Should we give aid to government budgets?

I’ve got a piece up on the CGD blog about a new evaluation of budget support, which finds that budget support helps to improve capacity for financial management and accountability in developing countries. 

I’ve been a long-time advocate of budget support, as I think it is a very important way to reduce some of the possible negative impacts of aid, such as undermining the systems of recipient governments, and reducing their accountability. It is good that the anecdotal evidence on which the policy is based has been backed up by this more comprehensive, rigorous and independent review.

I’m a bit surprised by the OECD press release about the evaluation (pdf) which is much more nuanced about the findings than the evaluation report itself (5Mb pdf here).

Hilary Benn, the UK development minister, was more effusive:

Mr Benn said Britain provided 25% of its aid directly to governments and, in addition to boosting health and education spending, there had been better management of public finances, greater transparency and more effective coordination between donors. …

The development secretary said he reserved the right to stop donating to  governments that failed to meet expected standards of governance and human rights. Britain has cut off aid to Ethiopia and Uganda over alleged human rights abuses, and in Zimbabwe the UK is
prepared to back only specific projects, such as HIV/Aids assistance.

See also the BBC report here.

1 thought on “Should we give aid to government budgets?”

  1. Nothing is totally independent, you are right (CGD blog) but I think you know that in many cases the consultants carrying out the evaluations are the same consultants that have helped implement BS programmes.  Of course, one would have expected this…though I wonder what would have happenned if the IFS would have been involved. Also, you can imagine how difficult is to  model the counterfactual here.  (For a nice technical evaluation see Howard White and education in Ghana, IEG). Still budget support may be the best thing, though I suspect that for public finance management to be biting you need some democratic accountability.  In practice, my sense is that donors are not as happy as two years ago with budget support…but who knows. 😉  

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