Improving Governance and Public Financial Management through Budget Support: The Experience of the African Development Bank

Both Donors and partner countries increasingly prefer budget support as an aid delivery mechanism. The Paris Declaration on Aid Effectiveness (2005) helped to boost support for this instrument, as did, albeit to a lesser extent, the Accra Agenda for Action (2008). Budget support is seen as the instrument of choice for many donors and partners to help (i) avoid aid proliferation and fragmentation and the resultant transaction costs; (ii) increase the availability of resources for financing recurrent costs, which is an essential element of sustainability (Agbonyitor, 1998; World Bank, 2006); (iii) foster greater national ownership in the development process and in the use of official development assistance; (iv) strengthen public financial management (PFM) systems by integrating resources into national planning, budgeting and oversight functions; (v) strengthen predictability and timeliness of foreign aid (AfDB, 2004); and (vi) give donors a seat at the table in discussions of critical cross-cutting policy reforms