Budget support
Budget support is a particular way of giving international development aid, also known as an aid instrument or aid modality. With budget support, money is given directly to a recipient country government, usually from a donor government. Budget support differs from other types of aid modalities such as: In practice, budget support varies dramatically and is done in a large range of different ways. One of the broadest distinctions is between general budget support and sector budget support. General budget support is unearmarked contributions to the government budget including funding to support the implementation of macroeconomic reforms (structural  adjustment programmes, poverty reduction strategies). Budget support is a method of financing a recipient country's budget through a transfer of resources from an external financing agency to the recipient government's national treasury. The funds thus transferred are managed in accordance with the recipient's budgetary procedures. Funds transferred to the national treasury for financing programmes or projects managed according to different budgetary procedures from those of the recipient country, with the intention of earmarking the resources for specific uses, are therefore excluded. Sector budget support, like general budget support, is an un earmarked financial contribution to a recipient  government's budget. However, in sector budget support, the dialogue between donors and partner governments focuses on sector-specific concerns, rather than on overall policy and budget priorities. Rationale for budget support. The underlying rationale for budget support is variously seen as: a) Researchers at the Overseas Development Institute (ODI) describe how highly fragmented, ad hoc, small projects were not delivering results and cumulatively may have been undermining aid agencies' own objectives. There is some evidence that the effect of ad hoc, small projects is not systematic, but there is a wide range of individual evaluations of project as well  as some more meta-review data such as Wapenhans report (1992) and ‘Assessing Aid’ (1998). Thus the ODI highlights the following benefits: b) that building recipient government capacity and accountability to their own populations for service delivery, as the only sustainable way of reducing poverty in the long term. Evidence is scarce, since it is hard to tell what level and type of effect budget support is or even could have on these long term and highly political processes. The findings of the largest review to date are over all positive. For more information, see the 8-country evaluation of  GBS (1994-2004), 4-page summary: http://www.oecd.org/dataoecd/16/63/37421292.pdf In practice the other types of aid instruments are still running concomitantly which means the potential expressed in the underlying rationale is unlikely to be fully tested. Risks. The risks for donor governments and recipient governments are very different. The literature describes a range some of which are summarised below. For the donor government the risks include: For the recipient government the risks include: