Article: Budget Support Flashcards
Can’t be studied properly:
Corruption
What is the article about:
It studies the effectiveness of budget support
Pros of Budget Support
Most proven effects of budget support are positive or at least in presence of certain context factors positive: a high number and quality of donors’ common interests and the adherence of partner governments to the conditionalities.
increased the level of public spending, in social sectors i.e. health and education.
Result oriented but followed from both the input and outcome pov
ownership and responsibility by recipient governments - alignment with national structures of the partner and harmonization among donors.
Geared towards the priorities of the recipient.
Improves public financial management of recipient, on budget formulation and planning, auditing and budgeting, and comprehensiveness and transparency of the budget.
Positive effects on non-income poverty in the recipient countries, BUT the effects are not attributed to budget support only.
Cons of the Budget Support
More difficult to demonstrate
Does not Increase predictability due to late confirmations and disbursements of budget support tranches, and uncoordinated decisions by donors following breaches of conditionalities by partner governments.
Political** **conditionality** **central interest instead of poverty reduction>more sceptical risk-assessments>more critical stance towards budget support
Fiduciary risks: the misappropriation of budget support funds, such as corruption (mixed effects and little sources), as well as a misallocation of funds in non-poverty relevant sectors. - X effect to poverty is impossible to measure
not found to increase the quality of delivered services.
effects on income poverty is mixed.
Methodolical difficulties
Political risks
Possible negative effects on domestic accountability due to one-sided support of the executive and less incentives to mobilize domestic revenues.
Lack of transparency: the risks of budget support are inadequately researched by the covered sources, thus statements on risks are not possible.
-Suspension of budget support
Fiduciary risks:
meaning the misappropriation of budget support funds i.e. corruption and misallocation of funds in non-poverty relevant sectors
Mixed or implausible effects
Most of the budget support effects show mixed results.
effectiveness of budget support is then dependent on immanent factors, such as the programme cycle of budget support programmes or suspensions, and on context conditions.
Time-varying effects of budget support on transaction costs for recipients. While transaction costs initially increase, they are subsequently reduced as processes become routinely established.
The absence of one suspected risk of budget support, the crowding-out of domestic revenue, is confirmed by the evidence. Only a few sources identify positive effects of budget support programmes on revenue mobilization.
Budget support increases domestic accountability on the supply side, effects are mixed on the demand side of domestic accountability and for democratic governance. Changes in parliament and CSO participation in the budget process are not sufficiently attributed to the presence of budget support programmes. Budget support programmes contribute to stronger intra-government accountability structures, whereas effects on decentralization are inconsistent across countries.
Budget support reinforces pre-existing macroeconomic stability X Improvements not only due to budget support
Implausible: corruption
