Policy Ownership and Aid Conditionality in the Light of the Financial Crisis

A Critical Review

image of Policy Ownership and Aid Conditionality in the Light of the Financial Crisis

The current economic situation has obliged the international donor community to reexamine its stance on the conditionality of development assistance. This study evaluates which controversies persist with respect to aid conditionality, how successful donors have been in stemming the rising tide of aid conditionality of the 1980s and 1990s, and whether the donor community practices what it preaches regarding the allocation of aid based on governance and development criteria. Above all, the report considers how the financial crisis has rendered it increasingly difficult to maintain traditional conditionality frameworks. Strategies for reducing the number of aid conditionalities and for enhancing recipient ownership of aid policies are proposed in light of the unsustainability of existing frameworks.

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Conditionality and the Shift to New Aid Modalities

How Far Does Budget Support Resolve the Dilemma?

OECD Development Centre

Having established the practical difficulties of allocating aid according to performance, in this Chapter we ask the question about how donors can limit the difficulties associated with conditionality. Arguably, part of the solution entails re-examining the arguments in favour of different aid modalities. OECD (2008b, p. 15) points out that most donors mix aid modalities depending on local contexts, with no one preferred way of delivering aid. Many donors still rely on project aid, whether or not as part of sector or programme approaches, to maintain contact with field realities, to work with non-traditional actors such as the private sector and civil society, to develop innovative approaches and to compensate for weak national capacity. The proliferation of decentralised cooperation, especially in donor countries such as Spain which have expanded their co-operation significantly in recent years, has increased the visibility of project aid.

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