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Disbursement of the third payment comes after the Government of Liberia made satisfactory progress in improving public financial management and toward specific targets relating to security and rule of law in line with the Agenda for Transformation, Liberia’s medium-term development strategy. Ambassador Tiina Intelmann, Head of the European Union Delegation to Liberia, said:
"The EU gives this 10 million euro expecting that the Government will use it to provide Liberians with the vital public services they deserve and it has committed to provide: health, education, security and rule of law. I encourage the Government to continue improving the management of public finances and fight against corruption. In particular, I applaud the operationalisation of four pilot county treasuries, the establishment of a Civilian Complaints Board for the police and immigration services and improved access to justice through magistrates' courts and county courts for cases related to sexual and gender based violence. I encourage Government and the Judiciary to continue their efforts to better plan procurement for entities in the security and rule of law sector and to ensure that spending takes place as planned."
The European Union withheld EUR 2 million due to the Government of Liberia's failure or partial failure to meet indicators related to the timely publication of procurement plans for the Ministry of Justice and the Judiciary and spending less money than planned through entities in the security and rule of law sector.
The European Union's budget support programme for Liberia, known as a State-building Contract, was signed in May 2015. It was initially intended to support reforms in the security and rule of law sector in the context of the drawdown of the UNMIL peace-keeping mission. Due to the Ebola crisis, it was agreed with the Government of Liberia to modify the project so as to frontload much of the funds for the first payment in July 2015.
The State-building Contract has a total value of EUR 65 000 000 (USD 73 million) over three years. The EU contribution is allocated as follows:
EUR 62,000,000 – General budget support;
EUR 2,690,000 – EU contribution to Integrated Public Financial Management Reforms Programme, implemented through the World Bank;
EUR 300,000 – Technical assistance to build capacities within the Ministry of Finance in the implementation of the State Building Contract, implemented by the Overseas Development Institute.
The current disbursement of EUR 10 million is made up of two parts:
EUR 5 million is linked to four general conditions:
satisfactory progress in the implementation the Agenda for Transformation;
implementation of a credible stability-oriented macro-economic policy;
satisfactory progress in the implementation of the Public Finance Management Reform Strategy; and
satisfactory progress with regard to the public availability of timely, comprehensive and sound budgetary information.
Payment of an additional EUR 5 million was triggered by the Government meeting the following performance indicators fully:
fiscal decentralisation implemented in four county treasuries;
Civilian Complaints Board established to strengthen the accountability and integrity of the Liberian security sector actors after UNMIL drawdown;
strengthened adjudication of sexual/gender-based violence as measured by an increased number of Sexual and Gender Based Violence (SGBV) cases tried in Bong, Lofa, Nimba, Maryland, Grand Kru, River Gee, Grand Gedeh and Sinoe;
magistrate courts in Bong, Nimba and Lofa increased the share of cases disposed of leading to more timely justice in the region; and partially meeting indicators related to:
disbursement according to spending plans by spending entities in the security and rule of law sector as expression of the financial commitment of Government to Security and Rule of law sector reforms;
Bureau of Immigration & Naturalization, Drug Enforcement Agency, Liberia National Fire Service, Liberia National Police and Liberia National Police Training Academy published procurement plans in a timely manner for FY2015/2016 as an element to improved budget execution.
What is budget support?
Budget support is a way for donors to provide development assistance through a partner country's own budgetary processes. It involves dialogue, financial transfers to the national treasury account of the partner country, performance assessment and capacity development, based on partnership and mutual accountability. Eligibility criteria have to be met before and during the programme and conditions need to be fulfilled before payments are made.
EU budget support involves the transfer of financial resources to the National Treasury of a partner country, provided the partner government has met the agreed conditions for payment. Transfers are made in EURO to a Government account held at the Central Bank and then converted into local currency during transfer to the National Treasury Account. Any transfer is always made after the agreed conditions for payment have been respected. Once this transfer has taken place, budget support funds are used in accordance with the partner country’s own public financial management (PFM) systems, and responsibility for the management of these transferred resources rests with the partner government.
Budget support is focused on development results and offers a platform for dialogue with the partner country (Government, national control bodies and civil society) on policies and their financing, objectives and results. This is consistent with the aid effectiveness principles of ownership, transparency and accountability.