EU maintains stance on budgetary support

Published: 21 June 2015

The European Union (EU) says Zimbabwe is yet to qualify for budgetary support, but the economic trading bloc will continue to channel aid through multinational organisations, EU Ambassador Philippe Van Damme said.

In an interview with businessdaily yesterday, Van Damme said there were some conditions that the country must fulfil before it can receive budgetary support to revive its ailing industry.

"To be able to channel funds directly to government Treasury in terms of budget support we need to follow very strict and rigid procedures and we are not yet there," he said.

"It is important to state that our current re-engagement with Zimbabwe has no direct relation with our aid implementation modalities, but the objective is to enter into stricter dialogue with Zimbabwe," Van Damme said.

According to the EU website, budget support involves direct financial transfers to the national treasury of the partner country - conditional on policy dialogue, performance assessment and capacity building.

Van Damme said the trading bloc aims at rigorous dialogue with government, assurance of rule of law and sound financial reforms before directly injecting cash into Treasury.

"We have to help government with its public finance management system and we will do that through the Zimbabwe Reconstruction Fund which is managed by the World Bank.

"But I really hope that by 2017 we can make an assessment of the progress made in funds management and on that basis maybe decide if we can change modalities but for the time being we continue like in the past," the EU envoy said.

Budget support accounts for around a quarter of all EU development aid and in 2011, 26 percent budget support was availed to sub-Saharan Africa, 16 percent in Asia, 23 percent in Latin America and the Caribbean.

To be eligible for this kind of support, a country must have a well-defined national or sectorial development or reform policy and strategy, a stable macroeconomic framework, a good public financial management or a credible and relevant programme to improve it, transparency and oversight of the budget through making budget information publicly available.

Van Damme said he was not in a position to shed light on the asset freeze and travel ban on President Robert Mugabe and wife, Grace as the matter was still under deliberations by the 28-member union.

Last year, the EU lifted sanctions imposed on Zimbabwe 13 years ago on allegations of human rights abuses.

The move paved way for the trading bloc to resume aid to hard-pressed Zimbabwe.

Early this year, EU offered a $234 million olive branch to Zimbabwe, intended for development projects decided jointly with the government and, if certain conditions are met in the next few years, could lead to a resumption of direct budget support.
- dailynews