At the end of 2011 the European Commission published a Communication on the future of EU budget support. It recommended that budget support be tied to the political conditions in recipient countries, particularly those related to human rights and democratic values.

The European Think-Tanks Group, in collaboration with the Institute of Development and Policy Management, look at the implications of this new approach on EU development assistance in this report

In this ODI blog, Heidi Tavakoli analyses the European Commission’s new strategy for budget support.

As one of the biggest providers of budget support, any policy changes by the EC will not only affect the budget support landscape, but may also drive changes in many of its member states. Heidi notes that the new proposal introduces two significant changes: firstly, the EC proposes that budget support becomes a political instrument; and secondly, as with DFID, the EC will change the name of its budget support instruments to better reflect its objectives. Read more here to see how this could be both a ‘name changer’ and a ‘game changer’.

Developing country Finance Ministers arriving at the Busan High Level Forum on Aid Effectiveness in November may be surprised to discover that their favourite way of receiving aid – budget support – is fast becoming an endangered species: swept away by donor scepticism about good governance and budget accountability; and swallowed by the contemporary need to demonstrate that every dollar or pound of aid delivers demonstrable development results.  In this EDCSP Opinion, Simon Maxwell sets out a way forward for Busan to help shape future policy on budget support.

Register your vote on whether the EU Development Commissioner, Andris Piebalgs, was right in setting a target of 50% of EC aid as budget support.

 ODI and Oxfam International hosted an event looking at budget support in Brussels on 13 July.

The event opened with presentations from ODI’s Marcus Manuel and the World Bank’s Edward Mountfield; and followed with a high level panel debate involving European Commissioner Andris Piebalgs, Sierra Leone Finance Minister Dr Samura Kamara, Serge Tomasi from the French Ministry of Foreign Affairs, Dr Friedrich Kitschelt from the German Ministry of Economic Cooperation and Development and Oxfam’s Helen Magombo. The event was chaired by ODI’s Simon Maxwell.

The debate focussed on the following questions:

  • Does budget support deliver development results? What kind of results?
  • What are the benefits of budget support in fostering domestic accountability and how can they be strengthened?
  • What are the right criteria for allocating budget support (notably in fragile states)?
  • Political dialogue. How to react to human rights breaches?
  • Should the political dialogue apply to just budget support or to all aid instruments?

To read more about the event click here.

ODI have submitted their opinion to the European Commission’s consultation on the future of EU budget support to third countries.

Given the growing interest in the results-based aid agenda, this consultation comes at an opportune time. In the current economic climate, tough decisions will be required about aid and it is likely that those decisions will be guided by performance. A better understanding of the complex relationship between aid modalities and their effects on outcomes is needed now to inform such decisions.

To read ODI’s submission click here

 

The European Commission published on 19th October a Green Paper on the future of EU budget support to developing countries to kick-start a public consultation on how to improve the EU’s approach to budget support.

ODI has worked extensively on budget support across the world. The following are just some of ODI’s publications and resources on this issue:

 

ODI will contribute to the consultation. Sign up to our monthly newsletter to be kept informed about this and other issues

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