The Disbursement “Gap” III: A Non-problem?

A postscript on the disbursement “gap” issue which may be something of a non-problem. See here and here for earlier posts.

In talking with colleagues more knowledgeable about budgeting and the commitment process by the various donors, there is a sense that the difference between commitment and disbursement is both (1) normal and (2) idiosyncratic somewhat to the experience of the United States.

It’s normal in the sense that the amount of money being dedicated to this problem has ramped up dramatically so one would assume that both administrative issues on the donor end and distribution/absorptive capacity on the recipient side would make scaling up tricky, particularly in the early years. We have to remember that none of these programs existed five years ago. The Global Fund was created in 2002, and PEPFAR was announced in 2003, and so it takes time.

On the U.S. side, the U.S. is a little more idiosyncratic than other donors. Some streams of U.S. funds do not have to spent in a single year (like from USAID) so U.S. policymakers might think in terms of a commitment, but not actually disburse the funds until the following year or years. Some U.S. funds do have to be spent in the same calendar year, and other countries have this a feature by law. I think based on conversations with British officials in the past that this is a constraint for them.

The U.S. apparently is very different from the other donors in that U.S. policymakers think in terms of commitments. That idea is somewhat ill-suited to other governments like the UK and continental European governments. Whereas the U.S. will track its commitments and then assess disbursement, other governments just report disbursements and commitments as if they were the same. So, trying to infer from British behavior that they are better at disbursement could be problematic since, unlike the U.S., they may not distinguish between the two and differentially track the difference as a function of policy.

In any case, I think the scaling up and absorptive capacity issues are probably real ones that will be with us for some time, particularly as donors seek to enhance their commitment in the goal of providing universal access. Here, I think a non-jaundiced view of donor behavior is probably valid. In other words, I’m hopeful that the donors are not only doing this work out of good will but also have competent managers on the ground. At the same time, there will be inevitably be problems, and to that end, I think the detailed reports from CGD and other organizations about where the money is going are really helpful contributions. Watch this space for more on this topic.

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