2018 Public Administration Analysis

The Rise and Fall of Budget Support in Swedish Development Cooperation

Karl-Anders Larsson

Budget support is the aid modality that best complies with the principles for aid effectiveness and it has been stated in several Swedish government documents since 2000 that its share of total Swedish aid should increase. It increased up to 2008, when it reached a peak, but after that it has decreased dramatically and in 2016 no general budget support was provided by Sweden. The aim of this study is to find explanations for this development.

The results were further elaborated in a EBA-report (2018:04) written by Geske Dijkstra, which was presented during the seminar What can Swedish development cooperation learn from the Budget Support era?

Main findings

  • The decline of budget support is not due to lack of results regarding poverty reduction. On the contrary, all evaluations have concluded that is has contributed to increased budget expenditure for social sectors and improved macroeconomic policies and economic growth which has benefitted poor people.
  • The problem with budget support is not mainly its effects in recipient countries but rather in donor countries.
  • The increased focus on visible results is another possible explanation for the decrease of budget support since it is difficult to specify results at micro level and results at macro level cannot be attributed to the Swedish funding.

Karl-Anders Larsson