What is Sector Budget Support (SBS)
Budget support in general
Budget support (BS) is central to EU international cooperation. The EU is the world’s top provider of budget support. It involves direct financial transfers to the national treasury of partner countries engaging in sustainable development reforms. These transfers are conditional on policy dialogue, performance assessment, and capacity building.
EU budget support promotes progress towards all 17 Sustainable Development Goals (SDGs). It has, for example, contributed to halving the poverty rate in partner countries over the last 15 years (SDG1). Another example is in achieving gender equality and women empowerment (SDG5) where 50% of the portfolio is directed towards this goal. Finally, countries receiving EU budget support perform better in controlling corruption than other developing and emerging countries (SDG16). Lately, EU budget support was instrumental in helping countries cope with the COVID crisis.
In 2020, budget support disbursements amounted to € 3 billion and accounted for 24% of EU external assistance (including neighborhood countries and the Instrument for Pre-Accession Assistance). The breakdown of commitments by region shows that sub-Saharan Africa remains the largest recipient of budget support in volume (38 %), followed by neighborhood countries (27 %), Asia (17 %), Latin America (7 %), Western Balkans (5 %), the Caribbean (3 %), overseas countries and territories (2 %) and the Pacific (1%).
Three types of BS
As budget support implies tailored assistance, it can be granted through 3 types of contracts. The choice of the contract will depend on the partner country’s context and own development objectives.
Sustainable Development Goals Contracts (SDG-Cs) are meant to support the partner countries’ own efforts to achieve several SDGs. They support high-level strategic development objectives, which require a comprehensive and transversal approach.
SDG-Cs can only be assigned after a satisfactory assessment of the partner government’s commitment to EU fundamental values.
Sector Reform Performance Contracts (SRPCs) focus on sector policies and reforms, to improve governance and service delivery. They focus on one or a few SDGs. They support our partner countries’ efforts to ensure inclusive access to qualitative public services, promote women’s and children’s rights, and create at the sector level the conditions for sustainable growth.
State and Resilience Building Contracts (SRBCs) are used in fragile contexts. They support our most fragile partner countries’ transition towards recovery, development, and democracy and help them address the structural causes of their fragility. They can also be deployed right after a crisis or a natural disaster. Eligibility criteria for SRBCs are the same but they are assessed using a forward-looking approach. A strong policy dialogue – and safeguard measures when necessary – is a pillar of SRBCs. SRBCs usually prepare the ground for SDG-Contracts and SRPCs, as they support the formulation of national or sectoral development strategies in our partner countries.