'Pity the Finance Minister': Issues in Managing a Substantial Scaling Up of Aid Flows
37 Pages Posted: 3 Mar 2006
Date Written: September 2005
Abstract
Substantially scaling up of aid flows will require development partners to address many issues, including the impact of higher aid flows on: the competitiveness of aid recipients; the management of fiscal and monetary policy; the delivery of public services; behavioral incentives; and the rate of growth of the economy. Other issues will include the appropriate sequencing of aid-financed investments; balancing alternative expenditure priorities; the implications for fiscal and budget sustainability; and exit strategies from donor funding. Donors will need to ensure greater long-term predictability and reduced short-term volatility of aid. The international financial institutions can play a critical role in helping countries address these scaling-up issues.
Keywords: Foreign Aid, Fiscal Policy, Dutch Disease, Aid donors
JEL Classification: F35, H30, O11, O23
Suggested Citation: Suggested Citation
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