General budget support, also called development contracts, is a strong development assistance modality. Development contracts increase ownership in the partner country and are an effective instrument for supporting reforms, promoting delivery of services and strengthening macro-planning, policy dialogue and public finance systems. The use of development contracts promotes the accountability of governments to their citizens and strengthens the democratic oversight of parliaments, as civil society and local parliaments can play a key role as watchdogs in relation to their own government. Through the linkage to the human rights-based approach to development, Denmark will focus on the importance that the population as rights holders can hold their government accountable.
Denmark will strengthen the use of development, sector and statebuilding contracts, and in this regard the EU has a vital role to play. During the Danish EU Presidency, the EU adopted council conclusions that revised the use of development, sector and statebuilding contracts. Increased focus is now on the need for flexibility and context-sensitive differentiation of criteria, clearer inclusion of exit strategies, including stronger focus on domestic resource mobilisation in the priority country, as well as promotion of development contracts as an instrument for building and consolidating democracies.
Globally, the EU is among the largest providers of development contracts. For example, almost EUR 1 billion, corresponding to 26 per cent of the funds of the European Development Fund, was channelled to ACP countries through development contracts in 2012. However, the EU has curtailed its use of development contracts due to diverging positions on these contracts among Member States. Evaluations show that the risk of corruption is no greater with development contracts than with other forms of development assistance. It is expected instead that the EU in the future will have greater focus on sector and statebuilding contracts.
Denmark will therefore engage to ensure that the EU continues to prioritise development contracts in Danish priority countries which meet the terms and conditions for their use. Denmark will also enhance efforts to ensure that the EU builds up particular competence in statebuilding contracts, which are a useful instrument in a transition period for fragile states. They provide an opportunity to grant funding that can contribute to stabilisation or to restore basic services within, for example, education and health. Contributions to statebuilding contracts must be based on the principles from the ‘New Deal’ aimed at strengthening the existing country systems and fostering strong local ownership and leadership.
The close coordination and harmonisation with EU development contracts will be achieved through increased engagement and involvement at country level in the Commission’s development contracts. Denmark has also aligned its terminology and criteria for development contracts with EU criteria. This provides Denmark with the same starting point as the EU when assessing in which countries Denmark will enter into development and sector contracts. The streamlining of the criteria has been partly facilitated by the EU’s adjustment of its approach in a way converging with the approaches and rules of many Member States. This has led Denmark to align its criteria for use of development contracts with the EU’s criteria.
Ministry of Foreign Affairs of DenmarkDanidaAsiatisk Plads 2 DK-1448 Copenhagen K Tel. +45 33 92 00 00Fax +45 32 54 05 firstname.lastname@example.org