Institute of Development Policy

The Aid Architecture Debate: Beyond Busan

Policy Brief 5: Debt Relief as Disguised Budget Support

In 1996 the ‘Heavily Indebted Poor Countries’ (HIPC) Initiative for debt reduction was introduced. In 1999 it was replaced by a more generous, ‘enhanced’ version, which was succeeded in 2005 by the Multilateral Debt Relief Initiative (MDRI). Through these initiatives, debt relief has become an important feature in the relations between rich and poor countries, not only because of its sheer volume (also in ODA terms), but also because it is acknowledged as an ‘alternative’ financial instrument. Indeed, debt relief is now regarded as an important modality of aid, alongside more traditional project aid, technical assistance, balance of payments support in support of Structural Adjustment Programmes, sectoral (SBS) and general budget support (GBS).

At first glance, a reduction of public debt bears a close resemblance to grant-type GBS. Indeed, a reduction of public sector debt service obligations increases the amount of resources in the government’s budget. In other words, it increases the fiscal space of a country, enabling the government to reduce the fiscal deficit, to increase spending, to reduce taxes, or any combination of the three, just like GBS would.

This brief discusses to what extent international debt relief granted under these recent international initiatives is indeed similar to GBS, and to what extent debt relief is as good as providing ‘new‘ resources. To the extent that the answer to both questions is positive, we address the co-existence of two separately managed but basically identical aid modalities, i.e. debt relief and GBS. We also assess debt relief in case the answer to the above questions is not unequivocally positive. To start, we briefly list the most salient features of GBS.

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Policy Brief 4: Monitoring and Evaluation in the Context of Changing Aid Modalities

This brief sheds light on monitoring and evaluation (M&E) in the context of changing aid modalities. It elaborates on the importance of M&E, discusses progress in the M&E reform agenda and suggests possible ways forward.

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Policy Brief 3: The Paris Declaration and the Accra Agenda for Action Through a Gender Lens

The 2005 Paris Declaration (PD) and the 2008 Accra Agenda for Action (AAA) translate a broad consensus among donors to increase aid effectiveness. The PD and AAA set out a sweeping reform agenda for donors and recipients around five key principles: ownership, alignment, harmonisation, management for results and mutual accountability. In particular, donors are expected to replace their traditional stand-alone projects with more programme-oriented aid, including budget support.

While the rationale for a gender-sensitive PD may easily be built on grounds of equality, effectiveness and impact, the 2005 PD was largely gender-blind, with only a passing reference to gender in the paragraph on harmonisation. Until the ongoing 2011 PD Monitoring Survey, gender had not been included in the set of monitoring indicators, and it was largely absent from the PD Evaluation. By failing to consider the gender differentiation of poverty impacts, ambitious but gender-blind cross-national PD monitoring and evaluative exercises risk leaving important aspects of changing aid modalities unexposed.

On a positive note, the 2008 AAA pays slightly more attention to gender equality and women’s empowerment, and it opens opportunities for integrating a gender perspective into changing aid modalities. The OECD/DAC has endorsed the 2008 ‘DAC Guiding Principles for Aid Effectiveness, Gender Equality and Women’s Empowerment’. It has also endorsed an optional Gender Equality Survey including three gender-performance indicators that have been added to the 2011 PD/AAA Monitoring Survey.

In principle, a shift towards ‘higher’ aid modalities need not have negative repercussions for gender equality and women’s empowerment. In fact, each of the five key PD principles opens opportunities, just as each entails some risks. Gender blindness is not neutral, however, here or elsewhere. It aggravates risks and under-exploits the opportunities that more effective aid modalities offer for equality between men and women.

Download Policy Brief 3: The Paris Declaration and the Accra Agenda for Action Through a Gender Lens

Policy Brief 2: The Role of Civil Society in Poverty Reduction Strategies

Since the launch of the Poverty Reduction Strategy Papers (PRSP; 1999), donors have elevated civil society organisations to a key role in both pro-poor development and the deepening of democratic practices. This implied a shift in the roles of civil society organisations: from micro to macro, from projects to policies and from beneficiaries to citizens. This evolution, known more broadly as moving from ‘development as delivery’ to ‘development as leverage’, however, has met with numerous challenges at different levels. This brief presents evidence and suggestions regarding how and when donors can meaningfully engage with civil society organisations in low-income, aid-dependent countries.

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Policy Brief 1: Budget Support and Political Conditionalities

General Budget Support (GBS) is considered the modality par excellence for delivering aid in accordance with the principles of the Paris Declaration (PD). It has become an important component in the aid portfolios of the donor community in many aid-dependent low-income countries. Lately, it has also become the subject of sharp controversy. Designed to function as a flexible financing instrument to support technocratic reforms in public finance management, GBS is now increasingly being used to push for democratic governance reforms, as was recently the case in Uganda, Rwanda, Zambia and Mozambique. These cases reveal a growing divide among donors regarding the role of GBS in achieving fundamental political reforms. This divide translates into growing tensions over the conduct of the political dialogue with partner countries and, in particular, with regard to which issues should be discussed where and by whom.

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