Country Economic/Thematic Review Meeting: “Promoting Economic Reforms in Developing Countries: Rethinking Budgetary Aid?”

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Date: 04/03/2013
Lieu: Tunis, Tunisia

“Promoting Economic Reforms in Developing Countries: Rethinking Budgetary Aid?” is the first paper to be discussed by the African Development Bank’s Office of the Vice-President (ORVP) and Chief Economist Complex (ECON) on March 4, 2013 in Tunis as part of the joint ORVP/ECON Bi-Monthly Country Economic/Thematic Review Meetings. Monday’s meeting marks the first of the 2013 series.

Discussions on Monday will be centered around the paper “Promoting Economic Reforms in Developing Countries: Rethinking Budgetary Aid?”, which will be presented by its author and the Bank’s Lead Economist, Ferdinand Bakoup. The paper examines, among other things, donor practices in the use of budgetary aid to promote economic and structural reforms in developing countries, notably those of Africa. The discussions aim to contribute to position the Bank as the first knowledge institution.  It is based on an observation in recent literature to the effect that, despite its increased use since its advent in the 1980s, budgetary aid appears to have had limited impact on the design and implementation of economic reforms in developing countries.

The paper affirms that reforms have a cost, which can be accurately estimated. It stresses that: i) budgetary aid should be devoted to support the implementation of reforms requiring the creation of intangible assets, an area in which it has a comparative advantage; ii) clearer identification of the changes in economic behaviours targeted by reforms together with an accurate estimate of the associated cost, and alignment of resources made available in the form of budget support with the estimated cost of reforms, is a pre-requisite that must be met if donors are to strengthen the linkages between the definition and implementation of reforms and budget support in recipient countries.

According to Bakoup, in order to improve, in other words, reform, it must be possible to measure. And to measure, there is need to accurately define. This paper systematically upholds this generally acknowledged dual requirement in its bid to contribute to the ongoing efforts in the development community aimed at strengthening the role of budget support in the implementation of reforms by improving donor practices as well as those of recipient countries in the use of this instrument.

Monday’s meeting will be co-chaired by Gilbert Mbesherubusa, Vice-President, OIVP, and Prof. Mthuli Ncube, the Bank’s Vice-President and Chief Economist.