SRBCs targeted the strengthening of government capacities in: 

  • macroeconomic and fiscal stabilization and PFM systems, with an important focus on domestic revenue mobilization (DRM); 
  • provision of basic social services; and 
  • democracy and the rule of law. 

Macroeconomic and fiscal stabilization policies are the IMF’s mandate. The IMF provides partner countries with incentives to follow a macroeconomic stabilization policy. It is often backed up by EU budget support, first through the budget support eligibility criteria, which require the partner country to pursue a macroeconomic stabilization policy, and second by the EU’s direct contribution to stabilization via the injection of large amounts of funding into national Treasury accounts right after the shock. The EU’s role in supporting macroeconomic stabilization was particularly significant in fragile countries with a high security risk. Indeed, the large influx of EU funding and the EU’s presence as a frontrunner in providing budget support has often provided a strong signal for other development partners to follow suit and provide support in a high-risk environment (Box 3.9).

Box 3.9: Support for the Central African Republic

In 2014–2015, the EU’s SRBC was the only budget support provided to the Central African Republic. Equivalent to 15% of total revenues in 2014 and 12% in 2015, it covered as much as 36% of civil servants’ salaries during and just after the peak of civil war violence. In 2016, the IMF, World Bank, African Development Bank, and France joined to assist and cover the gap on the balance of payments and state budget, in the form of budget support. In this manner, the relative weight of the EU SRBC gradually declined over the period. These various budget supports helped to relieve some of the pressure on public finances, but with domestic resources mobilization only increasing from 5% of GDP in 2014 to 9% of GDP in 2018, the country’s Treasury remained extremely stressed during that period.

An increase in foreign direct investment has been observed in countries where the EU provided SRBCs, with the influx of foreign currency having a positive effect. The resumption of external debt interest payments and the availability of essential imports provided the wider public with more confidence in the government: during the periods of SRBC provision, the cost of domestic borrowing decreased, further easing the fiscal situation. 

Fiscal stabilization was also enhanced by the EU’s focus on domestic revenue mobilization (DRM). This was usually achieved through policy dialogue, the performance indicators of variable tranches and complementary technical assistance. In most cases, this focus on increased DRM paid off, with positive results obtained through better tax administration (including tax exemptions and the taxing of extractive industries), improving the sustainability of fiscal stabilization. 

Public financial management (PFM), supported by the EU and other development partners, made good progress. Since vast amounts of grant funding were passing though domestic systems, PFM improvement and more rigorous treasury management were amongst the most important objectives of policy dialogue between the EU and the government. As a result, about half of the variable tranche performance indicators were linked to targets in the areas of PFM, including DRM, external audit, and transparency and anticorruption. PFM was a major focus of policy dialogue and technical assistance support. Although not all these efforts appeared to have paid off, improvements were noted, especially in treasury management, budget planning and procurement, and in democratic participation of budget programming. Transparency in budget execution and external oversight did not improve. 

SRBCs enabled an increase in government recurrent spending on basic social services, mostly for salaries, in a general context of fiscal restraint. The additional space for discretionary spending allowed by EU SRBCs was found to have been crucial to protecting recurrent expenditures during the evaluation period. Capital expenditures did not increase. The allocation of the discretionary expenditure to social spending was, at least partly, influenced by the accompanying policy dialogue and use of performance indicators. 

In line with the focus of early SRBCs, which was on stabilization rather than growth, the SRBCs did not seek to influence public policies other than macroeconomic and fiscal management. Nevertheless, EU SRBCs were instrumental in preserving and even increasing social services, despite the very difficult contexts. EU funding, coupled with an insistent dialogue on the need to protect social sector budget allocations and to fully execute available budget lines, as well as the inclusion of performance indicators targeting the protection of these budget allocations, enabled the maintenance of spending on social services and an increase in health spending. As a result of SRBCs, social services in fragile countries continued to be delivered. Health services, including drug availability, improved in all countries and especially so in those countries suffering from the Ebola pandemic. In some cases (Côte d’Ivoire, Madagascar), SRBCs also supported a better distribution of services over the territory. 

In turn, the protection of basic services delivery was recognized in the evaluation to have contributed, alongside other international technical and financial support, to the attainment of SDGs, in particular to positive effects on health and education outcomes, such as lower infant mortality and improved maternal health. However, no evidence was found that the quality of services or the food security situation of the population improved as a result of EU SRBCs. 

With regards to democracy and the rule of law, the strengthening of the institutions responsible for security, justice, peace and democratic governance has been slower than expected. The accent has been on policy reforms and legislation, which did not yet result in improved public governance over the period evaluated. About one-third of SRBCs specifically targeted the reinforcement of democracy and the rule of law through the use of performance indicators (on budget allocations, the creation of institutions, the reinforcement of institutional processes, the strengthening of institutional capacities). SRBCs were found to have been instrumental in triggering reforms in the fields of justice, internal security, decentralization, the fight against corruption, and citizen participation. Despite this good progress, the effect upon improved governance is not yet visible. In Niger, for example, the first two SRBCs supported reforms to justice and internal security. The EU, the United Nations Development Programme, and the EU Capacity-Building Mission (EUCAP) Sahel supported the government to prepare a national strategy for internal security and its action plan, which was adopted in 2017. Its implementation continued to be supported by the EU through a third SRBC during 2019. 

Countries with an on-going political transition provided a favourable context for SRBCs, which could accompany a peace consolidation process by supporting stabilization and the strengthening of state functions, leading to stronger public governance. In others, efforts made were undermined by the difficult context, marked by persistent political and security fragility, continued macroeconomic risks, political resistance, and insufficient capacity to implement difficult reforms addressing structural bottlenecks. These problems were exacerbated by a lack of popular trust in state institutions and state legitimacy. In these cases, the SRBCs’ efforts to improve governance were not successful.