Budget Support, Poverty and Corruption: A Review of the Evidence

Around the year 2000, budget support was considered to be the effective and often preferred aid modality. Used at the discretion of recipient governments, normally accompanied with policy dialogue, budget support is arguably the aid instrument that best complies with the principles of aid effectiveness. Following Swedish government priorities, it increased up to 2008. However, after that it decreased dramatically and by 2016, no general budget support was provided by Sweden. A similar change is apparent in the aid portfolio of other donor countries.

In this review of evidence, Professor Geske Dijkstra shows that the decline in budget support to a large extent is explained by factors in donor countries rather than by lack of evidence on effectiveness or limitations in its possibilities to reduce poverty.