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Budget support, poverty and corruption: a review of the evidence

Budget support led to substantial alignment of aid to local systems. In most countries disbursement conditions were harmonised to a great extent. The predictability of budget support was good, and better than for project aid. Budget support decreased transaction costs.

Budget support strengthened not only institutions for the oversight of budget execution, but also other institutions aiming to monitor corruption. This helped detect more corruption cases. However, in most countries concerns remain about the extent of prosecution and punishment of the culprits. Contrary to the many expectations on the high fiduciary risks of budget support, there is no evidence that it increased corruption.

However, each of these positive findings held true mostly for the earlier parts of the evaluation periods (only). The benefits largely evaporated by the end of the period as a result of more intensive governance discussions, varying donor responses to perceived breaks with the underlying principles, and lower budget support volumes.

Budget support, poverty and corruption: a review of the evidence
Geske Dijkstra, EBA/Swedish expert group for Aid Studies, 2018.