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German Institute for Development Evaluation

Effectiveness and sustainability of budget support: Evaluation synthesis and exit evaluation (concluded)

Budget support has been a preferred aid instrument for implementing the principles of effective aid formulated in the 2005 Paris Declaration. Recent multi-donor evaluations find that budget support has contributed to increased budget allocation towards poverty reduction and improved development outcomes in a number of countries. Nonetheless, budget support has increasingly come under criticism in recent years. Especially bilateral donors have either partly or fully stopped using this instrument, while others, in particular the European Commission, have shifted the emphasis of their budget support programmes from general to sector budget support.

Against the backdrop of an ongoing international debate on budget support and a trend towards developing new financing instruments, DEval is conducting a systematic evaluation synthesis of budget support effects and relevant contextual conditions for its success. The exit evaluation then assesses how and to what extent proven positive effects of budget support can be sustained if donors individually or collectively withdraw from the aid modality in a country.

Objectives

The overall goal of the envisaged evaluation is to learn from the experience gained through implementing budget support and from the findings generated by evaluating this aid instrument. Specifically, the evaluation pursues the following objectives:

• Contribute to an objective discussion about the effectiveness of budget support.

• Compile lessons from implementing budget support to inform the programming of future budget support operations, as well as the development and implementation of new financing instruments.

• Contribute to understanding the consequences of ending budget support at country level.

• Identify best practices to ensure sustainability of budget support outcomes, and approaches to mitigate negative effects of ending budget support.

Methodology and process

The evaluation comprises an evaluation synthesis and an exit evaluation. The evaluation synthesis systematically reviews around 90 relevant documents, comprising existing evaluations as well as scientific and grey literature, for budget support effects. Building on first results of this analysis, the exit evaluation investigates whether proven effects of budget support are sustained after donors have withdrawn from using the instrument. Thereby good practice ensuring the sustainability of positive budget support outcomes and approaches to mitigate potential negative effects of ending budget support shall be identified. Applying a theory-based case study design to four country cases (Zambia, Uganda, Rwanda and Malawi), the evaluation team will also analyse how aid portfolios and the relationship between donors and partners change as a result of ending budget support.

The findings of this evaluation will be directed towards policy makers in Germany, other bilateral donors, and multilateral institutions, as well as towards implementing agencies that design financing instruments and implement development programmes in partner countries. The results of this evaluation will also be relevant for stakeholders in partner countries who may need to pro-actively manage donors’ exit from budget support and other financing instruments.

The final report for the evaluation synthesis is scheduled for July 2017. The exit evaluation report will be available in the fourth quarter of 2017.

As at: June 2017