Issues in managing scaled up aid
Sanjeev Gupta, Senior Advisor, Fiscal Affairs Department, IMF
Patricia Alonso-Gamo, Assistant Director, Policy Development and Review Department, IMF
Mick Foster, Director, Mick Foster Economics Ltd.
Max Lawson, Senior Policy Advisor, Oxfam GB
Tony Killick, Senior Research Associate, ODI
Questions and comments raised during the discussion which followed included points on:
- MTEF programmes
- What one might put in an email to Gordon Brown regarding scaling up aid
- Infrastructure investment to support the absorption of increased aid
- The role of private financing
- The importance of the long-term predictability of aid
- Aid dependency and political sustainability
- Guarantees to ensure that increased aid funds do not go into government reserves
- The importance of investment in health and education
The prospect of scaled-up aid presents low-income countries with opportunities for achieving the Millennium Development Goals (MDGs). Managing these aid flows however, poses significant challenges for macro-economic management. These challenges arise from the potential impact of higher external inflows on competitiveness, inflation, and debt sustainability, and the complications posed by aid volatility and uncertainty for longer-term fiscal planning.
At this ODI and IMF event, the fiscal, monetary, and exchange rate policy challenges of managing aid, including issues of competitiveness, inflation, government spending, and debt sustainability, and the complications posed by aid volatility were discussed.