Effectiveness of Budget Support

The evaluation was intended to provide lessons learned for the design and implementation of  future budget support programmes and related financing instruments. Moreover, it was intended to pinpoint how the sustainability of the effects of budget support can be ensured. The evaluation also looked into the consequences that exiting budget support might have for the recipient countries and how possible negative effects could be limited.
The results of the evaluation are aimed at political decision-makers in Germany, at other bilateral donors and multilateral institutions and at implementing organisations that plan financing instruments and implement development programmes in partner countries. The findings may also be of interest to stakeholders in partner countries who have to proactively plan donors' exit from budget support and handle possible consequences.

For a long time, budget support has been considered the best instrument for implementing the principles of effective aid formulated in the 2005 Paris Declaration. A series of multi-donor evaluations have reached the conclusion that budget support has contributed to an increased provision of funds to combat poverty and to improved development results in the partner countries. Nevertheless, budget support has become subject to increasing criticism in recent years. Bilateral donors, in particular, have partially or fully ceased to provide their support, while the EU Commission has shifted its focus from general to sectoral budget support.

The evaluation comprised an evaluation synthesis and an evaluation on the exit from budget support (exit evaluation). As part of the evaluation synthesis, 95 relevant documents (budget support evaluations, scientific and “grey” literature) were assessed and the effects of budget support systematically recorded. Building on this, the exit evaluation investigated the extent to which the effects of budget support could continue or be preserved following the exit of individual donors or even entire donor groups. This involved identifying possible approaches to sustain the positive effects of budget support and avoid negative consequences.

As part of a theory-based case study design, the evaluation team also used four country studies – Zambia, Uganda, Rwanda and Malawi – as a basis for analysing changes in the portfolio, in the implementation of development programmes and in the relationship between donors and partners.