Download - Joanna Komorowska
Methodology for measuring government expenditures in
support of food and agriculture sector
development
Joanna Komorowska
Outline• Key concepts• MAFAP classification• Budgetary transfers versus revenue
foregone• Mapping aid onto government
expenditures• What will we learn from the PE indicators?
Motivation• Agriculture’s key role in raising incomes, reducing
poverty and improving food securityReflected in 2003 Maputo declaration
• Important to be able to analyse the performance of expenditures – but there is a lack of systematically organised data
• African governments recognise the need to gather such information on a regular basis in order to make evidence-based policy choices
Having an economically meaningful classification system is a pre-requisite for policy analysis and efficient budgetary processes
The main principles of classification of policy measures in MAFAP
• Seek to measure all expenditures that are supportive of sectoral development (both from national resources and aid)
• Seek to monitor both, the level and the composition of expenditure measures Complementarities and trade-offs between
spending in different categories
The main principles of classification of policy measures in MAFAP• Primary focus on food and
agriculture sector, but possible to include forestry and fisheries
• Seek to capture related public expenditures in rural areas Important role in ag sector
development
Key concepts: what policies to consider?• That generate monetary transfers to:
▪agricultural agents individually▪agricultural agents collectively ▪rural sector more generally
Objectives or economic impacts of policies not considered
General policies not considered, even if they generate transfers to agricultural producers
agriculture-specificagriculture-specific
agriculture supportiveagriculture supportive
The main principles of classification of policy measures in MAFAP• Seek to distinguish between
different economic characteristics of expenditure measures
The main categories differ depending on The main categories differ depending on how policy measures are how policy measures are implementedimplemented and and
not their objectives or impactsnot their objectives or impacts
Discussion question 1
What information should be considered to understand how policy measures are implemented?
Information on policy implementation• Who is the recipient • What is the basis for payment (area,
income, unit of output etc.)• Commodities covered• Conditions attached to obtain the
payment
The way in which measures are implemented matters - examples1. Input subsidies in China2. Extension services in Uganda
Input subsidies in China• Comprehensive Subsidy on Agricultural
Inputs introduced in 2006Objective: to compensate grain producers
for an increase in prices of agricultural inputs such as fertilisers, pesticides, plastic films and diesel
Implementation: payment per unit of land, not necessarily to buy inputs
Conclusion: direct payment supporting farmers’ incomes
Extension services in Uganda• NAADS responsible for extension
services provision“classical” extension services, but also
input subsidies: although officially input subsidies were
abolished, subsidised inputs are distributed through other channels, particularly agencies providing extension services
(Uganda case study after WB2010)
MAFAP classification(see handout with categories and their
definitions)I. Agriculture-specific policies1.1. Payments to the agents in the agro-food
sector: producers (e.g. input subsidies), consumers, input suppliers, processors, traders, transporters
1.2. General sector supportII. Agriculture supportive policies: rural
education, health, infrastructure
MAFAP classificationI.1. 1. Payments to
producers• Payments based on output• Input subsidies:
variable inputs capital on-farm services
• Income support• Other
I.1. 2. Payments to consumers
• Food aid• Cash transfers• School feeding
programmes• Other
I.2. General sector support: ag. research, technical assistance, training, extension, inspection, infrastructure, storage, marketing and other
Discussion question 2Are the proposed MAFAP categories exhaustive? What other categories of spending might be present in Tanzania?
Budgetary transfers versus revenue foregone• Transfers in support of food and
agriculture sector development may be provided in two forms: actual budgetary transfers (such as
production subsidies) and the revenue foregone by the
governments (such as tax concessions)
Estimating budgetary transfers• Complete coverage of institutions,
administrative levels and financing instrumentsImportant to identify all budgetary
expenditures in support of food and agriculture sector regardless their: source of funding (national or aid) public institutions involved administrative level financing instrument used
Estimating budgetary transfers• Budget planning versus actual
spendingBoth should be collectedActual spending should be used in
the classification and other calculations
Contrasting the two will feed into the PE efficiency analysis
Estimating budgetary transfers• Treatment of one-off investments
versus recurrent expendituresBoth should be includedBoth should be recorded on annual
basis using information on actual year-to-year spending
Estimating budgetary transfers• Treatment of policy administration costs
Generally should not be included in the classification
Exception: when support is provided via services e.g. extension, research or inspection
Excluded admin costs will be collected separately to contribute to the PE efficiency analysis
Discussion question 3How to estimate policy administration costs associated with policy transfers in support of food and agriculture sector development?
Estimating revenue foregone• Support may be provided in forms that do
not imply actual transfers from the budget:Tax concessions (income, VAT on inputs, fuel)
Most common in Africa?Preferential lending (from the bank to ag.
producers)Administered input prices (SOE charging
lower prices for inputs to ag. producers)
Estimating revenue foregone• A largely empirical and potentially
complex task• Only those should be captured that
unambiguously provide support to agriculture and can be measured in a reasonable time frame and with adequate accuracy
Estimating revenue foregone• Tax concession can be measured by
establishing counterfactual and quantifying monetary value of the tax reduction by comparing the value of tax revenues from the counterfactual and the target group.
Discussion question 4
What types of revenue foregone measures are present in Tanzania? How can they be estimated?
•DAC donors•Other bilateral•Other multilateral
DONORS
•Central government•Local government•Specific projects
conducted by NGOs or international organisations
National budgets •Agriculture specificPayments to agents in
agro-food sectorGeneral sector
support•Agriculture
supportive MAFAP public
expenditure classification
CRS, AidDataCRS, AidData
budgetbudget
Mapping aid onto national expenditures
Mapping aid onto national expenditures• Recording aid flows at every step of
its distribution will help to:Clarify how effective donors are in
disbursing committed moneyEstablish the extent to which aid is
provided for a specific purpose or in a form of general support to the budget
Establish the extent to which disbursed aid was actually spent
Discussion question 5Is it possible to establish a direct link between donor commitments and disbursements and budgeted amounts and actual spending at the national level?
Potential problems related to classification of expenditures
measures• Disaggregation of programmes may be
difficultSolution: estimate using expert consultations
and/or allocation keys• Classification categories may not be
exhaustiveSolution: classify to the most suitable “other”
categoryCategories will be revised periodically to adapt
to the existing expenditures measures
What information are we looking for?• Policies that generate transfers in support
of food and agriculture sector including: Detailed description of policy
implementation criteria (for whom, how, for which commodity, under which conditions)
Actual expenditure Source of funding (national and/or aid) Government level (national/subnational)
at disaggregated level at disaggregated level (MAFAP classification)(MAFAP classification)
What information are we looking for?• General characteristics of spending:
Proportion of admin costs in total expenditures Recurrent versus development budget Ratio of actual spending and budget
allocations Share of aid in budget allocations and share of
aid in actual spending Aid type – loans versus grants Off-budget expenditures
at aggregated level (derived indicators)at aggregated level (derived indicators)
What will we learn?• Proposed indicators seek to keep track of both the level
and composition of expenditures (national and aid)How much of budgetary allocations are disbursedWhether they address the investment needsCorrespondence of spending with stated
objectivesTrade-offs and complementarities between
different spending categoriesRole of aidEffectiveness – economic impact?
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