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Does General Budget Support Work?. Stephen Lister Copenhagen, 16 May 2006 . Overview of Presentation. The Study joint donor (+government) study rigorous methodology, 18 month study seven countries, 1994—2004: Burkina Faso, Malawi, Mozambique, Nicaragua, Rwanda, Uganda, Vietnam

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does general budget support work

Does General Budget Support Work?

Stephen Lister

Copenhagen, 16 May 2006

overview of presentation
Overview of Presentation

The Study

  • joint donor (+government) study
  • rigorous methodology, 18 month study
  • seven countries, 1994—2004:

Burkina Faso, Malawi, Mozambique, Nicaragua, Rwanda, Uganda, Vietnam


  • theory and practice of budget support
  • scope of the evaluation
  • principal findings
  • implications

Does Budget Support Work?

what is general budget support gbs
What is general budget support (GBS)?
  • Unearmarked funds to government budget
  • Using government systems
  • Complementary inputs:
      • dialogue and conditionality
      • harmonisation and alignment
      • technical assistance and capacity building
  • Focus on partnership GBS
    • new style of conditionality (?)
    • support to poverty reduction strategy
  • Identified via country-level inventories
    • overlap with “sector budget support”

Does Budget Support Work?

what effects did we look for
What effects did we look for?
  • Expectations from GBS
    • ultimately, poverty reduction
    • via:
      • more predictable funding
      • harmonisation and alignment
      • lower transaction costs
      • more efficient public expenditure
      • more effective state and public administration
      • improved domestic accountability
      • etc.
    • i.e.
      • more efficient, effective use of resources
      • strengthening government systems
  • Types of Effect
    • flow of funds effects
    • policy effects
    • institutional effects

Does Budget Support Work?

what did we find to evaluate
What did we find to evaluate?
  • illustrative sample of countries
  • large volume, but recent, uneven distribution of PGBS
  • useful contrasts in “penetration”

(e.g. Uganda vs. Vietnam)

Partnership GBS flows (Table 3.3)

Does Budget Support Work?

main effects flow of funds
Main Effects – Flow of Funds
  • Influence on discretionary expenditure
  • Influence on “pro-poor” expenditures
      • support to expansion of public services
  • Efficiency of expenditure
      • gains in allocative and operational efficiency
      • efficiency improvements benefit other modalities
      • lower transaction costs for government
  • Macroeconomic effects

Does Budget Support Work?

institutional and policy effects
Institutional and Policy Effects
  • Harmonisation and alignment of aid
  • Public finance management
      • Bringing discretionary funds on budget, and using government systems does have the anticipated effects on ownership and system strengthening.
  • Capacity development
      • TA and capacity building are the least well specified or coordinated inputs of PGBS.
      • Nevertheless, complementary effects on system development.
  • Policy processes
      • A variety of positive effects on policy processes, where PGBS is established.

Does Budget Support Work?

effects on growth and poverty
Effects on growth and poverty
  • Macro-economic effects
      • contribution to total aid flow effects, reinforces existing stability and discipline
  • Effects on poverty reduction


      • problems of data, time scale, correlation vs causality (not unique to GBS)
      • form vs. content of PGBS: support to evolving PRSs


      • Weak effect on income poverty (indirect, via macro effect)
      • Stronger effect on basic services (limited by quality and targeting issues)
      • Weak empowerment effects (but early..)

Does Budget Support Work?

unintended and adverse effects
Unintended and adverse effects
  • Unpredictability?
      • short term predictability improving
      • destabilising effect of suspension in Malawi
      • long term predictability?
  • Bias against private sector / growth?
      • public services bias reflects first-generation PRSPs
      • no major “crowding out” effects specific to PGBS
  • Revenue effect?
      • no major revenue substitution effects found
  • Fiduciary risk and corruption?
      • PGBS increases focus on strengthening public finance management
      • no clear evidence that PGBS funds have been more vulnerable than other modalities

Does Budget Support Work?

interaction with other modalities
Interaction with other modalities

Important interactions include:

  • Broad influence on harmonisation and alignment.
  • Increased policy coherence across sectors.
  • PGBS flexibility improves expenditure efficiency across all funding sources.
  • General benefit of strengthening PFM (public finance management).
  • Complementarity between PGBS and other instruments (e.g. on cross-cutting issues, capacity building, corruption).
  • PGBS benefits (e.g. on efficiency and t-costs) are diminished when off-budget modalities persist.

Potential complementarities are not very systematically exploited.

Does Budget Support Work?

feedback and sustainability
Feedback and sustainability
  • Evolutionary design, adaptation.
  • Some convergence between PGBS and PRSP monitoring systems.
  • Limited effects so far on domestic accountability (but domestic and donor accountability can reinforce each other).
  • PGBS needs to be durable for sustained institutional effects – main risk political?

Does Budget Support Work?

overall assessment
Overall assessment
  • Overall positive assessment in 5 of 7 cases.
  • Principal findings:
    • Relevant response to problems in aid effectiveness.
    • Efficient, effective and sustainable way of supporting national poverty reduction strategies.
    • Positive systemic effects on capacity by providing discretionary funds to national budget system.
    • Spill-over effects enhance quality of aid as a whole.
    • Initial effects on poverty mainly through expanding public services. Ultimate effects will depend on the quality of the national poverty reduction strategy.
    • Capacity for learning suggests instrument can become more effective over time.
    • Did not find unintended effects or side-effects that would outweigh benefits.
    • Sustainability requires more attention to mitigation of risks.
    • Findings are more widely relevant to programme-based approaches which share PGBS design principles.

Does Budget Support Work?

implications and challenges
Implications and challenges
  • Use of budget support as part of portfolio
  • Range of applications?
  • Adaptation by both governments and donors to new ways of doing business
  • Long-term support instruments
  • Mitigating risks (fiduciary, political)

Does Budget Support Work?

thank you
Thank You

Does Budget Support Work?