budgetstöd

Budgetstöd, or budget support, is a form of development assistance where a donor provides financial resources directly to a recipient government’s budget to support policy objectives rather than financing specific, stand-alone projects. The aim is to strengthen macroeconomic stability, public financial management and the implementation of national development plans by aligning aid with the country’s own budget and policy priorities.

Modalities typically include general budget support and sector budget support. Disbursements are often linked to performance against a policy matrix or benchmarks and are released in tranches after reviews. Funds are channeled through the national treasury and integrated into the budget, subject to fiduciary risk controls and financial management assessments. Donors may pool resources in multi-donor funds or work through individual agreements while maintaining aligned conditionalities and mutual accountability.

The rationale for budgetstöd includes improved aid predictability, greater ownership by the recipient country, and better alignment with national reforms. It is intended to strengthen budget credibility, public financial management, and service delivery by improving policy coherence and the use of public resources. However, it carries risks and criticisms, such as vulnerability to macroeconomic shocks, potential policy drift if domestic politics diverge from reform plans, and over-reliance on aid for budgets. Measuring impact is challenging, since results are policy and budget outcomes rather than discrete project outputs.

Evaluation and oversight commonly involve joint reviews, financial management assessments, and sector performance indicators. Budgetstöd is typically embedded in a broader development cooperation strategy that coordinates with other instruments and partners, emphasizing governance, transparency, and alignment with national reform agendas. In Swedish practice, budgetstöd has been used to support governance and anti-corruption objectives within Sida’s framework, subject to fiduciary and policy conditions.