disagreements and enforcing contracts. In the case of development assistance provided in a multi-donor context, these transaction costs fall under two broadly defined headings: coordination failures and measurement problems. In addition, there are the costs associated with collective action that may prevent agencies from contributing to a multiagency fund because of concerns about possible free-riding. The question this paper aims to answer is whether the MDBS structure did evolve to minimize these costs and, therefore, fulfill its stated objective of reducing the transaction costs in accessing and delivering development assistance. The answers that emerge from this paper are that the structure of the MDBS evolved to mitigate coordination failures by delegating the policy dialogue to sector-specific groups that aimed at reaching agreements over a narrower set of issues. Also, the MDBS reduced the cost of collective action by devising rules that allowed all the participating agencies to have a role in the decision-making process, and, in doing so, encouraged all agencies to increase their contribution to the MDBS. There has been less success in reaching a settled view on how to best measure progress in the implementation of the program supported by the MDBS, however. While the MDBS attempted to overcome this measurement problem by agreeing with the Government of Ghana ahead of time on the indicators that would be used to ascertain whether a policy action was completed or not, it has not been able to reach consensus on whether to rely primarily on so-called outcome indicators. At the heart of these disagreements regarding the use of outcome indicators was the fact that the Government did not favor the use of outcome indicators and the evidence that some development agencies had a preference in directing the dialogue toward policy actions aimed at reaching the desired outcomes.

**This focus on policy actions leading to outcomes does not appear to have detracted the program supported by the MDBS from achieving important results during these first four years.** The first set of more visible results came from the contribution of the MDBS toward macroeconomic stability.  As highlighted in recently completed ODI briefing paper on the MDBS experience in Ghana,<sup>4</sup> the MDBS resources helped the Government of Ghana reduce the fiscal deficit and lower the domestic debt to GDP ratio, while raising public expenditure on poverty reducing programs.  The overall fiscal deficit in Ghana shrank from 4.4 percent of GDP at end-2003 to 3.0 percent by end-2005, providing scope for an increase in the share of credit allocated to the private sectors thanks to lower domestic debt to GDP ratios.  The share of private sector in total domestic credit rose to 57.5 percent by end-2005, up from around 47 percent at end-2002. This increase in credit to the private sector is attributable to a large degree to declining public sector deficits, which allowed the public debt to GDP ratio decline 11 percent at end-2005, down from 24 percent in 2002.  Meanwhile, the spending on poverty reducing programs reached 10.5 percent of GDP at end-2006, up from around 5 percent in 2002, accounting for just over one-third of overall Government expenditures.  Moreover, the budget execution rate for most of the poverty reducing programs achieved higher than expected levels of budget execution, rising in those cases where additional funding became available during the year to over 100 percent.<sup>5</sup>

> 4 Overseas Development Institute (2007). _Budget Support to Ghana: A risk worth taking?_ Briefing Paper number 24, July.

> 5 The sources of these data are several IMF staff reports.  See the reference section at the end of the paper.

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