1. PREPARING IPA II SECTOR PLANNING DOCUMENTS (SPDs)
Ruggero Tabossi
George Chabrzyk
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2. Training Objectives To explain:
The IPA II legal basis and regulatory framework
The hierarchy of EC and Serbian strategic planning documents for programming IPA II assistance
The ‘Sector Approach’ in the context of EU enlargement and IPA II
EC criteria for assessing sector maturity and readiness for adopting a Sector Approach
How sector assessments are undertaken in Serbia
Types of IPA II Programmes /Actions
IPA II and Sector Budget Support
Standard templates for Sector Planning Documents (SPDs)/ Action Documents (ADs)
SPD Intervention Logic
SPD Sequencing and Budgeting
SPD Indicators and Targets

3. IPA II REGULATORY FRAMEWORK

4. (Country /Multi-Country /CBC)
Legal Framework
EU Enlargement Package (Enlargement Strategy + Progress Report)
EU Financial Regulation (+RAP)
IPA II Regulation (+RAP)
Common Implementing Rules
IPA II Common Strategic Framework
Country /Multi-Country Strategy Papers
Framework Agreements
IPA II Programmes
(Country /Multi-Country /CBC)

5. Hierarchy of Strategic Documents
Enlargement Package
(EU Enlargement Strategy, EC Progress Report /SAA/ European Partnership)
IPA II Regulation / Rules of Application
Country /Multi-Country Strategy Paper
National Sector Programme or (IPA-specific) Sector Planning Document -SPD)
Action Documents (ADs)
Annexed: SPDs
(Draft) Action Programme (AP)
Financing Proposal
Annexed: ADs
Commission Implementing Decision
Annexed: AP
Financing Agreement

6. Programme Types
The Action Programme then becomes an annex to the Financing Agreement between the European Commission and the Beneficiary Country in the case of a Country Action Programme. No Financing Agreement is concluded in the case of a mainstream Multi-Country Programme
Cross-Border Cooperation Programme, which sets out up to four thematic priorities for assistance for each border area for the entire programming period The Cross-Border Cooperation Programmes are the main basis for the drafting of Financing Proposals (to become an annex to the Commission implementing Decision once adopted), which will highlight the priorities for funding and trigger commitments for up to 3 years.
The Financing Decision becomes an annex to the Financing Agreement between the European Commission and the participating Beneficiary Countries.
Rural Development Programmes (RDPs) represent the most formalised type of IPA support in the area of rural development. The aim of these programmes is to implement the strategic priorities for rural development set out in Country Strategy Papers, through a set of measures defined in the Framework Agreement.
Programme documents
A single Rural Development Programme drawn up at national level should be submitted by Beneficiaries. The programme is prepared by the relevant authorities designated by the Beneficiary and is submitted to the European Commission after consulting the appropriated interested parties.
Before putting together a Rural Development Programme, a National Rural Development Strategy must be in place and analyses of the main sectors of agriculture must be carried out. Once drafting of the programme has advanced, ex-ante evaluation of the programme must be conducted.
Before the programme can be adopted via a Commission implementing Decision, and in addition to the preparatory work and preconditions above, a Sectorial Agreement must be concluded with the country.
A Financing Agreement is concluded concerning the Rural Development Programme after its adoption

7. Programming Terms used in IPA II
Action Programme: A group of Actions which address CSP targets and which are the subject of a Commission Implementing Decision
Action: A coherent set of coordinated activities carried out to meet a defined objective, which have an estimated total cost plus implementation schedule and performance parameters.
Activity: A component of an Action which can be clearly identified by its costs and type of financing (procurement, grant etc.)
Measure: A set of operations contributing to one or more common objectives
Operations: Projects and /or contracts

8. There might also be cases where an individual Action Programme is made up of one single Action, particularly where an Action (and therefore the entire Action Programme) focuses on a defined sector (e.g. through Budget Support).
There might also be cases where an individual Action Programme is made up of one single Action, particularly where an Action (and therefore the entire Action Programme) focuses on a defined sector (e.g. through Budget Support).

10. Proposed Sector Planning Document (SPD) Template

11. Sector Planning Document
SPD Template
Purpose
Section 1: Sector Description
To systematically address the EC criteria for Sector Approach and show that the sector in question is sufficiently mature to adopt a Sector Approach. Also the steps being undertaken to increase sector maturity.
Section 2: Sector Programme Rationale
To provide justification for the proposed programme to explain the focus of IPA assistance within the whole scope of the sector An overall picture of the problems to be solved with the support of IPA funded sector support.
Section 3: Sector Programme Description
To describe in detail the proposed programme covering: overall /specific objectives; impact indicators; results; measures & operations; institutional arrangements for implementation.
Section 4: Budget
To provide an indicative 3-year sector budget based on all sources
Section 5: Annexes
Log Frame
Institutional Arrangements
Implementation Schedule
To provide inputs for the associated Action Documents

12. Sector Planning Document
1. Sector Description
1.1 National Sector Policy & Strategy
1.2 Sector Institutional Framework, Coordination, Capacity
1.3 Performance Assessment Framework
2. Sector Programme Rationale
2.1 Sector Status and Problem Analysis
2.2 SWOT Analysis
2.3 Links with National Documents, Sector Strategies and Country Strategy Paper
2.4 Cross-Cutting Issues
2.5 Links with other sectors
3. Sector Programme Description
3.1 Overall & Specific Objectives
3.2 Impact Indicators
3.3 Results
3.4 Measures & Operations
3.5 Past and on-going experience, lessons learned
3.6 Sustainability
3.7 Assumptions & Pre-conditions
3.8 Institutional Arrangements for Implementation
4. Budget
4.1 Summary of Indicative Budget
4.2 Budget breakdown per year
INTERVENTION LOGIC
SPD 2.1
SPD 2.2
SPD 3.1
SPD 3.3.
SEQUENCING
SPD 3.3
SPD 3.4
SPD 4.1
SPD 4.2

13. AD Intervention Logic
Intervention logic shows how planned results and specific objectives will be achieved by sector action operations.
Overall Objective
Specific Objective
Result 1
Result 2
Result 3
Activities
Contracts

14. Sector Planning Document
SPD: Sequencing
Sector Planning Document
Action Document
Specific Objective 1
Specific Objective 2
Results R1 R2 R3 R4 R5 R6 R7 R8
Results
2015 R1 R2
2016 R3 R4 R5 R6
2017 R7 R8

15. The Sector (Wide) Approach

16. What is the Sector Approach?
The Sector Approach is a way of working together between: Government and Donors and other Key Stakeholders (NGOs, CSOs etc)
It is a process aiming at broadening government and national ownership over public sector policy and resource allocation decisions within a sector by increasing the coherence between policy, spending and results, and reducing transaction costs
It involves a shift from stand-alone projects to programmes where donor assistance contributes to the development and implementation of a coherent, nationally owned programme across a whole sector (i.e. ‘Sector-Wide’)

17. Paris Declaration: Aid Effectiveness
Paris Declaration (02/03/2005) principles are: 1) Ownership; 2) Alignment; 3) Harmonization; 4) Managing for results; 5) Mutual accountability
Indicators
Countries put in place national development strategies with clear strategic priorities (OWNERSHIP).
Donors align their aid with national priorities and provide the information needed for it to be included in national budgets (ALIGNMENT)
Co-ordinated programmes aligned with national development strategies provide support for capacity development (ALINGNMENT)
As their first option, donors use fiduciary systems that already exist in recipient countries (ALINGNMENT).
As their first option, donors use procurement systems that already exist in recipient countries (ALINGNMENT).
 Aid is released according to agreed schedules (ALINGNMENT).

18. What is a Sector?
There is no single definition of the policy area that can be considered a sector, nor is there an exhaustive list of possible sectors.
A sector is a defined policy area under the responsibility of a line minister (following DG ELARG guidelines).

19. Criteria for Sector Definition
Sector should be have relevance for EU accession and/or national socio-economic development.
Sector should be wide enough to be significant for national accession /development objectives, but narrow enough for institutional coherence
Sector should have a clearly established institutional framework, institutional leadership & responsibilities, ideally there should be one lead institution;
Sector should have a clear linkage to the national budgetary process

20. Sectors Defined for Country Strategy Papers1
Indicative Sectors
Policy Areas
Sectors Defined for Country Strategy Papers1
Transition Process & Capacity Building
Democracy and Governance
Rule of Law and Fundamental Rights
Regional Development
Environment
Transport
Energy
Competitiveness and Innovation
Employment, Social Policies & Human Resource Development
Education, Employment and Social Policies
Agriculture & Rural Development
1Taken from ‘A Quick Guide to IPA Programming’. DG ELARG December 2013.

21. Rule of Law Chapter 23: Judicial and Fundamental Rights
Chapter 24: Justice, Freedom and Security
1. Judiciary
Migration
Impartiality
2. Asylum
Independence
3. Visa Policy
Accountability
4. External Borders & Schengen
Professionalism, Competence, Efficiency
5. Judicial Cooperation in Civil, Commercial & Criminal Matters
2. Anti-Corruption
Alignment of legislative framework with EU
6. Police Cooperation & the Fight against Organised Crime
Effective implementation
7. Fight against Terrorism
Prevention awareness raising
8. Cooperation in the Field of Drugs
3. Fundamental Rights
9. Customs Cooperation
Minority rights and cultural rights
Protection of personal data
10. Counterfeiting the Euro

22. Implementing Actions: PRAG Contracts and/or Budget Support

23. Types of Contract and Associated Documents
IPA Action Document
SERVICES
Terms of Reference
Procurement
SUPPLIES
Technical Specifications
WORKS
Bills of Quantity
Services
Studies - identification and preparation of projects, feasibility studies, economic and marketing studies, technical studies, evaluations and audits (Global price)
Technical assistance - the service provider has an advisory role, directs or supervises a project, or providing expert services defined in the contract (fee-based)
The combination - defined as resources and product
Supplies
Purchase, lease or rental of assets (equipment).
During the delivery of the equipment may be required installation and maintenance products
Works
Performance, or design and construction that result in the building or work of civil engineers who themselves are sufficient to meet the economic or technical function.
Twinning (Twinning: 1-2 MEUR and Twinning light: up to EUR)
Cooperation tool between a Public Administration in a Partner/ Beneficiary country and the equivalent institution in an EU Member State
It consists of sending to Serbia at least one resident adviser ( months)- RTA- and a number of medium and short-term missions, all to be carried out by public officials of the EU Member State institution
Key features is the concept of mandatory results: both the Serbian and the EU partner commit themselves to work towards a commonly agreed result, which should be measurable and precise.
Includes at least some elements of approximation to the EU acquis
Grants
Direct payments of non-commercial nature
Grants contract is used for the grant scheme as direct donation for local and regional authorities and civil society organizations
Direct Agreements
For particular tasks with specific organizations like UNHCR etc.
GRANTS
Guidelines for Applicants

24. Contracting & Disbursement Deadlines
Deadline for concluding the Financing Agreement
The final date for the signature of the Financing Agreement is X+1 (where X=year in which budgetary commitment was made). Conclusion of FA=year N
Contracting deadline
The end date for the signature of contracts (including grant contracts) is 3 years from the date of conclusion of the Financing Agreement i.e. N+3
Deadline for the execution of contracts
The end date by which contracts (including grant contracts) must be finished is 3 years from the contract signature. The contracting deadline for the FA=N+3+3
Disbursement deadline
The end date for making payments to contractors is 1 year after the deadline for executing contracts i.e. N+3+3+1
Final date for the implementation of the Financing Agreement
The end date for closure of the Financing Agreement is 8 years. After this date no financial transactions can be made legally under the Financial Agreement concerned

25. What is Budget Support (BS)?
BS is a method of delivering financial assistance which normally has 4 steps:
(Sector) Policy Dialogue
Financial Transfers (in ‘tranches’) to National Treasury Account
Performance Assessment
Capacity Development
BS is delivered by means of ‘Sector Reform Contracts’.

26. Political and Economic Focus of IPA-BS
Compliance with the political criteria should be the primary focus of IPA2 BS. In particular, assistance should support preparations for acquis chapters 23 and 24 (The ‘Rule of Law’)
For the economic criteria, the main focus of IPA2 BS should be on supporting the establishment of a functioning market economy (Copenhagen Criteria: i.e. ‘The ability to withstand the pressures of the internal market’)

27. Assessment of Eligibility
Assessment takes place at 2 stages in the programme cycle.
During programme preparation: assessment of relevance (are key constraints /weaknesses addressed?) and credibility (realism, institutional capacity, track record, political commitment)
During programme implementation: assessment of progress made in policy implementation (benchmarked against reform commitments)

28. Risk Management Framework
Risk management is an internal assessment of risk levels based on the analysis of replies to questionnaires in 5 categories, namely:
Political
Macroeconomic
Developmental
Public Financial Management
Corruption /Fraud
There are 4 risk levels:
Low
Moderate
Substantial
High
Beneficiaries are expected to define their risk response by means of ‘Mitigation Measures’ (these are monitored)

29. Whether to Provide BS?
The EC decision on providing BS is based on 3 assessments:
Assessment of political commitment to a reform agenda (in line with EU accession)
Assessment of eligibility
Assessment of risks and mitigation measures

30. Variable Tranches: Performance Reserves
‘A Performance Monitoring System and related disbursement criteria is at the heart of any budget support operation’ (EC)
BS disbursements are of 2 sorts:
Base (or fixed) tranches: these are linked to eligibility criteria
Variable tranches: these are intended to create an incentive for improved performance and are based on performance indicators.
The EC limit (cap) the use of variable tranches to avoid unpredictability /volatility of disbursements. Typically, Sector Reform Contracts cover commitments for 3 years with an upper limit of 40% variable tranches

31. Variable Tranche (Performance) Indicators
The following principles should be applied:
Targets and indicators should be Coherent with sector problem analysis and programme objectives
Whilst combined indicators may be used, the emphasis should be on Results
Number of indicators should be limited to a maximum of 8 per Tranche (to avoid loss of policy focus)
Indicators, targets and assessment methodology should be defined during programme preparation

32. Sector Assessment

33. EC Assessment Criteria for Sector Approach
Key Criteria
National sector policies/ strategies
Institutional setting, leadership & capacity
Sector & donor coordination
Mid-term budgetary perspective
Monitoring & performance assessment
Sector Reform Contracts
6. Public finance management
7. Macro-economic framework

34. National Sector Policy/ Strategy
There are 3 groups of criteria for assessing the quality of national sector policies /strategies:
Nature of policy process & ownership
Quality of policy objectives
Implementation arrangements

35. National Sector Policy/ Strategy
There are 3 groups of criteria for assessing the quality of national sector policies /strategies:
Nature of policy process & ownership
Quality of policy objectives
Implementation arrangements

36. National Sector Strategic Frameworks : Example

37. Sector Policy /Strategy: Key Questions
Is the sector policy authored by domestic actors?
Is there enough political support & stakeholder involvement to ensure ownership & future sustainability?
Are policy objectives coherent with national development objectives?
Are the objectives sufficiently SMART?
Is there an ‘Action Plan’ showing the timing & sequencing of planned operations & showing institutional responsibilities for these?

38. Institutional Setting
There should be a Lead Ministry which:
Plays a leading role on donor coordination within the sector & works closely with the NIPAC
Is responsible for coordinating the planning /drafting of Sector Support Programmes
Coordinates with other relevant stakeholders
Coordinates the implementation of IPA funded sector support.
Coordinates the collection and analysis of monitoring data (indicators) for IPA sector support.

39. Institutional Mapping: e.g. Justice
Sector Lead Ministry
Ministry of Justice (MoJ)
Body Responsible for Priority
P1: MoJ
P2: Office of Human and Minority Rights (OHMR)
Body Responsible for Measure
M1.1, M1.2, M1.3: MoJ
M2.1, M2.2: OHMR
Potential end beneficiaries
High Judicial Council
State Prosecutorial Council
Supreme Court of Cassation
The Public Prosecutor’s Office
The Prosecutor’s Office for Organised Crime
Judicial Academy
The Anti-Corruption Agency
Ombudsman’s Office
Office of the Commissioner for Equality
Directorate for Gender Equality (in Ministry of Labour and Social Policy)
Commissariat for Refugees and Migration

40. Policy Implementation
Functional Analysis
Policy Making
Resource Planning
Resource Allocation
Policy Implementation
Monitoring
Coordination
Institution 1 
Institution 2
Institution 3
Institution N

41. Operating Structure SECTOR OPERATING STRUCTURE EC-HQ / EUD
 IPA Monitoring Committee
National Authorising Officer /National Fund
Audit Authority
NIPAC/
NIPAC-TS
Sector Monitoring Committee
Sector Working Group
SECTOR OPERATING STRUCTURE
Sector Lead Institution
Body Responsible for Measure 1
Body Responsible for Measure 2
Body Responsible for Measure N
Contracting Authority
End Beneficiaries
Contractors /Service Providers

42. Institutional Capacity
The Lead Ministry and other institutions within the Operating Structure must have the capacity to absorb existing and planned IPA financial support
Recent workload analyses of the Serbian administration (carried out in support of DIS /DMS accreditation) have show that, at present staffing levels, certain Lead Ministries will experience difficulties in absorbing IPA funds over the period.

43. Absorption Capacity (I): Ministry of Justice
Inherited Workload
IPA 2012 (2 service+1 supply+1 works+1 direct grant)
IPA 2013 (3 service+1 supply+ 3 twinnings+1 works)
The Procurement Plan
Year of Contracting
2013
2014
2015
Total
Number of Contracts 1 9 3 13
Year
2013
2014
2015
2016
2017
2018
Total
(M€)
IPA
Disbursement:
Contracting
1.60
7.12
9.72
7.43
4.42
30.29
IPA
30.80 M€ (for 3 yr SPD)

44. Absorption Capacity (II): Ministry of Justice
Workload Analysis (WLA) for staffing needs to implement IPA shows the following minimum staffing levels needed to meet the Procurement Plan, these are as follows:
Year
2013
2014
2015
2016
2017
2018
WLA staff needed for IPA 4 7 5 3
Existing and Planned Staffing Levels are as follows:
Available staff (incl. Heads of Division)=6;
Systematised staff (i.e. Planned)=9
Conclusion. Unless missing staff are recruited, the MoJ will not be able to implement IPA according to the Procurement Plan. The peak demand will be in which coincides with additional demands for contracting IPA2 Sector Programmes. The capacity of the MoJ to absorb IPA II funding will be low.

45. Institutional Setting & Capacity: Key Questions
Has the sector been defined with institutional coherence in mind?
Is there a lead Ministry in the Sector?
Are there inter-institutional agreements showing responsibilities for achieving sector targets?
Have workload analyses of the institutions in the Implementing Structure been carried out?
Is capacity building envisaged?
How & when will a needs assessment be carried out?

46. Sector Coordination
Covers 2 components: (1) Coordination of government institutions & key non-government stakeholders; (2) Coordination of donors.
Lead Ministry /Institution responsible for establishing & coordinating an ‘Operating Structure’ composed of the main government institutions involved in sector policy /strategy making and implementation.
Functional, government-led Sector Working Groups.
Government manages database(s) of external assistance per sector.
Government publishes regular monitoring/ progress reports for each sector.

47. Sector Budget
There needs to be a clear link between sector policy & budgeting.
Sector plans should be properly priced & prioritized within a realistic estimate of the resources available from the national budget & external donors.
IPA II Sector Support Programmes are planned to be multi-annual & should be co-financed by predictable, multi-annual national funding.
It is necessary to provide a brief description of the sector budget on an annual, & if possible, on a medium-term perspective (3-5 years). Ideally there should be a Medium Term Expenditure Framework (MTEF) for the sector.
However, development of MTEFs will be gradual, at first assessments should focus on the existence of credible annual sector budgets. At minimum, it is crucial to verify whether the sector budget can be identified in the state budget.

48. Monitoring Performance
Stand-alone project-based assistance emphasises the monitoring of resource usage (inputs) & immediate deliverables (outputs) and relatively little on achieving objectives.
By contrast the sector approach will introduce much stronger results orientation to monitoring assistance & will focus national monitoring systems on measuring the achievement of policy objectives. There should be agreement on a Performance Assessment Framework (PAF).
Indicator Level
Function of Indicators
Examples (judicial reform)
Impacts
Measure the wider benefits beyond direct beneficiaries
% decrease in the backlog of civil cases
% increase in satisfaction rates
Results
Measure the benefits produced for direct beneficiaries
% reduction in number of appeals lodged due to inconsistent court rulings
% increase in number of court rulings enforced

49. Public Finance Management (PFM): Key Questions
Is there a PFM reform programme in place?
What are the PFM mechanisms in place for the sector?
Based on information available what are the possible areas where support could be considered?
How do the remaining weaknesses affect the sector policy & what recommendations can be made to improve the situation?

50. Macro-Economic Framework
The purpose of the macro-economic assessment is to assess the stability of the macroeconomic situation & consequent potential for future public funding
It is not expected that a separate macroeconomic analysis be carried out, but that a judgement on stability-oriented macroeconomic policies be made on the basis of existing documentation.

51. Overall Assessment
The purpose of assessments is to establish sector-level policy dialogues with beneficiary country authorities. Negative assessments of the key criteria do not necessarily prevent the adoption of a sector approach.
Few beneficiary countries will have functioning MTEFs & PAFs in place in 2014 but this is not a barrier to the introduction of sector approaches.
Sector assessment provides a basis for targeting necessary TA & capacity building activities.
However, 3 criteria are considered essential & must be in place before adopting a sector approach:
The existence of a national sector policy /strategy & a sector budget or a government commitment to develop these.
A lead institution/ ministry responsible for the sector/subsector
The existence of a functional sector coordination framework or a government commitment to develop one.

52. Overall Assessment: Key Questions
Are the priority sectors for IPA II assessed as being satisfactory on the 3 key criteria for a sector approach?
Can the problems revealed by negative assessments be addressed with domestic /IPA /other donor resources as part of programme preparation for 2014?
Can the problems revealed by negative assessments be mitigated by the time of the mid-term review?

53. Thank you for your attention
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