188.8.131.52. Decentralised management versus budget support
The possibility of increasing the level of delegation under decentralised management is, in legal terms, unlike budgetary support, an aid delivery method under centralised management.
Budget support constitutes a transfer of EU/EDF resources to the national treasury of a beneficiary country in support of a national development or reform policy and strategy (or in support of a sector programme in the case of sector budget support), whereas a project is a series of activities aimed at bringing about clearly specified objectives within a defined time-period and with a defined budget.
Although the objectives and some of the means used are similar (e.g. increasing ownership and responsibility of the beneficiary country by allowing that country to use country procedures and systems), budget support (under centralised management) as compared to project approach under decentralised management entails very different roles and responsibilities for the European Commission.
What is the difference between budget support and decentralised management in legal and procedural terms?
In budget support, the European Commission transfers funds to the budget of the beneficiary country after verifying that applicable conditions have been met. The action is completed by the transfer of funds, which occurs only after the European Commission has made sure that the required results have been obtained. Once the funds are transferred, they become the property of the beneficiary country, mingled with its general budget. The European Commission, in order to verify the conditions for budget support, focuses on the entire public financial management system and checks that it complies with the established budget support eligibility criteria. This is done under centralised management as the implementation (i.e. transfer of funds against checks of conditionalities) is done by the European Commission itself. Under budget support there is no actual delegation of budget implementation tasks to the beneficiary country. The main responsibility of the European Commission is to check compliance with the eligibility criteria of the country system (in addition to transferring the funds under the agreed conditions).
In cases of decentralised management, the European Commission delegates some budget-implementation tasks to a given entity of the beneficiary country. The beneficiary country then manages EDF or EU funds to implement the project under the ultimate supervision of the European Commission. The action is only completed once the given project/programme is actually implemented by the beneficiary country. During its implementation, the European Commission shares responsibility for the implementation of the specific project or programme. Assessments of the country systems are consequently focused more narrowly on the procedures and entities involved in the management of the specific project or programme. The control of the implementation of EU/EDF resources by the beneficiary country using country systems in the case of co-financing entails a number of challenges for the European Commission (for instance, the monitoring of the implementation by the beneficiary country would require an adequate knowledge of the controlled procedures).
It is thus important for the responsible authorising officer to bear these elements in mind when the aid delivery method and the method of implementation are chosen.