The provision of aid through budget support is becoming increasingly important to a number of development agencies, primarily because it can offer significant country ownership of the development process. Budget support has been defined as ‘financial aid which is provided in support of a government policy and expenditure programme, spent using national (or sub national) financial management, procurement and accountability systems’ (DFID, 2006).
The OECD Joint-Donor Evaluation of General Budget Support suggested that environmental considerations have fared worse than other cross-cutting issues such as gender (IDD and Associates, 2006). There are clearly still challenges in integrating environmental priorities into national planning processes, and the report highlighted that a) even where environmental issues have been raised in a PRSP, there is little or no follow-up by donors during budget discussions and/or b) the financial support provided to tackle the issues is small/non-existent.
As a result of the OECD evaluation, DFID, in collaboration with the Poverty Environment Partnership (PEP), recently commissioned a literature review of evidence on links between the environment and budget support and aid instruments (ODI, 2006). This highlighted the relative paucity of information on what is actually happening in country in relation to budget dialogue, budget support agreements and national environmental actions.