Statistics on International Development 2006
Annex 2 - Glossary
Administrative costs
DFID administrative costs cover the total cost of delivering all DFID’s programmes. They include UK based and local staff, consultants, travel, rents and communications – anything that does not provide a direct developmental benefit. They also cover expenditure in respect of residual rent liability on the Chatham Maritime site arising from the terms agreed for the privatisation of DFID’s former Next Steps agency, the Natural Resources Institute.
Other administrative costs cover the overseas costs of staff in agreed diplomatic posts concerned with full time aid administration and other elements of FCO and CDC administration costs which are related to aid delivery.
Africa Conflict Pool
Aid
Aid is an imprecise term but in SID, three concepts are presented of aid to developing countries: the DFID programme of aid; Gross Public Expenditure on Development (GPEX); and Official Development Assistance (ODA). Particular usage should be clear from the context. The term "Official Aid" (OA) relates to countries which were on Part II of the DAC List.. In December 2005 the DAC approved a new list of Recipients of Official Development Assistance (ODA) and the previous Part I and Part II lists were discontinued. There are also some countries to which the UK gives aid although not classed as ODA (see Annex 1 for a list of ODA eligible countries). In situations covering all recipient countries, the term "aid" is used. Further discussion is found in Section 1 of SID under ‘What counts as aid?’.
Aid and Trade Provision (ATP)
ATP was an allocation of bilateral aid funds to finance development projects which were also of commercial and industrial importance. It was used to enable banks to provide long term loans at below market interest rates to recipient country governments for specific projects agreed with the British Government. The ATP scheme lacked poverty elimination as its central focus and was closed in November 1997.
Attribution of EC budgetary spending
The external relations part of the EC regular budget provides Official Development Assistance (ODA) to the countries of Asia, Latin America, Europe, the Mediterranean and Africa. The costs are attributed to member states.
Most of the UK’s share of EC expenditure for developing countries is
attributed to the DFID programme and is shown under multilateral contributions
(Table 16
31 kb). From 2004/05 the EC attribution of spending to ten countries (on the
old DAC List Part II) is attributed to the Treasury. In addition, a small amount
of EC spending on administration is attributed to the Treasury and parts of some
specific projects may be attributed to the FCO. These are included in gross
public expenditure.
Bank lending
This refers to net lending to countries on the DAC List of Aid Recipients by banks in OECD countries. Loans from Central Monetary Authorities are excluded. In SID, figures obtained from the Bank of England, are shown in Table 4.
Bilateral aid
Bilateral aid is provided to developing countries on the DAC List and some other countries on a country to country basis, and to institutions, normally in Britain, working in fields related to these countries.
British Council
The British Council promotes Britain abroad and works in close co operation with British Diplomatic Missions. It provides access to British ideas, talents and experience in education and training, books and periodicals, the English language, the arts, the sciences and technology. DFID contracts the Council to manage development projects, administer the training of overseas study fellows in the UK and in other countries. DFID’s contribution to British Council ceased from 1 April 1999.
CARDS
CARDS is a European Union assistance programme to the Western Balkans whose objective is the promotion of stability and peace in those countries, through their participation in the Stabilisation and Association Process (SAP). The SAP is the framework for EU policy in the region. It seeks to promote stability while also facilitating closer association with the EU and focuses on political and economic reform and administrative capacity building.
CDC Group PLC (formerly Commonwealth Development Corporation)
CDC was transformed from a statutory corporation into a public limited company in December 1999, paving the way for it to become a Public/Private Partnership. From 1999 to 2004 it traded as CDC Capital Partners. From July 2004, most of the operational staff, including all overseas offices, transferred to a new company called Actis Capital LLP, which was de-merged from CDC. Actis has a majority of private sector partners and manages some of CDC’s investments under contract. CDC Group plc itself remains wholly Government-owned and is now the UK government’s instrument for investing in the private sector in developing economies (it does so through fund management companies. CDC only has activities in developing countries and regions. They provides equities and concessional loans to companies in some aid-eligible countries, and these disbursements and repayments are included as UK flows. Although CDC no longer provides loans to governments, it did in the past and these existing loans can become eligible for debt relief.
Civil Society Organisations (CSOs)
Non-governmental organisations, trade unions, black and ethnic minority groups and church faith and community groups have a long and impressive record of involvement in international development. These civil society organisations and networks can play a vital role in empowering poor people overseas and in building global alliances in support of eliminating world poverty.
Civil Society Challenge Fund (CSCF)
The Civil Society Challenge Fund replaced the Joint Funding Scheme from April 2000 as DFID’s main funding mechanism for UK based development non-governmental organisations and civil society organisations. It is open to any UK based non-profit making organisation or network, which shares DFID’s overall objective, namely the eradication of poverty. Financial support is offered on a project basis up to a maximum of £500,000 over periods of up to five years. Among other conditions for funding, the applicant organisation must be working with a local partner in the developing world.
Concessional
A loan, the terms of which are more favourable to the borrower than those currently attached to commercial market terms is described as concessional (or a soft loan) and the degree of concessionality is expressed as its grant element. (The grant element is a mathematical summarisation of the financial terms of a transaction or set of transactions. It is measured as the difference between the face value of a loan and the present value, calculated at a rate of discount of 10 per cent, of the service payments to be made by the borrower during the lifetime of the loan, expressed as a percentage of the face value.)
Consultancies
Consultancies is a generic term used to describe a range of entities that DFID uses under contract to provide services to the development programme, usually in response to requests from developing country partners,. Contracts may be issues to profit and not profit companies, CSO's, universities, research institutions and self employed personnel. Consultants provide wider experience and innovation, and can fill skill gaps. Business over £93,000 is subject to mandatory competition. All payments are in areas on completion of satisfactory work
Conflict Pools
There are two Conflict Prevention Pools – one for sub-Saharan Africa (the Africa Pool), and one covering the rest of the world (the Global Pool).
The Conflict Prevention Pools were formed in April 2001, following the HMG cross cutting review on conflict prevention in 2000. One of the key challenges in addressing conflict is ensuring a coherent response from the international community, and across the different interests of the UK Government. The cross-Whitehall Conflict Prevention Pools were set up to help address this problem, by bringing together the UK Government’s development, diplomatic, and defence interests.
The Pool’s total budget is set by the Treasury in response to a joint bid from DFID, FCO and MOD. Ministers representing the Pool Partners then agree to divide the annual budget between a limited number of priorities on the basis of recommendations put forward by the Global Conflict Prevention Pool Steering Team comprising of members from the three departments. The funds voted to DFID and other government departments are added to their budgets.
DAC list of aid recipients
This list used to be in two parts (Part I for countries and territories eligible to receive official development assistance (ODA) and Part II for countries and territories eligible to receive official aid (OA)). From December 2005 there is only one list, those countries eligible for ODA and details of these countries are shown in Annex 1. The list is designed for statistical purposes and not as guidance for aid or other preferential treatment. In particular, geographical aid allocations are national policy decisions and responsibilities.
Debt relief (see also section 5)
Debt relief may take the form of cancellation, rescheduling (or reorganisation). Interest and principal foregone from aid debt cancellation forms part of DFID programme expenditure; other debt relief is funded from other official sources, and forms part of the UK’s total Official Development Assistance (ODA).
- Debt cancellation is relief from the burden of repaying both the principal and interest on past loans.
- Debt rescheduling is a form of relief by which the dates on which principal and interest payments are due are delayed or rearranged.
A country’s debt can be described in terms of ‘principal’ and ‘interest’. The principal is the amount of the original loan still outstanding. A country’s debt stock is the outstanding principal and interest combined (plus any penalties incurred for failure to maintain debt service payments.
Launched by the World Bank and the IMF in 1996, the HIPC Initiative recognised that exceptional debt relief would be needed to bring about a once and for all reduction in the debts of some of the poorest countries, and that this would need to include debt relief from multilateral institutions, such as the World Bank, the IMF and the regional development banks. The HIPC Initiative was enhanced in 1999. Forty three of the poorest countries are eligible for HIPC and more may become eligible. HIPC countries have to demonstrate commitment to poverty reduction through the production of a Poverty Reduction Strategy. Under the HIPC Initiative, countries progress through Decision Point to Completion Point.
At Decision Point countries start to receive partial or full relief on debt service payment – both principal and interest (flow relief). At Completion Point countries receive partial or 100% reduction of amounts outstanding -principal and/or interest. This debt relief is irrevocable. More information on the HIPC Initiative and the triggers for Decision Point and Completion Point can be found in Section 5 of SID along with information on the flows involved.
The UK (like other donors) makes payments to the HIPC Trust Fund to ensure implementation of the HIPC Initiative. These payments include sums to compensate multilateral institutions for the debt relief they are awarding.
Official bilateral debts are re organised in the Paris Club of official bilateral creditors, of which the UK is a permanent member. The Paris Club has devised increasingly generous arrangements for reducing and rescheduling the debt of the poorest countries. The most generous terms offered by the Paris Club are for countries qualifying for the enhanced HIPC Initiative.
Paris Club arrangements in recent years are:
- Toronto terms agreed by the Paris Club in 1988 provided up to 33 per cent debt relief on rescheduled official bilateral debt owed by the poorest, most indebted countries pursuing internationally agreed economic reform programmes.
- Trinidad terms agreed by the Paris Club in 1990 provided up to 50 per cent debt relief.
- Naples terms agreed by the Paris Club in 1994 provided up to 67 per cent debt relief.
- Enhanced Naples/Lyons terms were agreed for countries qualifying for the HIPC debt initiative (see below). Paris Club members agreed to increase the amount of debt relief provided to 80 per cent.
- Cologne terms were agreed when the enhanced HIPC initiative was approved in September 1999. Debt relief is provided up to 90 per cent, and more when this is required for countries to achieve debt sustainability, as defined by the HIPC initiative.
- For non-HIPC countries, the Paris Club announced its adoption of the Evian Approach on 29 October 2003. Under this new flexible approach, the fixed menu previously offered by the Paris Club has been replaced by a tailor made solution linked to a debt sustainability analysis prepared by the IMF. The key innovation is that the Paris Club will now look at the sustainability of a debtor country’s long-term debt position, not just its short-term cash needs. If the debt position is clearly unsustainable, creditors will adopt a more active approach, including debt reduction if necessary, with the aim of offering a long-term solution.
Developing countries (see map in Annex 1)
Developing countries are those countries and territories in the DAC List of Recipients of Official Development Assistance (ODA).
Development Assistance Committee (DAC)
The Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD) is a forum for consultation among 22 donor countries, together with the European Commission, on how to increase the level and effectiveness of aid flows to all aid recipient countries. The member countries are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, UK and USA.
DAC sets the definitions and criteria for aid statistics internationally. Statistical Directives exist to encourage comparability of reporting of resource flows by DAC members. An updated version of these was approved in 2000. The countries receiving aid are set out in the DAC List of Recipients of Official Development Assistance (ODA).
DFID programme
This term covers all DFID expenditure on development assistance. DFID programme comprises:
• Bilateral development assistance to developing countries on the DAC list of ODA eligible countries and some other countries, including activities funded from the two conflict pools (one for Africa and one for the rest of the world) jointly managed by DFID, Ministry of Defence and the FCO.
• Multilateral development assistance, including global environmental assistance and the UK’s assessed contribution to EC development programmes
• Administration costs.
Total expenditure on these programmes is the sum of expenditure of funds which are voted for development assistance and the attribution (to the UK aid budget) of EC budgetary spending.
Direct investment
This is investment that adds to, or acquires, a lasting
interest in an enterprise operating in an aid recipient country, the investor's
purpose being to have an effective voice in the management of the enterprise. It
is measured as the change in the net worth of branches, subsidiaries, or
associate companies to the investing company. Direct Investment is shown in
Table 4
(33 kb).
European Development Fund (EDF)
The EDF finances development co-operation between the EC and the African, Caribbean and Pacific States under the Cotonou Agreement, and its predecessor, the Lomé Convention. It is an intergovernmental fund managed by the European Commission and financed on a voluntary basis by member states separately from the regular EC budget.
Export Credit Guarantee Department (ECGD)
ECGD is an agency of the Department of Trade and Industry and provides insurance for exporters against the main risks in selling overseas, and guarantees to banks providing export finance. It also negotiates debt relief arrangements on commercial debt.
Payments by the ECGD to commercial banks to enable them to maintain internationally agreed interest rates for export credits for trade with aid recipient countries are known as International Stabilisation Grants. These are included in Other Official Flows (OOF) but are excluded from GPEX as they are not developmental. ECGD debt relief is included in GPEX.
Export credits
Export credits finance the supply of goods and services to aid recipient countries. Only credits with an initial or extended maturity of over one year are included in total flows of resources. Private export credits are those made available by the private, bank and non bank, sector. Guaranteed export credits are those parts of private export credits guaranteed by ECGD.
Financial aid
In SID the term financial aid covers Poverty Reduction Budget Support and other financial aid (ie projects and programmes including sector wide approaches not classified as PRBS).
The term ‘financial aid’ is sometimes used in a wider sense to mean a grant which is the subject of a formal arrangement with the recipient government or institution. This would cover all bilateral aid other than technical co operation and administrative costs. In SID, bilateral financial aid expenditure is sub-divided into PRBS (General and Sector), other financial aid, grants and other aid in kind, humanitarian assistance and debt relief.
Flow of resources
See Official and private flows.
Food aid
All British food aid is provided in accordance with the code of conduct agreed under the 1999 Food Aid Convention.
Under the terms of the Convention, the EC and its Members undertake to provide a minimum of €422 million each year to cover food aid and related transport and operational costs. Of this, a minimum 1,320,000 tonnes of cereal is guaranteed.
In addition, the EC has its own food aid programme, the cost of which is
attributed to member states in accordance with the normal arrangements for
external assistance (see Table 16
31 kb) for UK share).
Britain’s food aid obligations are met both bilaterally, on a country basis, and multilaterally through the World Food Programme and others.
Global Conflict Pool
Global Environment Assistance (GEA)
This comprises of two funding agreements – the Global Environment Facility (GEF) and the Montreal Protocol.
The GEF provides grants and concessional funds to help developing countries fund projects and programmes that protect the global environment. Established in 1991, GEF is the designated financial mechanism for the international conventions on biodiversity, climate change, persistent organic pollutants and desertification. GEF also supports projects that protect international waters and the ozone layer. The GEF partnership brings together the World Bank, specialist UN agencies such as the UNDP and UNEP, regional development banks and NGOs. The GEF is also positioning itself to work more systematically with the private sector.
The GEF meets recipients’ agreed incremental costs (ie the additional costs of meeting global rather than national environmental benefits) in the following focal areas:
- Climate Change
- Biological Diversity
- International Waters
- Ozone Layer Depletion (for countries with economies in transition)
- Persistent Organic Pollutants
- Land Degradation
The GEF are, in addition, managers of the Special Climate Change Fund (SCCF) and the Least Developed Countries Fund, enabling funds agreed under the UN Framework Convention for Climate Change to help mainstream adaptation responses to the impacts of climate change into the national development strategies of developing countries. It was agreed by DAC members that 84 per cent of contributions to GEF in the period 1994-1997 be reported as official development assistance (ODA). From 1998-2001, 75 per cent of contributions counted as ODA and the remaining 25 per cent as official aid (OA) From 2002, 77 per cent of contributions count as ODA and 23 per cent as OA.
The Montreal Protocol on Substances that Deplete the Ozone Layer is a legally binding multilateral agreement to eliminate or reduce the use of chemicals which damage the ozone layer. The Protocol was established in 1987. Its control regime has been progressively tightened in the light of new scientific evidence and developing countries are now entering the compliance period.
The protocol explicitly recognises the different capabilities and needs of developing countries. Through the Multilateral Fund of the Protocol, provision is made for the transfer of appropriate technologies and skills to enable industry in developing countries to convert to ozone friendly alternatives. Assistance is also given with institutional strengthening to ensure that the necessary policies, strategies and institutional framework for the phasing out of Ozone Depleting Substances (ODS) are in place at the national level. The Multilateral Fund was established to meet, by grant or concessional lending, the agreed incremental costs to developing countries of their phasing out of ODS.
It has been agreed by DAC members that 100 per cent of contributions to the Montreal Protocol may be reported as ODA from 1994.
Grants and Other Aid in Kind
This covers:
- Support to the development work of UK and international voluntary organisations, grants to the British Council and for other development work by UK institutions, and non-emergency special appeals through multilateral agencies.
- Small Grants Scheme (an amalgamation of the former British Partnership Scheme and the Heads of Mission Gift Scheme). The Small Grants Scheme allows Heads of UK Diplomatic Missions to finance projects in line with DFID objectives costing up to £100,000 a year, with an annual ceiling which is normally £200,000. (This is administered by the FCO from 1 April 2005.)
- Funding of land and geological surveys in developing countries.
- Provision of books, equipment and other supplies in addition to those supplied through the Small Grants Scheme.
- Development Awareness Fund.
Grants by private organisations
This comprises all expenditure by UK
voluntary agencies on development assistance and relief to recipient countries,
to multilateral agencies or to private international organisations for the
benefit of recipient countries net of any support from official sources. Data
are shown in Table 4
(33 kb) and obtained via DFID’s Voluntary Agency Survey (See Annex
3).
Gross National Income (GNI) - formerly Gross National Product (GNP)
GNI comprises the total value of goods and services produced within a country (ie its Gross Domestic Product or GDP), together with income received from other countries (notably interest and dividends), less similar payments made to other countries.
The new System of National Accounts (SNA 1993) co-sponsored by the OECD and other major international organisations broadened the coverage of Gross National Product and it was renamed Gross National Income. This change for aid reporting did not take place until 2000 when all DAC donors would be using the new system.
Gross Public Expenditure on Development (GPEX)
GPEX is expenditure by all official UK sources i.e. government departments and public bodies such as CDC, on aid to developing countries on the DAC list of ODA eligible countries and some other countries, which meets the criteria for developmental official flows agreed by the DAC. See ‘Understanding Aid Statistics’.
Guaranteed export credits
High income countries (HIC)
See Income groups and Annex 1.
Heavily Indebted Poor Countries (HIPC)
HIPC Trust Fund
Humanitarian assistance
Humanitarian assistance generally involves support to humanitarian organisations and the provision of material aid (including food, shelter and medical care), personnel, and advice in order to:
- save lives, alleviate suffering and maintain human dignity during and in the aftermath of man-made crises and natural disasters;
- reduce the incidence of refugees and internally displaced;
- hasten recovery and protect and rebuild livelihoods and communities;
- reduce risks and vulnerability to future crises, including strengthening preparedness measures.
DFID provides funding to certain UN agencies (mainly WFP, UNICEF, OCHA, UNHCR and WHO) for their humanitarian assistance programmes in individual countries. These amounts are recorded as bilateral disaster relief as DFID has influence over the use and destination of the funds.
DFID also channels assistance through civil society organisations, including the Red Cross/Red Crescent movement, as a means of providing humanitarian assistance to individual countries. These contributions are recorded as bilateral aid as the destination country of flows is known.
Income groups
The classification of aid recipient countries by income groups is based on GNI per capita figures in 2004 according to the thresholds set out below. These thresholds are identical to those used by the World Bank as follows:
- low income group: countries with a GNI per capita in 2004 of $825 or less;
- lower middle income group: countries with a GNI per capita in 2004 of $826 or above but not exceeding $3,255;
- upper middle income group: countries with a GNI per capita in 2004 of $3,256 or above but not exceeding $10,065;
- high income group: countries with a GNP per capita in 2004 of $10,066 or above.
These thresholds differ from those used in the Value for Money PSA target on aid to lower income countries based on 2001 GNI per capita thresholds
Least developed country (LDC)
In the mid 1960s, 24 developing countries were identified as having particularly severe long term constraints on development. They were assessed on three criteria: per capita GDP, manufacturing base and literacy. Inclusion on the list of LDCs is now assessed on two main criteria: economic diversity and quality of life. The total number of LDCs at 31 March 2004 was 49 and they are identified in Annex 1.
Low income countries (LIC)
See Income groups and Annex 1.
Lower middle income countries (LMIC)
See Income groups and Annex 1.
Montreal Protocol
See Global Environmental Assistance
Multilateral aid
This is aid channeled through international bodies for use in or on behalf of aid recipient countries. For those international bodies whose activities benefit both developing and developed countries, only that part of the UK contribution estimated to be for development oriented activities in the former is reckoned as aid. The proportion reckoned as aid for each agency is agreed by the DAC.
Aid channeled through multilateral agencies is regarded as bilateral where DFID controls the use and destination of the funds. This relates mainly to humanitarian assistance delivered through UN agencies, including the World Food Programme.
Multilateral Debt Relief (MDRI)
In 2005, the G8 agreed a proposal for an MDRI that would cancel 100% of the remaining debts of HIPCs to the concessional lending arms of the World Bank (IDA), IMF and African Development Bank (AfDF). The MDRI, worth over $50 billion to 43 countries, will mean 100% debt cancellation when countries reach HIPC Completion Point.
Official aid (OA)
This refers to countries on the DAC Part II list of countries which ceased to exist from 2005. To qualify as official aid, resource flows should have had the same concessional and qualitative features as ODA.
Official and private flows
The flow of resources to aid recipient countries is a term used in DAC reporting and corresponds broadly to the following transactions with recipient countries and multilateral institutions (for the benefit of recipient countries).
• Grants and long term capital transactions effected by governments or the official sector of DAC countries;
• Private flows which are long term (over one year) capital transactions by UK residents (as defined for balance of payment purposes) with aid recipient countries, or through multilateral agencies for the benefit of such countries. They include all forms of investment, including bank lending and export credits where the original maturity exceeds one year. Private flows are reported to DAC separately for direct investment, export credits and bank lending. Figures can be seen in Table 4.
• Grants by private voluntary agencies (often referred to as "private grants").
It excludes:
- military equipment or services: grants, official loans, or credits (guaranteed or not) for the supply or financing of military equipment or services. However from 1993 onwards forgiveness of debt generated by military lending is recorded as OOF.
- transfers to private individuals: transfer payments to private individuals are not included unless they are part of technical co operation or relief programmes.
- transfers by private individuals: private payments are excluded except for grants by private voluntary organisations for development assistance and welfare purposes (see third bullet above).
Official Development Assistance (ODA)
Official Development Assistance is defined as those flows to developing countries and multilateral institutions provided by official agencies or by their executive agencies, each transaction of which meets the following tests:
- it is administered with the promotion of the economic development and welfare of developing countries as its main objective; and
- it is concessional in character and conveys a grant element of at least 25 per cent.
Official Development Assistance is shown both gross and net of loan repayments. From 2005 only aid to countries on the DAC List of Recipients of Official Development Assistance is eligible to be recorded as ODA.
The UN target for aid (0.7 per cent), endorsed in 1970 by the UN General Assembly, is expressed in terms of net ODA (ie after deduction of loan capital (ie principal) repayments) as a percentage of Gross National Income.
Other Official Flows (OOF)
Other official flows are defined as flows to developing countries by official sector which do not satisfy both criteria necessary for ODA ie can be either non-concessional and convey a grant element of less than 25 per cent or non-developmental purpose or both
Partnership Programme Agreements (PPAs)
These are strategic level agreements between DFID and UK civil society organisations with which it has significant working relationships and shared objectives. The PPA sets out at a strategic level how the two partners will work together to meet the Millennium Development Goals. PPAs are long-term agreements of 3-5 years, which aim to strengthen the relationship between different parts of DFID and significant civil society organisations who have a strong track record of work in international development and an ability to make a contribution to achieving the Millennium Development Goals.
The Agreements are built around a set of specific outcomes and identify the respective roles of both DFID and the partner in achieving those outcomes.
Phare
The Phare programme is a European Union initiative which provides grant finance to the countries of Eastern Europe to help their transition to democracy and assist with the institutional reform required to meet the standards for membership of the European Union.
Policy Information Marker System (PIMS)
DFID's spending departments mark new bilateral project commitments according to which policy areas they target. This system is described in Section 4 on the purpose of UK expenditure on development.
Poverty Reduction Budget Support
Poverty Reduction Budget Support (PRBS) can take the form of a general contribution to the overall budget (general budget support) or support with a more restricted focus (sector budget support). PRBS is aid which is:
- Provided in support of a government policy and expenditure programme whose long-term objective is poverty reduction;
- Spent using national (or sub-national) financial management, procurement and accountability systems, although provided the recipient government’s Public Financial Management Administration (PFMA) systems remain the principle means by which fiduciary risk is managed, additional safeguards may be agreed to where necessary;
- Normally transferred to the central exchequer account, but may be transferred to a sector specific bank account or sub-national level bank account over which government has full financial authority;1
And, in the case of sector budget support
- Earmarked for expenditure either in a particular sector, sub sector, programme, or set of expenditure lines, but where the use of DFID funds cannot be tracked to the level of goods and services.
Note:
I. This definition was agreed in May 2005 and is wider than that used in last year’s SID. The main difference is that the old definition required PRBS to be spent through a central exchequer while the new definition recognises the important issue is that the funds are spent using national (or sub-national) financial management systems and are allocated through the government’s budget process.
II. The difference between the definitions with regards to DFID’s current portfolio is likely to be relatively small. Some PRBS expenditure included in SID has been classified under the wider aspects of the new definition, however to date no retrospective marking exercise has taken place so most of the historical PRBS data has been gathered using the old definition. In the future, expenditure will be classified using the new definition.
Private Flows
See Official and Private Flows
Promissory notes
Capital subscriptions to the World Bank, the regional development banks, the European Bank for Reconstruction and Development, the International Fund for Agricultural Development, GEF and the Montreal Protocol are made in the form of promissory notes which are deposited by DFID mainly with the Bank of England. They are subsequently cashed by the agency when needed. The disbursements recorded against DFID programmes and GPEX are at the time of encashment; those recorded as ODA are at the time of deposit.
Reorganising
Resource accounting
Resource Accounts are an accrual-based approach to Government accounting that adopts a commercial style of preparation in line with generally accepted accounting practice. Accruals accounting is a method of recording expenditure as it is incurred, not when it is paid out, and income as it is earned, not when it is received. Resource Accounting requires departments to report on and manage all assets and liabilities and takes account of non-cash charges not previously recognised under cash accounting such as depreciation and capital charges. Resource accounts also provide information on how resources have been used to meet objectives.
Under Resource Accounting, expenditure is recorded at the time goods and services are consumed rather than when payments are brought to book. Under the earlier cash accounting conventions it was possible for advance payments to be attributed to a particular financial year provided they were accounted for in the two months following the end of that year. Historically quite a number of payments have been handled in this way, mainly relating to overseas accounts and grants to NGOs, averaging £127m per annum in each of the four financial years to 2000/01. However, this practice ceased in 2002 and so, for 2001/02, there was no information available on these “prior year” adjustments. From 2001/02 onwards, in cash terms, all payments have been counted in the year they are made. As SID continues to be produced on a cash basis in line with international reporting practices, this means that 2001/02 was a unique year. It was ‘light’ by the amount of what under the old system would have been prior year adjustments, which have instead been attributed to 2002/03. 2002/03 is the starting point for a new consistent series.
The data in SID are on a cash basis, but can be reconciled to DFID’s formal resource accounts as shown in the table at the end of the glossary.
Tacis
The Tacis programme is a European Union initiative which aims to foster economic and political links between the European Union and the newly independent states of Central Asia and the former Soviet Union.
Technical Co-operation (TC)
Technical Co-operation is the provision of know-how in the form of personnel, training, research and associated costs. It covers primarily:
- Consultancies: the provision of assistance to recipient countries in the form of contracted specialists
- Knowledge and Research: includes grants for agreed programmes of research and development at UK institutions (sometimes in collaboration with non-UK institutions) which will be of benefit to assisted countries.
TC also includes:
- Training and Scholarships: the provision of assistance in the form of training for persons from aid recipient countries. The training may be provided in the UK, in the home country of the student, or in a third country. Training provided under the Commonwealth Scholarship and Fellowship Plan, the Shared Scholarship Scheme and Training through Country Programmes is managed directly by, or on behalf of, DFID.
Increasingly training is also being provided by means of short in-country courses as part of, or in association with, country projects. This is not fully captured at present in the statistics on training. The costs of these activities are included within projects and programmes.
Upper middle income countries (UMIC)
See Income groups and Annex 1.
Voted funds
Voted funds are those funds approved by Parliament for public expenditure. Details are contained in the supply estimates.
World Bank
The term World Bank is commonly used to refer to the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The World Bank has three other agencies, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). Together these organisations are referred to as the World Bank Group.
Reconciliation of DFID programme expenditure in SID and DFID formal resource accounts for 2005/06
SID £m |
Accounts £m |
||
Total DFID Programme (Gross) |
4413 |
||
Less |
|||
EC Attribution |
680 |
||
Retrospective Terms Adjustment |
15 |
||
Receipts |
24 |
||
Plus |
|||
Non aid contributions |
13 |
||
| Non aid capital payments | 1 | ||
Cash Expenditure (Net) |
3709 |
3709 |
|
Plus |
|||
Non cash items |
152 |
||
New provisions + promissory notes |
478 |
||
Year end adjustments |
(8) |
||
Less |
|||
Use of provisions |
424 |
||
Capital investment |
7 |
||
Non resource income |
(3) |
||
Resource Outturn |
3904 |
||
Notes to table:
Non cash items – include the cost of capital charges and depreciation costs.
New provision and promissory notes - include provisions taken in year for early retirement costs and other new provisions, as well as deposits of promissory notes made in 2005/06
Year end adjustments – includes the movement between the opening and closing debtors and creditors, including accruals and prepayments.
Use of provisions – provisions have been taken for future liability on current obligations, for example showing the deposit of a promissory note or the pre-independence pensions costs for colonial pensions. The amount shown against the use of provision relates to the calls made on them.
Capital investment – reflects the purchase of fixed assets. Additions to investments and loans and repayment of loans
