Aid instruments
Poverty reduction budget support: a DFID policy paper
UK government’s policy on direct budget support
Authors:
; DFID
Publisher:
Department for International Development, UK, 2004
The objective of this paper is to summarise DFID’s policy on the provision of Poverty Reduction Budget Support (PRBS). It aims to increase consistency in the implementation of poverty reduction budget support in DFID country programmes; and outline some of the benefits and risks associated with the provision of poverty reduction budget support, based on initial experience. DFID believes that PRBS is the aid instrument most likely to support a relationship between donor and developing country partners, which will help to build the accountability and capability of the state.
However, experience of PRBS is still at an early stage. Preliminary comparison of actual outcomes of PRBS with its anticipated benefits and risks suggests that some of the benefits are medium term, rather than immediate. Few of the expected benefits (local ownership, alignment, and harmonisation) are automatic. Complementary measures, such as appropriate technical assistance and policy dialogue, are needed. The paper concludes that DFID will continue to work with its development partners – both developing countries and other donors – to assess the effectiveness of this instrument and to review practices in the light of what is learnt.
