Budget Support – Another Passing Fad in the Development Community?

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OECD has made an ‘independent’ evaluation of development aid delivered in the form of ‘budget support’ (currently some $5 billion or 5 % of all aid)- as opposed to project aid;

The evaluation points out that when a developing country’s government has the political will to reduce poverty, budget support can be an effective way for donors to deliver aid. Overall, it has helped to strengthen the relationship between donors and developing country governments, and encouraged better coordination between different donors. It has helped to strengthen planning and budget systems, making them more transparent and therefore accountable. It has also helped to prioritise areas of expenditure that target the poor like health and education.

The team of evaluators found no clear evidence that budget support funds were, in practice, more affected by corruption than other forms of aid.

They noted however, that donors should be prepared to better analyse political risks and gauge support for poverty reduction by a government. In some cases, the evaluation found that political risks had been under-estimated by donors.

While there were increases in expenditure in areas such as health and education, any increase in the incomes of the very poor is not yet evident.”

My Take; Every now and then development practitioners need compelled to reinvent themselves and delivering aid through ‘budget support’ may be fashionable way to fight poverty with the rhetoric of country ownership and predictability of aid. My worry is that this might be pushed too far without realizing that budget support is not a panacea to the deep rooted problems of the developing world. People in international institutions will find justification for anything their bosses tell them with fancy equations and econometric jargon. Look at this publication- Budget Support As More Effective Aid?. This book reminded me of Steven Pinker’s book Words and Rules- where he looks at irregular verbs from every imaginable angle of scholarship. The publication looks at budget support from every imaginable angle available to an economist. Then there is also the issue of fungibility which will always remain in the closet.

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1 Comment

I find absolutely nothing rhetoric about the need of country ownership but indeed much abusive and self-serving interpretations of what it really means and, foremost, on how its existence is evidenced.
In a country where there exists a generalized commitment for taking the next step up the ladder of development, almost any help in any way will do some good. Where this national sense of responsibility and a real we want, we can, and we will do it attitude does not exist, almost any help, in any way, would do little good and could even be harmful.
Now these are the facts, and their recognition is a must, even though of course that does not make the life of a developing institution any easier… but, then again why should their life be easy?


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This page contains a single entry by Paul published on May 13, 2006 7:12 PM.

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