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Aid and Public Expenditure: A Guide

Working papers

This working paper was originally produced for DFID economists, and aims to provide practical guidance on the budget process in developing countries, and the role of aid within it. Though aimed primarily at development agencies, the paper should be of wider interest to anyone involved in the budget process, or seeking to influence it. Though written for economists, the treatment of the issues aims to be largely non–technical, and should be accessible to anyone with a general interest in development and the aid relationship.

Sections 2 and 3 aim to equip readers to make intelligent assessments of the quality of public expenditure planning and management. This is an enormous subject area, in which a number of major guidance manuals are available. The main emphasis will be placed on diagnosis, and on drawing the implications for the appropriate form of financial support. Section 4 includes brief lessons of experience from integrating poverty elimination, gender sensitivity and participation into the budgetary process. Comprehensive treatment of these issues, each a chapter in themselves, can not be attempted, but the chapter will provide diagnostic advice, and signposts to further material.

Sections 5–8 discuss the relationship between public expenditure and forms of aid which support it, directly or indirectly. It discusses the experience with attempts to co–ordinate aid flows and debt relief with the budget process. It aims to equip economists to make judgements on when different types of aid are appropriate, including the choice between interventions at macro, sectoral or project level. It also provides more detailed guidance on issues to consider in the design and appraisal of programme aid, sector support, and support to budget reform.

The working paper covers an enormous amount of material, and the depth of treatment reflects that: it is not sufficient in isolation, and readers are encouraged to also consult the sources of additional material and advice which are referenced. For Budget appraisal, the World Bank Public Expenditure Management Handbook should definitely be on the bookshelf.

Mick Foster and Adrian Fozzard