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Back under the microscope: insights from evidence on budget support

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This article explores evidence on budget support to discern how it has performed over time against its original rationale and expectations. It finds the biggest improvements in the pro-poor nature of public expenditure and public financial management.

More modest improvements have been made in relation to the predictability of aid flows, with achievements failing to live up to expectations, and the burden of transactions costs where medium-term gains have been undermined by ‘the far from complete’ harmonisation and alignment between donors and with partner country priorities.

Less is known about the effects of budget support on domestic accountability, in part because of its intrinsically complex nature. Despite improvements in policy dialogue, for reforms to be effective, government commitment is required and policy dialogue alone is not able to generate this commitment.

Drawing on this analysis, the article highlights seven areas  where budget support design can be strengthened vis-à-vis its original rationale.

Heidi Tavakoli, Gregory Smith