Reduction Budget Support (PRBS) Programme in Zambia

Updated: March 2011

General Budget Support (GBS) in Zambia is provided through the PRBS Group, made up of the Government of Zambia (GRZ) and currently 7 Cooperating Partners (CP’s): Germany, Finland, Norway, UK (DFID), African Development Bank, EU and World Bank. On the CP side, Germany holds the Chair, until the end of 2011. At this moment, there are five official observers: Sweden, the Netherlands, IMF, Denmark and Ireland.

The PRBS Group is regulated by a Memorandum of Understanding (MoU) signed in April 2005 between CPs and GRZ. The MoU provides a framework for structured dialogue between GRZ and CPs, based upon mutual trust and accountability. It is fully consistent with the principles set out in the Joint Assistance Strategy for Zambia (JASZ), signed by 16 CPs in April/May 2007, and with the GRZ Aid Policy adopted in May 2007. Both the PRBS MoU and the JASZ are currently under revision.

The provision of Budget Support to Zambia for all of the CPs is given on the understanding that Zambia continues to demonstrate commitment to four essential Underlying Principles as set out in the MoU:

Commitment to pursuing sound macro-economic policies, as evidenced by a positive IMF assessment of overall macroeconomic performance;
Commitment to the fight against poverty, including through a pattern of public expenditure consistent with poverty reduction priorities identified in the National Development Plan (usually assessed through the MTEF, the annual budgets and the FNDP Annual Progress Reports);
Commitment to Public Financial Management Reforms;
Commitment to peace, democratic principles, the rule of law, good governance and integrity in public life, including the fight against corruption.

Monitoring & Evaluation

Under the cited MoU, performance in the PRBS is measured through a common Performance Assessment Framework (PAF) and its indicators which CPs use as a basis for assessing progress in reducing poverty. The PAF includes a rolling multi-annual matrix (3 years) of priority milestones, targets and indicators. The indicators are drawn from the set of Key Performance Indicators of the Zambian Sixth National Development Plan (SNDP), hence ensuring a strong link with the broader Monitoring and Evaluation Framework. The focus of the PAF was on the priority areas identified in the SNDP, as well as PFM reforms. The new PAF 2011-2013 will be agreed at the end of this year.

Financial overview

PRBS grants provided so far:

2005 - $60million
2006 - $111 million
2007 - $145 million
2008 -$160 million
2009 -$ 183 million
2010 -$ 177 million

PRBS credits provided so far:
In 2008, the ADB provided $30 million, in 2009 $11 million, and approximately $30 million in 2010. The World Bank has released $10 million budget support in 2009, and $20 million in 2010.

The Netherlands GBS programme in Zambia

The Netherlands has provided Zambia with GBS since 2006, but ended its budget support programme in the beginning of 2011. The Netherlands did provide Sector Budget Support. Since 2008, The Netherlands had entered a three year GBS programme (2008-2010), in which it disburses € 10 million per year, with the possibility of an extra incentive tranche of 2-3 million Euro in case PAF scores were over 80%. Because PAF scores have been below that threshold since 2008, the incentive tranche could not be paid.

PRBS grants provided by the Netherlands:

2006: 6 million Euro
2007: 8 million Euro
2008: 10 million Euro
2009: 10 million Euro
2010: 10 million Euro

It is not expected that the Netherlands will continue budget support operations in Zambia beyond 2011.