## Budget Support Versus Project Aid

_IMF Working Papers, April 1, 2003_

## Source details

**Canonical URL:** [Budget Support Versus Project Aid](https://www.imf.org/en/publications/wp/issues/2016/12/30/budget-support-versus-project-aid-16445)

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- [Markdown version](/en/publications/wp/issues/2016/12/30/budget-support-versus-project-aid-16445/index.md)
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## Bibliographic details
- Authors: Tito Cordella, Giovanni Dell'Ariccia
- Published: April 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451851182.001

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### Research question and approach
- Research question: Should donors who are interested in the effectiveness of developmental programs rely on conditional budget support or on project aid?
- Analytical approach:
  - Present a model in which only a subset of the developmental expenditures can be subject to conditionality.
  - Test the model by estimating a modified growth model for a panel of developing countries.

### Theoretical findings
- Budget support is preferable to project aid when:
  - donors and recipients' preferences are aligned, and
  - assistance is small relative to recipients' resources.

### Empirical findings
- Empirical estimation of a modified growth model for a panel of developing countries finds evidence supporting the model’s predictions (i.e., the conditions under which budget support is preferable).

### Subject areas and keywords
- Subjects: Budget planning and preparation; Capital spending; Expenditure; Financial institutions; Foreign aid; Poverty; Poverty reduction; Project loans; Public financial management (PFM)
- Keywords: aid policy; asymmetric information; Budget planning and preparation; budget support; Capital spending; conditionality; East Asia; empirical growth models; first derivative; policy Index; Poverty reduction; project aid; Project loans; recipient government; Sub-Saharan Africa; WP

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## Content in this bundle

- **Budget Support Versus Project Aid - WP/03/88**
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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/budget-support-versus-project-aid-16445_